12 APRIL 1975, Page 10

Policy maker

The Whiggery of Sir Keith

Bill Jamieson

There is a brilliant passage in the postscript to Friedrich Hayek's The Constitution of Liberty where the joint winner of last year's Nobel Prize for Economics tells why he is not a conservative. By its very nature, he writes, conservatism is incapable of offering any alternative to the direction in which society is being moved by others. "It may succeed by its resistance to current tendencies in slowing down undesirable developments, but, since it does not indicate another direction, it cannot prevent their continuance. It has, for this reason, invariably been the fate of conservatism to be dragged not of its own choosing." For this same reason, "the conservatives have tended to follow the socialist rather than the liberal direction and have adopted at appropriate intervals those ideas made respectable by radical propaganda."

Hayek reaches for the term 'libertarian' to describe his political beliefs, his warnings on economic totalitarianism and commitment to the free market economy. But he settled finally for "Whiggism — historically the correct name for the idea in which I believe. I am simply an. unrepentant old Whig — with the stress on the `old'."

The Constitution of Liberty was written in 1959. In the postscript he recorded an almost uncanny premonition of how seriously the defenders of capitalism and the market economy were subsequently to lose the battle of ideas. Nowhere has this been more true than in Britain. Indeed, it is debatable whether there has been until recently a battle of ideas on these lines at all: British conservatism could be said to have lost by virtue of having never fought at all.

Now we know Margaret Thatcher is a Hayek reader: she has not been afraid to quote him directly in her speeches. But no public figure has raised this chalice more often to his lips or drunk more deeply than the Whig who is now in charge of Conservative Party policy-making and research — Sir Keith Joseph.

In seven key speeches since June of last year — those seven pillars of his new found wisdom — runs a rich vein of Hayek. It is said loosely that Joseph is revitalising 'the Conservative tradition.' It is hard to see how. All the questions, the agonising questions, the searching and the self-depreciation resolve themselves into an attack on the role of government in the management of economic affairs and the prevailing assumptions about the nature and effect of its social welfare commitments: precisely that body of fashionable ideas in which successive Conservative administrations have acquiesced, each time more wilfully and with more zeal than the one before.

By fine semantic irony Sir Keith expressed his opposition to this state of affairs by declaring, "I have only recently become a Conservative." But the policy-thinking he has chosen to attack is by no means a recent 'deviation.' Is the failure to speak up for and advance the process of ernbourgeoisement only a recent one? Is government intervention by the Conservatives only deemed to have begun with Mr Heath? Did the Conservative commitment to full employment at all costs begin, say, only with Macmillan? These things go a long way back into the Conservative psyche. "For thirty years," Keith Joseph proclaimed in Upminster last June, "the levels of state expenditure have been greater than the economy could bear." Not for the seven years, as in the parable of Pharaoh's dream, but for thirty years have we been eating the healthy cows, with industry "distracted and harassed by constant and often unpredictable changes in policy and taxation"; and for at least half of those thirty years, he declared, Conservative governments "did not consider it practical to reverse the vast bulk of the accumulating detritus of socialism."

"I was a Tory," Sir Keith should have said, "but I am now a whig."

When I put this view to him recently he of course demurred. But he reacted as a man not altogether surprised at the suggestion that he may have ended up in the wrong party. You can't, he argued, equate modern with old labels that easily; "After all, the Tories weren't as interventionalist or the Whigs as laissez-faire as they were thought to be. I am for extremely active government: breaking up monopolies and cushioning the edges of change. I'm an active government man." True, indeed. But there is emerging in his speeches an outline of interventionism entirely opposite to that which is now commonly accepted and understood. It is intervention to help undo the interventions of the past: not to subsidise, bolster and sustain the increasing number of companies suffering liquidity problems — crippled in the first place by government "inflation-blind taxation."

If Sir Keith is out to break up the growing monopoly power of government and, in his own words, "reverse the vast bulk of the accumulating detritus of socialism," if against the bureaucratisation of society, he is to posit the mechanisms of the social market economy, economic competition, a return to sound monetary policies and the reassertion of the values of thrift, enterprise and self reliance, it is hard to doubt that he is a Whig in the classical Hayek sense. That the Conservative Party should seek replenishment from a Whig source is no real surprise; and certainly no cause for misgiving. Where the doubt must arise, however, is over how ably and how long Sir Keith will be allowed to fight this battle and, no less important, how far his radical ideas about the role of the Conservative Party will ever get beyond this series of most seminal speeches.

