It took only a few individuals. They included an Old Etonian chicken farmer, a dashing millionaire, who became a 'Mad Monk', an Austrian seer, a classical scholar, and a chemistry student, who became an 'Iron Lady'. At first, they were voices in
the political wilderness. Their views thought, at best, eccentric, at worst, mad. But this small band of right-wing revolutionaries
was to change the course of life in Britain. We were not conventional, we were not congenial,
we were tearaways in our different respects. They were all like going to, a
sort of private religious sect. I would call it classical liberalism: a belief in people running their own lives rather than
having government running them for them. It's only very small groups of people
who stand out against any consensus. People who are different in some way.
They may be cranks, they may be geniuses. This is about the misfits,
the dreamers, the strategists, and how they came in from the
cold and changed life in Britain. It's the history of a people, and ideas behind Thatcherism, and those
who were Thatcherite even before she was. You turn if you want to. The lady's not for turning! Mrs. Thatcher's determination to push
ahead with reform, towards a world of individualism and self-reliance,
has found echoes down the years: I can only go one way. I've
not got a reverse gear! On the surface, today's politics sound
like an uncanny echo of those of the past. But is the similarity all surface,
and style as shallow as a soundbite? Or do the similarities run
deep in the political blood. Just how much of today is shaped by the past? It all began with chickens,
lots of chickens - a revolution in Britain's eating habits was to
lead to a revolution in politics. In 1953 an Old Etonian farmer, called
Anthony Fisher, was looking for new ideas: He took the opportunity to go to America,
where he was introduced to factory farming of chicken in sheds, and not in cages,
and he brought this idea back to the U.K. Fisher introduced intensive
battery chicken farming to Britain. The humble chicken
was about to lose its freedom. Chicken was something you ate on Sundays if
you were lucky, and as everyone will now know, chicken is probably the cheapest meat you
can eat, and that was really due to him. So Fisher put a chicken in every pot and
a fortune in his pocket, but curiously he wanted to turn his money into ideas and change
the direction of Britain's political life. Britain had fought a war for freedom
against the totalitarian menace of Nazi Germany. Fisher's personal view was
that the country was still in peril. His brother had died fighting in
the "Battle of Britain". Now Fisher wanted Britain to be a land worth dying for. The war had been won, but fear
of totalitarianism lingered on. The Soviet Union was seen as a threat by all
sorts of people. George Orwell first described its menace in "Animal Farm", and down on his
farm, Anthony Fisher worried about the future. He just adored his younger brother. Seeing
his brother in his mind's eye, seeing that this was happening to other people all over
the world at that very moment under Communism, and knowing that he could do something
about it, and that was what he did. Fisher didn't share in post-war euphoria.
In 1945 the Labour Party was elected by a landslide vote - a vote for a
Brave New World that would make the unemployment of the 1930s impossible,
and banish hardship for everyone in need. Most young people, immediately after the
war, had seen their parents suffer from unemployment. They may have had a job
- it was always threatened - often they would have spent a long time between jobs,
trying to find another one. Sometimes they simply couldn't find another one,
so the experience of unemployment wasn't just a theoretical experience,
it wasn't something read about in books. And so you've got this passionate desire, on the part of people who were emerging
from the war, to make sure that there would not be mass unemployment. It
was hard to describe how grim it was. The new government had radical ideas.
It nationalised key industry and introduced the Welfare State and
the National Health Service. The intention was, that society should care
for us, "from the cradle to the grave". You've got the Welfare State established, so
there was a move towards a socialised economy, and then, of course, although
Nazi Germany had been defeated, there was Soviet Russia, and Communism
was very far from defeated, and so you could feel you were living in a world in which
liberal values were increasingly endangered. To an individualist like Fisher,
the new government's planning and control seemed like a threat to personal freedom. But instead of just railing against
the government, Fisher decided to act. It's only very small groups of
people who stand out against any consensus. People who are different
in some way - they may be cranks, they may be geniuses - they don't accept
what the majority accept, and Fisher was one of those people. I'm not saying
he was right, but he was exceptional. Fisher was influenced by a little-known
Austrian economist called Friedrich von Hayek, who went out on a limb to warn that we
were all doomed if we didn't watch out. I have come to regard the writing of this
book as a duty I must not evade. When we look to Nazi Germany, the gulf
which separates us seems so immense, that nothing that happens there
can possess relevance for any possible development in this country. But let
us not forget, that fifteen years ago, the possibility of such a thing happening in
Germany, would have appeared just as fantastic. "The Road to Serfdom" argued that, by
embracing Socialist ideas, Britain was unwittingly sliding towards totalitarianism.
