A Liberal State

How Australians Chose Liberalism over Socialism 1926–1966

David Kemp

• Publisher: Miegunyah Press Digital
• Year: 2021
• Print ISBN: 9780522873443
• eBook ISBN: 9780522873450
• Topic: History
• Subtopic: Australian & Oceanian History
• Index: History

A Liberal State: How Australians Chose Liberalism over Socialism 1926–1966 explores the revival of Australian political liberalism after the Great Depression of the 1930s and its sweeping domestic political triumph after World War II over utopian socialism.The fourth title in a landmark five-volume Australian Liberalism series, A Liberal State examines how Australians reasserted their claim to control their own lives, following decades of expanded government control over economic and social life, and intrusive wartime and post-war restrictions.From the 1920s Robert Menzies became the major voice for liberal thought in the nation's political life and David Kemp looks at his role in reconstructing liberal and conservative politics. The book highlights the importance of the factional struggles within the Labor Party arising from its adoption of a Socialist Objective, and the domestic and international advance of utopian socialist ideology during World War II and the Cold War. A Liberal State tells of Jack Lang's advocacy of the socialisation of industry in New South Wales in the 1930s, and of Menzies as war-time prime minister and his key relationship with John Curtin. It assesses Menzies's historic Forgotten People statement of liberal ideas, the formation of the Liberal Party of Australia, and how, after his election victory in 1949, Menzies rebuilt a liberal basis for national policy during sixteen and a half years as prime minister.

1

A liberal or a socialist state?

BY 1925 THE liberal project in Australia was under threat. Liberal government had thrived in the peaceful world of the Victorian and Edwardian eras. The Great War of 1914–18 had been a shattering experience, which had destroyed the Liberal Party and had transformed the nature of the Labor Party. The latter had expelled its founding leadership and placed its external organisation in control of policy on matters both in and outside the platform. The war had eroded the liberal character of the economy, consolidating its anti-competitive character, promoting government enterprise, price controls, replacement of markets by bureaucratic administration, and creating precedents for high levels of regulation for many industries.

The war, with its restrictions on civil liberties, seemed to have moved the culture towards greater acceptance of legal restraint and compulsions. The conscription referendums (especially in the context of the Irish Easter rebellion of 1916) had intensified religious sectarianism. Utopian socialist and anti-capitalist ideologies had gathered strength. Internationally, supporters of utopian communism had taken power in Russia in 1917, violence had become a continuing feature of the politics of European countries after the war, and fascism had come to power in Italy. Echoes of each of these had entered Australian politics: in 1920 a communist party had been established, and in 1921 the Labor Party had adopted a socialist objective.

While World War I was undoubtedly the most damaging event to that time for the liberal project, it was not the only reason why that project was in trouble by the 1920s. A number of the problems Australians were facing had not been the product of the nation’s need to organise itself for war, nor of the reactions of the people to the war, but were the result of policies adopted before the war that were directed to people in their collective identities—identities of nation, race and class in particular—and not as individuals. By the 1920s, conflicts between the interests of individuals and laws based on collective identities were all too obvious.

At Federation, Australia’s Liberal leadership had arrived at solutions to several problems faced by the developing nation that placed restrictions on the ability of individuals to make decisions about their own lives and, significantly, because of this, were themselves the cause of serious political and policy problems in the post-war era. It was not that the nation’s leaders had ceased to be liberal. In fact, they remained defiantly liberal, and eager so to call themselves. The pre-war policies that were effectively ‘ticking time bombs’ for the political leaders of the 1920s were: white Australia, industry protection, compulsory arbitration and (still largely blanketed by the great silence) Aboriginal ‘protection’. It is certainly overly simplistic to suggest that these policies were based on single objectives. They were political products, and motivations in politics are never simple. Yet the values that recurred constantly in debates were overwhelmingly high-level values that were indeed central objectives of the liberal project: social harmony, opportunity, freedom from oppression, and human dignity. The answers that had been framed, however, depended on making rules for interest/identity groups rather than providing frameworks for responsible individual decision-making, and these proved divisive and demotivating.

