The recent biography of Mrs Thatcher by John Campbell (in particular volume one, The Grocer’s Daughter) did a good job of setting out just how much Hayek’s writings shaped Thatcher’s political outlook from her student days in Oxford onwards, in particular by paying close attention to her political speeches around 1950, when she was running for Parliament in Deptford, some of the few occasions in her early political career when she was making speeches without being bound by front bench discipline.
That part of the Right of the Conservative Party which is most keen to claim its legitimate political descent from Mrs Thatcher is most adamantly opposed to the European Union in general and British participation in the single European currency in particular.
I sometimes think that this should puzzle us more than it does…
… For what the Eurosceptics are defending most ardently is exactly what Hayek attacked repeatedly, the idea that it was a healthy state of affairs for national governments to have exclusive control over the currency. One characteristic remark from 1976 is this, that “Practically all governments of history have used their exclusive power to issue money in order to defraud and plunder the people”.
And whereas Hayek famously proposed the denationalisation of money as the solution to this problem, that’s not a subject that British Conservatives have ever been interested in seriously exploring, whether in Government or Opposition. They have preferred to live in the worst of all Hayekian worlds (short of state socialism, I suppose): national governments controlling national currencies (and, of course, no Conservative Chancellor, 1979-1997, sought to entrench Bank of England independence).
It’s true that Hayek was something of a sceptic about European monetary union. He wrote this in 1978, for example, that his private money scheme was
“both preferable and more practicable than the utopian scheme of introducing a new European currency, which would ultimately only have the effect of more deeply entrenching the source and root of all monetary evil, the government monopoly on the issue and control of money”.But as Otmar Issing makes clear in this interesting essay [pdf], from which I’ve excised the above quotations, Hayek saw the virtues of something like the present arrangements. Here he is again, again in 1978:
“It may still be true that, if there were full agreement as to what monetary policy ought to aim for, an independent authority fully protected against political pressure and free to decide on the means to be employed in order to achieve the ends it has been assigned might be the best arrangement. The old argument in favour of independent central banks still has great merit.”So what’s curious about Conservative Euroscepticism on this account, then, is that it’s the feature of European Monetary Union which makes the whole shebang most acceptable to people who think along Hayek’s lines — the relative independence of the Central Bank from national governments, and indeed from the central political institutions in Brussels — which they anathematise in the highest degree, with all the rhetoric about sovereignty, and unelected bankers, and not being able to throw out the people on the board of the ECB if they’re messing things up. In short, they take a stand against Hayek alongside Schumpeter’s vision of democracy — a world of ?lite politics in which, from time to time, the people get the chance to throw the rascals out (if the rascals haven’t sufficiently confused them ahead of time about what the best course of action might be).
So, to restate the puzzle: on the whole, the people we call the classical liberals were among those most keen to limit the powers of governments through various remedies: free markets, entrenched legal protections, charters of rights, the gold standard, the separation of powers, and so on. Yet often (perhaps not always) the politicians who claim to be most inspired by this tradition consistently oppose the institutions which actually do restrict the powers of government in order to protect citizen rights, price stability, and so on.
So to pose the question: Why is it that, when push comes to shove, so many Conservative politicians show their colours as Hobbesians and Schumpeterians and sovereignty fetishists and Little Englanders, and so on, rather than engaging more constructively with the classical liberal tradition by which they claim, from time to time, to be inspired?