The Transition from Keynesian to Monetarist Economics in Australia: Joan Robinson's 1975 Visit to Australia
Millmow, Alex, History of Economics Review
Abstract: When Joan Robinson visited Monash University in 1975 she was at the height of her fame. She had just brought out a new alternative economics textbook and was strongly tipped, in the International Women's Year, to win the Nobel Prize in economics. The Cambridge School of Economics, which she represented, was in late bloom but it was the neoclassical school that was proving resurgent and already exhibiting a strong presence at Monash. It would make for theatrics when she arrived there. Although the visit to Australia overall was only for a few months, she gave lectures to first-year students at several universities and made several public presentations. The timing of her visit was poignant, with Australia, like Britain, caught in the throes of stagflation. There was an ongoing reappraisal of macroeconomic policy. Robinson's visit occurred while Milton Friedman, too, was visiting Australia on a stockbroker-funded lecture tour to push the monetarist explanation of inflation. Drawing on her correspondence with Richard Kahn and some of the lectures and the reaction they provoked, this paper recalls Robinson's visit and assesses the impact, if any, it had upon Australian economics.
Although there is a considerable literature on Joan Robinson's frequent visits to North American universities to incite students' interest in heterodox approaches to economics, there has been nothing on her visits to other nations, not least Australia, which she visited twice. When Joan Robinson accepted an invitation to visit Australia in 1975 it was at an interesting time, with the incumbent Labor government at a crossroads over its approach to the new problem of stagflation. It was also a time when the Australian economics profession was swinging away from Keynesianism to a new economics based upon Chicago and Virginia school perspectives. The purpose of this article is to review Robinson's visit to Australia, and her reflections on Australian economics at the time, particularly at Monash, then arguably the country's leading economics department.
The paper is divided into three parts. First, there is some background on the Monash economics department, which was the primary host for Robinson's visit. The second part of the paper recalls Robinson's observations on her hosts at Monash, the general level of economics education in Australia and the country in general. The paper concludes with an ironic, rather telling, sequel to her visit.
2 The Setting--the Monash School of Economics
At the time of Joan Robinson's 1975 visit, Monash University possessed one of the leading and certainly the largest economics department in Australia. It had also become influential in policy-making circles. Much of it was due to the efforts of Donald Cochrane, a Cambridge-educated Australian economist, who from 1961 had been the Foundation Professor of Economics and founding Dean of the Faculty of Economics and Politics. Cochrane's strength lay in macroeconomics and econometrics, and he set out to make Monash a pacesetter in the fields of economics and quantitative economics (a hitherto neglected area of study in Australia). To that end, the faculty boasted Alan Powell, one of the first Professors of Econometrics appointed at an Australian university. The first-year politics unit was compulsory for all Bachelor of Economics students until 1975, giving students a good grounding in public policy formation. At the postgraduate level there was a stress upon coursework, which meant that the training in economics at Monash was rigorous. Cochrane's faculty grew quickly from 57 students in 1961 to 1,400 in 1968. By 1966 the number of undergraduates admitted to the first year of the economics degree reached 500 and held at that level, making it the largest annual intake of undergraduates of any economics faculty in Australia (Cochrane 1968, p. 1). So popular was the Bachelor of Economics degree that there was keen competition for places. …