Approaching my 70th birthday, my thoughts turn to the depredations of the Grim Reaper. Two notably were taken this year: an old friend of nearly 40 years, Alan Walters, and a younger and newer friend, Yegor Gaidar. Both were notable for being economist-intellectuals who found themselves at the centre of power in crucial periods of their country’s history, and succeeded in influencing its course.
I first got to know Alan Walters when I was working at the World Bank in the late 1970s just before he left to become Mrs (as she then was) Thatcher’s economic advisor. His influence in changing the course of British economic history was attested to me by another departed friend Keith Joseph, who was the political architect behind the turn in Conservative political philosophy away from the consensual Butskellism which had prevailed since the War into a belief in classical liberalism. He told me that soon after the Tories had repudiated the Selsdon Park manifesto under Edward Heath, he hailed Alan outside the Institute of Economic Affairs (IEA), but Alan refused to shake his hand, exclaiming: “You are an inflationist”! Startled and shaken, Keith asked for readings and tutorials from Ralph Harris of the IEA to learn what Alan might have meant. Soon Milton Freidman and Fredrich Hayek had dethroned John Maynard Keynes and his myriad left wing followers as the mentors of Tory economic policy.
When I later asked Alan what his role had been when he was advising Mrs Thatcher, he replied: “Reassurance”. When she was beginning to have doubts about the efficacy of the new Tory course, he stiffened her spine by reassuring her that the expected results would occur. They did and a Britain that was written off as the sick man of Europe had an astonishing economic renaissance.
Alan’s other signal service was to strengthen Mrs Thatcher’s natural scepticism about creeping European integration. He strengthened her spine as long as he could, until being outmanoeuvred by Nigel Lawson and Geoffrey Howe who saw Britain enter the ERM (Exchange Rate Mechanism) with disastrous results. That Britain has subsequently stayed out of EMU (Economic and Monetary Union) and the euro, has cushioned some of the effects of the recent recession, unlike the Club Med countries being crucified on the fixed exchange rate system of the euro. At a dinner party in our London home with Sudhir Mulji, we persuaded Alan to write a book about monetary union which still remains prophetic.
The second friend , Yegor Gaidar was only in his early 50s. We saw him at the end of September in Moscow at the launch of the Russian edition of my Reviving the Invisible Hand.
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I first met him when he rang me in December 1994, soon after he had ceased being Boris Yeltsin’s Prime Minister, to invite me to give a paper on the natural resource curse in Latin America at a conference he and Robert Skidelsky had organised. I told him that I was an Indian, not used to a cold climate, and that I had read my War and Peace. He assured me that it was a very mild winter. I arrived in Moscow and nearly froze to death.
But the conference with members of the Duma and the Russian elite was an eye-opener. Half way through, I shut my eyes and just listened to the translator. I was in the middle of a Chekov or Tugurnev play with the 19th century anguished literary and philosophical discussions between modernisers and traditionalists — the keepers of the Russian soul! On my many subsequent visits to Russia, I have felt that Russia has still not resolved these cultural debates.
Gaidar wrote perhaps the best book explaining the collapse of the Soviet Union (Collapse of an Empire) and was the principal architect of the shock therapy which converted the country overnight from a dirigiste planned to a market economy. There has been much controversy about the wisdom of this policy. But, Gaidar and Yeltsin were right that, to solve the perennial Russian problem of an adequate supply of grain to the towns, prices would have to be freed. The other complementary market-oriented policies followed, including privatisation.
But an equally important aim was to break the power of the Communist Party. This was also a success, but with Yeltsin’s choice of Vladimir Putin, an ex-KGB officer, as his chosen successor, there was an ironic twist. As Putin is reported to have said: “Once a Chekist always a Chekist.” Till the recent rule of the Slivoki, the Cheka and the KGB had always been kept in check by the Party. With the latter destroyed, a popular authoritarian capitalist state has emerged much to the chagrin of the liberal reformers led by Gaidar, whose own failings, in uniting to get popular support for their liberal policies, is partly to blame. I had meant to ask Gaidar why Yeltsin chose Putin. But now I will never know his answer.
Both Walters and Gaidar were also distinguished by repudiating their background. Having failed the 11 plus exam, the working class Alan had to work his way up the academic ladder to reach his academic eminence. He should have been a natural socialist. Gaidar’s grandfather was a Red general in the civil war, and his father was the military correspondent of Pravada. But he repudiated this revolutionary background. Both became eminent market economists. Their role in influencing the course of economic events in their country also gives the lie to Keynes’ glib statement about “madmen in authority …are distilling their frenzy from some academic scribbler of a few years back”.
The worst thing about losing friends to the Grim Reaper is that one cannot pick up and continue one’s conversations with them. For as Michael Oakeshott so eloquently put it: “As civilized human beings, we are the inheritors, neither of an inquiry about ourselves and the world, nor of an accumulating body of information, but of a conversation begun in the primeval forests and extended and made more articulate in the course of centuries... Indeed, it seems not improbable that it was the engagement in this conversation (where talk is without a conclusion) that gave us our present appearance, man being descended from a race of apes who sat so long and so late that they wore out their tails”.
As the Grim Reaper wields his scythe and narrows the circle of one’s friends, we finally confront the last irony when “the rest is silence”.