Australia is one of the most successful capitalist societies in history. An economy with 27 years of uninterrupted growth and relatively high levels of social mobility. A stable bourgeois democracy in which the military is rarely deployed to the streets and where states of emergency are called only because of bushfires or extreme weather events (with the important exception of Indigenous people living on their homelands). The big cities all rank among the “most liveable” in the world and there is abundant space. 

Yet the country has earned the epithet of “coup capital of the democratic world”, after five prime ministerial changes in eight years (Gillard-Rudd-Abbott-Turnbull-Morrison), only one of which resulted from a general election. 

The starting point for understanding this seeming contradiction lies on the embankment of Australia’s long neoliberal toll road. The very things that today’s politicians tout as the drivers of Australian capitalism’s success – financial deregulation, privatisation and the rule of the market – have undermined their own political fortunes.

More than three decades of economic structural adjustment has, despite long term rising living standards, created a more unequal, more alienated society and transformed mainstream politics – making it less receptive, less democratic, increasingly insular and myopic. The parliament has become increasingly disconnected from the opinions, and the real world, of the rest of us, generating high levels of disaffection and eroding traditional loyalties.

Not every instance of volatility – be it a leadership change, an electoral landslide followed by a one-term government and so on – can be directly explained by the sweeping changes of the neoliberal era. Plenty of events can be put down to opportunism, personal enmity or political overreach. Yet these things have always been part of politics. The question is why political fortunes shift so rapidly today. Answering that requires at least some grounding in the larger changes in Australian capitalism.

Australian neoliberalism

In the early 1970s, working class living standards were rising, trade unionism was a dominant force in the workers’ movement and the newly-elected Whitlam Labor government was carrying out an historic reform program in response to a working class and student radicalisation. 

Significant controls were in place to manage monetary policy, limit financial speculation, allocate credit to priority areas of the economy and direct funds to government. Utilities, public transport, telecommunications and sections of the banking industry were under state control.

But while the wind was in the sails of the left, the early breeze of a coming right wing tempest was soon to become noticeable. The shift to market-oriented regulation began as a world economic crisis struck in 1973. But the winds gathered force in the 1980s, particularly after the election of the Hawke Labor government in 1983, which promoted a fraudulent social contract, the Prices and Incomes Accord, drawing the union leaders into a “partnership” with big business to transform the economy. 

One of the first areas was financial deregulation. It was touted as competition in aid of consumer choice. But it had far reaching political ramifications. Peter Jonson, former chair of the Life, Investment & Superannuation Association of Australia, noted in a 1996 speech that deregulation meant:

“Driving a financial wedge into an economy … to discipline both governments and Australia’s entrenched industrial relations club … [It] linked us closely to international financial markets, and participants in these markets provide unforgiving dispassionate evaluation of domestic economic policy – thus ‘keeping the policy makers honest’.”

It wasn’t just a case of the government being held hostage to finance, though. The process was internally driven, the ALP adjusting its policies to suit the needs of big business in an increasingly internationalised economy. 

The Accord led to one of the greatest transfers of wealth from workers to bosses in Australian history, inequality rising as labour militancy was policed by the union leaders. This catastrophically undermined the workers’ movement, union membership precipitously declining to this day. It also meant that more and more of the right wing neoliberal program passed without significant resistance, the ALP being under no pressure from the unions.

Privatisations began as part of a broader shift to bringing down tariff walls and capital controls and opening up greater sections of the economy to competition – and human life to its effects. Today, almost everything has been sold and is run for profit, the prices of utilities being one reflection of that. 

The financial wedge that Peter Jonson spoke of is pushed deep into society as all major areas of state provision have become run according to market logic: health, aged care, education, retirement, welfare and community services. In all these areas, which should provide services for human need, the profit motive reigns. And responsibility for social welfare has been pushed down to the home, the family and the individual, increasing people’s sense of isolation from the state and society.

Democratic deficit

The late political scientist Peter Mair spent much of his career investigating what he described as a “hollowing out” of democracy in Western countries: a decline in engagement in official politics; a decline in party identification and affiliation; declining voter turnout and rising electoral volatility; and the policy convergence of the parties historically associated with the labour movement with the conservative parties of the rich. 

In Australia, the convergence of the major parties is more advanced because the ALP rather than the Liberals introduced neoliberalism. And the size of the perceived democratic deficit is striking. 

The Australian National University’s latest “Trends in Australian political opinion” survey notes that, in 1967, 72 percent of people claimed to always vote for the same party. By 2016, it was down to 40 percent, with only one-quarter to one-third of voters believing there is “a good deal of difference” between the ALP and the Coalition. 

