Why this weakness?
Doubtless a degree of culpability lies in the post-war period being ‘the age of macroeconomics’. Of course, macroeconomics meant Keynesian economics, and that in turn suggests another clue; Australian economics had drawn its intellectual capital too narrowly from Cambridge.
It is remarkable how many of the personalities of the still compact world of post-war Australian economics had studied there: Austin Holmes, Maxwell Newton, Richard Downing, David Butt, Gerard Firth, Ronald Frank Henderson, Wilfred Salter, Eric Alfred Russel, Geoff Harcourt, John McCarty, Duncan Ironmonger, James Perkins, Allan Barton, Sydney Butlin, Michael Schneider, Burgess Cameron, Donald Cochrane, Peter Karmel, G.L.S. Tucker, not to mention Trevor Swan, who had distinct Cambridge ties if not formal qualifications (Harcourt, 2006).Indeed, it may be argued that Cambridge in its 1950s formation actually constituted a burden to Swan. He had, of course, advanced in 1956 the ‘neoclassical growth model’, at essentially the same moment as Solow. It is uncertain if Swan’s model was conceived independently of Solow’s: the relevant issue of the Quarterly Journal of Economics had arrived in the library of the Australian National University by the time of Swan’s first public outing of his ideas; on the other hand his contemporaries deemed Swan's paper original (see Pitchford, 2002). But despite Solow's (1997) generous salute to Swan, Swan's 1956 paper takes on a slight dimension when placed next to Solow's in the same year. Swan's paper is barely more than a note; 10 pages in length. It is dwarfed by an 18-page appendix of Swan's defending his use of a Clarkian capital aggregate against ‘Joan Robinson's Puzzle'. How much more useful would have been 18 pages investigating the growth model?
In its broader Marshall-Pigou incarnation the ‘Cambridge complex' was enervating.
Marshall and Pigou loomed massive in the intellectual capital of post-war economists. Thus the Principles of Economics and the Economics of Industry were textbooks at Sydney University until the late 1950s (Groenewegen, 2010). A similar enduring prominence was found in New Zealand (Endres, 2010). Regrettably, economics is not ‘all in Marshall'. And the presumption that ‘economics' and ‘Marshall' were synonymous encouraged the neglect, among other things, of Fisherian analysis of inter-temporal wealth and utility maximisation, which in the post-war period so palpably stimulated even enthusiastic American Marshallians such as Friedman.A second ground for the deficiencies in post-war Australian economics might be sought in its utilitarian style. Such an economics is ‘pragmatic'. It is not uncritical, but it is moderate, even unimaginative. It will not propose anything ‘not in the political vocabulary'. (What would be the use of that?) And it is conservative in a literal sense; it tends to wait for an acrid smell to arise before concluding the mechanism needs repair. In the absence of any reek, its tendency was to appreciate, or perhaps recommend rationalising, the various peculiar institutions of Australian economy — the Commonwealth Grants Commission, Australian Conciliation and Arbitration Commission, the Loan Council, the Commonwealth Tariff Board — but not to judge them. The suggestion of something a bit mould-breaking was rare; it could only be, for example, a British economist who would propose in the 1960s the introduction of a consumption tax (Bensusan-Butt) or another (James Meade) who might suggest the Australian currency would be better off floating.
For all that, three volumes of Surveys of Australian Economics published from 1978 constitute a worthy testimony to the intellectual merit and strength of post-war Australian economics. Indeed, it was shortly thereafter that post-war economics enjoyed its day in the sun as the traditional formulation of the Deakinite project faltered, and the Hawke government (1983—91) sought to re-calibrate it with major assistance from economists. It was a hey-day, but the moment was brief.