by Andy Beckett
But the long rise of the British Left and British state had decades to run. Through the Edwardian era, the First World War and the interwar period, both continued to expand. By the thirties, the Liberty and Property Defence League had disappeared, and the small scattering of writers, academics and pressure groups who continued to promote its free-market values were widely regarded as out-of-date cranks. Yet for these beleaguered right-wingers there was one remaining source of encouragement and intellectual nourishment. In Austria, an attachment to small government and unfettered capitalism endured in the universities. Economists such as Ludwig von Mises were fierce defenders of the principles of ‘classical’ free-market thought, as originally and famously set out by Adam Smith in The Wealth of Nations in 1776. Von Mises was also a penetrating critic of the growing vogue for state intervention in the economy, which had taken hold across Europe and the rich world, among political parties and governments of the Left and Right alike. State planning and capitalism, he argued, were fundamentally incompatible; combined, they would lead to inefficiency and, ultimately, an economic crisis.
This analysis was echoed and developed by Hayek, who was a colleague at the University of Vienna. ‘The Austrian School’, as the Viennese economists became known, began to attract international attention. In 1931, the LSE, the British university most receptive to free-market thinking, offered Hayek a professorship. For the next two decades, he and a few LSE allies mounted an often lonely campaign against the Keynesian orthodoxies that pervaded academia and government. There were occasional victories, such as the success of The Road to Serfdom, but most of the time it was the slow business of making converts and hoping they would achieve influence.
Margaret Thatcher may have been deeply affected by Hayek’s book, but she spent the late forties and the fifties taken up with less philosophical matters. She married Denis, a divorced Tory businessman who ran a sometimes struggling paint and chemicals business. She gave birth to twins, the level-headed Carol and the more challenging Mark. She moved out of chemistry and into law, significantly specializing as a tax barrister. And she struggled for a decade to find a winnable parliamentary seat. Only in fleeting moments in her pithy, combative speeches – when she attacked excessive public spending, or portrayed socialism as a threat to freedom – did she reveal Hayek’s influence.
A more charming young Conservative would act as the crucial go-between between the party and the Austrian economist through the post-war period and far into the seventies. Ralph Harris was a quick and irreverent working-class north Londoner who had been introduced to Hayek’s work in the forties by one of the Austrian’s few supporters at Cambridge University. In 1956, another Hayek disciple, a right-wing poultry magnate called Antony Fisher, hired Harris as the first director of the pioneering political think tank he had set up the year before, the Institute of Economic Affairs. Over the next quarter of a century, the IEA would act as the ideas factory and embassy of a new British conservatism. Harris would end up being nominated by Thatcher to go to the Lords as Lord Harris of High Cross. ‘It was your foundation work which enabled us to rebuild,’ she wrote to him and his IEA colleagues a few days after becoming prime minister. ‘The debt we owe to you is immense.’
On a sparkling August morning in 2006, I went to see Harris at his home in the north London suburbs. He lived in High Barnet, at the end of the Northern line, among the big horse chestnut trees and detached houses that mark the outermost, most Tory-inclined parts of the capital. His flat was a few minutes’ walk from the underground station, but he insisted on picking me up. As I waited outside the station in the sunshine, I thought uncharitable thoughts about the Thatcherites’ famous love for the car. Then a brand-new hatchback drew up and an eighty-year-old man jumped out. Harris was wearing a yellow cravat, a pale, wide-brimmed hat, a tweed jacket in a dapper faint check, enormous black-framed glasses and a moustache straight from the forties. As we drove off, he immediately started talking about his new car and, more unexpectedly, about Nabokov. ‘I’ve just read Speak, Memory,’ he said in a high, quick, infectious voice. He smiled and shook his head in wonderment. A minute later, we pulled up outside a huge Georgian house on a hill. Harris ushered me into a long flat on the ground floor with a proudly suburban cream colour scheme and orchids in the rooms. ‘We always have orchids,’ said Harris with enthusiasm.
