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.