"People are hungry for ideas," he told the Economic Research Council on January 15, "hungrier than they have been for a long time." It is not only the hunger of people in general, but the hunger of Keith Joseph in particular that has made the Conservative Party more intellectually exciting than it has been for most of this century. It was on June 22, in a speech on 'the implications of Betin' that he first revealed the setting up of the Centre for Policy Studies. "I have," he declared, "been entrusted by Mr Heath with drawing lessons from the relative success of (social democratic) countries. To enable me to do this on the scale and depth the subject deserves, I am setting up a small policy study centre. . . I hope that in the months to come we shall be producing a flow of papers and presentations which will deal comparatively and analytically with the various features of our economies," Thus, after four years of government elected on the slogan of "Action not Words" we were to have words. Lots of words. "Words have great power," Joseph told the Economic Research Council. "For a word or a phrase people will work, fight and die." Seven months later, however, "the flow of papers and presentations" was not to be. For he referred again to the "new venture" in his speech to the ERC on January 15. By then the ground had certainlY shifted. "We shall work towards influencing policy rather than just producing research briefs. . . we shall work to shape the climate of opinion, or to be more •exact, the various micro-climates of opinion."

What, however, has the Centre for Policy Studies achieved so far? The most obvious shortcoming to emerge is organisation. In nine months it has not produced one paper, let alone "a flow of papers and presentations"; comPart: ative studies are notoriously bound Wit' difficulties, as Joseph is first to recognise. Nothing has come out of its Wilfred Street headquarters other than a nebulous, cyclostyled credo. Nothing has been published. Shaping "the various micro-climates of opin" 'ion" has extended to a few visits to universities and polytechnics and some of these have been pretty roughly received. There has certainlY been no ideological incursion into the Conser" vative Party to any grassroots extent. One full-time worker has already left the Centre all there are fears that some of its financial backers in the City and in industry may be getting restive about the value of their contribution. The work of the Centre has the mamtnnt“ task of turning the tide of ideas so that the bureaucratisation of our society is not onlY halted but reversed. This is not easily done' Over, the past ten years many have come t° believe that grossly inflationary wage settle' ments, stunted economic growth, indiscrimio' ate aid to lame ducks and increasing state control of industry is the price we pay for sale modus vivendi with the trade unions and the continued existence of the form and f°,11/11, only — of government by parliament. In ",'" introduction to Hayek's paper for the Institul of Economic Affairs on Economic Freedom 0., Representative Government, Graham Hutt°" quotes the "bitter complaint"' of Sid01io.5 Appollinaris: "Facto est pretium suae POI; nostra servitudo" — "The price of their Pe°, has been our servitude." Hayek himself in tha,.' paper comes reluctantly to agree with Joseill: Schumpeter who argued thirty years ago Oa,' there was an irreconciliable conflict betwee. democracy and capitalism — "except that it J: not democracy as such but the particular fonil: of democratic organisation" that provide th` dynamic for increasing government interverv tion in, and control of, economic life. Hayek comes to argue for a revigoretee 'Second House' to act as a brake on legislati:1r majorities discriminating against particu,'8.r racial or socio-economic groups, I doubt if Keith would follow him all the way there.' rather, it is a question of political will and tlici„r: particularly the goodwill of the trade uni°1 Abating the level of demand through control ° the money supply may douse wage inflatiotli what it will not cool is the stated aim of manY our biggest unions to push through a nlarf re-distribution of income in Britain — ao",;5 necessary at the price of weakening compe so that they fall like cankered apples into toir lap of the National Enterprise Board. }331I; ruptcy is no longer an admissible sanctio against excessive wage demands. For a social market economy ever .E.,!) re-emerge, however, there must be a re-distPr' bution of wealth in the other direction — profits, dividends, sharply reduced corporatioi tax, income tax and the dismantling of much the capital transfer provisions in order t" encourage and provide the investment neceS; sary for growth. That implies something not fait short of a revolution in political attitudes, rt° least within the trade unions. Sir Keith Joseph has set out on a long, ha,.11 haul to create this new will. It is uphill 'Al°v both for him and all those deeply disturbed 1",, the way our economy and our society is beiT run. To be in charge of Conservative Farl'of policy and research in 1975 makes the post Shadow Chancellor — with all due respect Sir Geoffrey Howe — something of a dawdle. Bill Jamieson is a financial journalist Wit Thomson Newspapers