With the ANU human coordinates in place, Copland began to write copiously on the Australian economy, and became a regular public affairs commentator on ABC radio (Copland 1951).

By 1949, with several other economists, Copland had become disheartened by the direction of Australian economic policy, and with the failure of the government to deal with the manifold difficulties that faced it. These problems were to some degree the result of failures by the economists themselves. They had failed to identify the major problem that would beset the post-war economy: an excess of aggregate demand rather than a deficiency of aggregate demand, which they had predicted would recur once the immediate post-war reconstruction boom had run its course. The economists (with one or two exceptions) had also failed to emphasise sufficiently the problems of a full-employment economy, including wage pressures, price inflation, exchange rate instability and current account deficits.

Worst of all, they had failed to educate the public – and ministers – of one of the fundamentals of the new (Keynesian) economics, that when excess demand manifested itself, it was necessary to curtail demand. The public welfare required tax increases, or reduced government expenditure, or higher interest rates, or the appreciation of the exchange rate, or some combination of these and other policies. This was a problem that the economists had first encountered in the early stages of the war when attempting to apply Keynes’ policy blueprint for an economy experiencing excess demand. At this time the politicians had been reluctant to adopt measures involving steep rises in taxation and severe limitations on credit expansion. They were equally reluctant to do so in the late 1940s, with Chifley – now Prime Minister as well as Treasurer – hoping to stop the inflationary pressures by clinging to direct controls.

In a veritable flood of publications, most of them written after he returned to Canberra, Copland pursued this line of argument.^[22] His critical stance on the problems besetting the economy, and his recommendations for change in economic policy, were robustly stated. There was an excess of aggregate demand in relation to aggregate supply. Domestic shortages, fuelled by a backlog of demand and an accumulation of savings manifested in high levels of liquid reserves held by the banking system, were being augmented by a strong demand for Australian exports. Supplies of coal, steel, electricity, transport and housing were in critical short supply, while output was booming for many inessential consumer goods. Australia, Copland asserted, had the hallmarks of a ‘milk bar economy’: basic industries, such as iron and steel, power and housing, were starved of resources, while consumer goods industries were attracting an over-abundance of essential resources to them.

According to Copland, there ‘had been a tendency to concentrate on “full employment” as a goal, regardless of the costs and difficulties that may follow … Our economic thinking as well as our political outlook has been too much pre-occupied with depression psychology’ (Copland 1948, pp. 42–3).^[23] What he believed was required was a refocusing of economic policy, so that the emphasis was placed less on preserving aggregate demand for the purpose of achieving full employment (or, more accurately, over-full employment) and more on augmenting aggregate supply for the purpose of alleviating wage and price pressures. In later publications he developed his criticism of post-war economic policy further, arguing that direct controls, and government intervention generally, were adversely affecting productivity, and hence the capacity of the economy to generate increased supply.^[24]

Much of the blame, he asserted, should be directed at the younger economists who had formulated Australia’s full-employment policy and who had actively promoted it in Australia and overseas. They had been altogether too pessimistic about the state of the post-war economy, both in its international and domestic contexts. Rather than experiencing balance of payments difficulties, the excessive buoyancy of the Australian economy was a consequence of the vigorous demand for its exports.

The seeds of this disagreement lay in the White Paper on Full Employment in Australia (Commonwealth of Australia 1945). The authors of the official history of the war economy state that ‘Coombs was not as closely involved as Giblin and others in the early formulation of the employment approach’ (Butlin and Schedvin 1977, p. 648). But as the White Paper^[25] progressed through its various drafts, Giblin’s influence became fainter. He became apprehensive about the inflationary pressures that would arise from the increased wage bargaining strength of labour in conditions of full employment. He was much more optimistic than many others that buoyant levels of demand would continue for many years. Overall, he thought that somewhat greater attention should be placed in the White Paper on the problems of excess demand, rather than being devoted almost exclusively to problems associated with a deficiency of aggregate demand. He doubted whether, when demand was excessive, politicians would be able to discriminate sufficiently between different investment projects, and would probably allow the economy to run at dangerously high levels of domestic demand.

