Political behaviour of voters befuddles the experts

The outcome of the WA election has befuddled experienced political commentators and media shock jocks alike. They seem unable to reconcile the landslide acceptance of one side of politics by the voters in one State whilst the very same political party is very unpopular in another State. The favoured explanation by the "experts" is the popularity of the State leader.

Inconsistent and seemingly perverse rejection of major political parties on both sides of the political spectrum can be explained in terms of economic systems theory. Prior to the adoption of economic modelling, a compulsory first year subject in the University of Queensland B. Econ. was Political Economy and Comparative Economics. This subject dealt with political and economic orders within an economic system. Sadly, the art of economic modelling has replaced the study of economic systems. A major weakness in accuracy of economic modelling outcomes is their reliance upon underlying assumptions and value judgements to reflect consistently real- world behaviour.

It is the impact of policies on voter's wellbeing that influence real world behaviour. Policies on offer in 2021 are determined from within a corporatist economic system which has a very different structure of influence to the post World War II mixed economic system based upon the economics of John Maynard Keynes. The post War mixed economy demand management polices of Keynes impact very differently to the modern corporatist economic system underwritten by supply side economics. Moreover, the change from the Keynesian class based society to one of political interests in a corporatist economic system generate very different voter behaviour

Political Economy and Comparative Economics

Political economy deals with the interaction between economic mechanisms of society and political and social spheres of social activity. Comparative economics, on the other hand, concerns itself with the different types of economic systems i.e. capitalism, socialism, communism; and, corporatism. It is within these dimensions of economic theory that voter behaviour can be best explained as a reaction to applied policy in a particular economic system.

Thus, an economic system can be viewed as comprising two components or orders of society. Firstly, there is the economic order which embraces decisions relating to the production and distribution of goods and services. Secondly, there is the political order which considers relationships that are concerned with authoritative decision making within an economic system. Both orders of an economic society are interrelated. Consequently, decisions in one order directly affect the other order of the economy.

Economic Systems

The ownership and control of the means of production and control determines the type of economic system. There are two authoritarian economic systems politically situated on the left and on the right of the political spectrum. The authoritarian system of the left is communism whilst on the right is fascist dictatorship. There is no classic example of a particular economic system. Identification is made according to dominant features of an economy. To understand the changing classification of economic systems, imagine a clock at 12.30 o'clock. A pendulum swinging from point zero, traces out the changing economic system.

Imaging the pendulum swinging leftwards from 12.30 o'clock, it traces out the mixed economy, socialism and finally authoritarian communism. Meanwhile, the pendulum swinging rightwards from 12.30 o'clock passes through laissez – faire capitalism, corporatism and finally authoritarian fascism

The identifying characteristic of the type of economic system is the ownership and control of the means of production. As the pendulum swings leftwards from 12.30 o'clock, it denotes increasing public ownership and control of the means of production. Conversely, as the pendulum swings rightwards from 12.30 o'clock, the means of production remain privately owned ; but, government control of the means of production increases through regulation and legislation.

1. The horizontal axis describes the economic order or ownership of the means of production distribution and exchange
2. The vertical axis describes the political order or decision-making process i .e. level of authoritarianism

Leftwards from 12.30 o'clock, examples of economic systems would be the Australian post World War II mixed economy. Moving to Swedish socialism, and finally to the Soviet command economy. Similarly, swinging rightwards through laissez- faire capitalism, the pendulum would encounter Thatcher's England, Hawke and Howards corporatist Australia, and finally the command fascist economies of Franco's Spain, Mussolini's Italy, and Hitlers Germany.

