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Michael Beggs: Inflation and the Making of Australian Macroeconomic Policy 1945-85.

Michael Beggs

Inflation and the Making of Australian Macroeconomic Policy 1945-85

Palgrave Macmillan, Basingstoke, 2015, 325pp.

Mike Beggs shows how macroeconomic policy has been implemented in Australia. His book deals with the crucial decades when macro policy was variously part of a strategy of 'nation building', a means for securing full employment and a tool for preventing high rates of price inflation. The last of these elements is particularly distinctive because, as Beggs notes at the outset, 'the control of inflation is of central importance to the structural role of the state within contemporary capitalism (p.1). This emphasis may strike some younger readers as odd because it is a quarter of a century since inflation was a major economic threat in Australia and, post-GFC, it is deflation rather than inflation that has been the bigger worldwide concern. Yet the fundamental importance of the inflationary threat remains, Beggs argues, and is now enshrined in the independent role of the central bank in many nations. In Australia the Reserve Bank of Australia has the capacity to use monetary policy as a brake that can be applied whenever it regards an elected Australian government's expansionary fiscal policy as unwise.

Starting with an excellent chapter on the nature of the state and economic policy, reflecting on the ideological and institutional influences on the policy process, the book then turns detailed attention to how policy was shaped during the forty years studied (split broadly into two sub-periods). The story ends with the experience of the ALP-ACTU Accord during the Hawke-Keating years, but does not venture beyond. So it takes us to the period commonly regarded as marking the onset of neoliberalism, but it also shows the longer-standing influences pushing public policy in that direction. These include concerns with 'cost-push inflation' (blaming the unions), the nature of the balance of payments constraint, beliefs about the unemployment-inflation trade-off (depicted by the Phillips curve), the influence of monetarism, the effects of floating the dollar, concern with the 'wage overhang' (oh dear, unions again!) and much more.

By scrutinising these matters, the book tells the story of economic policy, showing the influence of economic analysis channelled through institutional processes and shaped by the evolution of real-world conditions. It is a much deeper political economic exposition than Greg Whitwell's standard book on The Treasury Line (1986) which was written at the end of the period that Beggs surveys.

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Author:Stilwell, Frank
Publication:Journal of Australian Political Economy
Article Type:Book review
Date:Jun 22, 2015
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