Introduction

In 1970, monetary policy was viewed as an esoteric subject of minor importance and of interest only to a few specialist economists. Thus, for example, the Nuffield study of the 1970 General Election included a 47-page survey of events from 1966–9, which though largely devoted to economic affairs did not include a single mention of monetary policy. ¹ None of the nine chapters of The Labour Government’s Economic Record 1964–70’ was devoted to monetary policy and there was only one reference to any monetary topic in the index (money supply, p. 297). ² By 1981, it was widely believed that the ‘monetarism’ of the Conservative government, led by Mrs Thatcher, was its major hallmark. Almost every speech by an opposition leader denounced ‘monetarism’ and Mr Healey’s alleged tainting with monetarism was said to be a major reason why he was defeated by Mr Foot in the September 1980 Labour leadership election. In 1971 a new regime of monetary control was inaugurated – competition and credit control – with scarcely a mention outside the City pages. In September 1980 a visit by Professor Brunner to Mrs Thatcher to discuss monetary control topped the news headlines on Radios 1 and 2. One of the purposes of this book is to consider this extraordinary change and the events which brought it about.