Post 1983 structural reform of the Australian economy provides an excellent example of how an economic system structures society. As selected industry groups and trade unions were granted access to the government policy making process, consensus politics became necessary to manage conflict amongst powerful interest groups privileged to directly access government ministers and department heads. Consensus politics in the political order would approve increasing regulation of privately owned means of production in the economic order as the pendulum swings rightwards. The old class system of the post War economy collapsed and was replaced by organized political interest groups across, individuals, consumers, environmentalists, conservationists etc. Community voting patterns would be expected to change as society reorganized. Over time, these organised interest groups develop immense political and economic power

The move to corporatism is generally associated with the Hawke Keating Administration; but significantly, no successive government has abandoned the political order introduced by the Hawke Administration. Indeed, by signing the Kyoto Protocols, the Howard Administration created an opportunity for state governments to exercise increased authoritarianism as environmental policy. As the states moved to regulate privately owned land, the Commonwealth Government implemented a National Biosecurity Act which now underwrites State Government response to the Covid -19 pandemic.

The Australian Economic System

Corporatism

A political system which rests on the direct involvement in government decision-making institutions of a limited number of corporations or groups which are functionally necessary for the stability and growth of the economy. These corporations usually from business groups and trade unions, and sometimes farmer groups, are seen by corporatists as representing the important interests of individuals in society. These corporations have apparently conflicting interests, but if they are brought together in government institutions, consensus between them can be found and expressed in agreements and contracts. Liberal corporatists distance themselves from the Fascist corporatism of Italy and Spain of the 1930's, arguing that corporatist institutions must be linked to Liberal democratic parliamentary institutions.

Tripartite forms of corporatism, so called because they involve government, business, and unions, gained popularity in western Europe in the 1960's and 1970's. Some of the initiatives of the Hawke government, such as the 1983 National Economic Summit, the 1985 Tax Summit, and the Economic Planning Advisory Council, have been based on corporatist ideas.

Macquarie Dictionary of Australian Politics, 1988; pp. 96-97

The Australian economy meets the necessary structural definition of corporatism. The move to corporatism was a necessary adjunct to the post 1983 structural reform of the highly protected Keynesian mixed economy which existed from World War II until the 1971 when the Bretton Woods international monetary system collapsed. For the next twelve years, the Australian economy joined the international movement to Friedman's closed monetarist system. From 1983, the Hawke and Keating Government embraced supply side economics and began structural reform of the historic Keynesian demand management economic system. As structural reforms opened up the economy to international competition, the pendulum in the economic systems model would swing rightwards through laissez-faire capitalism to come to rest in authoritarian corporatism.

Political order of Australian Corporatism

The basic structure of corporatism is that input into the political order is restricted to a number of important interest groups or corporations drawn from industry, trade unions, agriculture; and , some social groups. These "corporate" groups are given access to Government Ministers and department heads. Conflict between the groups is managed through negotiation, collective bargaining, and agreements. In essence, the political order becomes driven by consensus politics which broke down the class system. As the class system broke down, political activity changed community values and voting patterns to reflect these new values of society

Business groups pursuing economies of scale through efficiency and productivity build monopoly power through mergers and acquisitions. Social groups, on the other hand, build political influence through public agitation. Consequently, as the class system breaks down, established party loyalties erode transferring political power to community and industry interest groups.

Political power exercised within the political order considerably influences important economic variables within the economy such as:

• Distribution of economic power
• · Distribution of political power·
• Distribution of income
• Distribution of wealth

As these powerful interest groups never face the voting public, their political power effectively silenced the voice of ordinary people. Consequently, the opportunity for the voice of ordinary people to be heard in a corporatist economic system becomes limited to periodic opportunities presented at the ballot box.

The Economic Order

Since 1975, policy analysis within the economic order has been driven by CGE modelling when the IMPCT Project institutionalised economic modelling across several Government Departments: IAC (Productivity Commission), Departments of Industry and Commerce; Employment and Industrial relations; Environment Housing and Community Development, and the ABS. Economic models of the RBA and Treasury are also CGE.

