In Australia, the resources boom has shielded us from the stagnation part of the stagflation equation. However, we need to recognise that the resources boom has not occurred on the back of rising export volumes. The volume of minerals and resources exported by Australia is on a par with volume levels witnessed in the 1990s.
The resources boom is driven by commodity prices and China shows signs of having an overheated economy, which is fueling inflation and threatening political stability and the sustainability of economic growth - a source of concern given the importance of the resources boom in driving economic growth in Australia. China needs to lower aggregate demand to cool an overheated economy.
What is interesting about that is that, in Australia, neo-liberal economic reforms were designed to change the structure of the Australian economy from a reliance on commodity exports to exports of elaborately transformed manufactures. Instead, our commodities are being used by Chinese and Indian industries to crowd out Australian industry in global markets.
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Neo-liberal globalisation has not had the desired effect of re-structuring the Australian economy and even here has actually led to a reversal of the desired outcome. After decades of economic reform we have ended up with stagflation in the industrial West and in Australia we are still reliant on commodity prices.
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About the Author
Mark Beljac teaches at Swinburne University of Technology, is a board member of the New International Bookshop, and is involved with the Industrial Workers of the World, National Tertiary Education Union, National Union of Workers (community) and Friends of the Earth.