In 1902 New Zealand’s first Minister of Labour, Pember Reeves, described the Australasian states as a ‘social laboratory’. This was a laboratory in which state institutions were to play a major role in meeting social and economic objectives. Eighty years on the experiments carried on in this ‘social laboratory’ were producing poor results. A range of social and economic indicators suggested that the time had come to try something different. On the surface, the prospects for reform were not good. On both sides of the Tasman there were, until the early 1980s, conservative governments prepared to tinker with existing institutions, but not to undertake fundamental reform. These governments were replaced, in 1983 in Australia and 1984 in New Zealand, with social democratic governments. Both countries were being ruled by parties with deep institutional ties to the old order, and seemingly without the intellectual traditions which could have given them a basis for rethinking the way they organised their economies. Both countries once again become ‘social laboratories’. This time, though, the experiment was of a quite different nature. While in the early years of the century and the following decades the state was seen as the solution, now it was seen as part of the problem. Following through the logic of this position, Australia and New Zealand began to replace government control with market coordination.