The Day Thatcher Met Hayek – and How this Led to Privatisation

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Prime Minister Margaret Thatcher meets free market economist Friedrich von Hayek at IEA. She appoints Lord Lawson and they direct privatisation of British energyย interests.

Thatcher arrived at the humble offices of the Institute of Economic Affairs in Lord North Street, a short walk from the Houses of Parliament, flushed with victory in the Conservative party leadershipย battle.

Ralph Harris ushered into the boardroom for a private audience with Friedrich von Hayek, the architect of herย success.

The economist had recently been awarded the Nobel Prize, the highest honour for any academic, in part due to the consistent support of theย institute.

This was the first time they had met and they talked for less than 30 minutes. Harris would recall: โ€œAlthough she is known as being a rather overpowering lady she sat down like a meek schoolgirl andย listened.

โ€œAnd there was a period of unaccustomed silence from Margaret Thatcher. She said nothing for about ten minutes while he deployed hisย argumentsโ€.

Soย Beautiful

The politician left and the economist was left in an โ€œunusually pensive stateโ€ as the IEA staff gathered to see his reaction. โ€œShe’s so beautifulโ€ heย muttered.

Lawson would write some years later: โ€œMargaret instinctively realized the need to regain the moral as well as the practical initiative fromย collectivism.

โ€œIn this she was strongly fortified by the writings of the economist and philosopher Friedrichย Hayek.

โ€œAlthough Hayek’s popularity was largely confined to non-mainstream bodies like the robustly free-market Institute of Economic Affairs, his warnings conformed very closely to recent Britishย experience.โ€

Thatcher’s victory immediately rose the value of the IEA stock. No longer a fringe group of ideologues dismissed as fascists, they now had a disciple vying for the highest office in Britishย politics.

Harris, a tireless fundraiser, was keen to bring home the advantage. He wrote to British American Tobacco and asked them to increase their donation to ยฃ5,000 aย year.

On 13 May 1975 the BAT chairman’s policy committee received the following note: โ€œIt’s work has been increasingly relevant andย influential.

โ€œWe have established good personal contact with its directors (Ralph Harris and John Wood) and could undoubtedly make more use of the institute’s knowledge of sources of economicย information.โ€

Pander andย Protect

But the IEA still represented a potential political risk due to the radical nature of its agenda.ย Linda Whetstone, the daughter of Antony Fisher, had followed closely in her father’sย footsteps.

She became a trustee of the Institute of Economic Affairs and would even make a cameo appearance at the Conservative conference in October 1978 in the decaying seaside resort ofย Brighton.

The party was keen that the controversies of Powell and Joseph be forgotten and that it would attack Labour on economic rather than socialย grounds.

The theme of the conference was The Next Government. Linda had inherited her father’s clarity of thought and impatience with politicalย pragmatism.

She took to the podium, wearing a crumpled canary yellow collared t-shirt, immediately in front of Margaret Thatcher and addressed assembled delegates in a clear, almost shrillย voice.

โ€œWe have far too much legislation, too much rest and we must start undoing it,โ€ sheย said:

โ€œThe next Conservative government must not pander or protect certain sectors. Let’s not go out of our way to help small businesses, agriculture trade unions, ย coloured people,ย women.โ€

She shouted: โ€œI may be what people call a right wing Conservative but I believe we cannot help those people who cannot help themselves at the moment because we cannot afford to do it we cannot give them the choice in education, we cannot give them the choice in health care that some of us can afford and we cannot do it because we insist on trying to help different groups on trying to legislate against things all theย timeโ€ฆ.โ€

Miners, oil,ย privatisation

Before she finished her speech the band started a rousing rendition of God Save the Queen, the audience took to its feet and her concluding remarks were, deliberately or otherwise, drowned out for the television viewers watching the conference atย home.

Whetstone’s ideological distrust of the state would later inspire her to support free market attacks on climateย science.

Thatcher was elected prime minister in May 1979 with an underwhelming government majority of 44 seats. But she was determined to immediately implement her free marketย agenda.

She made Howe chairman of a new special sub-committee to plan the mass privatisation of State assets with Lawson at hisย command.

Lawson was installed as energy secretary by October that year and began immediately the process of transferring control of the country’s vast oil and gas assets to privateย companies.

โ€œI saw myself, quite simply, as having three main tasks: to bring to a successful conclusion the long struggle with the miners’ unionโ€ฆto pursue Britain’s interests in the international politics of oil; andย privatizationโ€.

Lawson would in the next decade sell off British Airways, British Petroleum and British Gas. The government would no longer have the power to transfer the country to renewables in a planned, orderly and relatively painlessย manner.

This could well be recognised by historians to come as the moment the British state lost any control over the emissions of greenhouse gasses from homes, offices andย factories.

This is particularly poignant because the country as the birthplace of the industrial revolution has produced more carbon dioxide than anyย other.

If we had to hold one person solely responsible for our tragic state of affairs, would it be Lawson? Was this mass privatisation the cause of climate change, and therefore the cause of Lawson’s curious personal investment in remaining doggedly sceptical however certain the science would become?ย ย 

ย 

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