When Julia Gillard deposed Kevin Rudd in June 2010, she declared Labor had lost its way. However, the Prime Minister did not say how such a fate had befallen a first-term government so soon after the ALP's big victory in November 2007.

Looking back from the present, when the Labor brand is tarnished and its leadership deauthorised, the evidence suggests the decline and fall began around February 2009, when the leftist house-journal The Monthly published Rudd's essay The Global Financial Crisis.

Here Rudd blamed the crisis on what he termed neo-liberalism. This was defined as “that particular brand of free-market fundamentalism, extreme capitalism and excessive greed which became the economic orthodoxy of our time”. Rudd claimed “the political home of neo-liberalism in Australia is, of course, the Liberal Party itself”.

As I mentioned in my column at the time, Rudd's essay overlooked the fact that it was the Labor governments headed by Bob Hawke and Paul Keating which had commenced the economic reform process in Australia in the early 1980s, and that this had been continued by John Howard with the support of his treasurer, Peter Costello.

I pointed out the reality of Australian politics undermined Rudd's thesis. So did economic data.

Around the time Rudd was drafting his Monthly article the then deputy prime minister Gillard represented Australia at a conference in Davos. She, correctly, described the Australian economy as one of the strongest among the OECD nations and specifically praised Australia's financial institutions, competitive markets and regulatory systems along with the (then) surplus. Yet the very policies which made Gillard's declaration possible were bagged by Rudd's Monthly attack on neo-liberalism.

The disaster that was Rudd's Monthly essay has been recognised by such considered pro-Labor commentators as Michael Costa and Cassandra Wilkinson. The unintended consequence of Rudd's trashing of the Hawke/Keating legacy was to leave Labor without a rationale.

The Coalition handled its loss in 2007 much more ably than Labor coped with defeat in 1996. The Liberal Party leaders after Howard – Brendan Nelson, Malcolm Turnbull and Tony Abbott – were careful not to criticise the Howard government, in which they all had senior roles. Now the Coalition can look back with pride on the successful Howard years. But it is much more difficult for Labor to do so with respect to the equally successful Hawke/Keating years.

Martin Ferguson was one of the most able ministers in the Rudd and Gillard governments – primarily because his overwhelming focus was on job retention and creation. In his resignation speech on Friday Ferguson regretted the “class war rhetoric” which Labor commenced at the time of the mining tax debate in the first half of 2010. Simon Crean, another fine Labor performer, made a similar point.

The class war, begun by Rudd, was continued by Treasurer Wayne Swan and, to a lesser extent, Gillard. In his essay in the March 2012 issue of The Monthly, Swan bagged mining entrepreneurs Andrew Forrest, Gina Rinehart and Clive Palmer. Again, this sent out a confusing message. Certainly Rinehart and Palmer are critics of Labor (and, occasionally the Coalition). But both Rudd and Gillard have praised Forrest's laudable attempt to increase indigenous employment through his GenerationOne initiative.

In May 2007, as opposition leader, Rudd described himself as an “economic conservative”. By February 2009, however, he was blaming economic conservatives for the global financial crisis and attacking neo-liberalism without seeming to realise that his targets included Hawke and Keating, and Bill Clinton and Al Gore.

When Tony Abbott replaced Malcolm Turnbull as Liberal Party leader in December 2009, there was a genuine argument over policy. Put simply, Turnbull supported an emissions trading scheme and Abbott did not. The problem with the Labor leadership battles of June 2010, February 2012 and last week is that they are not about policy at all. They turn on who is best equipped to lead a political party which does not have a clear direction and which has distanced itself from its only successful period of government since the Second World War.

In recent times former Labor leader Mark Latham has been declaring his support for Gillard and urging a vote for the ALP since Australia has one of the best performing economies.

The latter point is correct now as it was in 2010, and as it was in 2007 (when Howard lost). Yet in 2010, on the 60 Minutes program, Latham declared that Gillard Labor was not worth supporting and urged all Australians to vote informal. Little wonder some one-time Labor voters are confused.

❏ Last week I incorrectly called the ''oil-for-food'' controversy the ''wheat-for-food'' controversy.