Putting the ism in Thatcherism

During the mid 1970s Thatcher was listening to a member of the Conservative Research Department staff explain why the party should take a pragmatic ‘middle way ‘ between left and right. But before he could finish Thatcher reached into her briefcase and pulled out a copy of Friedrich Hayek’s The Constitution of Liberty. "This is what we believe", she said. And slammed the book down on the table.

Some people say this story — told by John Ranelagh in his book Thatcher’s People — is a little too good to be true. But everyone agrees Hayek had a major influence on Thatcher and Thatcherism.

Hayek had a theory about how intellectuals influence politics. And it wasn’t as simple as getting politicians to read their books. Hayek advocated an indirect approach. When businessman Antony Fisher came to him asking how he could join the fight against socialism and promote the ideas of classical liberalism, Hayek told him going into politics would be a waste of time.

Hayek argued that political decisions were shaped by the climate of opinion that prevailed among intellectuals. People like journalists, university lecturers, radio commentators, and novelists functioned as ‘second hand dealers of ideas’ filtering and distributing ideas to a broader audience. The climate of opinion was the set of general preconceptions this class of people used to decide whether a new fact or opinion was worth passing on.

Putting one sympathetic politician into parliament wouldn’t make much difference. But slowly altering the climate of opinion would. So Hayek advised Fisher to set up a scholarly research institute to feed classical liberalism and free market economics to the intellectuals. Fisher took his advice and went on to set up the Institute of Economic Affairs in 1955.

According to Hayek intellectuals had more influence on policy than most people realised. While they may not be able to persuade voters to change their minds on contentious issues in the short term, in the long term they shaped public opinion by filtering the ideas that entered public debate.

Capable people who saw nothing wrong with the status quo rarely became intellectuals, according to Hayek. They had all kinds of other opportunities for influence and power. But to take advantage of these opportunities it was a good idea be seen as practical rather than theoretical and pragmatic rather than idealistic. Business executives and senior civil servants tend to be dull supporters of business as usual.

According to Hayek:

The most serious obstacle which separates the practical men who have the cause of freedom genuinely at heart from those forces which in the realm of ideas decide the course of development is their deep distrust of theoretical speculation and their tendency to orthodoxy; this, more than anything else, creates an almost impassable barrier between them and those intellectuals who are devoted to the same cause and whose assistance is indispensable if the cause is to prevail.

Intellectuals tended to be people who were unhappy with orthodox ideas and the status quo. So to get their attention people like Fisher needed to give them something radical, idealistic, and intellectually challenging. As Hayek wrote:

What we lack is a liberal utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical, and which does not confine itself to what appears today as politically possible. We need intellectual leaders who are willing to work for an ideal, however small may be the prospects of its early realization. They must be men who are willing to stick to principles and to fight for their full realization, however remote.

This was the job of free market think tanks like the IEA. For many of those involved in the struggle to promote classical liberal ideas, Thatcher’s free market reforms were the pay off for decades of work.

In the late 1940s, many intellectuals wanted to extend government planning to major industries. But by the late 1990s, the most fashionable ideas were about applying market principles like competition and entrepreneurship to the public sector. Today, promoters of innovations like social impact bonds want to make the public sector look more like Wall Street. Is it too soon for the free market think tanks to say ‘mission accomplished?’

When it comes to economic issues, today’s left-leaning intellectuals seem to be divided into two groups. On one side are left-conservatives who struggle to stave off attacks on labour market regulation, public services, and the post-war welfare state. And on the other side are progressives who want to import business innovations like performance-based contracting into the public and community sectors.

Perhaps what the left lacks today is a utopia, a program which seems neither a mere defense of things as they are nor a diluted kind of Thatcherism.

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14 Responses to Putting the ism in Thatcherism

  1. john r walker says:

    “Intellectuals tended to be people who were unhappy with orthodox ideas and the status quo.” are you sure?…… paradigm shifts have often had to wait for a generation to drop off the twig.

  2. Mike Pepperday says:

    Very interesting. I’m persuaded about the influence of intellectuals generating a climate of opinion. Who else? Perhaps they need a criticial mass to get started—international socialism a century ago, Hayek, Friedman et al in 1940s. In answer to John Walker I suppose we just have to say SOME intellectuals.

    “Perhaps what the left lacks today is a utopia”

    Surely left utopianism has had its day. Its faults have been exposed, whether it was colonies in South America or communism as government. Bit by bit the faults of the free market, also, are making themselves felt. The GFC is apparently not enough to be the kind of coup de grace to the right that the fall of the Soviet Union was to the left, and it makes you wonder what it will take to similarly relegate the libertarian utopia.

    But I think the situation is a lot more serious than lack of goal-oriented ideology. The peoples of our civilisation don’t know what they are here for. Like some economists, I place the end of history around 1970. We’d recovered from WW2, got rich, landed on the moon, the 1968 rebels had swept away a lot of foolish restrictions and since then nothing has happened. Nothing positive anyway; we have had big increases in crime, drug use and family break-up, the environment has gone to the pot and religion as the purpose of life has all but vanished.

    For a while we were distracted by the cold war but since it ended it seems to have become clear that since 1970 our civilisation has just been holding the line, not having children, wondering what the point of it all is.

    The only glimmer of hope I see is in a gathering emphasis on our cosmic place. Carl Sagan started it off and nowadays there is always a program telling us about the wonders of the universe and how it made us. Have the intellectuals who tell us that we are the universe become conscious and that the only worth-while thing is to colonise space, reached critical mass?

