FOR three decades at the epicentre of free-market thinking, Ralph Harris was decisive in converting the British political consensus back to liberal economics. He did this chiefly by informing — and often inspiring — an ideological underpinning for Margaret Thatcher and Sir Keith Joseph as they remodelled the Conservative Party after 1975.

Supplying the motivating energy (as its general director, 1957-87) behind the Institute of Economic Affairs (IEA), the most enduring and intellectually substantial of the think-tanks made famous by the Thatcher phenomenon, Harris had exhibited great character in maintaining his viewpoint while government by dirigisme dominated political fashion.

At the root of his thinking lay an abhorrence of the “vain ambition” of economic planning — 1940s controls really did entail, he recalled, that “the practical world was a kind of serfdom. You did as you were told.”

But his methods of changing matters were sophisticated. As far as the IEA was concerned, he was opposed to orthodox political involvement. Think-tanks should aim to change opinion, but remain uncontaminated by baser activity. He argued the point with inimitable style: “Keep clear of politics. Politics is bad for you. It leads to compromise and deals and confusion and vote-getting and lying and cheating and all these, in the end.”

Thus protected, the IEA retained an invaluable aura of scholarship.

When appointed a life peer in 1979, Harris joined the crossbenches. A pipe-smoking devotee who carried spares in his pockets and extolled the joys of conjuring, he was a generous, energetic and charming man, with a seemingly irreverent but well-executed turn of phrase.

Even his hero, Friedrich Hayek, was fair game for deconstruction. Given the great ideologue’s thoughtfulness, said Harris, “I can’t imagine, if I may say so, Hayek running a picnic.”

But behind the exquisite charm and premier skills as generous host and renowned after-dinner speaker lay a formidable intellectual sharpness — and an ardour that remained fiery despite the passing decades.

Once elevated to the peerage, his speeches achieved a following in the Lords which helped to crowd the chamber as if he were, in the words of one friend, “the opposite of the dinner gong”.

His contact with the higher echelons of British politics had in essence begun in 1964, when he was visited by Keith Joseph. The IEA had already published an impressive array of tightly argued, mainly microeconomic studies of health, education and housing policy.

Joseph told Harris he had heard of his work — and ideas. Pleased to see the former minister making “endless notes”, Harris recalled giving him papers predicting that the NHS “would never succeed as a monopoly, politicised institution”. Joseph left with ample reading material, and became a lifelong supporter.

Ten years later Joseph returned. The 1970 Heath Government had reversed its policies in 1971-2, had been humiliated by economic crisis, and had lost its majority.

Hearing that leading Tories on the Right were planning a think-tank that would exceed the IEA in political participation, Harris was enthusiastic for the new project. He added, for Joseph’s benefit: “I’ve even got a name for you: ‘the Centre for Alternative Policies — CAP’.”

With characteristic generosity, he gave the new body — which became the Centre for Policy Studies — substantial assistance. True to his beliefs, he also noted that competition would enhance, not impede, the IEA’s position.

After Thatcher won office in 1979 the overall influence of the IEA could be seen across the Government’s innovations, most of all in counter-inflation policies to guarantee stable business conditions. Later it provided impetus for privatisation — and, through Harris’s inspiration of the No Turning Back group, kept the Thatcherite policy flame burning.

In 1987 Thatcher used the opportunity of an IEA anniversary dinner to pay tribute to Harris’s work, saying: “What we have achieved could never have been done without the leadership of the IEA.”

Ralph Harris was born in 1924. He attended Tottenham Grammar School and he remained proud of his roots, noting that coming from a working-class family in Tottenham “was my greatest shield, because people couldn’t say, ‘Oh, you public school boys, you rich characters, you privileged people’.”

After the war he took a first in economics at Queens’ College, Cambridge, and from 1949 he lectured in political economy at the University of St Andrews.

