Posted: December 5, 2002
he "Thatcher Revolution" has fascinated conservatives worldwide for its ambitiousness, robustness, and success. It does not seem excessive to say that it provides one of the "master narratives" of modern limited-government conservatism, a narrative composed of three main elements or assumptions. First, a revival of free-market ideas made possible the policies which Margaret Thatcher's governments enacted. "Ideas have consequences," as the saying goes, and the Thatcher revolution was a major consequence. Second, once these ideas were in place, failures to implement free-market reforms resulted from failures of will. Third, vast explanatory credit thus goes to Thatcher's legendary obstinacy—dubbed "conviction politics"—which enabled her to succeed where others failed. It is obvious that this narrative is easily adapted to apply to the Reagan-era United States. It is equally obvious that assumptions like these can serve as lessons guiding both scholarly analysis and political strategy.
It is therefore important that, taken together, these three books undermine all three assumptions. These books can be read in several ways, including as (auto-)biography and as histories of economic thought. I will limit myself to discussing how they challenge the narrative described above. Above all, these books provide extensive evidence that we routinely overestimate the impact of "ideas." I don't wish to exaggerate: all three portray ideas as crucial. But these books suggest that Thatcherites found it indispensable to supplement their ideas with a careful examination of how politics was also shaped by material interests, in order to deduce how interest-based obstacles to reform could be evaded, undermined, or realigned. In the absence of such theorizing and strategizing, "ideas" did not have certain crucial consequences. To be provocative about it: absent such strategizing, ideas seemed powerless.
If true, this would require important corrections to the free-market narrative. It would mean that failures to reform often resulted from resilient interests which were impervious to ideas and will. Correspondingly, successes often resulted from subterfuge rather than stubbornness. This means we may be failing to appreciate just how much Thatcher achieved through shrewd, even devious, short-term compromises.
These three studies read like an unfolding telescope. Alan Ebenstein offers the widest view, placing British events in the context of Friedrich Hayek's audacious and lifelong project of restoring limited government as the dominant political system of the Anglo-Saxon world. The apparent success of that project can be measured by "Thatcher's public embrace of [Hayek] as her leading philosophical inspirer." The biography of Keith Joseph narrows the focus by relating the life and career of the man regularly described as Thatcher's intellectual guru or Svengali. John Hoskyns brings us nearer still, through a perceptive insider's account of the few years on either side of Thatcher taking office in 1979.
Hayek's trajectory appears most emphatically to place ideas at the center of discussion. At 32, he left his native Austria to teach at the London School of Economics, beginning a lengthy intellectual struggle against John Maynard Keynes regarding the economic role of the state. Hayek's debatable contributions as a technical economist are indisputably eclipsed by his work as a philosopher of both liberty and science. Most unusually, he successfully integrated his research in economics, epistemology, methodology, and norms, as in his superficially technical but hugely important discussion of the (un)feasibility of economic calculation by central planners. He stands out as one of the great intellectuals of the last century. Ebenstein skillfully crafts his story.
Hayek saw struggle in ideational terms: "I doubt whether it is possible to overestimate the influence which ideas have in the long run." He quoted Giuseppe Mazzini to the effect that "[i]deas rule the world and its events." He was proud of his role in the intellectual Mont Pelerin Society and London's Institute of Economic Affairs (IEA), the mother of all free-market think-tanks, founded in 1955. At times, the results of all this effort seemed sadly easy to measure. One of Hayek's periods of depression overlapped with his sense in the late 1960s and early 1970s that his work was ultimately being ignored. But the mid-1970s brought the vindication of a Nobel prize. A decade later most observers acknowledged that a substantial political change was underway in Britain and elsewhere.
What caused the shift? Keith Joseph's career is one way to trace an argument. Joseph seems improbable in the role of one of postwar Britain's pioneering advocates of free-markets. He was unusually self-doubting and self-effacing for a public figure, later saying it was for the best that he neither became party leader nor prime minister. He also defied political stereotypes as one of a number of British Jews who became leading advocates of modern conservatism; others included the IEA's Arthur Seldon, Nigel Lawson, Alfred Sherman (Joseph's own ideas guru), Leon Brittan, and Michael Howard. In 1956, Joseph joined a Conservative parliamentary party which had drifted substantially leftward with time. Altering this direction was daunting. As with Winston Churchill, Joseph's privileged upbringing in no way diminished an agonizing personal need to excel. As a backbencher, shadow cabinet member, and cabinet member, Joseph put in work-weeks long enough to undermine health and his first marriage. He was among the first senior Tories to begin visiting the IEA in the mid-1960s.
Yet in office in 1970-74 and after 1979, Joseph and like-minded colleagues achieved progress on some issues but utter defeat on many, many others. An explanation of the successes must account for the failures as well, and given the pervasive revival of free-market ideas at the time, ideas alone seem a poor candidate for the job. This is not the place to debate just how market-oriented Edward Heath's 1970-74 Conservative government ever tried to be. Suffice it to say that many of the free-market proposals which it did generate quickly met robust resistance from unions, welfare-program beneficiaries, and diverse (often corporate) rent-seekers. As a welfare minister, Joseph found himself unable to bring colleagues or voters around to profound reform. In a familiar story, he found himself bragging at election-time about spending increases on his watch.