Freedom could only be assured by Capitalism. And my father read it, and he obviously thought: "He has put into words what I think, and
know - this man knows really the answers." For some it was a potent message, as
Enoch Powell's former secretary recalls: I remember Hayek telling me that Brits
thought you only had totalitarian dangers if people wore funny uniforms and funny
salutes, and he said they don't understand that a man in a tweed suit can be
as vicious as any Gestapo officer. Hayek saw the social and economic planning brought in during the war as the
thin end of a dangerous wedge. Personal freedom would be eroded
until people were enslaved. It's rather like today, when the government has a
little security, you know, in the name of security, it just curtails liberty a little bit,
and everyone says: "Well, you know, of course, it doesn't
curtail liberty by very much". And then the next thing curtails are just
a little bit more, because there are some unintended consequences of, er, and so, you get
a gradual erosion, which no one is in favour of, everyone proclaims their devotion to liberty
all this time, but you get this erosion. But the idea that freedom could be eroded
by stealth fell on stony ground in Britain. Hayek's message was generally thought
to be sensationalist or wrongheaded. "The Road to Serfdom" was ignored in Britain, ignored much more than in the United States,
where I think it was taken more seriously. The message did percolate into odd
corners, like Anthony Fisher's farm, and a lab in Oxford University,
where it acted like alchemy and helped to turn chemistry student
Margaret Roberts into a politician. Right or wrong, many years later "The
Road to Serfdom" did become a standard text for the blue revolutionaries
in our story. But in the beginning, state intervention ruled the political roost: Newsreel narration:
"Providing hospital and specialist services, medicines, drugs, and appliances, care of
the teeth and eyes, maternity service." Let's go forward into this fight
in the spirit our William Blake: "I will not cease from mental fight,
nor shall the sword sleep in my hand, till we have built Jerusalem, in
England's green and pleasant land." Von Hayek was employed at the London School
of Economics, where he'd been since 1931. When Fisher discovered this, he wasted no time in
asking to meet him. And so it was that Fisher met von Hayek, and explained that he planned
to go into politics to turn things around. Von Hayek's response was not what he expected.
Hayek said to him: "Don't go into politics, you have to alter public
opinion. It'll take a long time, you do it through the intellectuals,
the second-hand dealers in ideas." Von Hayek took Fisher under
his wing and introduced him to his own private thinkers' club in Switzerland. Anthony Fisher was also initiated into liberal
market thinking through the Mont Pelerin Society, which was started by Hayek in order to
counter what he saw as the drift towards Socialism and Collectivism, and this was a
small group of liberal-minded economists, and they met once a year in Switzerland,
and kept alive the flame of, as he saw it, of freedom - economic freedom and political
freedom - and a lot of the people who made an impact in the 60s, 70s, and later, had their
initiation through the Mont Pelerin Society. Von Hayek told Fisher, that if he wanted
to stop the slide towards totalitarianism, and safeguard freedom, he must start his own
organisation to influence the opinion-makers. Fisher agreed. He would use his money
to found a think-tank. He called it the Institute of Economic Affairs.
But Fisher needed someone to run it. At a Conservative meeting in East Grinstead in
1949, he heard an eager young Conservative give a stirring speech on the ills of wartime
food rationing continuing in peacetime. I remember vividly the context my
talk was about the free market, and the difference between the free market
and rationing, which was then going forward. We still had rationing, and
controls, and all that stuff. Newsreel dialogue:
"I get up wondering what I'm going to give the boys to eat, and the stuff I have to put in front
of their father doesn't bear thinking about. I did hope we might have it a bit easier, now there's
no more war, but instead of that, it's worse. Fisher and Harris shared the feeling that
Britain was 'going to Hell in a handcart', pulled by politicians of every persuasion. Well, it was amazing, actually, that the
great burst of nationalised industries was in 1945, after the war, and included
transport, all the fuel, and so forth. The Tories came to accept it. They disputed only,
I think, was steel. Steel had been nationalised for good reasons of developments and stuff. The
Tories said they would de-nationalise it. All the parties should accept them, even the Liberal
Party. It's pathetic, really, when you think about liberalism and market economy and stuff. It was
a period really of 'collective amnesia madness'. At first, Harris seemed to Fisher too good to be
true. Fisher assumed he was a Russian spy: One of his great bugbears was Soviet Russia,
Communism, and all that horrible post-war stuff, and he assumed that the Russians had their
fingers in a lot of pies, and what more natural that they should try and influence
the Conservative Party. It's bizarre in a way. But Harris wasn't a spy. He was an economist. Fisher decided to hire him to
run his new Institute. And so it was that Ralph Harris gave up his
job on a Glasgow newspaper, and came to London as the first Director of
the Institute of Economic Affairs. Harris's 'leap into the dark' landed
him in a small office in Westminster in 1957, on a salary of £50 a month, to
preach the gospel of the free market. He looked around for someone to run the
Institute's research programme. He chose another economist. Arthur Selden had grown up in poverty in
the East End of London in an immigrant Jewish community. The experience turned him not
towards Socialism, but towards self-reliance. I think Arthur's guiding principle
was, that people could make choices with themselves much better than
government, and government at the end, people will spend their own money much better
than government would spend it for them. That was the key of his belief, which
he never varied from. He didn't like governments. He never even flirted with the idea
of Socialism, never, and that was remarkable, really, because think of what a very
poor boy he was, what a very poor boy. And he lived his childhood among
people who are very poor in the East End of London. He had a remarkable
mind, you know, to get out of that. Young Arthur's remarkable mind took him to the
London School of Economics, where he too fell under the spell of the free market and von Hayek.