  3. john r walker says:

    I was particularly thinking of Louis Agassiz.
    However on a general level high IQ is no bar to stubborn dumb ideas/structures- it often has ended in a very clever person gaining the position needed to do sub-prime ideas on a large scale.

    The decline (ignorance) of mainstream Judeo christian faith is a better fitting hypothesis .

  4. Nicholas Gruen says:

    The remarkable thing is that the progressives have been so ham-fisted at doing something you’d think would be their bread and butter. Projecting the importance of collective goods. After all, modern developments such as globalisation and technology have transformed the landscape of public goods. There are global public goods like climate and reduced pandemics, and privately produced public goods like web platforms. We could have had the NBN as a public good – subsidised by the state. It would even have been popular. But the dear old pets at headquarters couldn’t quite get their minds around the idea. Never seriously considered it. We could have called the websites OurSchools and hospitals. But no – the language of their political opponents would be adopted. And on it goes. Having engineered the world’s best fiscal stimulus the poor dears can’t even defend what they’ve done and promise to do it again if necessary. No. It’s a guilty little secret that saving all those jobs drove us further into deficit, and we’re not doing that again. It would be shameful!

    • john r walker says:

      NBN as labor stubbornly visioned it was ideal in an platonic world.
      Why did direct connecting up of schools , hospitals so on mean that you also had to fiber up every old age pensioner and backpacker flat at the same time?

    • Pedro says:

      Perhaps the problem is that your case is not so easy to make. I think everybody would love to have the NBN as long as it does not cost too much. Ditto for art galleries and museums and hospitals and highways and so on.

      The historical problem with the progressive project is efficiency, or the lack thereof; whether it’s the extra-stupidity of central planning, or the more subtle dillishness of many smaller scale interventions. I’d list the NBN as exhibit A for the progressive fetish for ignoring common sense in favour of a not even fully imagined utopian future..

      The other problem with the progressive project is that there seems to be less enthusiasm for wealth transfers than progressives would expect.

      • john r walker says:

        I live in a compact small town about 2.5ks X 2.5Ks. Connecting Braidwood to canberra about 100ks of fiber. Connecting up the 4 nodes you’d need and direct connecting the main street & hospital would ad another 10ks of fibre. On the other hand connecting the last 500m to every home and shop would be 800 buildings X 500 m = a extra 400km of tricky to lay fiber.
        Stage one fiber to the node, stage two ,as needed, the last 500 meters. No brainer.

  5. m0nty says:

    The most prominent leftist utopia these days is the European Union, in the sense that it is an attempt to extend the welfare state to entire countries that haven’t ever experienced it in any meaningful form by bringing them under the umbrella of richer, more progressive countries. Of course, the problem is that the EU also represents a liberal free market utopia in the sense that it is a mechanism by which Germany secures a favourable free trade agreement to enrich itself at the expense of its trading partners who then can’t defend themselves with currency devaluation, like a giant organised Washington Consensus zone.

    The leftist think tanks have done a poor job of articulating a full philosophical position for the left in the Australian context, in the face of the IPA’s “I’m on board; pull up the lifeline” mantra. Seems to me that it could be as simple as being about the future, not the past. Whether you cast this in economic rational terms of “investing” in the future, or talk in more broad terms about “believing” in the future – or both of course – that is the solution to the current left malaise, to my mind. So many constructive and progressive (and popular) policies would flow from that source.

    • Pedro says:

      “Of course, the problem is that the EU also represents a liberal free market utopia in the sense that it is a mechanism by which Germany secures a favourable free trade agreement to enrich itself at the expense of its trading partners”

      Still not understanding how trade works I see Monty.

      “Seems to me that it could be as simple as being about the future, not the past. Whether you cast this in economic rational terms of “investing” in the future, or talk in more broad terms about “believing” in the future – or both of course – that is the solution to the current left malaise, to my mind. So many constructive and progressive (and popular) policies would flow from that source.”

      All policies are about the future, the question is whether any policy has a good effect on the future.

      • m0nty says:

        You’re engaging in sophistry, Pedro. You know what I mean. The right’s policies are mostly about enshrining privilege for those who are privileged in the present – the old, the white, the rich – and forgetting about those lower down the totem pole. The left should be about extending opportunity for those who are not presently privileged to become so if they work hard and/or intelligently enough.

        Of course there is a glib one-line riposte to any -ism, but that doesn’t mean they can’t be useful to define a defensible position.

        • Pedro says:

          Not so monty, your comment about the germans was just ignorant and the rest was blather.

          The right you describe doesn’t really exist. I can’t think of any Australian political party that has an express or implied goal of enshrining priviliges for the wealthy. We do have a party keen on enshrining priviliges for the union movement for the benefit of the moderately wealthly people who lead it.

          A policy preference of not taking quite so much money off the people who earn it is not enshrining privilige, it’s mainly respecting toil and thrift.

        • m0nty says:

          Pedro, you accuse me of blather and then you blather on reciting your ideology in lieu of anything interesting to say. It’s the sort of thing I’d expect at Catallaxy, not here.

          Try harder next time.

  6. FDB says:

    The right you describe doesn’t really exist. I can’t think of any Australian political party that has an express or implied goal of enshrining privileges for the wealthy.

    Of course not. But that’s the problem precisely. Nobody expresses nor even implies it, yet all major Australian political parties do it.

    The “right” Monty describes is the mainstream.

  7. nottrampis says:

    Nick is on the money re NBN.

    It is a public good. treat it so.

    Much better for the economy as well.

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