We sat down with biscuits and coffee, and he started by talking about his childhood in Labour Tottenham. ‘My family were great Churchill fans, and I’ve always revelled in being part of the awkward squad. The Tottenham grammar school was right next to Tottenham Hotspur football ground. I affected to be a supporter of Arsenal.’ He paused and gave a jolly smile. ‘To stir up mischief and good argument.’ After studying economics at Cambridge – ‘I was already totally sure of the [pro-] market propositions’ – he stood as a Conservative parliamentary candidate in Scotland at the 1951 and 1955 general elections. ‘I was received as a bloody Tory,’ he recalled. ‘The atmosphere was wholly hostile to the right-wing position.’
In fact, the Conservatives, while in decline, were still the biggest party in Scotland in the early fifties. But a sense of embattlement, real or contrived, is often crucial to political crusades, and at least when it came to economics, the isolation of right-wingers like Harris was genuine: ‘All the most publicized economists were on the left. The Keynesians claimed almighty power.’ He leaned forward in his chair and a hint of contempt entered his voice: ‘A lot of socialism is fine – well-expressed ambitions, lofty goals. But as for actual mechanisms for operating an economy, to get people working’ – he threw up his hands – ‘completely lacking. It was a kind of madness! You can’t protect jobs that are going out of fashion. It was preposterous that intelligent people would defend this system. It couldn’t last.’
By contrast, the insights of Adam Smith and the Austrian School seemed to him solid and rigorous. ‘It was objective, the market view of the world. We had been getting wealthier right through the eighteenth and nineteenth centuries. At Cambridge, I had been influenced by the improvements in mortality that occurred during that period.’ Harris leaned further forward, and his hand gestures grew bigger. ‘The market is at once expansive and flexible … It’s a marvellous mechanism. It’s a cure-all. In the fifties and afterwards, I thought’ – he slapped a fist into an open palm – ‘“Why won’t they see it?”’
The idea of the IEA was threefold: first, to propagandize for market economics; second, to apply its insights to post-war Britain’s problems; and, third, to make converts. The think tank was unsqueamishly funded by the large profits from Fisher’s poultry business – he had been the first Briton to introduce American-style battery farming – and by donations from other right-wing businessmen, including James Goldsmith. At the same time, the IEA insisted on keeping its distance from the Conservatives and partisan politics in general, hence the institute’s bland, neutral-sounding name and its official status: ‘The Institute is an educational charity,’ pointed out Harris in a 1977 paperback summing up the IEA’s work so far. ‘In the early years … we reluctantly took and won four legal actions for libel against papers and politicians who mistook the findings of disinterested scholarship for the partisan promotion of interests.’
From the fifties until well into the eighties, Harris’s most important collaborator in the production and dissemination of ‘disinterested scholarship’ – in the form of a near-constant flow of books and pamphlets – was the IEA’s editorial director, Arthur Seldon. Seldon was another working-class Londoner and Hayek disciple, yet he was not a Tory; he had previously been a socialist and then a member of the small, frustrated wing of the Liberal Party that advocated free-market economics. He and Harris were different in other ways too. ‘Arthur had a slight speech impediment,’ Harris remembered, ‘but he wrote marvellously clear, lucid, masculine prose. He loved correcting galleys, punctuation, grammar.’ He paused. ‘I am by nature very convivial. Like to get people cheerful. I work on my quips sometimes.’
Residual political tensions also endured between them: ‘Arthur believed in fixed exchange rates. I believed in floating ones. He believed in education vouchers. I believed in fees for education. We didn’t ever argue against each other publicly. I was perfectly happy to argue for education vouchers in public. There had to be a collective view …’ Because the IEA was trying to achieve influence? ‘Yes. If you were forever bickering over nuances …’ Harris made a sour face: ‘The left wing were always bickering.’
