The Free Economy and the Strong State

Abstract

The slow-down in the pace of accumulation has provided the opportunity for a widespread rejection of Keynesian political economy and an onslaught on the policies, values and organizations of social democracy. There has always been an element among British intellectuals which has never required much inducement to join a collective stampede to the right. We are constantly being told that 'intellectuals' are finally losing faith in socialism (this follows their previous final rejection of it in the early 1950s). They have been converted, even at this late hour, to the need to resist totalitarianism and the British Labour Party, and to reject the beliefs in collectivism and equality that were enshrined in the policies and institutions established in the 1940s. Aside from these 'men who have changed their minds', swayed by the populist clamour of the new right, there has also been in recent years a real intellectual change, a remarkable revival of liberal political economy through the elaboration of the doctrine of the social market economy, a doctrine which, under different labels, has made increasing headway within the Conservative party in the last ten years. The Conservative Government elected in 1979 had a group of ministers in the crucial economic ministries (Treasury, Industry, Trade, Energy), who were all adherents of the doctrine and prepared to govern in accordance with its prescriptions. The term social market economy originated in Germany from the neo-liberal ideas that were current there after 1945. In Britain and America similar ideas have been put forward by a number of theorists including F.A. Hayek and Milton Friedman, and popularized in Britain by organizations like the Institute for Economic Affairs and the Centre for Policy Studies, by lead writers in the Times and Daily Telegraph, by economic commentators such as Peter Jay, Samuel Brittan, and Patrick Hutber, and by Conservative politicians (Enoch Powell at first; more recently, Keith Joseph).