Hopes had been high. Immigration policy excluding ‘coloured’ people was designed, significantly, to avoid the problem of racial conflict that America continued to experience. Compulsory arbitration aimed to abolish industrial conflict between employers and workers. ‘Protection’ regimes based on race, rather than individual needs or rights, were designed to safeguard Aboriginal people against the violence and invasion of people outside their communities and allow them to preserve traditional ways of life. Tariff protection of industries against international competition aimed to secure jobs for Australians and to build an industrial nation. But each of these policies demanded new kinds of conformity, reduced the flexibilities of a liberal society, and undermined individual choice and decision-making in favour of direction by central authorities. The new privileges and restrictions had been allocated according to nation, class and race.

In the 1920s Prime Minister Stanley Melbourne Bruce coped with the negative consequences of each of these well-intentioned, if misdirected, policy ‘experiments’.

• White Australia had damaged Australia’s reputation with America and Britain at the Versailles Peace Conference in 1919; it remained an issue with Britain, whose empire contained many peoples and cultures, and with Japan, and it entrenched parochialism and racial prejudice at home.

• Compulsory arbitration had not abolished strikes; indeed, it had encouraged them, by making access to conciliation and arbitration dependent on the existence of ‘disputes’, dividing workers and employers from each other and discouraging domestic competition and innovation.

• Industry protection had not created additional jobs or strengthened Australia. On the contrary, it shifted jobs from competitive industries to inefficient ones. Bruce could see that it was holding back growth and prosperity, limiting innovation and exports, and causing balance of payments problems and conflict with Britain and Japan and other countries. In fact, adopted by other countries, protectionism was undermining world trade and feeding economic dysfunction, nationalism and parochialism.

• Aboriginal protection regimes had not prevented violence against the continent’s original inhabitants nor averted drug dependence. These regimes had reinforced racial differences, and were obviously depriving Aboriginal Australians, especially those of mixed ancestry and living outside reserves and missions, of their civil and political rights on the basis of race in ways that were offensive to those with Aboriginal heritage and to liberal values.

When the Great Depression struck in the early 1930s, many Australians suffered a loss of trust in the liberal economic system and in the major parties of government. The NSW Labor Party led by Jack Lang rejected ‘capitalism’ and organised itself to begin the socialisation of industry in the state. Lang as Labor Premier campaigned nationally for a utopian socialist solution. His close colleagues debated whether Labor should remain a constitutional party or become revolutionary, and argued that parliamentary government and the rule of law should be replaced by a ‘people’s government’ and rule by regulation. Paramilitary groups set up by both radical and conservative extremes began training in anticipation of violence by the other. Some conservatives, recognising the power of business and farming organisations and labour unions, began to float the possibility of a fascist-style corporate state in which national policy would be made by cooperation between powerful interests. Less than a decade later, a deeply divided Australia found itself under military attack and its principal guardian, the British Empire, fighting for survival.

This volume tells the story of these events and those that followed, and how Australia managed to keep its ideal of a free and democratic society alive. For, despite the global crises that were the context for Australian politics during the period covered by this volume, the liberal project not only survived but also, after World War II, experienced a remarkable return to health.

This book explores the nature of this recovery and the reasons for it. Australia was fortunate to have political leaders with the understanding and the skills to address the damaging consequences of global crises and international pressures on their country and, after sometimes bitter political debates, find policies that would protect the country’s security, further restrain exploitation, and empower individuals and households to better define and achieve their ambitions in life.

Champion for liberalism

The central figure in the story told here is Robert Gordon Menzies who, with high intelligence, self-confidence, civility, resilience and immense persistence, was the main exponent of the political case for economic and social liberty from the Great Depression, through World War II, and for the first twenty years of the Cold War. In the process he transformed Australia’s political culture and its prospects as a nation. When he retired, of his own accord, as Prime Minister, after a total of eighteen and a half years in the office, he was widely acknowledged as one of the Western world’s most brilliant political leaders, and he remains the outstanding exponent of liberal thought in Australia’s political history. This volume spans his whole parliamentary career, first in the Victorian Parliament (1928–34), then in the Commonwealth (1934–66).

Menzies’s pursuit of humane values, and his victory in the battle of ideas with those who believed that the protection and advancement of their own interests, or socialist ideology, should become rules for the conduct of the lives of others, gave Australia by 1966 a much more liberal state and liberal political culture than would ever have been predicted at the end of World War II or even from the general election of 1949, which began Menzies’s second period as Prime Minister. Menzies proved remarkably adaptable to changing circumstances, and the forces of liberalisation he helped to set in motion continued to energise the nation and facilitate its adaptation to a then radically liberalising world long after he departed the scene.

