BOOKS

A bright particular star

Samuel Brittan

THE VIEW FROM NO. 11: MEMOIRS OF A TORY RADICAL by Nigel Lawson Bantam Press, £20, pp. 1119 Lord Lawson's book is by far the best account of the origin, development and aftermath of the political and economic counter-revolution which swept across many countries in the 1980s, and for which Thatcherism — a word that Lawson uses too much and in a favourable sense — is an infelicitous name.

The former Chancellor says in his fore- word that the contents should be treated, not as a table d'hôte, but more as an a la carte menu, enabling the reader to choose those dishes he or she likes and to omit those he or she finds indigestible.

The volume is so long because it is sever- al books in one; and much of the interest lies in their interrelation.

The treatment is inevitably a compro- mise between the chronological and the subject-by-subject approach. For instance, the origin of shadowing the Mark comes at the end of a mainly political chapter cover- ing events like Ulster, Westland and 'the bunker beckons'. But the carefully listed charts and tables help a great deal, as do the Annexes.

The prose is nearly always highly read- able, sometimes witty enough to repay a second reading, and occasionally moving, as when the author quotes from a dedication from Robert Boothby on the occasion of Lawson's greatest Parliamentary triumph — his 1984 Budget:

For Nigel Lawson, a rising star, with all good wishes from Robert Boothby, a fallen one.

Lawson remarks that most rising stars end that way.

But it is something to have been a star at all in that illustrious firmament.

The book is worth reading for the scattered pen-portraits alone. The author's frankness extends to himself. In a section called 'An Unusual Politician' at the begin- ning of Part Three he cites some double- edged comments by Edward Pearce and admits he was 'no great shakes at presenta- tion', that he was insufficiently gregarious, secretive but 'too ready to speak my mind' and needed a big or challenging occasion to produce an effective Parliamentary or television performance. The epilogue is one of the best succinct accounts available on a range of subjects, from the collapse of Communism to the downfall of Margaret Thatcher, together with a statement of the case for a plague on the houses of both the Europhobes and the Europhiles. I found my own attention flagging only in a few of the financial details of privatisation and tax reform. But I was surprised how interesting Lawson managed to make to-me-offputting subjects like 'fraud and the City' and the battle to make the BP underwriters fulfil their undertakings after the Wall Street crash.

Lord Lawson believes his main achieve- ments were tax reform and privatisation, both of which were imitated throughout the world. That presumably is why he draws attention to the first three Parts of the book — which, although less dramatic than the subsequent 'Battles of Downing Street', cover the key policies of the Thatcher era, when he was 'present at the creation' — and indeed midwife to many of them. The author's chosen art form was the Budget; and one of the purposes of the present book is to explain the principles that lay behind the virtuoso performances — lower marginal rates, and fewer tax breaks — easy to enumerate and formidably difficult to achieve in an inter-

est group democracy. These early sections also cover Lawson's period as Energy Secretary when his controversial stock- piling of coal laid the foundation of the government's subsequent victory over Arthur Scargill.

The View from No. 11 contains a full account of Lawson's various heresies against pious wisdom, such as the down- grading of the balance of payments, the refusal to see manufacturing or even investment as sacred cows, and an ingrained scepticism about fiscal as well as incomes policy, and about economic fore- casts — most of which were a bridge too far for Lady Thatcher. These heresies are the more interesting because they emerge from reflections on what Marxists would call the historically concrete situation rather than as seminar economics.

Lord Lawson's contribution to economic management was to grasp, more sharply than the academic protagonists, the key ideas of the post-Keynesian counter- revolution and inject them into public policy. By far the best explanation of why the postwar economic enlightenment had to be abandoned, and which no reader should miss, is given in Annexe I, The New Conservatism — a reprint of a speech given in 1980 when the author was Financial Secretary, which took a historical approach, free of Treasury language. The Toryspeak used instead can easily be penetrated by the commonsense reader. The Chancellor-to-be explained that in the decades after the second world war

inflation was held in check by two factors: the existence of a fixed exchange rate system and the fact that the numeraire of that sys- tem, the dollar, was managed by a country which itself pursued broadly non-inflationary policies.

In addition, the long persistence of money illusion — the belief that a pound next year will be worth the same as the pound this year — made it easier, by restraining wages, to run the economy at full employment. The inflationary financing of the Vietnam War devastated the dollar standard; and a conscious choice had to be made between 'bastard Keynesianism' with pay, price and import controls and the alternative of more conscious monetary rules.

Whether the latter takes the form of a money target or an exchange rate anchor is 'a second order question', as explained in Chapter 33, 'My Monetary Principles'. If the author has managed to drive that home, his labour will have been worth- while:

To go on heresy hunts against those whose

intermediate monetary objectives are different from one's own would be laughable, if it were not for the damaging effect of such scholastic controversies on the British economic debate and on the supposedly commonsense Tory Party in particular.

Teenage political monetarists need to but probably will not — read the detail of the vain search for a reliable domestic monetary indicator. Lord Lawson conclud- ed that the pragmatic monetarist should gain all the help he could from linking the sterling to the currency of a country which for a 'mixture of cultural, historical, institu- tional and constitutional factors,' aided by an independent central bank, had the best record for price stability (Chapter 39).

