Evangelist of the new Right

THERE could be no more profound mark of the way British politics has changed over the last 20 years than the fact that if there should be a Labour government after the general election, Dr Madsen Pirie expects to be advising it. He is the president of the Adam Smith Institute, a free market think-tank which he co-founded 20 years ago.

The institute's influence can be seen in a series of Conservative policies from privatisation to the introduction of an "internal market" in the public education and health systems to the Citizen's Charter. John Major, who put forward the latter, is on record as saying: "We could not have had a more powerful advocate of privatisation and liberalisation than the Adam Smith Institute."

A visitor to Madsen Pirie's office in Great Smith Street, a hundred yards from the Houses of Parliament, might expect, therefore, to find a man contemplating the end of an era of triumphs. With the Tories in disarray and the polls suggesting a Labour victory, this evangelist of the new Right ought to be anticipating the end of the world. Yet he is remarkably phlegmatic, and not just because he suspects that John Major may in fact confound the predictions and win the election.

He is absolutely convinced that Tony Blair, too, would open his heart to the gospel of free enterprise. "If there were to be a change of government, he pronounces, "the Adam Smith Institute would service that government. It would not service the Conservative party in opposition. That's not, what we do. Our ideas would be directed to a Labour government. The very fact that this notion cannot be dismissed, as the self-delusion of a zealot is eloquent testimony to the success of Madsen Pirie's intellectual campaigns.

And his confidence in his ability to influence Tony Blair seems all the more remarkable when he reveals that the next item on his intellectual agenda is the most sacrosanct of socialist achievements.

"The welfare state, one third of our spending, nearly £100 billion a year, that's our next target We did the industries, we did the unions, we did the utilities, we did the education and health services, its time now for the welfare state. The revolution hasn't run its course. Whichever party wins the general election, will effectively privatise the welfare state. We've already won the intellectual battle on that one."

Such a checklist belonged to the realms of science fiction when he arrived back in his native Britain in 1977, from a job as a professor of philosophy at Hillsdale College in Michigan, a missionary from enlightened America to the dark lands of the heathen.

Britain, he recalls, seemed to be going down the economic league table: high inflation, low growth rates, strikes crippling the economy. People called Britain the sick man of Europe. And three of us living and working in the United States thought it might be time to come back and inject some new ideas into the political process.

His timing, was good for the intellectual tide was with the Right, and the post-war Keynesian consensus was all washed up. In Britain a nightmarish combination of low growth and high inflation was suggesting that old formulae no longer worked. "A vacuum was created into which something had to come. That turned out to be the revival of market ideas."

Looking back, much of what happened seems inevitable, but Madsen Pirie is convinced that without the advent of Margaret Thatcher, Britain would now be like the old East Germany.

"Thatcher was a crucial factor", he insists. "It needed brave leadership, and she was very brave. Had we had another Heath, then I don't think those ideas would have been revived in Britain, and it wouldn't be Britain which the rest of the world is anxious to copy.

Unlike some ideologists of the new Right, he does not try to dress up the privatisation of public industries in high-flown economic or political rhetoric. It was, he says, an end in itself. He concedes that the share-owning democracy that the Conservatives claimed to be creating has not really come into existence, but maintains that this was never the real aim of the policy

"The political goal was to return to the commercial sector industries which really had no business being in the political domain anyway. A subsidiary aim was to create a share-owning democracy, but that was in many ways a built-on extra. I often used to give lectures on this, and people, would ask "What's the aim of privatisation? Is it to create a share-owning democracy, is it to stop them costing money, is it to make them more efficient? And I'd say No, it's to make them private'."

He has, however, a favourite statistic that sums up the shift that he helped to engineer. "In 1979, there were four times as many people who were members of labour unions as owned shares. By 1989, more people in Britain owned shares than were members of labour unions. So they did achieve something." And yet, even he concedes that Britain as a nation is far less unified now than it was in 1979.