The IEA’s books and pamphlets covered subjects from shopping to trade unions to government control of the money supply, and were written by academics, politicians and journalists with left-wing as well as right-wing credentials. Yet there was a campaigning discipline about the publications. ‘The titles were always two words, three words,’ Harris remembered. And those words, and the words of the text that followed, were always attention-seeking, combative, direct, didactic. This is the opening of All Capitalists Now, written by ‘an independent economic consultant’ and IEA trustee called Graham Hutton in 1960:
We all want to be better off. It is probably the first time in human history that everyone in the world wants to be better off at once. So there is a worldwide shortage of the things that make people better off: machines, vehicles, highways, human skills …
Free of the thickets of jargon and qualifiers that usually rendered economic pamphlets impenetrable to all but the specialist, the IEA’s publications quickly laid out a seemingly open and fresh intellectual landscape. ‘The space devoted to [them] by newspapers, and particularly by the oft-despised popular press,’ wrote Harris with satisfaction in 1961, ‘suggests that their subjects have been topical and … attention-compelling.’
The IEA’s output was not without its moments of poor judgement and strained logic. The institute spent much of the early sixties arguing that, in Harris’s words at the time, ‘fears of unemployment and widespread poverty’ belonged to ‘a vanished period’, and that the British economy was therefore healthy enough to be opened up to more vigorous competition. By the seventies, the IEA was arguing instead that the British economy was terminally weak – but still in need of a dose of the same free-market medicine. Whatever the question the institute’s pamphlets posed, their answer, it seemed, was basically identical: less government, lower taxes, more freedom for business and consumers. Harris did not think there was anything wrong with such consistency. ‘When you have a clear view of the market,’ he told me, sitting back in his chair now with his arms folded, ‘you have answers to all occasions and situations.’ Was the IEA’s degree of certainty akin to religious belief? ‘Yes.’
Yet the convivial Harris recognized that, at least to begin with, the institute’s teachings would seem challenging and austere to nonbelievers. ‘The free market is rather a cold distillation,’ he admitted in a brief pause from singing its praises. ‘Emotion is opposed to the free market. It’s rough and insensitive.’ To win converts, the IEA would need to seduce as well as lecture. It would need to invite people to lunch. ‘I thought, “People are going to come to the IEA. They ought to go away feeling they’d enjoyed themselves.”’
Three times a week during the sixties and seventies, at 12.45 p.m. sharp, small groups of journalists, politicians and businessmen would arrive for drinks at the IEA offices. Since the fifties, the institute’s premises had moved steadily upmarket, from a basement in Hobart Place in Victoria to Eaton Square in Belgravia to a whole Georgian house in Lord North Street – in all senses probably the best-connected street in Westminster, only a minute or two on foot from the Commons and both the Conservative and Labour Party headquarters. But the feel of the gatherings remained the same. ‘We had a good table, as they say,’ Harris recalled. ‘A lovely family cooked the food downstairs, brought it to the table. They tended to give too large portions. I used to tell them, “Put less on their plates! We’re paying for this!”’
There would be wine and coffee, and forthright discussion, either about the latest IEA publication or with a visiting free-market thinker. To keep things relatively amicable – and the identities of those attending private – politicians from opposing parties would never be invited to the same lunch. Conveniently for busy guests, the whole thing would be over by 2.30 p.m. Refusals were rare. ‘The only person I ever remember saying “Do not ask me to your lunches” was a Labour MP.’ Harris rolled his eyes. ‘A totally uncivilized response. I thought, “Come, and argue it out!”’ Occasionally, right-wing guests would be invited for a less free-ranging conversation: ‘We had “punitive” lunches for people we thought had let the side down. I remember a chap from the Confederation of British Industry who had embraced [Wilson’s] national plan …’
More often, Harris and Seldon would receive guests who were in varying states of readiness to become free-market converts. Brian Walden, in the mid-seventies still a Labour MP but moving rapidly rightwards, ‘came on condition it would be private. He told us, “Wilson is a fraud and a cheat. I shall deny it completely if you go public. I’ll pursue you and even sue you.”’ Harris stopped for a moment. ‘Fascinating chap. Spoke with a strange accent. He became a scalp that we treasured. Later, he would often have our chaps on his television programmes.’ There were other disillusioned left-wingers: ‘A trade unionist came and talked of the madness of the government building unnecessary steel plants … An ex-Tribunite [socialist] MP gave us the phrase “the dignity of choice”.’ Harris beamed: ‘Amazing turncoats! I would call them that privately,’ he hastily added. ‘They completely fulfilled our expectation that if people thought … they would come back to the market.’
