WHILE MARGARET THATCHER'S Conservative Party conference in Brighton was under siege for its failing economic policies, one of her financial advisers spoke of the parallels between that government and the perhaps soon-to-be Reagan government. The lesson should warn those hailing the monetarist future.

Gerry Frost, speechwriter for Sir Keith Joseph, Thatcher's Secretary of State for Industry, spoke to a largely English, mostly Laborite gathering at the Business School last Thursday, defending the first-year policies of the Tories that have resulted in 16 per cent inflation and two million unemployed, the highest since World War II. In a change of tune since campaign day, he said the Thatcher government was cutting only $4 billion from the national budget--no more than the Callaghan Labor government proposed to slice off in its later days. Unemployment wasn't really as bad as it sounded, since there were many jobs floating around waiting to be filled. In fact, "the British trade unions are responsible for the present high level of unemployment."

Conceding that monetarist policies to this point have failed to alleviate Britain's woes, Frost maintained they have played no part in the distinct downturn of the economy in the past year. The attempt to control inflation by tightening the money supply--cutting public spending and raising mid-range interest rates--has not worked, resulting only in 16 per cent interest rates, an economy mired in quicksand, and what promises to be a cold and turbulent winter.

But monetarists stick to their guns, largely because they have only one barrel that works. Theirs is a Randolph Scott world of black and white, profit and loss, widgets and blips. Frost said the Thatcher government has not gone nearly far enough in cutting spending, tightening money supply, and policing the trade unions. Although some portions of British Aerospace and the Post Office have been turned over to private industry, not enough other industries have gone back to the farm. British Leyland and British Steel--the latter losing over $1 million a day--still devour large chunks of British taxpayers' pounds. "No public enterprise anywhere ever made profits," he declared.

THIS IS THE sort of "economics-made-simple" we have come to expect from Ronald Reagan. Federal aid to cities accomplishes nothing because it takes from Chicago and gives to Detroit. Cutting federal spending on social services--while raising defense spending $25 billion--will curb inflation. Exactly this type of superficial approach to deepseated problems has brought the Tories to the threshold of a fiscal crisis.

Questioners in the audience reminded Frost that the British government loses so much money on its major public industries because it took them over in their death throes--an argument known as the "turkey theory" and often used on this side of the Atlantic to account for the weakness of public transit systems. British Steel's decrepit capital plant makes Bethlehem Steel look like the cutting edge of the new technology, and U.S. producers struggle way behind their Japanese competitors. Can the Tories really believe that selling British Steel to the private sector would suddenly make them competitive? Who, for that matter, would buy such a dinosaur? Surely the private sector's response to such a crippled heavy steel industry would be the "Youngstown" approach--packing up and leaving town. For this reason the U.S. government bailed out the "Old" Chrysler Corporation; for this reason the British Government originally acquired the companies that were to form British Steel.

Frost's simplistic assertion that public equals inefficient equals bad is contradicted by the experiences of Volkswagen and Renault. These two government-run (German and French, respectively) automobile firms have turned handsome profits and sold many cars in British Leyland's own market by investing wisely in new capital and research and development. Putting the blame for Britain's problems on government spending alone is cloud-cuckoo emotionalism and bad economics. It wins elections but doesn't run countries. According to Mr. Frost, only Mrs. Thatcher's strong stands on such questions as immigration and law and order--the sort of tea-and-cake, go-for-the-heart issues that woo British working-class voters the way the Moral Majority courts U.S. workers--have kept her from slipping too much in British public-opinion polls.

FROST CLOSED HIS speech by drawing parallels between Reagan's economic beliefs and those of the Thatcher government: tax cuts, deregulating industry, cutting government spending. He gave Reagan and his staff good marks as fellow monetarists. But he cautioned that opposition would be stiff, especially during the first year, and warned that fiscal policies "could be defeated before they're started" unless the forces were well-marshaled beforehand. It was probably the best news of the afternoon.

Fortunately, Americans have a few weeks before they have to decide whether to grab for the monetarist pot of gold. The failures of the Thatcher government in its first year should alert us to the dangerous consequences that can result from the application of "economics-made-simple" to complex national problems. Perhaps then we should pay more heed to the words of the 4000 unemployed who picketed the Brighton conference than to Thatcher's cutesy, Reagan-like pun, "The lady's not for turning." Once you hold your breath and take in your belt for the ride down the monetarist highway, there's no turning, it seems, not even on red.