I am all for thinking, but don't care much for tanks. When thinking is trapped inside ideological armour, it ceases to be thought. It becomes ideological entrepreneurship. Its function is reduced to pushing a cause, legitimising existing beliefs or promoting ideological claptrap in the guise of "new ideas".

It is not surprising that the term think-tank has its origins in the American military: the generals established and funded the first think-tanks such as the RAND Corporation. The function of the original think-tanks was to justify the rhetoric of the cold war, promote defence-oriented research and influence American foreign policy. During the 1960s the term gained currency in political circles and described a hotch-potch of private research organisations, including pressure groups and lobbyists.

In Britain, we have a long, honourable tradition of think-tanks working unassumingly for the public good. The Fabians spring to mind, but there is an even longer tradition of organisations working for change which stretches back to the utilitarians, or Philosophic Radicals, who worked under the leadership of Jeremy Bentham and James Mill in the early 19th century. This tradition was continued by the English disciples of Auguste Comte. Such groups helped to transform the trade union legislation and ushered in many welfare reforms.

More recently, Edward Heath established the first formal think-tank in Britain, the Central Policy Review Staff, a "central capability unit" formed in the Cabinet Office in 1970. It was led by Lord (Victor) Rothschild and staffed mainly by bright graduates who helped to co- ordinate government policies across departmental boundaries and devoted their leisure time to what they laughingly called long-term thinking.

Margaret Thatcher's interest was in the ideologically charged, free-market variety of think-tank which functioned outside government and had its natural home across the Atlantic. What she sought was intellectual justification for her "reforms" and efforts to move British public policy away from the postwar "consensus".

Denham and Garnett provide a gripping account of the evolution and work of British think-tanks, and their conclusion is surprising: the difference think-tanks have made to our political landscapes is far from beneficial. Indeed, they have tended to undermine democracy and generate false ideas about consensus and reform.

Demos is the most prominent new Labour think-tank, against which the authors direct their most trenchant criticism. Demos, they argue, is no more innovative than one of the earliest think-tanks, PEP (Political and Economic Planning), was in the 1960s. The subjects of its studies - concerns of young people, drugs, gender relations, political apathy - are designed for media consumption rather than promoting any serious debate. Its close association with the rootless mood of the 1990s means that it has little to offer that is of substance and value.

In the 1980s, the young ideologues of Thatcherism - "fired with a zeal for economic liberalism" - surrounded and insulated Margaret Thatcher from "manifestations of a public hostility which at best they regarded as temporary, dying spasms of the old consensus mentality". Demos may now be performing that same function for new Labour.