Hayek in Australia 1976

Hayek spent five weeks in Australia between 3 October and 6 November 1976. The visit was crowded with more than 60 appointments, seminars, informal meetings and formal presentations. He and his wife travelled from Cairns and the Barrier Reef to Melbourne Canberra and Adelaide with excursions to the country in Victoria and Queensland.

These notes come from the draft of a paper for a forthcoming collection of essays on various aspects of Hayek’s life and work, edited by Rob Leeson.

There are sections on the political situation at the Federal level and some aspects of the climate of ideas at the time before terms like deregulation, economic rationalism and the New Right were in common use. For many people now under the age of 50 that is practically ancient history but some of it is essential to appreciate the difficulty of getting any traction for Hayek’s ideas and for changing the direction of economic policy in Australia in the 1970s and 1980s.

The central issue in politics was the willingness and ability of the newly elected conservative Fraser administration to regain control of the economy after the big spending and other initiatives of the Whitlam era from 1972 to 1975. Inflation and unemployment were high and there were major issues to be resolved regarding monetary policy and the exchange rate. The political debate was soured by the resentment of ALP supporters following the Constitutional crisis in 1975 which the Governor General resolved by dismissing the Whitlam government on 11 November and calling upon Fraser as a caretaker pending a general election which the Liberal-Country Party coalition won in a landslide.

Many people had high hopes for Fraser and progressive circles were alarmed by a rumour that he was a reader of Ayn Rand. This was before it became apparent that Fraser was in fact the kind of conservative who Hayek had in mind when he wrote “Why I am not a conservative”, a man more concerned with holding political power than limiting it and more concerned to protect existing industries than to sweep away obstacles to free development. Hayek’s views were not music to the ears of the Prime Minister and the elders of the Coalition government, as indicated by the meeting of Hayek and Fraser.

In the mid-1970s interventionism had all the running in the formation and discussion of public policy. The strength of interventionist tendencies on the both sides of politics can be seen in the tenor of criticism of the so-called New Right a decade later when the Labor administration led by PM Hawke and Treasurer Keating became serious about deregulation. For many years the Institute of Public Affairs (IPA) in Melbourne was the major source of informed economic commentary on the conservative side of politics. Formed in 1943 it pre-dated the Mont Pelerin Society.

The Regulation Nation took a great leap forward during the war when the federal public service doubled in size between 1939 and 1945. The Keynesian “Nugget” Coombs was the most influential advisor to Labor and Liberal governments over many years, driving the new order based on central control of the economy, using the insights of Keynes to deliver sustained economic growth with full employment and other social benefits. Not only ALP supporters who were impressed by Keynes, much the same conversion happened to the remarkable industrialist and organizer Herbert Gepp, who formed the Institute for Public Affairs and charged C. D. Kemp with the task of producing a program for it.

An academic James Walter wrote “By the late 1930s Gepp, like Coombs, had discovered Keynes, and begun to propound a version of neo-Keynesian economic planning. Unlike Coombs, however, he drew the line at anything that looked like collectivism”. The Keynesian synthesis of private ownership and state planning provided a framework of ideas that the social engineers and the business community could share, even while they disagreed on details. This framework included a highly interventionist function for the state, and neglected the microeconomic foundations of productivity. Much of the institutional framework had been put in place by the first Federal Government at the turn of the century with tariff protection for industry and central wage fixing for the workers (in reality for the most militant trade unions and their workers).

Classical liberalism and libertarianism had practically no profile in Australia through the 1950s and 1960s until in 1974 a new party appeared with a libertarian program and aroused a deal of disbelief but little electoral support. First called the Workers Party (heightening disbelief), later the Progress Party and currently the LDP it has yet to garner sufficient support to make an impact in State or Federal elections. In 1976 the pros and cons of economic rationalism or deregulation were not yet significant topics for public discussion, and there was still a serious battle to be fought on the conservative side of politics before the agenda of deregulation achieved full support in the Liberal Party round about 1990. The tour came before the network of academics, the new think tanks and the “backbench Dries” of the Liberal Party achieved some traction. The Centre for Independent Studies started operations in 1976 but was not up and running when Hayek toured, although people like myself, who were not paying attention, later thought that the Hayek tour might have been timed to promote it.

Impact and outcome of Hayek’s visit

The major public record of the tour is an Occasional Paper published by the Centre for Independent Studies containing the the text of his three major speeches. His address to the IPA appeared in the IPA Review in 1976), as did his paper on Socialism and Science. A version of the Whither Democracy paper was published as “Can Democracy be Saved?” in Quadrant, November 1976.

A survey of four daily newspapers, The Australian, The Sydney Morning Herald, The Age and the Financial Review revealed no mention of Hayek and the tour. The SMH (15 October) announced Friedman’s Nobel award on the front page (near the bottom of the page, under the lead story on the five point plan for economic recovery presented by Gough Whitlam, the Leader of the Opposition). That would have been a timely moment to mention that a recent prizewinner was in the country at the time. The Financial Review (5 October) ran a short story on Gunnar Myrdal, who shared the prize with Hayek, reporting that Myrdal still saw socialism as the hope of the future despite a recent setback to the Swedish Socialist Party in the polls.

The impact of the visit is impossible to assess. Later in the decade Hayek would have found many more interested listeners as the forces for reform became better organized and more articulate. There is no doubt that his ideas energised many of the people engaged in the push for reform but it took more than a decade and a change of government to achieve real, and possibly permanent, progress towards a more open and competitive economy.

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23 Responses to Hayek in Australia 1976

  1. Ronaldo

    Interesting post Rafe, thanks. I find the lack of media coverage strange – if I recall correctly ‘The Road to Serfdom’ was an important text in some social science courses in at least one major Australian university in the 1960s, so his Hayek would not have been an unknown, even to people unsympathetic to his arguments.

