The Liberal party of Australia marks its 70th anniversary this year, by far the most enduring conservative party in the nation’s history and also the most successful. For 43 of those years it has held the reins of government in Canberra, and currently enjoys an almost complete domination of the political landscape, yet the Liberal party remains a curious beast: frustratingly elusive, little understood and not a little contradictory. It is emphatically not given to reflection, and certainly not to remorse.

It differs starkly in this regard from its principal foe, the Labor party, prone to a fault to navel gaze, over-analyse and second guess itself. But this difference is itself part of a strange but enduring paradox, and a kind of symbiosis: without a Labor party there would probably be no need for a Liberal party.

The first step in coming to grips with the Liberal party is to appreciate that it is a reluctant party, a party that would rather not have to exist.

Until the rupture of the 1890s, Australian politics was something of an amateur game, played hard but with no great issues at stake. The chaps who identified with the squatters and pastoral interests called themselves conservatives and the middle-class lawyers and traders from the cities thought of themselves as liberals. Mostly, they drank at the same clubs, salved their consciences at the same churches and frequented the same brothels.

It was all rather chummy until some liberals began to talk about democracy, and even worse, take it seriously. Some saw a commonality of interest with working men in opposing the influence of the conservatives, whose safe positions in the legislative councils, where a property qualification was needed to cast a vote, meant that they could exercise a powerful and frequent veto.

That, by and large, was the story until 1890, when bitter strikes and their savage repression – led, incidentally, by liberals such as Alfred Deakin – showed the superficiality of the liberal-worker alliance. When push came to shove, the liberals and the conservatives were one as defenders of capital. So the Labor party was born, and soon won the balance of power in the New South Wales legislative assembly.

'In 1890, bitter strikes and their savage repression – led, incidentally, by liberals such as Alfred Deakin – showed the superficiality of the liberal-worker alliance.' Photograph: flickr

The Labor party bound its members to vote along caucus lines by making them swear a pledge – the beginning of party discipline in Australia. Such regimentation alarmed the other loose groupings, by now organised more around free trade and protection. It also horrified the worthies, liberal and conservative alike, who viewed representative democracy as the preserve of men of civic substance, like themselves.

The liberals could never accept Labor’s party discipline, nor its union base, but were threatened by the new party's capture of the workers' vote and success in the 1908 election. So in 1909 the liberal protectionists reluctantly merged with the conservative free traders in what became known as the “fusion” Liberal party. Thus began the two-party system we know today, changed only with the addition of the Country party (now the Nationals) to the conservative camp in 1919.

The fusion and its successor parties showed an adaptable pragmatism in fighting the Labor threat, with no ideological qualms about accommodating ALP dissidents. In 1917 the fusion merged with pro-conscription Labor defectors and became the Nationalist party. Twenty-five years later the Nationalists took on more dissidents and became the United Australia party, with conservative Labor figure Joseph Lyons leading the new party against Labor's more radical approach during the Great Depression.

The UAP, the immediate predecessor to today’s Liberal party, was run, organised and funded by a cabal of business figures in Melbourne who called the shots, selected the candidates and largely dictated policy. It was precisely these people who sent Robert Menzies to Canberra in 1934, presumably to take over, but Lyons didn't budge until his death in 1939, just four months before the outbreak of the second world war.

The UAP disintegrated in the face of John Curtin's 1943 victory, after four years of white-anting and leadership struggles. The question of how conservative politics could survive in the face of a resurgent Labor party was again raised. Menzies, uncharacteristically chastened, set about picking up the pieces, making speeches and building bridges to other anti-Labor groups. Eventually at the end of 1944, he formed the Liberal party as we know it today.

'The UAP disintegrated after four years of white-anting and leadership struggles. An uncharacteristically chastised Menzies set about picking up the pieces.' Robert Menzies and Queen Elizabeth II. Photograph: National Archives of Australia NAA: A1773, RV490

Menzies was adamant that the new party had to learn from the ALP model: a continuous organisation between elections, a research capacity, a branch structure, a footprint in the community and most importantly, transparency in fund-raising that clearly separated responsibilities between the organisation and the elected members. He saw first-hand the public distaste at powerful business interests being seen to pull the strings, a lesson that Liberals in NSW seem to have forgotten, given the current imbroglio over secret donations.