He joined Harris at the IEA as Research Director. Selden's task was to fight Socialism
and argue the case for the free market, something he had had some experience of, for
he was married to the daughter of a Communist. Communism seemed to me, somewhat repressive, and
there were still people who would tell the other people what to do in Communism. As usually in
Classical Liberalism, people weren't telling other people what to do, and there was a
difference, and, anyway, I gradually became an ardent Classical Liberalist, which was just as
well, 'cause I was married to Arthur for 58 years. Seldon, a liberal free-marketeer, and Harris,
the former Conservative education officer, forged their own independent line of economic
inquiry - unaligned to any political party, but very much leaning towards what
today would be called 'The Right'. Together Harris and Selden turned out a stream
of pamphlets designed to influence academics, journalists, and politicians.
Their message was simple: the free market was good,
government interference, bad. They were widely thought of as
being close to the lunatic fringe. I think you have to realise, that
in the 1960s, people had no other template for government in Britain, than the
'post-war Welfare consensus', as it's called. You had broad agreement between
the political parties on that. The only such 'wild-eyed' dissent, came
from either the Left - the far-Left - - or what I wouldn't call the 'far-Right',
but certainly the 'libertarian Right'. Harris and Selden saw themselves as
optimists, believing that, given freedom, people would be enlightened enough to help
one another. In contrast, the Conservative 'old guard' was pessimistic, believing
people needed guidance and a helping hand. There was a consensus among the parties:
Capitalism should be tempered by Socialism. There was only one institutional
voice against this, and it wasn't the Conservative Party. It was
the Institute of Economic Affairs. The Institute of Economic Affairs was
beavering away on its own. They were pretty appealing stuff at that
time, because they were saying 'there is an alternative to all this,
you know, it's called "the free market". For the big idea to thrive, the government
mustn't think it could plan the economy. We were told that we had won the war through
planning, and therefore the peace was now with us, and we must plan, we must have planned
industry, must have planned employment policies and so and so, and so planning was a
great 'In' thing, and that to me was totally misconceived. It's totally misconceived,
because you learn in economics that the motive power of any economy, the driving
force in any economy, is individual action. And so, Harris and Selden hammered away
at their message seeing evil all around, speaking to many, being heard by few. But they were not downhearted. Ralph and Arthur - I mean this affectionately -
always struck me as not unlike the Marx Brothers, that you couldn't be in their company without
giggling, and they were wonderful at ridiculing the absurdities of both our politicians
and of the civil service pretensions. I had good fun, and we were very lucky, I think.
Because Arthur and I were both working-class lads, we both come from state schools, and
often the people who held our views were public school men, and they would present
themselves. They'd be anti-the Welfare State, anti-trade unions, and they would parody
the argument that we wish, the serious argument we wish to make about reform, and so we had
a lot going for us but it was very exciting. It was just as well they could
giggle. Hayek had told them it would take twenty years for
their ideas to break through: they would grow old together, side by
side, Seldon writing, Harris hustling. The problem was, their 'big idea'
was up against another big idea: that government could regulate the
economy to keep unemployment low. Its architect was the great British
economist: John Maynard Keynes. I used the phrase until I was fed up with it, it's usually a
phrase of the 'Keynesian Collectivist Consensus'. Keynesian Collectivist Consensus. And as you say,
all parties, Liberal Party included, by the way, largely went along with it: full employment,
who could be against that? Who wants unemployment? Full employment is a way of saying, 'a frozen
economy', because you have to have change, and in order to have change, you have some
jobs going out of fashion, out of action, and other jobs coming along. So the 'full
employment' is a phony, kind of, 'aim of policy'. So, governments should not maintain high
employment. All the more reason for the Welfare State, one might think. Not so. According
to the IEA, it was also an impediment to progress. Following his childhood experiences, Arthur Selden concluded: welfare should
not be run by the state, but by charities. Well, he thought that the friendly societies,
before the war, are doing a lot to help people in that way, and when Arthur's adopted mother
was widowed, when he was about ten or eleven, and the Jewish Charitable Association
supplied her with weekly money, to help her, and I think that Arthur thought that
charities and friendly societies would supply what was needed for very poor
people who couldn't help themselves. But in the world of the 1960s,
things were changing fast. There were nuclear disarmament rallies in
Trafalgar Square, the publishers of D H Lawrence's novel "Lady Chatterley's Lover"
were tried for obscenity, but acquitted. Britain was changing, yet remained
curiously stuck in the past. Holidaymakers going abroad could take a
mere handful of money out of the country. Newsreel narration:
"Now remember, you can take out £5 in notes, but not more than £5. The maximum is £5 in
notes. Five, five, five pounds in notes. Get it? Ahhh!! You mean five pounds in notes! Hooray!! To the IEA, this symbolised government
interference, at its worst. The Institute published a pamphlet saying the rules, which
were leftover from the war, should be scrapped. When I took my children aboard for
my first time in the 1960s, we had to go to our local bank, and with
our passport, and get our passport stamped, and a figure written in: £ 25. We were allowed
£25 pounds per head, so we had a family of four, so we got a hundred pounds stamped into my
passport, and that was my allocation of foreign exchange for that holiday, and for that year. That
was that year. I mean the thing was preposterous. But as with so many of the free-market ideas, it would not be taken up until many
years later. The new radicals were still to find their standard-bearer,
or maybe she was still to find them. And then a breakthrough: one of the
IEA's policies actually was taken up. In 1964, the Conservative government
scrapped the law fixing the price of goods. Harris and Selden immediately
saw it as a victory for their lobbying. 'Resale Price Maintenance', which was a system
that prevailed, going back in the 19th century, whereby manufacturers specified the retail
price at which their goods could be sold. Now, that'll mean little to modern ears but we forget then that The State was specifying
what the price of a chocolate biscuit was. The Minister who pushed the policy through was an
unsung hero for the market liberals: Ted Heath. I think you had in '68, '69, '70, a tremor
moving through the Conservative Party, represented by the Institute of Economic Affairs,
and by people like Ted Heath himself - I mean Ted Heath had to fight, and fight, and fight for
"The Resale Price Maintenance Act" - it was a very significant event in his sort of
intellectual development. He pushed it through in '64 against the heated opposition
of the corporatists in the Conservative Party. Now he remained a sort of Thatcherite.
(He'd kill me for saying so!) Edward Heath bought the notion,
and applied Jamie's ideas, and we abolish 'resale price
maintenance', and if you remember, "Private Eye" thereafter haunted Mr. Heath
and called him "The Grocer". And that was why. But Britain was haunted by 'stagflation'
- a terrible monster, half inflation, half stagnation. No one knew how to kill it. By an odd twist, it was a Labour Party
insider who suggested the answer: It began for me, on the last day of 1966,
at the New Year's Eve party given by John Morgan, in the Camden Town area I remember,
and at the very late stage in the evening when we had all wine taken, he said to me,
I was then a civil servant in the Treasury, "had I ever thought of becoming a
journalist?", and I gave some loose and casual answer like "Well you never know"
or "Not particularly", or something. Anyway the next morning he later told me he remembered
this, and communicated with William Rees-Mogg, who had been appointed though he hadn't yet taken
up the position, as the new Editor of The Times. I asked him to join The Times which he agreed
to do, and about a year later I asked him to go as the economic correspondent of The Times
to the United States, because I felt that the economic weather was coming across the
Atlantic and that, if we covered what was happening in America, we might get right
what was going to happen next in Britain. In America, Peter Jay met a pal from the
British Embassy, who had seen the future. He had made it his job to get very close to the
American economists, including the Chicago-based people, and he began to open my eyes to
what the Chicago-based people were saying, and what Milton Friedman was saying,
had been saying, both about inflation and the importance of the amount of money
in circulation in determining inflation. And Milton Friedman really turned them into
monetarists, and with a very, very simple doctrine: all the government has to do to control inflation
is to limit the growth of 'the money stock' to what the economy is capable of producing. And if it
just did that, there'd be no more inflation. So according to Friedman's big idea, the government could kill the monster
by squeezing its access to money. That in each of our countries the public at
large wants to achieve a smaller government, a less intrusive government, more control over
their own lives. The problem isn't the will, the problem is translating that will. But in Britain, hardly anyone was listening -
certainly no one under the age of 30. London was swinging. Entrepreneurs
with long hair and funny clothes were spontaneously creating new industries, and
without government subsidies or direction. Ironically the new music and fashion scenes were just the type of revolution the
free marketeers were looking for But not even the seers at
the IEA seemed to notice. [indecipherable] I think in the 1960s
various forces were at play, that were outside the political script or
the economic script. Take for example the flourishing of British pop music,
creating a major world industry. And so, while the young tried
to create a new society, the right-wing merely tut-tutted at their
antics. But there was one major politician who had independently heard the message of
the free market. Like the sixties hippies, he wore strange clothes, and was to be seen
about town dressed like an Edwardian undertaker. His name was Enoch Powell, and he
specialised in being a thorn in the side. "Judas was paid!" He first made his mark back in
