Thatcher was arguably the first Prime Minister to be heavily influenced by think tanks. A relatively new phenomenon by the time she won the Conservative party leadership election in 1975, originating from America, they went on to play an ever increasing role in policy formulation both inside and outside Parliament.
Mirroring the US, many British think tanks established were given uncontroversial names; the Centre for Policy Studies (CPS), the Institute for Economic Affairs (IEA) or the Adam Smith Institute (ASI). Almost all declare independence from political parties, and proclaim to be non-partisan. Another striking feature of many UK based think tanks is there common focus on free-market economics. A quick search uncovers other groups such as the Bow Group, The Cobden Centre, Policy Exchange, Politeia, Selsdon Group, the Social Market Foundation and the Stockholm Network, all of whom openly profess a belief in free-market ideology.
Thatcher was particularly receptive to free-market ideas coming from the Institute of Economic Affairs, who had ‘loaned’ IEA trustee Nigel Vinson to Margaret Thatcher and Keith Joseph as they set about establishing their own free-market think tank, the Centre for Policy Studies. Their belief in Hayek’s vision of the free market chimed with Thatcher’s own ideological inclinations, heavily based on her upbringing as a shopkeeper’s daughter, which she believed mirrored how capitalism worked on a larger scale. Vinson’s contribution and help evidently was much appreciated by Thatcher, who rewarded him with a life peerage in 1985.
One of the earliest groups proposing what would now be described as neo-liberal economics was the Mont Pèlerin Society. Originally organised by Friedrich Hayek in 1947, the group comprised of leading liberal economists and philosophers such as Karl Popper and Milton Friedman. David Harvey credited the group with spreading neo-liberalism, an economic theory which went on to become a key tenant of Thatcherism and her economic policy.
In 1959 the society met in Oxford, and among the normal topics of discussion there featured a new topic, ‘Strategy and Tactics’, featuring a paper by Arthur Seldon and Ralph Harris the joint founders of the IEA. Hayek saw new emerging think tanks as a necessary bulwark against the prevailing Keynesian consensus, and the IEA warmly embraced the core principles of Hayek’s work in its publications.
In their paper, Harris and Seldon talked of the potential obstacles to furthering their economic agenda, which they recognised to be the established interests who held large stakes in the post-war settlement, and weak politicians. They identified their principle task as gaining access to elite opinion; businessmen and politicians, but also academics, teachers, journalists and broadcasters. They aimed not to promote a groundswell of public opinion for their ideas, but to influence those already in positions of power. Like Hayek, they believed in changing the minds of those who informed other, ordinary people’s opinion.
Milton Friedman once said ‘it is only necessary to convince a few wealthy people to get funds to launch any idea, however strange, and there are many such persons, many independent foci of support’, this highlights the inequity of powerful think tanks who have access to politicians. In societies where those with wealth already exert a greater influence on policy making than those at the bottom, think tanks further exacerbate this problem. The lack of accountability of think tanks is surely a great injustice in a supposedly democratic society. Think tanks in the UK are not legally obliged to disclose their donors, meaning the public cannot see whose money is funding groups which exert such influence over policy.
This is particularly worrying when looking at the outcome of neo-liberalism in the UK. Inequality has soared since Thatcher’s administrations. Taxes for the very richest have been cut the most, while mass privatisation of public utilities and services has transferred previously publicly owned assets to private companies to extract profits from. Surely it is anti-democratic to allow large businesses and rich individuals to secretly fund groups which advocate bettering their own financial position (through tax cuts among other policies), groups which have become so embedded and influential in policy making?
Groups such as the IEA and CPS were only able to operate successfully because of donations from businesses, as revenue from other sources (such as the sale of publications) were insufficient to cover costs. The great irony here is that a key part of the neo-liberal doctrine is firms should be financially viable. Such groups were constantly critical of governments bailing out failing businesses in the 1970s, such as British Leyland, as they believed businesses which were not financially viable should not be aided by the state. This completely questions the independence of think tanks, furthermore there whole legitimacy, as businesses theoretically do not invest money without the potential for a greater return on there investments. As seen with the millions of pounds involved in American elections from wealthy donors, investors respect favourable laws in return for their investments. Despite the charitable status of think tanks, there acts of charity are at best highly dubious.
At the 1959 Mont Pèlerin Society conference, Harris and Seldon talked about the necessity of persuading businessmen that there vision of a market economy was right. This proved to be a relatively easy task, and with the help of fundraising led by Harris himself and John Wood of the Conservative research department, the IEA had attracted nearly 300 separate corporate donors by 1969. Corporate Donors included BAT, IBM, Proctor & Gamble, Shell, Unilever, high street banks and media outlets such as the Financial Times and the Daily Telegraph, as well as large businesses from the City such as British Assets Trust and Prudential. The IEA now had the backing of a range of big businesses in support of the free market policies it was advocating to Thatcher and Joseph.
While many decried Unions as the greatest threat to stability in the 1970s, arguably think tanks were the greater enemy. Throughout the 1970s the Trade Union movement was generally seen by many as one of the greatest threats to democracy and to the country, their unpopularity peaking during the winter of discontent. However, they represented working people, and their fights were much more visual, in the form of picketing and striking, the effects of which obvious and always picked up on by a hostile press.
Yet at least Trade Unions had democratic structures(though this again can be debated) and represented large groups of people. The rise of free-market think tanks, backed by big businesses and wealthy individuals, was much less transparent. These groups have had a much greater say on policy making in the period since Thatcher’s 1979 victory.
While Thatcher is regarded by many to turn British economic decline around, she was very fortunate with circumstances. Windfalls from selling off state assets, coupled with the income generated from North Sea oil allowed her to proclaim sound government finances and slash taxes. Her ideological zeal for the free-market helped set in motion the 2008 financial crisis when she deregulated the financial sector with the ‘big bang’, in the belief markets were inherently efficient, and regulation only hampered growth.
Thatcher’s legacy is often debated, however the influence of right wing think tanks is often ignored or understated in analysis. They provided the intellectual framework for her administration (and subsequent governments), an intellectual framework paid for by big businesses, who ultimately benefited the most from the deregulation of the economy and the cutting of social provisions and taxes which groups such as the IEA and CPS championed. It is a bitter irony that one of the corporate sponsors of the IEA in the 1960s and 1970s, Lloyds Bank, had to be rescued by the government from bankruptcy in 2009. This highlights the contradictions of neo-liberal economics, something that is now infinitely harder to move beyond due to the increasing influence exerted over the media and politics by big businesses and those asset rich. There is now a growing movement among economists such as Thomas Piketty and Paul Krugman who have begun to question capitalism in its current form as neither stable, equitable, nor economically sound.
With thanks to Ben Jackson and his work on Thatcher and think tanks