Australian Keynesianism in the 1950s and 1960s

Some perspective on the way in which Keynesianism was shaped in Australia and the way in which this process may have changed over time is pertinent to the overall argument for at least two reasons. First, there is a need to keep in mind the various types of Keynesianism made possible, if only to demonstrate the enormous political dimension to a Keynesianism which was disposed towards challenging the structures of capitalist society. A radical form of Keynesianism put to this end, for example, might be termed ‘Keynesian—Kaleckian social democracy’, as it was the work of Kalecki that highlighted the political implications of a full employment society. It is the view of post-Keynesian analysis, together with some other intellectual traditions of political economy, that it is precisely the lack of full appreciation of the political implications of Keynesian—Kaleckian social democracy which is responsible for the eventual demise of a watered-down Keynesianism in the 1970s. To put it another way, it is precisely the ad hoc nature of Keynesian policy in the post-war boom which goes a long way to explain why it fell out of favour. It will be argued here that this view is helpful as far as it goes but it does not, of itself, explain why, when the collapse of the Keynesian consensus came in the mid-1970s, the shift came in the forms it did, and not in some other variation.