This paper was originally presented at the ESRC Whitehall Programme/Public Record Office Conference on Whitehall in the 1950s and 1960s, Policy Making in an Expanding Government, which was held at the Public Record Office, Kew on April 16-1 7th 1997, and it is now published in a form that has been subject to the refereeing process. Its argument is that in the first part of the 1950s, as had been the case really since 1945, the dominant attitude towards British central government administrative arrangements -Whitehall, in shorthand terms -was Panglossian, meaning that the prevailing wisdom was that 'we lived in the best of all possible worlds.' After the trauma of Suez in 1956, this mood changed to what at times seemed to amount to an obsession with recasting the organization and staffing of Whitehall departments, as if 'we lived in the worst of all possible worlds.' In the spheres of defence and external affairs, the changes made tended to have more logic to them than was evident over in other areas ofpublic policy, where the main objective seemed to be to shore up the Keynesian Welfare State, unless, that is, it was to give an impression ofactivity on the part ofpoliticians.Few books have survived the passage of time as well as J.A. Schumpeter's classic study, Capitalism, Socialism and Democracy. Those given to pessimism may well suggest that Schumpeter's prediction of the inevitable triumph of socialism (Schumpeter, 1950, pp.424-425) provides the explanation for this durability. Most intellectuals of a particular vintage desired this outcome. What tended to be overlooked was that Schumpeter anticipated the post 1945 world being dominated not only by the USA and the USSR, but also by what he called England (Schumpeter, 1950, p.373), meaning Great Britain. That, then, the British thought much the same themselves for so many years afterwards was not surprising. Not only did the belief that Britain was still a Great Power persist, but so did faith that Keynes had devised the means to enable the British economy to prosper. The sentiment that 'we lived in the best of all possible worlds'