the 1950s, when he was in Harold Macmillan's government. When Macmillan
failed to reduce government expenditure, Powell resigned from the Treasury. It was
to set the tone for an explosive career. "We are all in this together, and the future of all of us is bound up
with the future of free British industry." Well Enoch was very, very
important in those early times, and I regard him as being
the author of Thatcherism. Powell had become a believer
in the free market while at Cambridge and remained
so throughout his life. My great hero in the mid-1960s was Enoch
Powell. In the early 1960s he was the apostle of free-market Toryism, and he was proclaiming
what most people thought was impossible, after the post-war consensus that, you
know, when the Atlee government introduced Socialism into Britain, it could only be
tinkered with, it could never be reversed. Enoch Powell believed anything was possible, even de-nationalising the state-owned
industries including the telephone system. Mr. Powell thought it was very urgent to
break up the Post Office [indecipherable], but more importantly for the telephone
monopoly. It's now barely believable that we used to depend on the GPO to
run all our telephones and the only colour you could get was black and
it would only come six months later. But no one listened. Powell seemed too extreme. Enoch Powell was regarded as a bit of a nutter at
the time. The sort of platform which he espoused, was regarded as so off the wall
and right-wing - it's several miles to the left where Mr Blair is
now - but times were different then. However, Powell was an important force. He was seen as a possible Party
Leader, until 1968, that is. He went to his constituency in Birmingham
and spoke of the perils of immigration. Quoting Virgil, Powell said he was filled
with foreboding, and like the Roman, he saw the river Tiber foaming with much blood: "This is why, to enact legislation of a
kind before Parliament at this moment, is to risk throwing a match on to gunpowder." The speech's inflammatory language did
for Powell. Edward Heath sacked him from his Shadow Cabinet. The free market
had lost its most eloquent advocate. He continued as a major political
figure for some time, but his voice grew fainter and fainter. Few now remember
that Powell was a free-market trailblazer. I think he wouldn't be human, if Mr. Powell
wasn't a little jealous that the dice hadn't fallen differently, and that he wasn't the man
who was Prime Minister to implement these ideas. And so the Right continued to
look around for a hero. No, not her! It had to be a man. They made an interesting choice.
Remember the man who deregulated the price of a chocolate biscuit?
Yes, Ted Heath, now Party Leader. In 1970, Harold Wilson's failure to contain
the power of the trade unions cost Labour the general election. By a whisker, Ted Heath
became Prime Minister. His government came into power with a strong free-market manifesto. It
pledged freedom from government interference, an end to wage freezes, and
a stop to nationalisation. "Our purpose is not to divide, but to unite." There would be no backsliding.
Once a policy was established, the Prime Minister would have
the courage to stick to it. Certainly, you had, in the 1970 manifesto, which was a more
Thatcherite manifesto than Thatcher's manifesto, you had in the 1970 manifesto many
references to what might be called 'private sector enterprise disciplines' being required
for politics, and the '70 - '71 years of the Heath government saw tax cuts, saw an attempt
to restrain public expenditure, saw an attack on the trade union monopolies, which failed, but
it was an attack on the monopolies, and so the Heath government was as Thatcherite in its first
two years as the Thatcher government was in '79. The new agenda - market forces rather
than government enforcement - appealed to a new breed of young Conservative MPs. They didn't belong to the paternalistic ruling
classes, but to a brash new meritocracy. The sense of the times was 'paternalistic
Toryism', you know, "We'll look after you", and 'consensus politics' was all the rage; and
the younger members coming into the Tory Party, my generation, many of whom came in '64 - I
only got in the house into '66 - they were getting more and more restless about
the corporatist politics of that time, and wanted to get more freedom in the marketplace. And it was around that time, in the mid-sixties,
that I met a young chap called Cecil Parkinson, who took rather similar views to
mine. We lived in the same area, we both joined the local Conservative Party, and
began to sort the local Conservative Party out, and we both agreed that we should
stand for election to Parliament. When I talked to Americans, and I
said "You do realise, that, you know, the government owns the steel industry, the
shipbuilding industry, the aviation industry, the airline, the telecoms. They'd say: "What?" I
mean, it's very easy to forget just how far down the command economy road we'd gone. We were very,
very well on the way to being a Socialist country. We both saw very clearly that one of the great
problems in the country was the excessive power of trades unions, which were being misused and
disrupting the industrial economy very strongly, that we were beginning to acquire
that unfortunate label of "the sick man of Europe" because of our poor industrial
relations, so that was one thing we agreed on. Things were looking up for the
free marketeers, but not for long. The Heath government manifesto in 1970,
if it had come out a few years later, would have been called Thatcherite.