    A minor point – my memory, although certainly not infallible, is that the Workers’ Party was set up earlier than you suggest, either in 1971 or 72, and that John Singleton was one of the main, if not sole, instigators.

  2. Rafe

    Yes I have the materials and the contacts necessary to get the date of the Workers right, thanks for picking up that slip of the pen! There is even the Singleton book somewhere in the house.

    One of the stories noted in passing through the papers, the Oct 76 wedding of Singo and Maggie Eckhart !

  3. Jim Rose

    the workers party was formed in 1975 see http://en.wikipedia.org/wiki/Progress_Party_%28Australia%29

    Its successor in WA, the Westralian Progress Party, won more than a few votes on the 1977 state election. Even had a federal MP efect to that party in late 1977.

  4. Jim Rose

    I read singo’s book too when it came out.

  5. Jim Rose

    now back to the very nice post, I find it interesting that there was no newspaper coverage of the visit. Do not know if this was the same for Friedman in 1975.

    I marvel at their Svengali. They were able to stage an intellectual coup in Australia that resonates to this day without perhaps even one press report of their incursion.

  6. Jim Rose

    rafe, in 1974 to 1977 or so, an outpost of Austrian economics in Australia was the general practitioners society. These were a bunch of doctors rabidly against Medibank and bulk billing. they had a newsletter that my father subscribed.

    As I recall, Singo and his co-author Bon Howard(?)were on Monday conference, which is where I learnt of their book.

  7. Greg Byrne

    The LDP was pro-abortion and pro-gay marriage which is why so many people turned away from it. It had a chance to be pro-life and work with pro-life parties but it became more like the Greens. I’m pro-life and I am also free market but I’ll never vote for the LDP because the sanctity of human life comes before free markets and so does the integrity of marriage and family life.

  8. ken n

    Good piece, Rafe. Thanks.

  9. Mr Anderson

    I came across this backhanded trashing of Ayn Rand via LinkedIn (hmmm), laying the blame for the (allegedly) ever decreasing tax take at the feet of those “greedy” corporations.

  10. .

    The LDP was pro-abortion and pro-gay marriage which is why so many people turned away from it.

    Which is why about five people turned away from it.

    The Liberals are also pro both of these. Family First and the CDP are socialists.

    It had a chance to be pro-life and work with pro-life parties but it became more like the Greens

    Absolute bullshit. I am sorry, I can’t let this pass.

    I’m pro-life and I am also free market but I’ll never vote for the LDP because the sanctity of human life comes before free markets and so does the integrity of marriage and family life.

    Then set up something like the conservative wing of the Republican party. It seems to be what you want to vote for.

  11. .

    I came across this backhanded trashing of Ayn Rand via LinkedIn (hmmm), laying the blame for the (allegedly) ever decreasing tax take at the feet of those “greedy” corporations.

    Salon is getting crap off AlterNet?

    Wow. Just phoning it in. Not even a façade of middle of the road politics.

    “Democrats are responsible” LOL

  12. Greg Byrne

    The LDP is going nowhere. It will never win any seats or decide seats on preferences. It will be what is called a telephone booth party. Even the communist party was more successful.

  13. Jim Rose

    Greg, LDP was the last party eliminated in the NSW senate count. It gets more votes than other parties with state MLCs. This makes it a contender for state upper houses.

  14. Jim Rose

    Economic liberals and social conservatives often have little in common.

  15. Greg Byrne

    HOPE BEATS ETERNAL IN THE HUMAN BREAST. DON’T HOLD YOUR BREATH WAITING FOR A SENATE SEAT. GREG

  16. Jim Rose

    greg, 21 seats got up to NSW upper house elections. anyone can get the last seat.

  17. Greg Byrne

    You still have nobody elected. The DLP (my party) has one senator. We know how hard it is to get a person elected. I don’t see the LDP having the resources or the people to do what the DLP has done. The LDP rather stupidly went down the libertarian left road on social issues and blew itself out of the water. Re-invent yourselves as conservative on social issues and you might stand a chance. Greg

  18. one old bruce

    Rafe: “…libertarianism had practically no profile in Australia through the 1950s and 1960s”

    All those young people singing and screaming in the streets for ‘Freedom’, then voting for the party which promised that? Nothing to do with libertarianism?

    Would it be better to just say, ‘Classical liberalism had practically no profile in 50s 60s Australia’? I’d grant that.

  19. one old bruce

    I was part of the Australian commune movement in the late 1970s, which had grown directly out of 1960s youth demands for freedom from oppressive government. You can’t convince me we weren’t libertarian. I’d say the movement as a whole at that time had more support than fringe political parties, perhaps vastly more support – difficult to quantify but *everyone* at the time seemed to support us. We got a whole hour on 60 Minutes!
    We seemed to be the wave of the future. But then after a new generation emerged, yes we failed, like all similar experiments of the past couple of centuries. Our experience painfully brought us to see that traditional social structures could not just be re-created.’Love’ and goodwill were not enough. The dog’s tail snapped back.

  20. one old bruce

    Yet now it seems to me that the western world has turned into one big ‘failing commune’!

  21. .

    I could rant about this and truly educate you but it is enough to say you don’t know what you are talking about (emarrassingly so), you have very little to offer us and I wish you luck in destroying the ALP as we hope to destroy the Greens.

  22. Ray

    Hayek was a socialist, like the rest of the right wingers here. Ask Mises.

  23. Jim Rose

    greg, the DLP has one senator because it netted together preference flows. not sure if the LDP, which I have never voted for, contested the 2011 NSW election

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