Economic model projections are dependent upon how closely underlying assumptions reflect real world behaviour. Supply and demand theory in a CGE model is based upon an underlying assumption that all markets clear simultaneously at equilibrium output. That important assumption requires a structural assumption that all markets are perfectly competitive which requires no single producer or consumer can influence either the supply or demand side of a market or markets. Such an underlying assumption is directly in conflict with the political order where policy decisions are structured through negotiation, collective bargaining, and agreements within the framework of consensus politics.

Inappropriate policy decision based upon unrealistic assumptions of economic modelling have direct impact upon the wellbeing of the silenced majority. The structural conflict between the two orders of a classless corporatist economic system become inevitably expressed at the ballot box.

Post War Mixed Capitalist Economy

Political Order

The mixed economy lies in the third quadrant of the economic systems model in which there is public ownership of some means of production. Community policy influence is achieved through organised pressure groups across business, industry sectors, and social groups. These groups lobby political parties and politicians to influence policy outcomes through industry and social policies. Labour had its own pressure group: the trade union movement, which pursued working conditions and rates of pay. Ultimately though, political decisions were made by ministers advised by a professional public service.

Political influence wielded by pressure groups can be illustrated by the 1972 Commonwealth Government decision to reinstate a 20% investment allowance in response to pressure applied by the Associated Chamber of Manufacturers. For the ALP, the power of the trade unions is often overstated; but, traditionally, the trade union movement has held a substantive voting power at the national level of the Party; and, many Labour parliamentarians were ex workers from particular industries.

Political parties themselves tended to be drawn from particular sectors of the economy. For example, the Country Party represented agricultural industries. The Liberal Party was asserted to represent the business sector whilst Labor represented the working class.

Economic Order

The economic order was concerned with the distribution of income and allocation of resources necessary to meet the post War commitment to the 1945 Full Employment White paper. As economic modelling was non-existent, policy decisions were based upon empirical factual evidence. Data collection was carried out through the Australian Bureau of Statistics, Bureau of Agricultural Economics, Reserve bank; and, periodic census whilst industry pressure groups completed the information flow necessary for policy deliberations.

Distribution of income was institutionally determined by the Tariff Board, Arbitration System, and orderly marketing of important rural industries. A comprehensive welfare system supported the incomes of those excluded from the institutional distribution of income. Deliberations of the institutional determination of income distribution was finally implemented by the parliamentary system.

Averaged Economic Systems Performance Comparison

It is the underutilisation of the labour force that tells the story of the two economic systems. The underutilisation rate is only available since 1978 so catches only the closing years of the mixed economy; but, capture the early years of institutionalised economic modelling from 1975

Conclusions

In 1973, the Electoral Act was amended to lower the voting age from 21 years to 18 years. Back then the age cohort was considered a significant voting population. Within the political order of economic systems, the impact of rising underutilisation rate for both groups 15-19 years and 15-24 years and sympathetic supporters seems not understood by our professional political commentators.

Covid-19 pandemic economic contraction policies imposed upon the corporatist economic system would have a voter transmission pathway through the breakdown of the class system. Under corporatism, the break down in the class system has allowed policy input through the political order from special interest social groups alongside privileged industry groups. Consequently, the combination of powerful political groups and monopoly industry interests have effectively silenced the voice of the silent majority. Consequently, as the political order within the corporatist economic system has not served the interests of the wider community at all well, voter reaction at the ballot box becomes inevitable.

Decisions in the economic order based upon assumed reality of economic models has led to tepid economic growth. An underperforming economic order has led to unacceptable levels of underutilisation of the labour force particularly in young age groups. Consequently, negative impacts have emerged in the form of social fabric erosion, inequitable income distribution and declining living standards. The distribution of income and wealth under the corporatist economic order is another transmission pathway for voter dissent.

As policy decisions within the economic order of corporatism do not reflect the real world, corporatism's reliance upon assumed reality in the economic order must also accept policy judgement at the ballot box as ordinary voters exercise their democratic right. It is time to re-evaluate the role of economic modelling in the economic order decision process; and, the structure of the political order of the corporatist model