The problem was, that we abandoned it. Within two years of becoming the
government, we made a complete u-turn. When unemployment began to reach what
was then thought the unacceptable level of half a million or so, well below what it is
today, Heath panicked and decided to pump more money into the economy. When inflation
shot up, he introduced a pay policy. I can remember at the Evening Standard, inspectors
from the government came around to go through the staff list, each year, to tell us whether we
were allowed to pay people more than 2% or 3%, whatever it was. It was more 'dirigiste' than the
Soviet Union. It was absolutely extraordinary. Prices and incomes policies were part of the old
ideas. They were part of the Keynesian system, which is that, you ran the economy at full
employment, then you had powerful unions who could push up prices at full employment, so you had to
have control over incomes, that is wages, to stop them doing it. So prices and incomes policy was
the last gasp, if you like, of the old regime. For me, it was a matter of principle, that The
State has got no business in deciding what a baker should be paid relative to a butcher, or a nurse
relative to a bus conductor. That seemed to be absolutely lunatic. Who could decide those things?
Who could evaluate all those relativities? And how can you control prices of potatoes or groceries,
or any commodity in a market? It was totally and completely contrary to the whole
system, which powers a Capitalist economy. And Edward Heath, it should be remembered, was
absolutely a man of the 1930s in the sense that he had been a student at Oxford in the
1930s, had come from a poorish family, and had exactly the same reflexes and scars
from the 1930s that everybody else who'd been running economic policy since 1945 also
had. Faced with the possibility of what, in those days, would have been referred to as
'mass unemployment', which meant unemployment, that of half a million or 600,000, decided, you
know, he had not gone into politics and given his life to this, in order to preside over
a repetition of the very thing which, in his boyhood, he remembered as the great evil: namely,
mass unemployment, and so we had the U-turn. These were bleak times for the free-market
men. They saw a Conservative government enact policies they hated, and employ an
enormous civil service to run the country. The strategy was to be gently mocked in
von Hayek's favorite television comedy. An awful lot of it was Jim and Sir
Humphrey pursuing their own private ends and pretending they were for the public
good. We didn't think these 'Jim Hacker' and 'Humphrey' are awful people. We thought, in their
position, given their rewards and penalties, we'd have done exactly what they did,
and that's how they were motivated. Politicians had a vested interest in politics, and
in the economics of politics, politicians if our idea came to roost, where would the politicians
be? You didn't need all these, all these bureaucrats and so on that they're employing. And
these ideas of ours were a threat to politicians. They would all lose their jobs if people were
doing things for themselves, wouldn't they? And so they would. As Britain moved into the
winter of 1973, jobs and pay were on the line. In a brutal struggle, unions fought to burst
through the government's wage controls. A strike by power workers was
followed by industrial action by the miners. The government was forced to limit supplies of
electricity to industry to three days a week. The 'three-day week' destroyed the Heath government. One of the many mistakes that
the Heath government made, was in thinking that the trade unions would
be cooperative about wage controls with a Conservative government. Trade
unions don't like wage controls. Ted Heath's government finally disintegrated
when he had on his hands a power strike and coal strike, which he couldn't negotiate his
way out of. And he decided the only thing to do was to appeal to the electorate, and to seek
a new mandate, on the question of: "Who governs"? Well, in my experience if you ask the electorate "Who governs?" Their reply is likely to
be, "If you don't know, it ain't you!" I can think of nothing that they did that really
endures in memory, indeed, what they did do was privatise four pubs in Carlisle, and Thomas Cook's
the travel agents. That was it! Nothing else! It was a turning point: free-market monetarist
ideas were, at last, being taken seriously. Even some ardent Keynesians
began to change their minds. What changed my mind, was that the neo-Keynesian
policies being pursued by the Heath government were a failure, and I remember having
conversation with Ted Heath himself, after he'd lost the first 1974 election, saying: "You
can't go back to another, into another election, with the same policies on inflation that you had
at the last election, or in their last government, because everybody knows they failed. You've got to
have different policies." And he wouldn't have it. Heath's government crumbled. From the
rubble arose murmurs of dissent. The loudest grumblings came from former Health
Minister and Tory grandee, Keith Joseph. He announced that, up to now, he had not been
a true Conservative, but a Socialist. Joseph was a flamboyant figure: an Old Etonian, who
had entered politics to help the poor. His problem was, he kept changing his mind about
how best to do so. But after Heath's u-turn, he decided it definitely wasn't by
big-spending, big planning government. [Indesipherable] He'd gone along with all
that Harold MacMillan stuff, the mixed economy. He'd gone along with the consensus.
