Stephen Bell and John Ravenhill
Charles Lindblom (1977:8) once argued that 'much of politics is economics, and most of economics is also politics'. This statement reflects a long tradition of thought in political economy that sees politics and 'the economy' as not separate but inextricably intertwined and mutually constitutive (Polanyi 1944; Block 1990). In the contemporary era, political economy divides into two principal approaches. One utilises an inductive methodology drawing on historical, institutionalist, Marxist, statist, behaviourist and other approaches to examine the mutual constitution of politics and the economy. The other utilises deduction, methodological individualism and rational choice methodologies in what largely amounts to a neoclassical economic analysis of politics.
Brian Galligan (1984:90) wrote in an earlier survey that 'political economy is a major part of Australian politics and the role of the state has always been crucial within Australian political economy'. We concur with this view. Accordingly, we concentrate primarily on studies of the state and of state–economy relations, set within an analysis of the major, relevant economic dynamics.
Only a small number of studies in political economy were conducted in Australia before World War II; in the immediate postwar decades the situation was much the same. This was partly because political science itself was still relatively embryonic, partly because what did exist was dominated by institutional formalism or by pluralist approaches that tended to eschew political economy, and partly because of the increasingly divergent disciplinary paths taken by politics and economics within academe (Galligan 1984; Capling and Galligan 1992). Only since the 1970s, led initially by Marxists and scholars influenced by Latin-American underdevelopment theory, including the founders of the Journal of Australian Political Economy, and later, in political science, by works such as Brian Head's State and Economy in Australia (1983), has there been something of a flowering of the study of political economy in Australia.The main focus here will be on the substantial body of work that has developed since that time.
One of the major preoccupations of Australian political-economy literature since the 1970s has been the political, ideological and policy transition towards 'economic