At the polls earlier this month, Tony Blair saw his majority in the House of Commons reduced from 161 to 67 seats. Though the Conservatives captured 33 seats, Michael Howard, the party leader, felt compelled to announce his resignation. Howard genuinely believed that he could have defeated Blair’s “new” Labour. He was wrong and his departure, once again, raises some important questions: What do the Tories stand for? What should they stand for? What does it mean to be a conservative in the 21st century? Answers to those questions will be crucial for Britain and for Europe alike.

A quarter of a century ago, Britain saw the rise of one the world’s most consequential politicians — Margaret Thatcher. Thatcher’s radical vision of free markets, limited government, and individual freedom changed Britain and continues to change Europe. Continental nations, beset by deep structural problems arising out of their overgenerous welfare states, look enviously at Britain’s relatively high economic growth, low unemployment, and rising standard of living. Though they denounce the “Anglo-Saxon” way of life in public, the European socialists continue, however cautiously, to privatize state companies and liberalize the labor markets.

Paradoxically, in the Conservative party, Thatcher’s legacy seems more uncertain. Their spectacular loss to Labour in 1997 convinced the Tories that their reformist zeal went too far. That was exactly the wrong lesson to learn from Tony Blair’s rise to power. Blair adopted much of Thatcherism as his own and even extended it, however tentatively, to education and healthcare. Thatcherism was now the new mainstream and the Tory party had no new ideas to offer. Therefore, a succession of Tory leaders, Howard being the latest, decided to “out-Labour” Labour. Not only have the Tories adopted many of Labour’s fiscal policies, but they opposed some of Blair’s market-friendly reforms, such as the introduction of the university tuition fees. But, as the Tory’s third successive defeat shows, that was a disastrous electoral strategy.

The Conservative Party needs an intellectual revival. It needs to address the persisting problems of Britain’s soviet-styled healthcare system, the declining quality of education, the rapidly rising tax burden, an over-regulated economy, the growing national debt and an ever-more interfering nanny-state. The Labour Party may have accepted macroeconomic liberalism, but its appetite for micro-management remains undiminished. Simply put, the Tories have to provide a coherent alternative to Labour and that alternative is called “choice.”

The philosophy of choice is unintrusive. Instead of forcing everyone to comply with one set of values — in Britain’s case the values of 37 percent of the 61 percent of eligible voters who cast their ballots last Thursday — the politics of choice would allow every Briton to live his life in accordance with his wishes. It would allow him to send his child to a school of his choosing, get timely medical help from a doctor he knows and trusts, and keep more of his hard-earned wages out of the taxman’s hands.

The politics of choice would put Labour in a difficult position. The Labour Party would either have to embark on a reformist course, thus alienating its socialist base, or come out against freedom to choose. Yet freedom is the most British of values. It has permeated the history of that island nation from the time of the Magna Carta, through the execution of King Charles, through the wars against Napoleon and Hitler, right up to the struggle against home-grown socialism in the 1980s.

The politics of choice would also contribute toward solving the Tory’s European conundrum. At the moment, it is all too easy for Mr. Blair to paint the Conservatives as a group of reactionary “little Englanders,” bent on withdrawing from the European Union. A choice-based Tory party would be more believable when arguing that their opposition to the centralization of economic and political decision-making in Brussels is based not on nationalism and isolationism, but on Britain’s wish to preserve freedoms unknown on the European continent. Moreover, the politics of choice would underline the contrast between those members of the EU who wish to move ahead and those EU members who prefer to remain wedded to the past.

History shows that the Conservative Party, led by a courageous leader, can change Britain and, indeed, the world. Britain is a fertile ground for the politics of choice. It is the birthplace of both the classical liberalism of Adam Smith and the modern conservatism of Margaret Thatcher. Many Britons continue to value freedom and wish to see it protected from interference, be it from Westminster or Brussels. What they need now is for the next Tory leader to set a choice-based reform agenda not just for Britain, but also for the whole of the European continent.