As a young man he was conspicuous for his energy, intelligence — and crucially, his sense of humour. He was someone who clearly had passions about things, notably politics. He had become an active Conservative, standing twice without success at parliamentary elections in Kirkcaldy in 1951 and Edinburgh Central in 1955. He then became a leader-writer on the Glasgow Herald.

His chance to made his political mark came when Antony Fisher, a businessman and former fighter pilot, was inspired by Hayek’s Road to Serfdom to create the Institute of Economic Affairs. Harris, in harness with Arthur Seldon (obituary, October 13, 2005), became its first general director.

The IEA, in Hayek’s phrase, presented “an intellectual case amongst intellectuals” — meaning teachers, students, academics and opinion-forming journalists — for free-market ideas.

Harris later denied that the IEA had been intended to change society, insisting: “We would have thought that a little pretentious.” He and his small band of colleagues were “lads of thirty” wishing to “put a firework down and see what happens. We were out to have a little fun.

“We started in 1957 and genuinely told each other each week that were now going straight, and that you don’t put your trust in principalities and power and politics and parties and all these frail characters. It was a marvellous period. We had no allies anywhere.”

But given the effectiveness of Harris’s charisma and energy, that situation did not last long. Soon an eclectic mix, including “a dozen or more really powerful academics”, had gathered, giving the IEA vital credibility. The institute, said Harris, was “driven not by Conservative-type leaders, but from a liberal, awkward squad”.

Nonetheless, some leading Conservatives did align themselves with it, including Enoch Powell, who wrote an early pamphlet, Saving in a Free Society.

After retiring as general director, Harris retained a measure of political involvement. As chairman of the Eurosceptic Bruges Group he found himself suddenly having to parry a storm created by the group’s young secretary, Patrick Robertson. He also had to take steps to prevent the IEA shedding its free-market loyalties in an attempt to remain in step with John Major’s premiership.

His loyalty to old friends was emphasised when he helped to assemble a fighting fund to assist Neil Hamilton in his libel battle against Mohamed Al Fayed. Harris had found it shocking that legal aid was unavailable, and had set about remedying the situation.

But Hamilton’s defeat pushed the former minister towards bankruptcy — and placed Harris, then 75, under an obligation to name the leading donors to the fund. From his own funds he had contributed less than £5,000, freeing him of liability — but this good fortune did not apply to more significant donors.

Briefly he resisted, protesting that it would be grotesque to betray the confidences in which money had been given. As for possibly disobeying the court, he reflected: “If it was a question of a week in jail for contempt of court then I suppose I’d have to do it. But I have a wife and lots of grandchildren and I can’t disappear for too long.”

Still conspicuously sprightly, Harris also chaired the pro-smoking lobby group Forest. He relished opposing the “authoritarian itch” of anti-smokers, asserting “with so many hazards to strike us down, how will the medics know which did us in when the time comes?” Pursuing into old age a robust raft of favourite causes, he also took on several boardroom roles, including serving as an independent national director of Times Newspapers Holdings (1988-2001).

Harris published a great many papers and books, a fair proportion with deliberately provocative titles, not least his 1971 volume, Down with the Poor.

Ralph Harris was made a life peer by Thatcher in 1979. From the Upper House he observed her premiership at comparatively close hand. He confirmed the extraordinary emotions she incited. “I see chaps in the House of Lords whom I know, who were contemporaries of mine at university. They won’t talk to me, and I’m not even Thatcher. I didn’t like Harold Wilson as Prime Minister, but I never felt the hatred and animus towards him that they have towards her. Itching to kill.”

But Harris had always relished life and good company too much to let political boundaries affect his friendships, which were legion, and as many confirmed, often heartfelt.

He married Jose Pauline Jeffery in 1949. They had two sons, who predeceased them, and one daughter.

Lord Harris of High Cross, general director of the Institute of Economic Affairs, 1957-87, was born on December 10, 1924. He died on October 19, 2006, aged 81.