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A History of Australasian Economic Thought. By Alex Millmow (New York: Routledge, 2017), pp.250, AU$200.00 (hb).

AbstractThe article argues there is little evidence that World War I quickened the currents of structural change in the Australian economy. It suggests instead that the War was reinforcing of the Deakinite model of economic management that already been established by the outbreak of War. It did so by enlarging the tenet of 'protection plus imperial preference' that had been inscribed in the pre‐War policy consensus; by strengthening the revenue and power of the central state basic to the Deakinite framework of economic governance; and by assimilating rural interests into the terms of that framework.

The paper presents a simple theoretical account of how an increase in government purchases may reduce total employment. It is shown that in a 'neoklassikal' model - in which utility maximising consumption choices are combined with a fixed-coefficient technology - an increase in government purchases will reduce the demand for labour at the given wage rate. The reasoning turns on the link between optimising consumption behaviour and employment in the investment sector. An increase in G will (as a matter of arithmetic) make current consumption scarcer relative to future consumption; and thereby reduce the valuation of future consumption in terms of current consumption. As labour is valued according to its contribution to future consumption (through its contribution to capital formation), it follows that an increase in G will reduce the wage at any given volume of employment.