"It is certainly the case that there is a greater gap between rich and, poor, but unless you're an egalitarian you don't necessarily think that's a bad thing. A fall in the living standards of the poor is undoubtedly a very serious thing. It's bad but it's not quite as bad as it looks. When you analyse it closely, you find that it's a rotating pool of people. Two thirds of the people who are in that group one year are not in it two years' later. So while you can look at the bottom 10 per cent and say, these are worse off than they were, it's not a particular group of people.

Britain is nevertheless "certainly a less cohesive society. But he adds that it, is also in many ways a less stifling society. It's one which is much more open to enterprise and opportunity than it was. People were expected to know their place and not have ideas above their station. There is more diversity and more opportunity for people to do different and sometimes adventurous things.

He doesn't deny that social breakdown, crime and an undermining of the traditional family have been part of the price for change.

"Yes, there are more of those and if these are by-products of the changes that have been made then one of the great things about policy innovation is that when you make mistakes, you can do things about it. But, it's easier to get an economy to improve than it is to get a society to improve. In a thousand ways Britain is better than it was in 1979. It also has a few new problems, but we've got into the habit of solving problems."

What Madsen Pirie tends to suggest, in fact, is that Thatcherism should get the credit for increasing diversity, but, not take the blame for undermining social cohesion, which he tends, with rather paradoxically Marxist logic, to attribute to underlying economic forces.

"WHEN this was a mass manufacturing economy", he says, "most people followed pretty similar lives and had pretty similar needs. They went to school, went into work trooped through the factory gates four times a day when the buzzer sounded, and retired having worked for the same firm all, their lives. They took their holidays at the same time. It was a mass society which spawned, as Marx might have said had he been alive, mass institutions. , Because people led broadly similar lives, you could have a broadly similar education, health, insurance, savings and welfare systems.

"Once you got the fragmentation of that economy because of technological change, and the break-up of the old, mass state industries, people started leading more diverse lives and they developed different needs. A good Marxist would tell you that the break-up of those mass state institutions is almost inevitable following the break-up of the mass standardised economy. And that is what has led to a more diverse, less cohesive, less coherent society, not anything done by the Thatcher government.

And yet he, like most of those on the Right, believes that the particular state institutions that, he cherishes can be somehow exempted from the radical change that he prescribes for every other aspect of society. On the one hand, there is no such a thing as society, but on the other, social institutions like the nation, the law, the church, the monarchy must be honoured. On the one hand, competitive forces must be allowed to operate freely. On the other, the inheritance of wealth, and power that gives some individuals so much of a head start doesn't count as a distortion of market forces.

"There are", he says, "very strong arguments that a constitutional monarchy is one of the best guarantors of the liberty of its people. I rather think the liberties of people are best protected by structures that are not susceptible to the immediate vote of the majority. It's an enormous advantage for us to have as the head of the armed forces and the church and the judicial system someone who didn't have to either get elected there and who would think they had a mandate to do things, or someone who had to claw their way to the top in a power struggle."

Nor does he believe that the ability of the old rich to hold on to their wealth and power shows that Mrs Thatcher's revolution was not nearly as radical as it seemed. "It's okay to inherit wealth", he maintains, "otherwise why should parents attempt to provide for their children? But also the accumulation of capital pools passed down through the generations is good for society. It's the source of investment that creates the new jobs that Britain needs tomorrow.

And for all the talk of free markets, he sees no contradiction in Britain opting out of the social chapter of the Maastricht Treaty, designed to ensure that, in terms of social provision, the different European economies operate on a level playing field. And here, suddenly, ideas that have no place in the rest of his conversation - fairness, disadvantage, the need for the marginalised to be protected from the unrestricted operation of market forces - come into play.

"Britain," he says, "is on the edge of Europe physically. We don't have the communications the rest of the Europeans have with each other. So if we are not to see all of the wealth and power of Europe concentrate away from our shores, we have to assert some advantages We can at least, by the flexibility of our labour market, make ourselves attractive enough to redress the natural suction towards the centre. If you have a completely level playing field how do the disadvantaged nations ever get out of their disadvantage?

That the same question might be asked of disadvantaged individuals is not, after 20 years of radical thinking, an idea that the Adam Smith Institute has yet considered.