He'd gone along with nationalised industries, and inflation, and he'd been a
Minister in those days and he'd not declared the nonsense that they were,
so he was making up for his past follies. I think you could say, I'm teasing a little bit,
but I think you could say the young Keith Joseph was not unlike the young David Cameron, that
they both thought, in a rather naive way, that The State, organised by gentlemen, could be a benign
force, and it was only the experience of living in Mr. Heath's Cabinet, both as Housing Minister,
then the Social Security Secretary, that inoculated him against this. He saw The State was capable
of immense catastrophes and immense cruelties. This was Keith Joseph's u-turn. He
now toured the country denouncing all he had previously stood for, and
preaching free-market government. Since the end of the Second World War, we've
had altogether too much Socialism. For half of those thirty years, Conservative governments,
for understandable reasons, didn't consider it practicable to reverse the vast accumulation
of Socialism they found on returning to office. Kieth - it's hard to say what went on in Keith
Joseph's mind - but he thought the watershed had been reached, and that Conservatism, if
it was to claim proper use of the word, had to be more than just 'trying to slow down
a little bit the advance of Socialism'. And in that sense, he thought
the time to reclaim the word had come. The working population must
choose, between narrow, illusory job security in one place. propped
up by public funds from the taxpayer, or the real job security based
on a prosperous dynamic economy. So now it was going well for
the right-wing. Too well. Like Enoch Powell, Keith Joseph went to
Birmingham, and made one speech too many. He warned about "poor young mothers giving birth to children,
destined to become the delinquents of tomorrow". One phrase stood out: "Our human
stock is threatened." It smacked of eugenics. After that, his leadership hopes faded.
When a leadership contest was announced, he knew he couldn't stand. Yet again, the
free-marketeers saw their chances evaporating. If only another suitable right-wing
candidate could be found. But finding someone to oppose Heath was
tricky. Somehow the right-wing didn't think of Keith Joseph's close friend
and ally. She was only a woman! She was regarded as an extremely interesting
woman, a woman Cabinet Minister, perfect for Social Security, Education, one or two of those
jobs, but in the Conservative Party of those days, not sort of 'economic minister material',
if you like, just that wasn't women's work, and so she, and she slightly, she
found that irksome, because, I think, well it subsequently became known, that
her ambition was to become the first woman Chancellor. Even she didn't aspire to being
the first woman Prime Minister at that point. I don't think there will be a woman
Prime Minister in my lifetime. First of all, we too underestimated Mrs. Thatcher,
and it wasn't just the Conservative Party, all the media underestimated her, everybody
underestimated her, it was the story of her life. You know, she'd been underestimated all the way through,
and she increasingly knew that she was a hell of a lot better than the assessments of her, I
mean, just much more capable, and much tougher. When Mrs. Thatcher had watched the Heath
u-turn, it must have brought back memories of a warning from the past. Her interest in
politics had begun when she was a chemistry student at Oxford. In 1945 her inquisitive mind
brought her to von Hayek and his warning about the slow slide into slavery. Those doubts
bubbled up again during Heath's Premiership. The first time we had a real political
discussion, this was in about 1972, and, she said: "Could we have a word?" And we went and sat
in the corner of the Members' Lobby. There are some seats there. And she said: "We've got to resist
this incomes policy, you know, incomes and prices, we've been here before. I'm fighting it in the
Cabinet, I need the help of people outside." I didn't think she suddenly had a dramatic
conversion. She supported the Heath manifesto. What happened, was that the leadership
abandoned the policy and that's what she didn't like, and that's when she started
to strike out away from the leadership. But against almost everyone's expectations, Mrs. Thatcher stood for the leadership of the
Party, in place of her friend, Keith Joseph. And if, by the way, he'd been prepared to stand
for the leadership, she would not have stood. It was only after he announced subsequent, that
he wasn't going to be a candidate, that she said: "Well, somebody who thinks like us has got to
stand", and so she threw her hat in the ring. Margaret Thatcher was a surprise to everybody,
I think, but I think it, as ever, as a matter of just how the circumstances run, how the
cards fall, Ted did not see after his defeat, that he really ought to go. He took the
view that the country was in the wrong and that he was in the right, and everyone
would come to their senses sooner or later, but who was going to stand against him?
There was a great reluctance to do so, and in the end, it was Margaret Thatcher
who put herself forward as the candidate. In desperation, some of them think "Well, we'll
then have a 'stalking horse' to show that there is a good deal of unrest about Ted Heath's
manner of controlling the Conservative Party and leads the country", and they fall upon Mrs.