Menzies’s years in government after 1949 are therefore only a part of the story. When he entered the Victorian Parliament in 1928, he emphasised the priority and supremacy of the shared interests of individual people against those of organised vested interests, big government and class warriors. Seeing the need for talent in the country’s politics, he prepared the way for other young people of liberal mind to become active through the Young Nationalists. With his legal experience and idealistic political family behind him, he seized the opportunity to help reconstruct Australia’s collapsing party system in the political crisis resulting from the Great Depression of the 1930s, more effectively to fight Labor’s anti-capitalist renegade Jack Lang and his followers in the New South Wales Labor Party.

On entering federal politics in 1934, already an anticipated prime minister, Menzies stood for liberal principles in economic, budgetary, industrial and social policy—as much as anyone could in the highly politicised and regulated economy and society of the day. As Prime Minister after 1939, he gave priority to achieving national unity, and prepared and passed the crucial legislation that gave an ideologically divided country the means to fight Nazism and Japanese militarism, thereby paving the way for American support. Through the Advisory War Council he provided crucial support for a patriotic but fragile John Curtin, and laid down a vision for post-war Australia in his unique ‘Forgotten People’ radio talks.¹

Menzies’s frustration with the domination of politics by special interests led him, after the defeat of the United Australia Party at the general election of 1943, to explore the radical idea of a party that would have a philosophy defining the public interest, and a structure and character that would enable it to resist the pressures of the powerful. In 1944, with similarly disillusioned colleagues, he founded the Liberal Party of Australia, defined its philosophy, designed its internal mode of government to minimise the influence of vested interests and, with a group of talented colleagues, settled its policies. Its members would be individual Australians, not organisations. It would manage and collect its own finance, not rely on committees of businessmen, as had Alfred Deakin’s Liberal Party and its successors to that time. Its parliamentary discipline would help MPs resist pressures, but it did not demand that they vote against conscience. Few political leaders have founded a major party. Menzies’s party was a remarkable achievement.

In 1949 Menzies argued the need to reinvigorate the economic energies of Australia, persuaded the people to reject the control over their lives advocated by the Labor Party, and set about governing in the public interest, as he saw it, rather than for the special and vested interests that had so dominated national policy-making in the almost fifty years since Federation. To achieve this he placed particular weight on the now highly educated members of the Public Service, and on his party’s philosophy and links to the mass of individuals and families who provided its membership. In 1954–55, through relentless pressure on the Labor Party to declare its attitude to communism, he forced a realignment of Australia’s parties that changed their bases of support in the wider community and thereby won an unprecedented opportunity, in an era of rapidly changing attitudes, to obtain the years in office needed to liberalise the political culture.

When his government ran into electoral difficulties in 1961, Menzies faced strong internal pressures to give more influence to business interests in policy-making and promised regular consultations. Initially disappointed that the advice he received was still based on narrow interest considerations and lacked the national perspective of the Treasury, he encouraged business people to broaden their perspective on policy and to attempt to define policies that were not merely narrowly self-interested but in the wider interests of the community. A growing profession of economists provided recruits to begin to move the business world towards broader policy considerations.

Such was Menzies’s stature—and such the threat that his intellectual force posed to his opponents in his own and the Labor Party—that his critics were legion, but their attacks were often false or merely resentful of his ascendancy. He was the ultimate tall poppy whom others sought to cut down. Often his critics sought to diminish him by suggesting small, shallow or unpatriotic motives for his actions. He had none of these, and possessed the inner strength to withstand such attacks. In the end, Menzies made his own case, and never ceased to try to persuade his critics—whom he treated with courtesy and civility—with reasoned argument.

He attempted to respond to valid criticisms of his self-willed approach to politics, especially those related to his loss of office in 1941, and adopted more of what he called his mother’s ‘sweet reasonableness’, learning from bitter experience that leaving a trail of walking wounded was neither admirable nor politically sensible.² He became more open to others, more self-deprecating, more good humoured. Eventually the doubts faded, and it was he, at the end, who voluntarily took his leave of the Australian people who had endorsed him at seven consecutive national elections. His later reflections were often self-critical.

