DLT: Institute of Economic Affairs

Duncan Brack and Ed Randall, authors of the Dictionary of Liberal Thought, have kindly agreed to let us publish extracts on Lib Dem Voice. Last month, Distributism. The entire book is available on Amazon here and can also be bought at the Westminster Bookshop.

The Institute of Economic Affairs (IEA) is a UK-based think-tank dedicated to the promotion of economic or classical liberalism. It describes its mission as ‘to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems’. The IEA is one of a small number of think-tanks world-wide that can claim to have had a significant impact on public policy, both in terms of contributing to a transformation of the general climate of opinion in the UK and the implementation of specific policies.

The IEA was founded in 1955 by Sir Antony Fisher (1915–88), a former Battle of Britain pilot and founder of Buxted Chickens, following the advice of F. A. Hayek (q.v.). Fisher had sought out Hayek at his office at the LSE at the end of the war after reading The Reader’s Digest condensed version of Hayek’s The Road to Serfdom. Fisher told Hayek that he intended to go into politics to put right the wrongs that Hayek had identified in his book. However, Hayek counselled Fisher that future government policy would be determined by the intellectuals – academics, teachers, journalists and other opinion-leaders – whose ideas politicians would ultimately follow. Hayek advised Fisher to establish a research institute dedicated to the promotion of classical liberal (q.v.) ideas among the intellectuals rather than pursue a career in politics.

Ten years after that meeting the commercial success of Buxted Chickens put Fisher in a position to act on Hayek’s advice and establish the IEA. Fisher quickly recruited two young economists, Ralph Harris (1924–2006; later Lord Harris of High Cross) and Arthur Seldon (q.v.), to run the institute, a management team that was to remain in place for the best part of thirty years. During their collaboration Harris and Seldon established the IEA’s wide-ranging publication programme that continues to this day, consisting of monographs and, since 1980, the journal Economic Affairs. IEA authors, principally recruited from academia, are required to apply classical liberal principles and economic analysis to particular policy areas and to ignore questions of practical or political feasibility. Topics covered have included standard economic concerns, such as monetary policy and utility regulation, as well as more unusual subjects, such as markets in animal semen for the artificial insemination of cattle and in human blood for transfusion.

Judging the impact of a think-tank is notoriously difficult. For the first twenty years of the IEA’s existence its success in influencing public policy was probably limited to the outlawing of resale price maintenance by the Heath government – a policy that can be argued to be contrary to the classical liberal principle of freedom of contract. However, from 1979 onwards a myriad of policies advocated in IEA publications and often initially thought politically impossible have been implemented, including abolition of exchange controls, the ending of incomes and prices policies, the cessation of regional policy, the introduction of road charging, privatisation of the major utilities, bus deregulation idealism and central bank independence. Indeed, it seems reasonable to judge that the IEA and its authors were among the key architects of the transformation of UK public policy after the collapse of the post-war consensus.

The IEA is a non-partisan think-tank independent of all political parties. Although MPs of all parties have written for the institute, its influence has undeniably been greater on the Conservative Party than the Liberal Party or Liberal Democrats. While this may be a source of chagrin to those connected with the IEA who consider themselves liberals rather than conservatives, it has nevertheless meant that classical liberal policies (or neo-liberalism (q.v.)) have been implemented in the UK – in contrast to most of continental Europe where liberal parties, and hence classical liberal ideas, have remained marginal.

Further reading

  • John Blundell, Waging the War of Ideas (Institute of Economic Affairs, 2nd edn., 2003)
  • Richard Cockett, Thinking the Unthinkable (Fontana, 1995)
  • John Meadowcroft and Jaime Reynolds, ‘Liberals and the New Right’, Journal of Liberal History 47 (summer 2005)

John Meadowcroft

The Dictionary of Liberal Thought is one of the many titles available from the Liberal Democrat History Group. Find out more about them on their website.

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