Sixty years on: Why the battle for a free society is still yet to be won
The goal of the IEA was to challenge ideas and policies that had become politically predominant by the later 1950s – the so-called “post-war consensus”. What was new was the IEA’s method. Rather than lobbying or pressure group politics, public campaigning or working to persuade a particular political party, the intention was to influence and move intellectual opinion – to win the academic argument as the first stage and then to shift policy discussions as a result of this. In other words, the goal was to shift the boundaries of what was considered sensible.
The IEA sought to do this by producing commissioned scholarly research that was accessible and clear but of the highest intellectual standard. Equally important was that its output had no concern with what was “politically possible”. Rather, it put the case for sound economics, whether fashionable and politically feasible or not, and by doing this to actually make things that were unthinkable part of debate and ultimately politically possible.
There were any number of targets in those early years, but three in particular are worth mentioning. The first was Keynesian macro-economic policy and the notion of the government actively guiding or steering economic activity. The second was the belief that the government should directly own or control a significant part of the productive economy, and the related idea that there was a close match between markets and government planning in terms of efficiency. Finally, there was labour relations and the legally privileged position of trades unions at the time.
If we look back now from 2015 at the Britain of the 1960s and 1970s, it is striking how many ideas that were politically impossible at the time were advocated by the IEA, were put into effect later, and are now common sense. On the other side, many ideas that were politically influential and were criticised by the IEA have fallen off the political radar. State-owned industries such as telephones were privatised – something the IEA advocated in the 1960s – and few would now argue for this to be reversed.
The most dramatic change was the defeat of Keynesian macro-economic management. A whole range of associated policies such as exchange controls and detailed control of credit were swept away. Keynesianism of the kind advocated by Paul Krugman in the US has almost no support in the UK, as he himself has complained. Most fundamentally, the idea that there is a real alternative to markets as the basic institution of a modern economy has been buried, with even the most ardent critics saying that they only want to reform markets not replace them.
However, there were significant failures as well as successes, misses as well as hits. Two major ones were welfare and state income transfers which are now even larger, more intrusive and more damaging than when the IEA was founded, and healthcare where the NHS model remains sacrosanct despite persistent underperformance. Another is education, where IEA authors consistently argued for a shift to decentralisation and market mechanisms only to see governments of both parties go for centralisation and manic, top-down managerialism.
A case where the argument has been won is land planning and the housing market, but there has so far been no change in policy at all. So we should not think that this is a story of unqualified success. There have been victories but also setbacks and even reversals.
Moreover, there are new challenges, some of which were not foreseen in 1955, and others which were but which have become even more pressing. The intrusiveness of government into peoples’ private and personal lives and the attempt to manage matters such as child-rearing, diet, and leisure, unthinkable in the 1950s, have now become a staple of public argument. The share of national income consumed by government is now at levels that could be foreseen in 1955, but few then thought they would be reached and they are simply not sustainable. Defending the free movement of labour is now pressing, as is the need to criticise cronyism in contemporary capitalism, and to explain how and why it arises and how to stop it.
In short, the IEA has achieved much in its 60 years, but there are arguments not yet won and new challenges arising.
Dr Steve Davies is the IEA’s Education Director. This article first appeared in City AM.