An individualist culture

Robert Menzies and his ideas were the product of a culture uniquely favourable to liberal solutions—a culture that believed strongly in human equality and the right of people to pursue their dreams and build their own lives, values perhaps more pronounced in immigrant Australia than in any other country. He was a product of its large moral middle class, proud of his democratic Scottish heritage, schooled in its non-conformist and Enlightenment values, and trained in a legal profession dedicated to the rule of law, rationality, and procedural justice between individuals. He believed passionately in parliamentary government and open debate as the best process by which a society could resolve its conflicts. Much in his character was the product of a loving and non-sectarian family of clear expectations, patriotic loyalty, political idealism and liberal activism. His intellectual brilliance was widely acknowledged.

The political problems that faced Robert Menzies began with the crisis of organised Liberalism following World War I, the strength in politics of the organised special interests—rural, manufacturing and labour—encouraged by, entwined with and dependent on government to an exceptional degree, and the unusual influence in Australia (for an English-speaking country) of illiberal utopian ideologies now making their voices heard in Europe: communism and, if not fully fledged fascism, then shades of it.

Australia had emerged from World War I with a strengthened but parochial nationalism, corroded by virulent prejudices, especially class-war attitudes and religious sectarianism. There was also a largely submerged, but nonetheless real, racialism underpinning policies for immigration and Aboriginal people, and which also sustained a prevalent, if repressed, anti-Semitism. Menzies set himself the task of reconstructing the nature of Australian party politics and policy, combatting its hatreds and liberalising its prejudices.

In this task he was not alone. He was more systematic in his liberalism than most of his political colleagues, and there were many who recognised in him ideas that reflected their own credos and saw in his political talents the skills required to achieve the public support necessary for a government that could foster adoption of such ideals. Australian democracy, despite the anxieties of its founders, continued to attract people with a range of relevant parliamentary and organisational talents and liberal instincts. In Menzies’s time, this number included, federally, such people as John Latham, Wilfrid Kent Hughes, Frederic Eggleston, Joseph and Enid Lyons, Richard Casey, Elizabeth Couchman, Harold Holt, Paul Hasluck, Percy Spender, Garfield Barwick, John Gorton, Malcolm Fraser and many more besides. In the states, as political successes, the names of Henry Bolte (Vic), Rupert ‘Dick’ Hamer (Vic), Thomas Playford (SA), David Brand (WA) and Frank Nicklin (CP, Qld) stand out. Menzies’s relations with such colleagues generally form much of the known story of the Menzies years, yet it is the ideas and debates that gave substance to, and sometimes damaged, such relationships that ultimately shaped the direction of national policy, and which are the focus of this account.

Labor and liberalism

While the term ‘liberalism’ was not commonly used during this period in relation to the Australian Labor Party, nor internally in its debates, ideas that were important in liberalism were real and significant elements in Labor’s approach, whether in opposition or government, as well as to major aspects of its policies. The party, after all, had grown within the liberal project, and was a full participant in the liberal democratic parliamentary institutions the Constitution had established. Its humanitarianism was patent. It was policy-making that tested its broader liberal values.

Although Lang’s departure from government in New South Wales in 1932 by no means ended the flirtation of the Labor Party in that state with utopian socialism, Lang’s failure showed that if the electorate were to accept socialism, it would have to be in a much more moderate form. World War II focused the nation on more pressing issues, and John Curtin’s leadership temporarily eased fears of extreme solutions to economic and social problems. Nevertheless, fears persisted, and peace would revive some of them.

Ben Chifley, who succeeded Curtin as Prime Minister in July 1945, was considered by an early biographer, L.F. Crisp, to have had a ‘profound liberalism’, but it was a liberalism that had little understanding of the liberal economy and its market-based spontaneous order. The expression of liberal ideas in the Labor Party was subject to the views in the union-dominated party organisation, which controlled pres...

Table of contents

• Cover
• Title page
• Copyright page
• Dedication
• Contents
• Illustrations
• Acknowledgements
• Introduction
• 1. A liberal or a socialist state?
• 2. A questionable legacy
• 3. Liberal reaction
• 4. State and market in the ‘hermit’ nation
• 5. Depression and utopianism
• 6. The United Australia Party
• 7. Menzies and Lyons
• 8. Race, rights and morality
• 9. Principles and peace
• 10. Liberalism, war and socialism
• 11. The Forgotten People
• 12. A party with a philosophy
• 13. The revival of liberal thought
• 14. Campaigning for liberalism
• 15. Government in the Cold War
• 16. Party realignment and policy reform
• 17. Affluence and conflict
• 18. The ‘new individualism’
• 19. The key of the door
• Biographical notes
• Notes
• Bibliography
• Index