Over the Christmas break, John Howard and Mark Latham will both be contemplating the same question -- what's next?
The process of economic reform started by Hawke and Keating is now almost complete in Australia and the neo-liberal economic agenda has triumphed.
This phenomenon, together with the diminished capacity of governments to influence their own economy because of globalisation, raises the question of whether the two major parties have reached their own "end of history".
While there is the need for some fiddling around the edges (for example, on the liberalisation of the labour market), other than on tax, the principles of economic management for the foreseeable future have been established.
Now that the economic levers are largely out of politicians' hands, what remains for government to do?
The Liberal and Labor parties have come to the same conclusion and their answer is: social capital.
Peter Costello and Tony Abbott have given speeches about it and Mark Latham devoted 50 pages to it in his book Civilising Global Capital. It is an essential component in Latham's efforts to replace the missing rungs of his now famous "middle-class ladder of opportunity".
But what is social capital, and why is it so fashionable?
As with many a catchcry, it is easy to understand but almost impossible to define.
It can be used to explain everything from unemployment levels to literacy scores.
While it has literally dozens of definitions, simply put, social capital is a measure of the nature and extent of interpersonal relationships in a society.
If individuals know each other, trust each other, and undertake activities such as volunteer work then, it is claimed, the social capital of their community will be higher than if those things were absent.
Two reasons explain the popularity of social capital to politicians. First, it is a concept that seems to respond to voters' concerns about the changing nature of their neighbourhood and of their own lives.
These issues might be difficult to quantify but are real nonetheless.
Crime, rates of family break-up -- even the fact that young people no longer offer up their seat on public transport -- can be attributed to a decline in social capital. Second, it offers solutions to otherwise intractable social problems, particularly in the welfare area -- without necessarily requiring extra government spending.
Despite record economic growth, expenditure on welfare provision continues to grow unabated.
It was identified in Australia 40 years ago that 22 workers paid tax for every one person reliant mainly or wholly on welfare.
Today that ratio is five to one.
The idea of social capital justifies programs such as Work for the Dole. But both the Liberal and Labor parties face problems in adopting social capital as the heading for any major program of social reform. For the Liberal Party, that problem is philosophical, for the ALP it is political.
Strictly speaking, any political party that adhered to either conservatism or classical liberalism would be very reluctant to intervene in the field.
The intellectual progenitor of conservatism, Edmund Burke, wrote in the 18th century of the effectiveness of "little platoons" of voluntary organisations that contributed to a well-ordered society.
Two centuries later, those "little platoons" are regarded as one of the foundations of social capital, but it is often forgotten that those voluntary organisations were effective precisely because they operated free from external control. Classical liberals following Friedrich Hayek would strenuously deny any role for government in the realm of social capital, believing that for the state to intervene in personal relationships is positively Orwellian.
Labor is unlikely to be concerned with such philosophical niceties because in relation to social capital that party's issues are political.
As Mark Latham has written: "One of the weaknesses of left-of-centre thinking has been its lack of interest in issues of non-state governance.
"State socialists and social democrats alike have had little to contribute, either by way of ideology or policy, to the type of relations people might usefully hold in common with their fellow citizens".
If he is to succeed, Latham must get the Labor Party to abandon its century-old attitude that the way to overcome a social problem is to spend money on it.
It is ironic that Whitlam is Latham's political hero, given that it was between 1972 and 1975 that such policies reached their apogee. One of the consequences of Latham's critique is that Labor must change the way it has historically divided the spoils of ministerial office whereby the Right faction gains the economic portfolios and the Left the social ones.
With few exceptions, the impetus for reform between 1983 to 1996, despite the rhetoric of the Left, came from the Right.
When the ALP has been in government, only the Right has been able to combine ideology and pragmatism in sufficient measures.
Some of the Hawke government's most effective ministers like Peter Walsh, John Button and John Dawkins nominally might have been from the Centre-Left but their tendencies were those of the Right.
It was Dawkins as education minister who in 1988 introduced probably Labor's most innovative social policy reform -- HECS for university students.
Many of the ideas associated with social capital such as the need for a greater role for the voluntary sector in health and welfare provision will make the Labor Party profoundly uneasy.
To many, especially on the Left, it appears as if Latham is committed to overturning the very raison d'etre of the Australian Labor Party -- this country's welfare state.
In education, his suggestion that students should have "financial entitlements" to stimulate social capital and improve the quality of government schools sounds suspiciously like "vouchers" to the left-wing teacher unions.
Latham waxes lyrical about the Hawke and Keating reforms, but as Hawke commented earlier this year the "guardians of Labor virginity" were opposed, and remain opposed, to what he did.
The lesson for Latham is that many of Hawke's policies were implemented not with the support of either the Labor caucus or its membership, but despite them.
Social capital endangers the orthodoxy of both parties, but undoubtedly it presents the greatest threat to Labor and to its traditional policy positions.
Latham knows this, and his challenge is to turn the rhetoric of his backbench-exile into policy.
For the Liberals, as the party in power, and as the party still most likely to win the 2004 federal election, there is the opportunity to exploit the ideological conjunction presented by social capital.
What Hawke and Keating did in the 1980s could not have been achieved without the support of the Liberal opposition, led for much of that period by John Howard. The test of Mark Latham as a public-policy reformer might yet be a few years away.
Will he, as leader of the opposition, support Peter Costello as prime minister in implementing a vision for social capital in Australia?
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