Ben Rees, economist and pastoralist of the Roma region, has written the following neat summary of national economic policy.
The contemporary political world has transformed economic policy. The free marketers who were silenced post the 1930s depression regrouped following the 1947 Mt Peleron meeting. It took a while; but they had their opportunity when the Bretton Woods system collapsed. In Australia, they reemerged as economic rationalists. Hayek is supposed to have been the leader; but it was Friedman whose influence came to drive Australian economic policy.
Chapter 10, “The rise and fall of economic rationalism” in Studies of Political Rhetoric by Geoffrey Stokes describes how economic rationalism of the 1970s moved through the New Right and came to rest in “neoliberalism”. Now a modern version of classical/neoclassical theory drives macroeconomic policy. In Australia Friedman came to influence Treasury and RBA over the mid to late 1970s and into the 1980s. In 1976, the Fraser administration introduced monetarism in the form of monetary targets. In 1993 , the RBA was given unofficial control of monetary policy and introduced monetarist principles as NAIRU (non-accelerating inflation rate of unemployment).
Meanwhile, advanced mathematical economics emerged to try and move economics from a social science to a hard science discipline. Now we have a monetarist/neoclassical synthesis that underwrites economic policy. The New Keynesians simply added an assumption of sticky prices to distinguish themselves from the monetarist/neoclassical base; but their sticky prices still clear the market, so classical/neoclassical theory has simply been disguised not removed.
The problem is that classical, neoclassical, monetarism and Austrian economics all failed in the 1930 Depression. None of those philosophies were included in the 1944 Bretton Woods meeting to structure a post-World War II international economic system. Hence the Mt. Peleron meeting in 1947. Post the 1971 collapse of Bretton Woods, those philosophies re-emerged and now dominate western economic policy. Governments implemented a corporatist economic system to maintain “economic management”. The corporatist economic system includes industry and social group leaders as an advisory panel. However, whilst the differing groups can go their hardest upon unimportant economic and social policy issues; they must toe the government line on important policy direction issues. If a group does not toe the government direction on their major policies, the group is excluded from access to government, ministers, and departments.
The move to 19th century market economics was the legacy of the Baby Boomers and Generation X. Contemporary generations working under the economic philosophies of the Baby Boomers and early Gen Xers don’t like the distribution of income and class system that has emerged. I think there is now generational discontent with economic policy. However, the political parties still believing in the economics of yesterday will have no answers. The response of governments will be to try and isolate dissenting groups. Hard-line groups must fail in this environment. It will be the moderates among the dissenting groups prepared to use their votes to effect change that should win over time.
Other writings by Ben Rees include “Contemporary Economics and Artificial Intelligence”, in the Proceedings of The Royal Society of Queensland (2026, volume 135, in press); and “Rural Debt and Viability” , a paper delivered to the Rangelands Policy Dialogue of July 2019.