Alternate History: 1943-road not taken-II

WASHINGTON, Aug. 15 (UPI) -- This is the second part of an essay in alternate history, to suggest how, had random factors fallen differently, Britain's history in the gloomy 1945-79 period could have been very different, and perhaps happier.

It looks in particular at what might have happened had Thatcherism -- without the leadership of Margaret Thatcher herself, then only 18 -- been adopted in 1943, in the darkest days of World War II.

By adopting Thatcherite policies of free markets and low taxes in 1943, without ditching the country's traditional governing class or their values, Britain could have rebuilt her economy, and her technological lead, before Germany and Japan had recovered, and as a result have avoided her postwar decline into a dependency of Europe.

Part 1, covering the difficult years from 1943-49, appeared last Friday.

March 1949. The prime minister is Oliver Stanley, the foreign secretary is Ernest Bevin (kept on from the wartime coalition to preserve foreign policy bi-partisanship) and the chancellor of the exchequer is free-market former merchant banker Oliver Lyttleton -- who relies a great deal on Frederick Hayek as economic advisor.

The first years after World War II have been economically very difficult, but Lyttleton's low tax and government austerity policies have shrunk the share of the state in British national product, in spite of the still-huge military spending needs relating to the British Empire.

The empire itself is become an increasing economic boon, however, since it provides a large market for British manufactured goods, which can compete with U.S. imports and the nascent German and Japanese industries because of the competitive sterling exchange rate of $2.80 and the increasing streamlining of British bottlenecks in such areas as steel.

Morris Motors, in particular, has benefited greatly from an export drive into the U.S. market. It is satisfying pent-up demand for automobiles among U.S. consumers, particularly at the compact end of the market, where the new Morris Minor and the "half-timbered" Morris Oxford have proved very popular among East and West Coast intellectuals against the increasingly clumsy and overweight Chevrolet, Ford and Plymouth.

Morris' 1948 U.S. sales are 120,000 units; its 1949 sales, in spite of a slowdown in the U.S. market and the beginnings of saturation of the postwar boom in demand, are expected to top 200,000.

The inflow of foreign exchange allows Britain to begin repaying her wartime and postwar debts, particularly the short-term bank credits acquired at high cost in 1945-46.

The domestic economy, too, is showing signs of revival, with high activity in the housing and construction sectors limited only by Bank of England Governor Cameron Cobbold's high-interest rate policy. The bank rate has just been raised to 7 percent to prevent a resurgence of inflation.

January 1950. Secretary of State Dean Acheson excludes South Korea from the U.S. defense perimeter in Asia. Foreign Secretary Bevin, supporting the Conservatives during a jingoistic election campaign, announces that South Korea is unquestionably within the defensive perimeter of the British Empire, which has fought two World Wars to prove its implacable opposition to international aggression. Soviet plans to support a North Korean invasion are accordingly shelved. The Stanley government is re-elected with an increased majority.

In the new Parliament, the ailing Bevin, attacked by his old colleagues in the Labor Party, retires and is succeeded as foreign secretary by Robert, Lord Salisbury. Shortly thereafter, Stanley dies and is succeeded as prime minister by Lyttleton.

Education Secretary Richard (Rab) Butler, from the extreme left of the party, becomes chancellor of the exchequer, but Lyttleton and Hayek retain close control over economic policy.

September 1950. Following the South African National Party government's passage of the Group Areas Act and the Population Registrations Act, Salisbury declares its apartheid policy "unworthy of the British Empire."

South African Prime Minister Daniel Malan makes a Unilateral Declaration of Independence, and appeals for help to Stalin and Bengali Prime Minister Jawaharlal Nehru. Empire forces, with large contingents from Canada, Australia and the Indian Confederation, land at the Simonstown Naval Base.

The war lasts just over a year, with major Soviet and Bengali assistance for the National forces, and substantial African assistance for the Empire forces, both local and from other African colonies, before Pretoria is captured. A constitutional convention led by Salisbury designs a new color-blind South African constitution with full protection of majority and minority rights and voting on the basis of education or payment of income tax.

A United Party government -- including three black Cabinet ministers -- is elected in February 1952, mops up the remains of Afrikaner resistance with empire help, and embarks on a free market economic policy. South Africa prospers and elects its first black prime minister, the conservative Nelson Mandela, in 1971.

December 1951. The King's Speech includes a bill proposed by Home Secretary Peter Thorneycroft sharply limiting commonwealth immigration, which has recently increased, with immigrants attracted by Britain's vibrant economy though repelled by its lack of social "safety net."

