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Political behaviour of voters befuddles the experts

By Ben Rees - posted Tuesday, 30 March 2021


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.

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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
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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.

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About the Author

Ben Rees is both a farmer and a research economist. He has been a contributor to QUT research projects such as Rebuilding Rural Australia. Over the years he has been keynote and guest speaker at national and local rural meetings and conferences. Ben also participated in a 2004 Monash Farm Forum.

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