In the housing cycle which started in 1996, Australian house prices have risen more than those in the US, prima facie suggesting that Australian prices should fall sharply. This paper questions that simple hypothesis. The reasons explored are: Australian prices have risen significantly less than those in coastal California, the more valid comparison; the Australian housing finance system contains fewer of the structural weaknesses of the US system; fundamentals in the form of the decline in real interest rates explain most, but not all, of the price rise; and macroeconomic conditions for housing in Australia are more favourable to weathering the global financial crisis.

The driver of the current crisis is the collapse in domestic aggregate demand, originating from international factors. It is important, therefore, to consider potential areas where aggregate demand can be expected to increase in order to understand the possibility of recovery. The current crisis was preceded by an unprecedented increase in the level of household debt, which will hinder the recovery of consumer expenditure. Consumption is also being affected by uncertainty with respect to both income and employment. Similarly, the outlooks for investment and net exports suggest that they are unlikely to contribute to the initial phase of recovery. This leaves the important area of government expenditure. It is argued that government expenditure, particularly in infrastructure and capital, is particularly important as in the short run it contributes directly to demand, while, in the longer run it boosts growth and productivity. Finally, approaches to financing the implications of increased government expenditure are examined.

Capitalism has had many crises and often they have led to improvements in the way it has operated. Two related improvements are predicted as a result of the current crisis. One is the hastening of the decisive defeat of market liberalism. The other is the rehabilitation of fiscal policy as part of the tool kit used to minimise the inherent instability of capitalist economies. After a brief exposition of the core aspects of market liberalism, this article considers the use of fiscal policy in each of the short run and the long run. Policies around the OECD in the last 16 months have already embodied both these improvements, but a similar achievement in the long run will be more difficult. The crowding-out thesis has more appeal when applied to the longer run. However, the empirical evidence does not support crowding out. More generally, economic orthodoxy relies on neo-classical growth theory to support a belief that longer run trends in real economic variables such as output and employment are determined solely by supply side factors. The article uses the authority of Solow and Swan to emphasise that this is an assumption, not the result of any analysis, and that neoclassical growth theory itself assumes that fluctuations in investment over the business cycle will necessarily affect the path of potential output. Moreover, not only is the NAIRU (Non-Accelerating Inflation Rate of Unemployment) determined by the path of investment in physical and human capital, but at a much lower level of unemployment than the conventional wisdom believes.

A return to discretionary fiscal policy is required in the current economic crisis. Advocacy of deficit spending is consistent with mainstream economic models, whether those relying on traditional textbook analysis or those aligned with the New Neoclassical Synthesis. The notion that deficit budgets are necessarily profligate rests on an outdated theory of public finance that ignores endogenous money. It is the productive capacity of the economy and not the government's extent of taxing its citizens, or borrowing from them, that provides the limit to the use of fiscal policy levers.

Keeping an open mind on the severity of the financial crisis and its implications for capitalism, this article focuses on the role of the state and financial institutions in monetary regulation. Questioning whether orthodox economic theorists and policy-makers share the same world view as professional and central bankers, it argues that the monetary system has in the past twenty years been stabilised through trust relations, rather than by markets. Furthermore, in this process, which was not sufficiently recognised by the practitioners, such trust relations were unable to cope with the impersonality of money. The nub of the question about a ‘crisis of capitalism’ is how nation-states can possibly control money — the most anarchic and global social relation in the world today. The article questions Keynesianism and economic liberalism alike, by asking if it is possible for states to force global banks to take the risks of lending for development. It argues that the real focus of attention needs to be the practices of complex international banking networks and the way ‘banks march in step’.

Public-Private Partnerships have been a popular public procurement policy in a number of countries including Australia, the UK, and New Zealand since the early 1990s. This article examines the experience of the Port Macquarie Base Hospital (PMBH), the first public hospital delivered under the Public-Private-Partnership (PPP) model in the State of New South Wales, Australia. Using a framework adapted from Macário, this study focuses on the political climate in which this PPP mechanism was implemented, identifying the underlying motives driving the use of a PPP to deliver public health services and clarifying the essential conflicts undermining the PPP process. The article covers the entire life cycle of the PPP hospital, from the initial contracting process to its eventual sale. A political desire to reduce public debt, allied with an ideology assuming private sector superiority, made this approach particularly attractive, but failed to deliver the desired outcome. The success of PPPs would appear to depend strongly on goal alignment in a multi-level political system. Auditing processes during the implementation process need to take account of the presence or absence of such alignment.

The growth of information technology has enabled the ‘off-shoring’ of many business processes, and such off-shoring has grown exponentially in the past decade. India has been a major recipient of such off-shored work. To understand the effects of this phenomenon on off-shore workers, it is necessary to understand the legal context within which such work is undertaken.

This article thus explains the labour law framework of India, from Constitutional protections down to local laws, policies and rules. It then examines labour practices, and identifies the gaps between formal labour law and actual practice in this sector. The article notes that some of these gaps between law and practice are a result of public matters, such as corruption, legal exemptions, and lack of law enforcement; but others are due to features of the sector itself, such as its newness, the types of work it offers, and the ready availability of alternative jobs.

The article examines the impact, in one Sri Lankan garment industry, of a management initiative devolving to line employees the responsibility for decision-making about workplace performance. At the time of the study, garment manufacturers in Sri Lanka faced increased pressure from international buyers to improve product quality and to meet stringent production delivery schedules, along with growing concerns from Western consumers regarding factory conditions and labour standards. One outcome of these pressures was increased experimentation with a range of quality management techniques to elicit workforce commitment to improved efficiency levels and higher quality standards. This study documents one experiment whereby production line operators rotated the role of production supervisor amongst themselves and accepted responsibility for minimising production bottlenecks, and for communicating data on workplace efficiency, product reject rates and absenteeism levels to other line operators. We found that workplace productivity and product quality increased over the 18-month period of the study, while levels of labour turnover and absenteeism declined. Nevertheless, the study also found that the increased role in workplace decision-making provided to employees also came with increased expectations that line employees would achieve higher production targets, improve quality and monitor workplace attendance.