Chapter 42 Section Five

On the eve of the 1976 annual meeting, we published the article "The Right Way of Thinking".A powerful exposition of neoconservatism.It is indeed accessible and, at least in writing, comparable to "The Change of Our Allies", both of which are among the best written documents published by the post-war Conservative Party.Credit goes to Chris Patton and Angus Moder.They drafted the document with Keith Joseph, Jeffrey Howe and Jim Pryor. We have internally agreed on a revenue policy, which also contributes to the success of this document. In May 1976, Geoffrey Howe gave a report to the "Bow Organization" (a backbone group of the Conservative Party) and proposed a "line" agreed by everyone, and the article "The Right Way" followed this "route".The document pointed out that price and income policies cannot solve the problem of inflation in the long run, but at the same time it said that it would be unwise to deny the above policies "categorically and permanently", and we prefer West German-style "comprehensive governance".It's a compromise that avoids responsibility, but for the time being it panders to everyone's tastes.

But the success of "Correct Way of Thinking" lies in the fact that it focuses on the big proposition and reiterates the difference between our way and the socialist way.The paper was well received by the press, not because my colleagues and I had expended considerable effort explaining it to the editors beforehand, but because the critics were surprised by the confident and authoritative tone of the opening paragraph, which It sharpened their horizons by sweeping away their impression of the day-to-day political infighting and the government's never-ending appetite for changing "standards."

The success of "The Right Way of Thinking" reveals a crucial paradox that existed throughout this period.We are not a particularly successful opposition party in the usual sense for a number of reasons.We've had our own divisions from time to time, especially in the House of Representatives, and we haven't been able to capitalize on the mistakes the government made.But on a higher level of faith, determination, and philosophy, we've done it extremely well.We are winning the battles of ideas that are necessary not only to win elections, but also to achieve the changes we want and to win lasting broad support.

Keith Joseph's talk further develops the arguments he developed at the Center for Policy Research.In a speech at Harrow in March, he struck head-on at the government's argument that high public spending was necessary to maintain high levels of employment.In fact, as Keith points out: Government overspending has been the leading cause of unemployment.If we want to save the economy now, runaway state spending must be cut immediately so that high levels of steady employment can be restored...every Paul in a government-protected position costs several Peters out of work relief.For every wealth-consuming public-sector Paul to keep their artificial job, several wealth-creating private-sector Peters would have to lose their jobs.The retained jobs are visible and centralized, while the lost jobs are nameless and scattered.

I wrote the preface to Keith's Stockton talk when it was published a few months later under the title The Inadequacy of Monetarism.With monetarism far from being embraced by the majority of the shadow cabinet, the headline was meant to be a bold way of conveying an important truth: monetary policy alone is "not enough".Monetary policy does reduce inflation.But if we fail to reduce government spending and public debt at the same time, the negative consequences of the entire austerity economy will fall on the wealth-creating private education sector. Alfred Sherman had helped Keith prepare his Stockton lecture.He also assisted me in drafting my address to the Zurich Economics Society on Monday, March 14, 1977.Although the speeches were given in Switzerland, they were mainly aimed at a domestic audience.Alfred and I put a lot of effort into preparing the speech, which was optimistic about the future of the UK despite the economic crisis in which we argued:

The tide is now turning against collectivism...a turn that is brought about by the antipathy aroused by the frustrated experience of socialist practice.The tide is always against the losers.But it won't automatically get us where we want to go...it's up to us to come up with the ideological and political direction...if we fail, we lose momentum.But if we get hold of it, in the last quarter of this century a revival as good as our long and excellent history will flourish. The speech moved the bankers in Zurich.Carol and my friends Douglas and Eleanor Glover were among them.Douglas was a councilor for the Ormskok district for many years.But the key will depend on how the speech is received in London.In fact, at this point it is extremely important for me to start developing high-level theory, because we have enough trouble in low-level Westminster politics.