Only those with university degrees, 100,000 pounds in cash, or signing up for a 14-year term of service in His Majesty's Forces will henceforward be admitted.

British race relations are henceforth excellent, as the modest inflow of educated, wealthy and fanatically loyal immigrants is easily integrated.

March 1952. Butler proposes to the Cabinet the secret "Robot" scheme, designed by the Treasury, which involves free floating of the pound. Lyttleton and the cabinet reject this, and instead announce Britain's intention to return to the gold standard, at a price of 12.50 pounds per ounce, on the new queen's Coronation Day, June 2, 1953.

Gold coins of one, five and 10 pounds will be minted and banknotes under 100 pounds withdrawn. Butler resigns, joins the Labor party and is succeeded by Peter Thorneycroft.

June 3, 1953. The Brain, developed by the British Electronic Brain Corp., owned by a consortium of City institutions, has been operating for three years now in the Royal Exchange building, opposite the Bank of England. It has provided the City with daily updates of its foreign exchange and bond positions.

City research has determined that a whole host of "derivative" instruments -- swaps, options and forward contracts -- can be designed and managed using Brain technology. Today, following yesterday's Coronation, is launched the Empire Derivatives Market, which will be controlled by the Brain.

Participants in the market must be licensed by the Bank of England and must report their positions on a daily basis to the Brain, which will calculate their level of risk and the necessary hedging strategies; 50 percent of the derivatives-market profits will go to the Brain Corp. and used for further development of the Brain and uses for its capabilities.

Both demand for the Brain's services and funding for research on its development grow exponentially from this point.

June 1954. The Labor party, led by Hugh Gaitskell, wins the general election, on a program of a National Health Service and extended social services, fueled by Harold Macmillan's election slogan "You'll never have it so good." Gaitskell becomes prime minister, Macmillan foreign secretary and Butler chancellor of the exchequer.

Gaitskell, bound by Clause 4 of the Labor Party constitution, nationalizes the coal mining industry. Health Secretary Harold Wilson introduces a limited National Health Service.

Butler increases income tax to finance coal nationalization and the NHS. The economy stagnates, while the budget is in deficit. Trade unions win inflationary pay settlements, granted by Minister of Labor Walter Monckton

November 1956. The British attempt to recapture the Suez Canal after Egyptian nationalization is foiled by a U.S. attack on sterling. Macmillan advocates leaving the gold standard and continuing the military action but is outvoted in Cabinet.

Gaitskell and Butler resign, Macmillan becomes prime minister, with Wilson foreign secretary and Edward Heath chancellor of the exchequer.

January 1957. Declaring that Suez has brought a "Wind of Change" Macmillan gives independence to Gold Coast and Nigeria. Gold Coast (Ghana) heads towards bankruptcy, Nigeria towards civil war. Economy continues sluggish. Heath raises taxes again.

June 1958. Lyttleton runs against the Gaitskell/Macmillan government's poor economic performance, inflationary union pay settlements and chaos in the NHS with the slogan "Bring Back the Family Doctor."

Elected by a large majority, he makes Thorneycroft -- again -- chancellor of the exchequer and Alec, Earl of Home, the foreign secretary.

1958-60. Minister of Labor Enoch Powell repeals the 1927 Trades Disputes Act and outlaws the closed shop. Thorneycroft replaces the NHS and social security with a Social Provident Fund, with compulsory investment in individual accounts, to provide for health, unemployment and old age, and with private provision of health services.

Bookkeeping is of course carried out by the Brain.

Individual investment in the stock market soars, and the stock market and economy take off again. Morris Motors launches a takeover bid for Volkswagen and buys a controlling shareholding in Toyota. Powell is promoted to home secretary.

1961. Concerned about rising crime, Home Secretary Enoch Powell rejects the perennial Labor party demand for abolition of hanging and instead announces a stepped-up program of capital punishment to deter crime, which he publicizes as the "Swinging Sixties."

The crime wave is stopped in its tracks, and the former East End hit men Ronald and Reggie Kray become well known interior decorators.

October 1962. The Lyttleton government is re-elected owing to the surging economy. Heath replaces Macmillan as Labor Party leader in a close election over Wilson.

January 1963. General de Gaulle asks Lyttleton to consider joining the European Economic Community, since Britain's independent foreign policy will act as a useful counterweight to the United States. Lyttleton refuses.

In March, Lyttleton retires on his 70th birthday, becoming Duke of Chandos, since it is recognized that while Churchill won the war, Lyttleton won the peace. He is succeeded by Thorneycroft, who is replaced by Powell at the exchequer. The Conservative leadership process is "democratized." The leader is now to be directly elected by Conservative members of Parliament.

