The 1890-1910 Crisis of Australian Capitalism and the Social Democratic Response: Was the Australian model a pioneering regime of Social Democratic Welfare Capitalist regulation?

In 1890-94 Australia was convulsed by a crisis of historic proportions that marked a watershed in the development of the economy, society, culture, and polity. The preceding 40 years had been ones of great prosperity, wealth advancement, and democratization, sparked in 1851 by the great and long-lasting gold rush. By the late 1880s Australia was believed by boosters to be a 'working man's paradise' and a triumphant vindication of the egalitarian and democratic rejection of British social class and privilege. This successful settler capitalist country had ridden the great Victorian commodities boom and succeeded in overcoming the legacy of its prison foundation and the 'tyranny of distance' to become the richest society in the world. The capitalist model that had developed, however, was far from the 'laissez faire' of British theory and policy, combining instead industrial protection in most parts of the country with a significant degree of state ownership of economic enterprises. What was later called 'colonial socialism' was the more or less unquestioned model of a rudimentary developmental state that rested on the great wealth flowing from raw material exports and the distribution of rents for working-class urban expansion. Indeed, economic development and employment generation had been the chief preoccupation of colonial governments since the 1830s. In this context, the bursting of the long boom in 1890 and collapse into the first (and very severe) depression in half a century was a transformative event. The consequences of the crisis years, lasting for most of a decade, were profound. The main response by the political process, however, was not on the whole to question the centrality of the state in Australian capitalism but to reinforce it in new, ideologically-based as well as class-based, ways. Social democratic developments emerged that had long-lasting consequences, detectable even unto the 21st century. A 'historic compromise' of labourist-protectionism and other social measures was constructed and reinforced over the following decades that remained central to Australia's political economy until the 1980s.