TWO YEARS AGO Margaret Thatcher was voted into power in Britain on a platform of tax cuts to stimulate the private sector, spending cuts to curb the encroachment of the public sector, and tight money to fight inflation.

Today the British economy is in the grip of the worst slump since World War II, with output forecast to fall still further this year.Unemployment, which traditionally has been well below U.S. levels, has surged relentlessly for the past 16 months and is set to continue climbing sharply for the next year.

Already 10 percent of the work force is out of a job -- 50 percent more than in the depths of the last recession. And every day more businesses go bust under the combined pressures of high interest rates shrinking markets and loss of competitiveness abroad due to an exceedingly strong pound.

While there are important differences between the British and American economies, the Reagan administration was nevertheless voted in on a platform very similar to that of the British Conservatives. Its first policy pronouncements, moreover, have echoed those of mrs. Thatcher. Could the Reagan administration, too, preside over economic carnage in the next two years?

Naturally enough, administration members and supporters say no. Some have already gone out of their way to distance their policy prescriptions from the "Thatcher experiment."

Lewis Lehrman, a "supply side" Reagan supporter on whose ideas David Stockman, the forceful new director of the Office of Management and Budget, drew for his famous memorandum advocating the declaration of a national emergency, is one of these.

Recently in this paper he described two different ways to fight inflation. One, now being followed by Thatcher, he said, was through recession. Then there was another. This was through the "supply side" proposals of cutting back the public sector, cutting taxes on the private sector and controlling the money supply.

Unfortunately for Lehrman and other "supply siders", however, the two different ways collapse into one.

It would be indeed be nice to believe, as Treasury Secretary Donald T. Reagan told a senate committee last week, that the administration's two chief goals, "a major reduction in inflation and a resurgence of economic growth," were "not only compatible but inseparable." But this seems to be a flight from reality.

No rehetorical flourish can change the fact that when the economy is growing rapidly, both workers and firms are more likely to negotiate higher wages and charge higher prices than the other way around. A government faced with both sluggish growth and high inflation naturally dreams about solving both problems at once. But it will be forced to choose one course or the other, as the Thatcher experience starkly demonstrates.

The essence of the supply siders' argument is that tax and spending cuts can, in Stockman's words, "simultaneously spurs the output side of the economy" and fight inflation. Thatcher also believed this.

Lehrman, Stockman, Reagan and Ronal Reagan himself speak of how the private sector will respond dynamically to getting the government "off its back." So did Thatcher.

The key to fighting inflation is monetary policy, the American supply siders believe. That has been the guiding light of the British "experiment," too.

A committed new administration can inspire people to lower their expectations of inflation, and thus change their behavior and bring about lower inflation without the pain of recession, claim the supply siders. Thatcher used to think that as well.

The earliest signs of how the British experiment was turning sour came after the Conservative government's first budget.As expected and promised, it cut individual income taxes (businesses in Britain are already very lightly taxed). The marginal tax rates in the top brackets were slashed, the so-called standard rate -- the one most taxpayers pay -- was also cut, and there were promises of more tax cuts to come.

But alongside these cuts came a big increase in expenditure taxes -- the value-added tax which Britain, along with other Common Market countries, charges on almost all goods at all stages of production -- and the beginnings of a program to trim back the public sector. These medasures were deemed necessary to offset the effect on the budget deficit of cutting income taxes. At the same time, the government raised the key minimum lending rate -- broadly equivalent to the Federal Reserve Board's discount rate -- by 1 percent in a move toward monetary restraint.

Opinion polls taken just afterward showed that the budget was the most unpopular in many years. Far from unleashing new growth in the economy, it encouraged higher prices and the beginning of an economic downturn.

Since then the Conservatives have been unable to keep to their timetable of lowering tax rates still further, and they also have failed miserably in their effort to control the money-supply, rein in the budget deficit or reduce the public sector's share in the economy.

Why?

For once it's hard to complain that the government did not try hard enough. The present one in Britain, determined not to be deflected from its path, consistently has refused to modify its policies. The cure for the economy will take some time, it says. The country must be patient.

Even Ledhrman, who is critical of how things have gone in Britain, doesn't doubt Thatcher's convictions. The "agony of worklessness and bankruptcy" in Britain, he wrote last year, "has been wrought by the hands of the best intentioned conservatives to rule Britain in a generation."

This is not mere chance. Tax cuts will not stimulate the economy if their effect is offset by government spending cuts or other tax increases. There is absolutely no evidence for the supply siders' assertion that the stimulative effects of cutting personal taxes are larger than the depressing effects of cutting government spending. If both are done, the economy's growth rate is unlikely to change from what it would otherwise be.

As for the policies advocated by both Thatcher and Reagan to reduce inflation -- cutting spending and borrowing, and curbing money growth -- all work on prices by restraining output and jobs in the real economy. Unless there is some spontaneous reduction in inflation, restricting money growth just restricts the room for real growth in the economy.