`The Ingham Run on the Pound' is an example of a sub-heading not usually found in books on economic management. And politicians who have just started to mouth slogans about an independent Bank of England will find that the case was stated properly and much earlier by the former Chancellor. There is indeed an Annexe with a specific plan rejected by the less radical Margaret Thatcher.

The former Chancellor is engagingly frank about his own mistakes (Chapter 50) in missing the full significance of credit liberalisation and the subsequent credit boom — partly, I would add, because he was too bemused by the particular narrow form of money (MO) most emphasised by Lady Thatcher's academic acolytes. He gives chapter and verse from Bank of England public pronouncements to show that those who subsequently sought to distance themselves from him were no more perceptive.

If Margaret Thatcher had not vetoed Lawson's most serious early attempt to join the ERM in 1985, he would have been saved from the worst consequences of his own errors — an illustration of the argument for rules. There would indeed probably have been a downward realignment when the oil price fell in 1986. But sterling would still have been prevent- ed from falling as far as it did — a fall which worried Nigel Lawson far more than it did the Treasury or Bank of England. The need to protect sterling would have kept interest rates higher, thus deterring at least some domestic borrowing, while the higher exchange rate would have exerted a direct downward influence on prices and pay.

Unfortunately, 'Margaret's abuse of the formula that sterling would enter the ERM when the time was right delayed its entry until a time that could scarcely have been less right' (p. 1009) not only because of the strains of German unification, but also because of the plunging dollar and because the issue of the exchange rate regime had by then become inextricably mixed with the theological issue of 'Europe' and the ERM Was coming to be seen as a system of irrevocably fixed parities leading up to a single currency. It may be that Europe can gain some of the advantages of a semi-fixed exchange rate regime like the ERM without a United States of Europe or a full Monetary Union which the former Chancellor — mistakenly — abhors. The author is right to say that independent European central banks would be better able to work such matters out than governments posturing for support at home. But a lot more work needs to be done on the degree and types of co-operation required.

The clue to both the author's personality and his political economy is what William Keegan called in an earlier book, the desire to 'impale oneself on hooks'. The environment which the former Chancellor likes best is one with firm rules against which people can pit their own ingenuity and energies. The problems arise when the rules are not clear or there is a cleavage on who should select them.

There is obviously a sub-text, which is more personally characteristic of the author than his official doctrines, but which is never quite fully developed. It is exempli- fied in a sentence on p. 981:

In the real world the unexpected frequently happens and a sensible government exploits opportunities when they arise.

This is in contrast to Civil Servants who `dislike the unexpected and seek to undo or offset it'. You get a glimpse of the subtext in the anecdotal and off-beat observations, liable to crop up at unexpected moments, in some of the pictures and their captions, and in a few of the footnotes. In one he compares the postwar British attempt to stamp out elites with the French attempt to create one through the Ecole Nationale,

whose rigorous education was more attuned to the demands of the modern world than were the traditional disciplines of Oxbridge

— but what really impressed Nigel is that members of the French Grands Corps address each other as qu' rather than `vous'. Elsewhere he gently corrects Michael Dobbs for suggesting in House of Cards that a Chief Whip could stand as party leader — the point being that this is the post Margaret Thatcher originally intended for John Major and from which Lawson saved him by grabbing him as Chief Secretary. Text and subtext are most nearly linked in a footnote about the inflationary Barber boom of the 1970s, 'which was in fact largely instigated by the then Prime Minister, Edward Heath'. The former Chancellor clearly believes that if he had remained in charge, with a free hand, he would have had the flair to avoid some of the agonies of the last three years through skill, luck and timing — with the doctrines following in their wake.

Some readers, perhaps not of this jour- nal, will groan at one of the concluding paragraphs which calls for

more of the same. More privatisation, more tax reform, and a firm grasp on public spend- ing.

Lawson is, however, much less right wing in detail than in headline terms. For instance there is an eloquent section in favour of the health service and against tax relief for private medical insurance and a radical suggestion for the abolition of all local taxes — the author having been in a lonely minority from the beginning against the poll tax, of which he tells the full story. His suggestions for raising the state pension age and introducing 'workfare' are worth studying well outside the Radical Right. Shakespeare's Othello says at the end of the tragedy: I have done the state some service and they know't.

Unlike Othello, Lawson surely has service more to give. The British establishment will be more stupid than even I think it is if it allows him to spend too much more time with his family without reharnessing him to the governmental or financial arena.

Simon Curtis

LCM or HCF?

Dusty bay at a B-road's edge; A gate-gap in what's left of hedge. As I pull in for sun, pipe, view, A wren lets rip with wrensong, too.

Though quite banal as moment-yield, Both bird and rough ragworty field Square perfectly with my ad hoc Middle-of-nowhere dog days stop.

But strange how breaks like this possess One factor, sui generis: The way dull lay-bys, God knows why, (Not being Lulworth Cove, Versailles, Cape Wrath, Dove Cottage or Loch Ness) Will etch their lines on consciousness.