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.
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.