In the same vein, Copland was critical of the idea that public works could be turned on and off at short notice, as public works programs provided basic services. He believed that the White Paper should have given greater emphasis to the stabilisation of private investment expenditure, rather than public works, as the chief mechanism for stabilising aggregate demand.

Copland had lost sight of this difference of opinion during his venture to China. But four years after his return he told Melville: ‘Since I have been back to Australia and have come more into contact with the economists, both official and non-official, I am greatly impressed by the fact that the generation to which you and I belong are [sic] really talking a different language from that used by the generation that came after the depression … I need not dwell too intimately on this but it is extraordinary how far apart we are in our approach to the basic problem’.^[26] He told a friend: ‘I’m sure he [Keynes] would disown Coombs and his school if he was with us now’ (Millmow 2005b, p. 1).

Earlier, Brigden had expressed his own distance from the new Keynesian consensus to J. M. Garland, a former pupil of Giblin who was to become the Economic Adviser at the Commonwealth Bank: ‘Personally I have always been a sceptic on that theme [of full employment], in any sort of “free society” … in fact I may be classed as no longer progressive’.^[27]

In this disagreement, Giblin played the peace maker, in spite of his own views: ‘The Economics Winter School went off very harmoniously last weekend leaving me nothing to do in reconciling the combatants’ he told Eilean. He added: ‘Coombs was unexpectedly chastened in his outlook – to everyone’s disappointment’ (NLA LFG 8 May 1948). For Coombs, the chief architect of the 1945 White Paper, had also expressed publicly his disillusionment with the trend of economic policy in Australia, that was, in his view, an abdication of the government’s earlier commitment to the policy of maintaining aggregate demand within the limits of aggregate supply (Coombs 1948).

The problem of industrial relations is another illustration of the distance between the four and more commonly held views. Before peace had been reached, Giblin had grown concerned about the possibility of aggressive trade unions pressing for wage increases and shorter hours, the deterioration in productivity as unskilled labour was engaged in conditions of supply shortages, and disrupted production through industrial turbulence. The chaos of the late 1940s – the weeks of rationed electricity and gas, and consequent factory closures – was the cause of the deep, bitter pessimism of his unpublished memorandum, ‘Crisis in democracy’. His thesis was that the wage earner was threatening to halt and even reverse Australia’s already slow growth in productivity. ‘This crisis has been looming in the distance for the last, perhaps, sixty years [=1890]’. But he refused to accept that there was any simple economic solution for this militancy.

In brief, man ‘needs a fight at intervals’. ‘The problem is to provide conflict in other terms than high explosive’ – or strikes. ‘The government might establish a National Theatre to provide catharsis. “Hamlet” on the coal fields might well step up the production of coal’.^[28] More conventionally, ‘the continuing degradation of our economy’ might also be stemmed by a research effort. He nominated Copland, Wilson, Coombs and Melville. This effort could be under the auspices of the Commonwealth Bank or the ANU.

A related initiative was the Dyason Foundation Psychology of Conflict run by ‘old Australian friends’: Giblin, Bailey and Rivett, and funded by Dyason. For this venture they turned to the exotic figure of Kurt Singer: disciple of Stefan George and Martin Buber, refugee from Nazism, nipponophile and economist (Arndt 2000). Deprived of an academic post in Hitler’s Germany, he established himself in Japan. Perhaps it was there that Dyason met Singer, on one of his hopeful, ‘bridge building’ trips to Japan before the outbreak of war. In any case, Singer arrived in Australia – in disputed circumstances – only to be interned as an ‘enemy alien’. Upon his release in 1943, the Dyason Foundation gave him a modest stipend for three years as Research Fellow to write the book, The idea of conflict, an ‘immense amount of work’, which was published by Melbourne University Press in 1949.^[29]