By Richard Wade (auth.)
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Extra resources for Conservative Party Economic Policy: From Heath in Opposition to Cameron in Coalition
It was, unsurprisingly, pessimistic about the prospects for the nationalised industries and concluded that only by returning such industries to the private sector could industrial performance be improved dramatically.
But Friedman’s most decisive intervention in terms of impact on economic policy making arguably came in the late 1960s. The idea, derived from the original Phillips curve, of a long term trade-off between inflation and unemployment had provided strong justification for neo-Keynesian demand management. The aim of discretionary demand management was to achieve the most desirable trade-off between inflation and unemployment. If there was no trade-off to be had, then the idea that an economy should be demand-managed in such a way would be seriously flawed.
The correct policy response was to stop subsidising underperforming regions and instead free up the labour market so that firms and workers could migrate to the locations most appropriate for business activity. Heath set up a Regional Development Policy Group to consider economic policy towards the regions. Given its membership, there was no reason to suppose it would be unsympathetic to economic liberalism. It included William Deedes, who, though no doctrinaire free-market enthusiast, would nevertheless play a key role in the marketing of Thatcherism to a wider audience after 1974 as editor of The Daily Telegraph (Cockett, 1994: 183–4).