However, even among the ‘opinion makers’ the IEA was focused on, assembling a critical mass of supporters was expected to be a protracted task. ‘When we set up the institute, we thought this battle would occupy the rest of our lives,’ Harris told me with slightly theatrical graveness. ‘But twenty years later’ – he suddenly beamed again – ‘we had Thatcher. Far quicker than we imagined!’
Along with Geoffrey Howe, Keith Joseph and Enoch Powell, Thatcher began visiting the IEA and reading its publications during the early sixties. First as a junior pensions minister with an interest in trimming the welfare state, and then, later in the decade, as a shadow minister for power and then transport who made outspoken Commons speeches attacking the nationalized industries as oppressive and inefficient, she increasingly echoed the institute’s thinking. Seldon wrote to Howe in late 1969: ‘She said one day here [at the IEA] that she was one of a small group of Tory politicians like Enoch, Keith and you who saw the value of the market …’
A few months later, the Conservatives returned to power and Thatcher, Joseph and Howe were all given positions in Heath’s Cabinet. Like the prime minister – ‘I had hopes of him,’ said Harris, ‘but they dissipated quickly’ – the three Tory right-wingers proved much less radical in office than the IEA had hoped, and their relationship with the institute loosened during the early seventies. ‘I can remember Margaret Thatcher coming to an IEA lunch in the Heath [government] doldrums,’ Harris recalled. ‘She was wearing one of her spectacular hats. She made a very dogmatic statement about her reaction to people who supported socialism: where was the best place to do their shopping, the Co-op or Sainsbury’s? she’d ask them. I thought it was pretty straightforward, direct stuff. I can’t say I thought, “This is the woman.”’
At times, communication between the IEA and the Tory right-wingers cooled to the point of frostiness. In February 1972, after reading an article Seldon had written about the excessive cost of the welfare state, Howe wrote to the IEA man: ‘Opinion in favour of the [cost-cutting] policies you mentioned turns out to carry less weight than militant [public] response … to even quite modest applications of those policies e.g. on school milk …’ In turn, Seldon wrote at the foot of Howe’s letter: ‘Not convinced by these public schoolboys!’
Thatcher was hardly that. But as education secretary, her first Cabinet position, she found herself in charge of a large and
slow-to-change government department to which the insights of Hayek, Harris and Seldon could not be straightforwardly applied. Schools and universities did not (yet) constitute a market that could be liberalized. They consumed large and growing amounts of state spending, with the strong approval of the public, and they relied on members of the potent teaching unions to staff them. In her memoirs, Thatcher blames the alien political culture she found in education for ‘my difficulties with the department’: ‘The ethos … was self-righteously socialist.’ Her failure to make much impact could also be put down to inexperience and a political skin that had yet to achieve its later near-impregnable thickness: during the ‘milk snatcher’ row, she writes, ‘I was hurt and upset.’ Finally, there was Heath’s lack of respect for her. When she talked too much in Cabinet meetings, as she often did, he would irritably drum his fingers on his blotter.
In her autobiography, Thatcher explains her broader failure to stand up for the free market during his government with some uncharacteristic self-criticism, and with some uncomfortable home truths for right-wingers about Heath’s hold over British politics in the early seventies:
I was not a member of Ted’s inner circle where most of the big decisions originated … Ted Heath [was] an honest man whose strength of character made him always formidable, whether right or wrong … [his policies] were urged on him by most influential commentators and for much of the time enjoyed a wide measure of public support … There were brave and farsighted critics … But they were an embattled, isolated group. Although my reservations steadily grew, I was not at this stage among them.
