Australian Politics and Policy - Senior, 2019a

Australian Politics and Policy
impact on the way governments and businesses interact in the global economy. 2
Nevertheless, nation-states remain the legitimate political power within their
jurisdictions, and global businesses operating within these jurisdictions are still
subject to the laws of the host nation-state. In practice, the government–business
relationship is influenced by national institutions and cultures and, in line with
changing societal values and interests, remains necessarily dynamic. 3
This chapter discusses the various aspects of government–business relations in
the context of the capitalist economic system. It outlines the sectors of the economy,
introduces the levels of analysis for understanding government–business relations
and discusses the various ways that governments and businesses interact, before
considering industry policy and the regulation of business. The chapter concludes
with a discussion of some of the emerging issues for government–business
relations, including the impact of disruptive technologies.
Sectors of the economy
A central feature of the capitalist economic system is the idea of the market. The
term ‘market’ can mean many different things, such as a physical space where
goods and services are bought and sold (e.g. a shopping mall) or even a virtual
space where the sale and purchase of goods and services is conducted completely
online (e.g. eBay). The market is the incentive mechanism for the production and
distribution of property, goods and services and, through ‘competitive interactions
of businesses and consumers’, for the creation and dispersion of wealth. 4 Markets
are often said to be ‘self-regulating’ through the laws of supply and demand, but
they often require government regulation to ensure fair competition, prevent
market abuse and provide a safety net (e.g. for the elderly and people with
disabilities who are not able to participate actively in market relations).
In terms of typologies, markets can be classified into four broad categories:
markets for goods and services, financial markets, markets for the sale and purchase
of land and property, and labour markets, where employers and employees
negotiate salaries and wages for work performed. Capitalist economic systems, and
markets in particular, have an expansionary tendency. 5
Economic activity within the capitalist system can be divided into three
interrelated spheres of activity: the ‘for-profit’ private sector, government and the
public sector and the civil society or not-for-profit sector. Although these spheres
intersect in various ways in practice, the division of the sectors can be understood
in terms of the legal standing of entities within each sector and their sources of
2 Wanna 2003, 420–1.
3 Parkin and Hardcastle 2010, 352.
4 Ryan, Parker and Brown 2003, 24.
5 Stilwell 2002, 49–50.
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