In 1993, 71 percent of respondents said they watched the federal election leaders’ debate between the ALP’s Paul Keating and the Coalition’s John Hewson. At the last election, the figure had dropped to just 21 percent. In 1993, 49 percent of respondents said that they tried to persuade others to vote a certain way. In 2016, just 15 percent did so. 

The annual Lowy Institute poll also notes a significant questioning of capitalist democracy:

“In 2012, only 39 percent of … young Australians, then aged 18-29 years, expressed a preference for democracy [over other forms of government]. This year, it is the response of a broader group aged 18-44 years which differs from older Australians: only 47 percent of that group say democracy is preferable.”

The neoliberal turn didn’t just shift the economic terrain, but the way politics was structured according to economic imperatives. Over time, powers have been transferred from democratically accountable (in whatever limited way) governments into the hands of unelected bureaucrats. 

A range of “depoliticised” institutions have emerged in the last decades, such as an independent Reserve Bank, over which there is now no democratic control, and the Parliamentary Budget Office and the Productivity Commission, an advisory body that facilitates the development of neoliberal policy. 

On top of these, the Treasury has achieved a status among policymakers approaching that of the Holy See for devout Catholics. It is almost inconceivable that today’s politicians would formulate policy starkly at odds with the recommendations of the Commission or the economists in the Treasury. Indeed, every policy rolled out is routinely “costed” as a point of pride to show it is in line with prevailing market orthodoxy. 

Yet the more impotent governments seem in the face of state institutions and corporate interests, the less credibility politicians have.

These developments have created a polity in which, as US academic Wendy Brown has noted, “democracy becomes purely procedural and is detached from the powers that would give it substance and meaning as a form of rule… [It] becomes divested of politics, defined either as the handling of power or as struggle over common fundamentals or goals”. 

Labor’s introduction of neoliberalism had other effects. The erosion of the trade unions fractured the party’s traditional base of support. But the Liberal Party was thrown into crisis as well – its traditional support from big business was no longer guaranteed now that the ALP had proven itself a far sighted administrator of Australian capitalism. 

Both parties have come to rely on public funding and the state for their legitimacy and survival. And the erosion of their solid voting blocs – rusted-on types loyal to the party – has left the political leaders more reliant on positive corporate media coverage to get their message out. 

Yet that means they are more susceptible to destabilisation attempts run, for example, by the Murdoch empire. It also results in an endless circus of petty grievances within and between the parties themselves. When there is consensus about the big question of how to run Australian capitalism, competing politicians must find other ways of differentiating themselves.

It’s gotten so ridiculous that fashion and body language experts are brought into the TV studios to critique party leaders’ performance in election debates. “Oooh, he had his arms crossed there – very defensive. But the blue tie has really sent a softening message of a dependable father-next-door, so who knows who won this round …”


This long process of democratic erosion, founded in economic attacks, goes some way in helping to understand the increased parliamentary turbulence.

Yet the thing that stands out about the crisis in the Liberals is that it takes volatility to a qualitatively new plane. Unlike recent leadership acrimony in the ALP, the Liberals are divided politically, not just over personalities.

This is Australia’s contribution to the crisis ripping through parties of the centre all over the world. Australia’s major bourgeois party, long held to be a model of stability, is split over its own identity. Extraordinarily, this is coming at a time in which there is no crisis of Australian capitalism and no proven constituency, outside of small pockets of Queensland, for the right wing conservatism being pushed.

In Europe and the US, the ruling classes have faced real crises – economic depressions and recessions, EU integration stalling, the crisis of US imperialism in the Middle East, for example – which have brought the legitimacy of traditional parties into question. 

Here, there is nothing resembling those things. But with the neoliberal project at a crossroads internationally and the far right making gains in Europe, the US and Queensland, a section in the Liberals is flirting with transforming itself into a hard right outfit. 

The ALP may be the short term victors out of all this. Since 2014, all the major industry groups have been reluctant to campaign for the Liberals and seem unconcerned by the prospect of another Labor government. The sense that the ALP may be a more dependable choice for running the system would surely only have grown in the wake of the latest Liberal leadership change.

However, the disaffection resulting from years of neoliberalism is palpable even in this time of stability. In part, that’s because most people understandably don’t see any reason for government cuts when the economy is touted as so successful. But if capitalist crisis hits these shores, we can expect all the build up of the previous decades to be put on display. 

At the moment, the Liberal far right is the only force in the Liberal Party positioning itself to shape the nature of the political response in such a future scenario and build the constituency it currently lacks. For all the talk about them being crazy and throwing away government, this is the one thing that makes perfect sense.