In Australia, Keynesianism Is Back in Fashion — but It Still Won’t Work
Neo-Keynesians, nostalgic for the postwar economic boom, imagine that state spending can create full employment and resolve the crisis of neoliberalism. But their analysis is wrong about the past, wrong about the present, and wrong about capitalism itself.
Sydney, Australia. (@socialcut / Unsplash)
Large-scale state intervention into the economy is firmly back on the agenda in country after country, and Australia is no exception. It’s unsurprising, then, that a version of Keynesianism is coagulating amongst academics, elements of the Australian Labor Party (ALP), the Greens, trade unions, and progressive think tanks.
Ged Kearney’s op-ed, “Full Employment Could Be the Answer to Rebuilding the Economy” is a chemically pure version of this neo-Keynesian ideology. A close and critical look at Kearney’s argument is an excellent way to get a handle on this wider debate.
Paper Tigers
Kearney is the former president of the Australian Council of Trade Unions (ACTU) and Labor MP for Cooper, in Melbourne’s north. She argues that the ALP governments headed by John Curtin and Ben Chifly (1941–49) built their economic policy on the basis of the 1945 “White Paper on Full Employment,” penned by a team of economists who were led by H. C. Coombs. This, Kearney explains, directed government spending toward socially useful projects, raising direct state employment (a Job Guarantee in all but name), while also boosting wages — and thus consumer demand.
This article is for subscribers only. Please login or subscribe to access our full archives and beautiful print and digital magazine starting at just $3 a month.