The exchange rate, which loomed so large in my early writings, came to haunt me in later years. Some time before the European Exchange Rate Mechanism was launched in 1979, I wrote an article for the Journal of Common Market Studies, criticizing the ERM for providing the worst of both the fixed and the floating exchange rate worlds (Brittan 1970b). But as the 1980s wore on I could not help feeling, in view of the extreme difficulty the British authorities had in establishing satisfactory monetary guidelines, that there was much to be said for an exchange rate link with a known sound-money country, namely Germany. This was not any profound revelation, but mainly a second-order reflection on how to achieve a nominal framework for macroeconomic policy.

The same thought occurred to the Chancellor, Nigel Lawson, and to many others. But because I took Lawson's side on what became a high-profile issue, and coupled it with a principled objection to Thatchers attempt to settle the matter by Prime Ministerial ukase, Lawson and I were regarded as a conspiratorial duo, reminiscent of the equally imaginary Jay-Brittan duo of the 1970s. Some people assumed that Lawson had inspired my articles while others thought I was a sinister backstairs influence on him. I was even asked to give interviews on what his views were when he was unavailable.

Where, however, I took my eye off the ball was in failing to appreciate how the German handling of unification completely changed the balance of the argument after 1989. Like most others, I celebrated the fall of the Berlin Wall but saw the inflationary threat in Germany. But I both misjudged how much and how soon German interest rates might come down from their post-unification peak and how much harm high German rates would inflict on other countries with a large debt overhang. For many reasons, the German Mark was no longer the ideal anchor for the currencies of other countries that it had been earlier.

As it was, these events took the shine off the knighthood I received from a much friendlier post-Thatcher British government in 1992 and even from the Legion dHonneur that I received from France a few months earlier. I was left with a feeling of a lot of egg on my face and all kinds of unexpressed reservations on the part of colleagues and readers. Brittan (1995c) represents my attempts to pick up the pieces. The demonstration that a floating exchange rate does not provide full freedom for a government 'to manage our own interest rates for our own benefit' is novel, at least outside the more esoteric literature.

As for the political aspect of the European Community - or 'Union' as it now misleadingly calls itself- I would just recall the lines from Alexander Pope:

For forms of government, let fools contend,
What eer is best administered is best.

This quotation puts too much weight on the question-begging word 'administration'; but it does make the point that governments are workaday organizations to provide those services which are better secured by collective action than by either the profit motive or by voluntary cooperation. If we have a functional attitude to government we shall neither worry about the shedding of national sovereignty nor actually desire to do so just for the fun of creating new institutions.

Talking to economic liberals on the Continent, I have found quite a lot of sympathy for British opposition to centralization and Brussels-imposed regulation - combined with amazement that this arises in the name of an outmoded nationalism from which they are trying to escape. If I had to give a snap judgement now, I would favour a European executive with minimal state functions, confined to security, external and trade policy and, yes, the issue of a common currency.

The complications created by the end of European Communism for Western European monetary policy were, however, trivial compared with its wider implications. The enormous difficulties that the former Communist countries have had in establishing successful market economies surely shows that reflection on the foundations of market liberalism is still required.

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