Obviously, much has changed since then. Society has changed. White Australia is a thing of the past, capitalism has evolved, the Keynesian consensus has been abandoned and the mixed economy dismantled, globalisation has internationalised the economy in a way once unimaginable, and the Cold War has become the culture war.

Above all, the very idea of government has undergone an extensive rethink, with the economic libertarianism of Milton Friedman and minimal government of Robert Nozick having a powerful influence on Liberal party thinking. Like the conservatives in the US and Britain, the Liberals were deeply impressed by the 1975 manifesto, The Crisis of Democracy, put together by three political scientists, commissioned by banker David Rockefeller and his international business cabal, the Trilateral Commission.

It should have been called The Crisis of Capitalism, as its thesis identified government as the enemy of profit. Because of demands put upon government by existing and emerging pressure groups, such as women and ethnic minorities, government was being asked to do too much, and people had to be discouraged from political engagement. In short, government was no longer a mechanism for addressing social problems but had been recast as the enemy of capitalism. It was a fateful rupture that effectively destroyed a broad post-war consensus.

Yet in a very real sense, the basic raison d’être of the Liberal party remains as steadfast as ever: to keep Labor out of office.

If this appears to be too negative a reading of the party’s mission, one has only to look only at a recent survey of members in NSW, by Denise Jepsen of Macquarie University’s Faculty of Business and Economics. Of almost 300 members polled, 89 per cent strongly agreed that among their reasons for joining the party was a desire to “to keep Labor out” (compared with 55% wishing “to help local candidates,” for example).

'Yet in a very real sense, the basic raison d’être of the Liberal party remains as steadfast as ever: to keep Labor out of office.' Photograph: Lukas Coch/AAP

What, then, is so odious about the Labor party? While the parties have converged on many issues, the ALP remains (however feebly) wedded to a mildly redistributive program, which cuts across the now universal neoliberal paradigm of government that is the new orthodoxy of the Liberal party. This – essentially an argument about the appropriate role and size of government in the economy, including in industrial relations – is the main area of contention today. The Labor party still sees government as a means of achieving social progress.

Capitalism’s greatest triumph has been to decouple the economy from the political contest, as though the economy exists separately and outside politics. In this transformative shift, the liberalism in liberal democracy has overtaken and minimised the democracy; the dominant constituency is no longer the people but the corporate world.

The “wet versus dry” battles, between the moderate and economic rationalist wings of the Liberal party, are now all but over; the last wets the victims of a swift and destructive political climate change. Their language was simply no longer the language of a party that had turned neoliberal.

The new party agenda appears to be simple: the removal of all brakes from the influence of business on politics. Never mind that such brakes might serve a useful social purpose, as does regulation. The influence of think tanks like the Institute of Public Affairs, which Menzies deliberately kept at arm’s length, is now profound. Their fingerprints are everywhere to be seen.

The brazen shopping list of the Commission of Audit – in essence, a blueprint for dismantling government – comes as little surprise when you look at its ideologically slanted membership: chairman Tony Shepherd, former president of the Business Council of Australia, and the head of the commission secretariat, Peter Crone, the BCA’s chief economist, and joined by three committed free marketeers. The BCA has a long record as one of the more conservative business lobbies.

When you couple this with the extraordinary situation in Queensland, with the Newman government engaging QCoal executive James Mackay to write environment policy, and the scandal involving the junk food lobby and assistant health minister Fiona Nash, an inescapable fact starts to emerge: the notion that government somehow stands between powerful vested interests and powerless people, and mediates outcomes, has been completely and utterly trashed.

The Liberal party of the past, certainly under Menzies and Fraser, took the mediating role of government as an assumed social responsibility. Even John Howard was content at times to wear the wrath of the party ideologues for his pragmatism. But the Abbott-Hockey regime is qualitatively different: the party that didn’t want to become a party is now a government, apparently, that doesn’t believe in government.