The experience was traumatic, and while in opposition in the mid-'70s Joseph sharpened his critique of the statist post-war dispensation, which meant criticizing his party and himself. In 1975 he penned his best-known words: "It was only in April 1974 that I converted to Conservatism (I had thought I was a Conservative but I now see that I was not really one at all)." Thatcher later remarked that Joseph "gave us back our intellectual self-confidence."
Yet despite the intellectual revolution, resistance to market reforms did not cease. Certainly many dragons were slain in the Thatcher years, in privatizations, public employment, tax reform, and capital movement. But many Thatcherite goals succumbed to intense resistance; many others were never proposed to begin with. The fact remains that taxes and spending held steady as a share of the economy and resumed rising almost as soon as Thatcher left office. It does a gross injustice to chalk up all these defeats to failure of ideas or will. Thatcherites also confronted interest groups and vast portions of the electorate which acted as if they were impervious to Hayek's books, IEA studies, and Joseph's speeches. Joseph seemed to recognize that something besides ideas was at work when he began referring to a socialist "ratchet" which "we, for one reason or another, have not been able to reverse" (emphasis added).
What might that reason be? At least as early as the 1970s, a number of policy-makers, commentators, and scholars suggested a candidate. They concluded that welfare state programs created vested interests that had metastasized into social structures numbering millions of dependent people. In the words of a Tory journalist, Russell Lewis, "socialism creates socialists." In the language of public choice economics, James Buchanan later insisted that interests were resilient even when shorn of ideological justification; "socialism is dead, but Leviathan lives on." Ideas had some consequences, but not enough of them. Norms needed to be complemented by a better causal understanding of why certain programs were so politically resilient and how their effects might be evaded or undermined.
This is where John Hoskyns enters the story. He is the first to insist that conviction matters; his diary devastatingly described a leading Tory "wet" as a "nice, reasonable and sensible man, hoping to meet stupidity and ruthlessness with concessions and pragmatism." But he insists values needed to be harnessed to hard causal thinking. He joined the staff of Thatcher's shadow cabinet in 1977 and set out to persuade his political superiors that they needed to both pick and sequence their battles carefully. Their itinerary required a viable road-map; his was titled "Stepping Stones." He brought to this task the background of a military officer turned businessman, who tried to strategize more systematically than politicians usually do or believe is worthwhile.
Stepping Stones' details could not survive the vicissitudes of daily political life, even with Hoskyns as first head of Thatcher's in-house "policy unit." But it is notable that Thatcher later said both that Joseph had restored intellectual self-confidence and that without strategies like Stepping Stones, she would not have known how and where to move as the postwar consensus collapsed around her. The thinking underpinning Stepping Stones shares with public choice theory the notion that it is analytically erroneous and politically inadvisable either to ignore interests or to expect them simply to be trumped by ideas. Like ideas, interests have consequences, and it was smarter to work with rather than against their grain.
Practical recommendations followed from this, none of which were incompatible with waging a war of ideas at the same time. For example, the Thatcher governments proceeded as if people who had a large stake in government programs and employment were unlikely spontaneously to support slimming the state. Since militant union leaders were an immediate obstacle to almost all market reforms, the Tories placed union reform near the top of their to-do list. Citizens were to be weaned from public pensions not by public conversion to new ideas but on the contrary by technical policy changes designed to go barely noticed until their effects had taken hold. Of course, it wasn't feasible to buy out all stakes in the state. And Thatcher was generally ruthless in her willingness to backtrack if a proposal tangibly worsened reelection prospects. But these leaders knew they were operating within a web of interest-based constraints, and often acted accordingly.
This makes it all the more impressive that Joseph, like Hayek and many others, was never shaken from his belief that ideas were the decisive thing. This simply cannot be reconciled with many outcomes. Thatcher did not fail to defeat certain types of rent-seeking for lack of "ideas." And does anyone believe that teachers' unions oppose vouchers or that trial lawyers oppose tort reform because of ideas rather than the crassest of interests? For these groups, ideas are fig-leafs, not motivations.
Ideas and convictions provide the goals we seek. But the British experience suggests that, to be effective, ideas must be complemented by other kinds of causal accounts. Joseph insisted that in earlier governments he had lacked the "moral courage" to push through far-reaching change. It is not simply to be kind to Joseph to say that, however true it might be of many politicians, this cannot be the entire story. For one, it does not jibe with Joseph's gradually-developed realization that policy battles had to be picked very carefully and with an eye on both interests and ideas. Here, Hoskyns has much to teach Joseph and even, respectfully, Hayek. The limits of reform in both Britain and the U.S. testify to how much further that work needs to go.