June 2, 1963. To mark the 10th anniversary of the Queen's accession, the Duke of Chandos opens the Empirenet, a communication system developed by the Brain Corp. whereby any British or Dominion subject can buy an Empirenet terminal, and through it be connected to the Brain's huge information system and information-processing capability. Empirenet terminal holders can also communicate with other holders through Empiremail, a facility that becomes known popularly as e-mail.

1964. Malaysia, Singapore, Kenya and Rhodesia are given Dominion status, Malaysia with a franchise tempered by its hereditary state monarchies; Singapore, Kenya and Rhodesia with education and income tax payment qualification franchises. Rhodesian white supremacist leader Ian Smith is captured and imprisoned.

1966. Following the death of Party Chairman Nehru, Bengal petitions for re-admission to the empire and to the Confederation of Indian Dominions. This is granted, to follow a preliminary five-year period of direct British rule by retiring Bank of England Gov. Rowland, Earl of Cromer, to re-establish property rights and the free market and privatize state industry.

Ghana, following the overthrow of Kwame Nkrumah and Nigeria, following the end of the civil war, likewise petition for readmission to the empire, and are granted Dominion status after the same interim period of direct rule by British governors.

Independence movements in the remainder of British Africa are greatly weakened by the examples of poor performance of Ghana and Nigeria and economic advances in the mixed-rule Dominion of South Africa.

June 1967. Labor leader Edward Heath wins a surprise election victory. James Callaghan becomes chancellor of the exchequer, Roy Jenkins home secretary, Denis Healey foreign secretary. Taxes go up again. Jenkins passes "permissive society" legislation, but abolition of capital punishment fails in the House of Commons.

1969. Heath announces Britain's application to join the European Commission, to get "European levels of social justice."

Thorneycroft supports the application in principle, but is outflanked by Enoch Powell, who reads the Treaty of Rome, and announces that there will be "rivers of much blood" if this is imposed on the British people.

Heath signs the Treaty of Accession in 1970, to take effect on Jan. 1, 1972. The 1970 Conservative Party conference repudiates Thorneycroft, and the subsequent leadership election makes Powell leader of the party.

1971. The Commonwealth Conference, with strong backing from Powell, forces Heath to hold a referendum on EC membership, which is defeated. Heath resigns and Powell wins the subsequent general election. Cromer becomes foreign secretary, Margaret Thatcher the first woman chancellor of the exchequer. Heath retires from politics and is succeeded as Labor leader by the anti-European James Callaghan.

November 1973. Oil Crisis. Miners strike. Powell announces the closure of the British coal mining industry and the government's intention to import future coal supplies from free-market Poland. The Shah of Iran's attempt to nationalize Anglo-Iranian Oil Co. is foiled by a coup d'etat engineered by Cromer, which replaces the Shah.

Britain grants Iran Dominion status and imposes a constitution with the franchise qualified by education and payment of income tax. The oil price settles at $7 per barrel, but 1974 and 1975 are still recessionary years.

March 1976. General election results in a minority Labor government led by James Callaghan, with Jenkins chancellor of the exchequer and Healey foreign secretary again. In the following year, Powell retires at 65 and is succeeded by Thatcher. Jenkins pursues an austere budget policy, taxes go up, and the economy fails to recover. The Callaghan government falls in March 1979, and Thatcher wins the subsequent general election.

The situation inherited by Thatcher is overall a strong one. The Imperial Preference bloc, consisting of Canada, Australia, South Africa, the Indian Confederation, Iran and the other Dominions, is an enormously powerful economic grouping.

It is stronger than the United States, let alone the EC, which of course includes Poland, Croatia, Serbia and Bulgaria but not Britain.

It is held together by a modest common external tariff, political links, a common energy policy (it is self-sufficient in oil, with North Sea oil being supplemented by supplies from the Dominions of Canada, Iran, Kuwait and the Gulf states) and the Empirenet.

The City of London is unquestionably the financial capital of the world, since it is by far its most important source of international finance. Latin American countries, for example, have several times been bailed out of financial profligacy by London merchant banks providing loans and good economic management.

The British automobile industry -- Morris Motors, the somewhat struggling Austin-Renault and the hugely profitable up-market Rootes-BMW -- dominates the world automobile market in all but the very large car sector.

The Brain and the Empirenet have given Britain a lead in information technology that has put her 20 years ahead of the competition.

Medium-sized military threats abound, but the crumbling Soviet economy and the multi-polar world political system have prevented the Soviet Union from ever mounting a strategic military threat to the West.

Life is good.