I have already described some of the strategic difficulties presented to us by the economic crisis now engulfing the UK.Now a new problem has arisen.There is a growing confidence crisis in Labour, with opinion polls showing us leading by more than a dozen points.Our substantial victories in the by-elections at North Walsall and Walkington will confirm this situation shortly.At this critical juncture, some within the Conservative Party, determined to do whatever it takes to defeat me on the threshold of victory, are again talking about a coalition government. Harold Macmillan made a televised speech calling for a "government of national unity".It seems that he knows who will be called back to lead the government.I guess I'll have to go talk to him and see what he really thinks.We arranged to meet at the home of Maurice MacMillan in Catherine-Place.I arrived early and waited upstairs in the living room.I heard Maurice's father arrive, and he asked, "Is the phone coming?" Maurice replied, "No, not yet." He had to fight me.Our meeting was pleasant but fruitless, and McMillon urged me not to be too critical of the government in times of crisis.The only call he ended up making was to the IMF.

That's when I decided to make some changes that I wanted to make.What Reggie Maudlin has been doing both as a shadow cabinet member and as foreign secretary has always baffled me.Neither did he agree with my conduct in foreign affairs, and he was increasingly reluctant to hide his displeasure with me.He had to stand aside.When I told him he had to leave, he fired as rudely as he could.But he left anyway. I also want to move Michael Heseltine out of the industrials division and replace him with John Biffen.As long as the former does not react excessively, it is an effective whip for the government.Michael was clearly enthusiastic about his job at the Ministry of Industry.The trouble is that he sees things in a very different way than I do, and he doesn't have a hint of the Conservatives either.For example, in a speech in January 1976, he denounced the Labor government for infrequent meetings of ministers to "reach agreement and formulate a national industrial strategy".In fact, he seems to be criticizing the Labor Party for intervening in industry and picking losers, while he will intervene in industry for picking winners.It never seemed to occur to him that the government does not know and cannot know who will lose and who will gain.In this way, taxpayers' money will be used to intervene in the economy and prove their own judgment.This approach is to benefit the entire economy.Likewise, when I asked Michael to leave the Ministry of Industry for the Ministry of Environmental Protection, he said he would not go.I sent my Parliamentary Private Secretary, John Stanley, a man who knew him well, to speak to him.Michael reluctantly agrees to step aside for John Biffen, on condition that he is not installed as Environment Secretary once we are in power.With this problem solved, the rest of the steps can proceed.I put John Davies in place of Reggie at foreign affairs.John Davies worked hard and excelled until, unfortunately, he fell ill.

With the increasing likelihood that we will soon be called upon to form government, it is important to us to have an active and efficient front bench. On Wednesday, December 15, Dennis Healy went a step further with a small budget.He announced sharp cuts in public spending and public debt, and as part of an agreement with the International Monetary Fund set a goal of reining in the money supply (though expressed in terms of domestic credit expansion).This is in fact exactly the kind of monetarist move that Keith Joseph and I believe in, bypassing the bogus prescriptions in my own shadow cabinet that still cling to Keynesian outdated demand management theory from the right.In line with our decision not to object to the measures necessary for the government to overcome the crisis, we abstained from voting on these measures.The package the IMF asked the government to adopt was a turning point, as the economy began to recover under the new financial order.From a party political standpoint, this gives us mixed blessings.The worry is that dissatisfaction with the government's economic management will decrease and people may return to Labor.The good news is that we can now say that socialism as an economic creed has completely failed, and that even socialists have had to accept the reality portrayed by the Conservative Party.As for the specific impact of all this on the election outcome, we will have to wait and see.

This political instability makes everyone uneasy.The government no longer has an overwhelming majority.No one knows how MPs from minor parties will vote on a specific issue.Even those of us with parliamentary watchdogs reporting parliamentary vote count dynamics find things tricky.Supporters of the Conservative Party at home find this all inconceivable, and they don't understand why we can't deliver a coup de grace to the government and get a general election.In fact, on Tuesday 22 February 1977, the government had already been defeated when the bill for Scotland and Wales came to an end.With Scotland and Wales running out of any immediate hope of winning "devolution", this led Scottish and Welsh nationalists to withdraw their support for the government.A new parliamentary crisis - where the government no longer has a working majority - lies before us.