As promised, here’s the first section of the first chapter. In the final document it will be preceded by an introduction, but I haven’t written that yet… So here you’re dumped right into the action. I’ll give the chapter structure here, though, to give a vague idea of how things fit together:
- Economic policy and inflation
- Monetary policy: the state in the capitalist financial system
- 1945-65: Inflation and ‘external balance’
- 1945-65: Counter-inflation policy in general
- 1945-65: Counter-inflation monetary policy
- 1965-85: Inflation and the exchange rate
- 1965-85: Counter-inflation policy in general
- 1965-85: Counter-inflation monetary policy
- Conclusion: the 1980s and beyond
So the first two chapters are theory chapters, and in fact the first may be split in two.
I’m sure no one will want to, but you never know what will happen once stuff’s on the web and it gets Googlified (my Keynes stuff has had a strange journey) so I’m putting a standard disclaimer on each page: This is a draft of an unfinished document, please don’t quote without getting in touch first. Quoting in blogs is fine.
My explanation for the development of policy is structural rather than ideological. By this I mean that I do not explain the shifts in policy in my forty-year period as an outcome of ideological struggles, first as the rise of ‘Keynesianism’ and then its fall at the hands of ‘neoliberalism’. I suggest that the relative strengths of the ideologies in political struggle was itself determined by the changing, interdependent structures of state and economy, which exerted strong pressures of selection. This is not to deny independent influence at specific points from the details and discursive structures of the warring ideologies, or from particularities of the actors and groups through which they warred, but I will argue baldly that this is the less enlightening part of the story, and in any case a story already many times told. Beyond the ‘Keynesians versus neoliberals’ story are more subtle questions about how the mainstreams of those ideologies were themselves sculpted by the political-economic field in which they sought to embed themselves: Why, from Keynes, effective demand and the IS-LM apparatus, and not “the euthanasia of the rentier”? On the other side, why Friedman’s strong, rule-bound central bank and not von Hayek’s free banking? Ideologies do not conquer by the superiority of their reasoning, and the structure of the social networks through which they take material political form and come into contest are shaped by selective pressures from the broader social conditions in which they emerge.
Selective pressures of what form? I follow Jessop’s [1990: 260] analysis (adapted from Poulantzas) of the state as “a system of strategic selectivity,” that is
a system whose structure and modus operandi are more open to some types of political strategy than others. Thus a given type of state, a given state form, a given form of regime, will be more accessible to some forces than others according to the strategies they adopt to gain state power; and it will be more suited to the pursuit of some types of economic or political strategy than others because of the modes of intervention and resources which characterise that system.
Or, as he later developed the concept:
The state is an ensemble of power centres that offer unequal chances to different forces within and outside the state to act for different political purposes. How far and in what way their powers (and any associated liabilities or weak points) are actualised depends on the action, reaction, and interaction of specific social forces located both within and beyond this complex ensemble. [Jessop, 2008: 37]
This notion has the advantage of conceiving social structure in a way that does not neglect agency and subjective creativity; it merely emphasises that they are embedded in social structures that put up more resistance against some strategies than others, and thus tend to select some over others. It is not determinist; history remains open to choices and the chance outcomes of interactions between the intertwining strategies of many social actors, outcomes more often than not unintended by anyone in particular.
My object of study, therefore, is the structural pattern that tended to select counter-inflation policy as a dominant aspect of economic policy in Australia during my period, and tended to shape it in a particular form. It is not simply a narrative history of the development of counter-inflation policy; it seeks to go one step deeper to explain why, although other counterfactual histories were certainly possible, the structure of capitalist society was such that the dominance of counter-inflation policy was no accident, was in fact strategically selected, not by the arbitrary ideological whim of policymakers but by the structure of the interdependent state and economic systems in capitalist society at that point in their historical development.
The protagonists of my story are ‘policymakers’, a collective term which denotes a diverse assortment of individuals and institutional actors from Treasurers to central bankers. But in what sense can we consider ‘economic policymakers’ collectively as a strategically-acting subject/actor? For Poulantzas and Jessop subjectivity and agency are explicitly denied to the state as such. Rather, the state is a social relation, in the same sense in which for Marx, capital is a social relation – a structure reproduced through relationships between people, mediated by things. However, de Brunhoff  – writing within the Poulantzian tradition – argues that economic policy, in specific historical conditions, came to act as if it were a unified strategic actor. I will retrace this argument, which explains my reasoning for centring my narrative on the strategic action of policymakers as a group.
Suzanne de Brunhoff : The State, Capital, and Economic Policy, translated by M. Sonenscher, Pluto Press, London.
Bob Jessop : State Theory: putting capitalist states in their place, Polity, Cambridge.
Bob Jessop : State Power: a strategic-relational approach, Polity, Cambridge.