T. - she's the only person who's willing to do it, or not the only person, but the only person
of any substance who's willing to do it. She agrees to do it because she's by
this time very angry with Ted Heath and with some justice. And she then, to her
amazement, and everybody else's, gets elected. I mean, almost nobody expected
her to get elected as Leader, and very many of the people who voted for her
didn't seriously consider her likely to be Leader. Very important to realise that, because,
she actually was the recipient of a lot of votes that were not really intended
to bring about the result that then occurred. So the whole thing was quite extraordinary
and eccentric. There was no 'Thatcher group' within the Tory Party. She had no constituency
within the Party. She was utterly and completely on her own. She was just very, very useful
to the anti-Heathites - but that's history. So in 1975, Mrs. Thatcher became the Leader of
the Conservatives, becoming the first woman to lead a British political party. She had the
top job, but she had few natural allies. She simply was an outsider in every
sense, and I think that everything she achieved she achieved in spite of her
personality, and in spite of her likability, which was not very high. She had no real friends,
I mean, there was no 'coterie' around Thatcher. "Let us proclaim our face in a new and
better future for our Party and ...." She didn't know it then, but she was to be the
Anointed One who would lead the Libertarians, the economic free marketeers, whatever
they were called, and whatever their place on the Right, now they had found their
'Boadicea', their 'Joan the Baptist'. And equally importantly, she had found them. I think the ideas of people like Enoch Powell,
Keith Joseph, and, of course, Arthur Selden and others in some of the think tanks. They began to
put some intellectual rigor into the framework, and certainly, I think they were a great deal of
the guidance which Margaret Thatcher followed. And what about that other great prophet, Anthony
Fisher, who helped to start it all off? He sold his chicken empire, went into
turtle farming, and lost the lot. He went to America from where he spread
the free-market message across the world. And as for Hayek, who had inspired them all, he finally met the woman who he hoped would
take his forgotten ideas into the future. Hayek used to visit these premises twice
a year, when he came over from Germany, and on one occasion I introduced him to
Margaret Thatcher, in the room through there, and she sat crouched over the desk with him,
like talking, eyes closed and musing out loud, and she, perhaps, so she hear every
word and syllable and stuff, and she was totally silent for ten minutes,
which, dear Margaret, that may be a record actually, to silence Margaret Thatcher for ten
minutes, while she listened to what Hayek had to say. It was a love match forged by the
chemistry of economics. After the meeting, all the 'sage of Vienna'
could say, was: "How beautiful she is." The 'Beautiful One' was a believer by
instinct, but she was a keen student. At a dinner, one of Britain's
foremost economic commentators found himself explaining the
theory of monetarism to her. We got onto the subject of what's wrong with the
British economy etc., and I allowed myself to be drawn into, as it were, giving her a "New Reader's
Start Here - Beginner's Guide to Monetarism", to the economic ideas that I'd been writing about
and thought were important, and as far as I know, though I can't prove this, this was the first time
that anybody had ever talked to her about these things, so that in a way that left me feeling
that I had been the first one to tell her about some of the ideas with which, subsequently,
her name became very prominently associated, which led me also to remark that this left
me feeling rather like the geography teacher, who had first shown a map of
the world to Genghis Khan. Whenever anything great occurs, there's always got
to be a union of ideas, events, and personalities. And if any one of those are missing,
then 'the great thing' doesn't happen. Well, with Thatcher, these ideas
found their expression. The new Right had found their champion in Mrs. Thatcher.
It would remain to be seen whether, in the face of opposition from the Tory 'old guard',
she could put her radical ideas into practice. And I remember going to a dinner - I think it was the night after the second ballot down in Winchester - and Whitelaw was addressing the Conservative Association in Winchester
some reason rather an old date doubtless at the emotion in that room was quite extraordinary
and the old man gets up there old then and starts making this great speech about how he'd longed
to be Leader in all his life, he wanted to be Leader, and now this wonderful woman was Leader
and don't worry, you know, she's a wonderful woman. He was loyalty personified, and he speaks so
movingly about her, and then he burst into tears, and he sits down in floods of tears, and
the entire dining club is a large - supposed to be two or three hundred people - we're all sobbing at this great old Tory figure, so smitten both by her but also in its sense by her as well, that the emotion
was really very high, and I remember people thinking: "We've just made the most terrible
mistake! We're going to have the most awful time. This chap should have been a Leader,
should have been the Prime Minister. We owed it to him. He's so loyal, so long-serving,
and we've got this mad woman instead!" In the next episode of our story, will
the revolution be stopped in its tracks? Can Mrs. Thatcher beat the opposition in her own party, and can
she formulate a winning strategy for a general election? Watch Maggie's struggle to win
over party and country next week.
