Economics with social conscience

Economics is the dismal science, as the 19th century Victorian historian Thomas Carlyle put it.

The term has gained currency as the pejorative description of the branch of social science that studies the production, distribution and consumption of goods and services. Former British prime minister Margaret Thatcher exacerbated the unfortunate perception in her identification with the work of Nobel prize-winning monetarist economist Milton Friedman.

Yet from Ibn Khaldun - six centuries before Carlyle - down to Adam Smith, 300 years after Khaldun, there has been a social conscience to economics. Friedman's contemporary foils, John Maynard Keynes and John Kenneth Galbraith, held firm to the Smith tradition.

The argument goes on today. Economics makes and breaks governments. It figures in judgment of new governments.

Seven months into the frenetic pace of Prime Minister Kevin Rudd, one question swirls: what does the Rudd Government stand for?

Economics looms large.

Where does the government stand on economics? Rudd has not been explicit on this question. One might piece together a picture from his pronouncements, and people he looks up to, not least the German theologian and political activist Dietrich Bonhoeffer.

In Rudd's maiden speech to Parliament (November 11, 1998), he had this to say:

"Competitive markets are massive and generally efficient generators of economic wealth. They must therefore have a central place in the management of the economy.

"But markets sometimes fail, requiring direct government intervention ... There are also areas where the public good dictates that there should be no market at all."

Or, one might draw conclusions of the Rudd position from the company he keeps.

One pointer might come from Rudd's Minister for Small Business Craig Emerson in a speech he gave to The Sydney Institute, Prosperity & Fairness in a Market Democracy.