Stockman suggested last week that the economy could grow at a 5 percent annual rate during Reagan's term, after allowing for inflation. But simple arithmetic shows that if the money supply is kept within the tight targets proposed by the Fed and supported by the new administration, there would only be room for such growth in output if inflation suddenly were halved. How is this near-miracle to be achieved?

It did not take too long for Thatcher to abandon the argument that the pain could be taken out of this tight money policy by reducing inflationary expectations. But at first the new Conservative government rejected the British Treasury's gloomy forecasts for the economy.

Thatcher and her aides declared that as workers and firms assessed the government's commitment to contol money, public spending and borrowing, they would adjust accordingly, lowering interest rates and wage demands and bringing down inflation. Stockman outlined a similar argument last week.

It is unlikely that even financial markets will change their behavior because of expressed intentions. Certainly the more crucial price behavior of those across the nation who fix wage levels -- both workers and firms -- was hardly likely to be affected by an edict from London, just as here they are unlikely to be affected by one from Washington.

As it turned out in Britain, neither financial nor labor markets took much notice of the government's announced plans. They waited to see how they actually affected the economy. The government had to raise interest rates by a sudden 3 percentage points six months after its first budget, and then hold them at a record 17 percent for eight months, to give some credibility to the promises of tight money. Despite this, the money supply soared.

Meanwhile, wage increase continued to accelerate, averaging 20 percent in the first year of the Tory government, compared with 16 percent the previous year.

Clearly, in the absence of wage and price controls, inflation would only slow down as wage and price setters were forced -- because of the threat or reality of losing jobs and markets -- to lower their settlements. The same is likely to be true here.

Granted, the differences between Britain and America put the United States in a better position to withstand the drastic economic policies being proposed here and carried out there.

For one thing, the public sector takes a much smaller share of the economy here than in Britain, and so the administration has correspondingly less power to affect the whole economy than the British government does.

For another, Britain's economy started off much weaker than America's, with a longer and worse history of high and variable inflation rates, very low productivity growth, and uncompetitiveness in world markets.

In America economists have noticed that it is now harder than it used to be to curb wage inflation through recession: Workers are reluctant to take any drop, or slower growth, in their living standards, and they are quick to demand compensation for price rises which occur for other reasons, such as a drought or a spurt in oil prices. So if inflation is fought through recession, the recession now has to be that much more severe to work.In Britain a high degree of unionization has made it even harder to hold down wages by inducing a recession, so that the unemployment price of slowing inflation there may be even higher than here.

Third, Britain is much more dependent on exports than is America. The combination of tight money and the presence of North Sea oil has pushed the British pound up sharply on foreign exchange markets. This has had a near-disastrous effect on exporting industries, particularly in manufacturing, and it is the main way in which high interest rates have slowed down the real economy.

A tight money policy here will also drive up the dollar, hurting exports and encouraging imports, even if an uncompetitive dollar hurts America less than an uncompetitive pound hurts Britain.

Despite these differences between the two nations, however, nothing will change the fact that tight money and fiscal policies produce slower economic growth -- and put more people out of work. The British-American differences merely affect the size and speed of the impact.

The power and independence of Congress is a difference of another kind, one that could prove more important. Although the Thatcher policies are extremely unpopular, there is as yet litle opposition to them within the government. Parliament, except in extraordinary circumstances, carries out the will of the government in power. By contrast, it is hard to imagine Congress going along with the entire Reagan administration program -- especially all the promised slashes in federal spending.

There are those who say that although Thatcher meant well, she has in fact failed to carry out the policies she herself prescribed.

The Conservative government came into power at a time when inflation was accelerating and after a winter of bitter strikes in the public sector, which were resolved only by awarding large pay settlements to many public sector workers.

Thatcher allowed these settlements to go through, and has since regretted it. But one reason she did this -- and why she ignored warnings that raising expenditure taxes and boosting prices charged by many nationalized industries would exacerbate inflation -- was that she believed her own rhetoric. Only the money supply could determine the rate of inflation, she believed. So action to reduce the budget deficit, even if it raised prices directly, would in the end help fight inflation by making it easier to control money growth.

There is dangerously similar rhetoric in the Reagan camp. Higher oil prices translated into higher inflation because the Federal Reserve supplied the money to pay the higher prices, Stockman has argued. The trouble is that if the Fed had not supplied the money, the price would still have gone up; there simply would have been an even bigger recession. Similarly, decontrol of oil and gas prices will add to the price of gas and heating oil, whatever happens to the money supply.

Others accuse Thatcher of reneging on her commitment to cut back the public sector. But it is not that she has not tried. Apart from the real political difficulties in achieving spending cuts, there has been another problem: As fast as she has tried to cut spending and borrowing, the recession into which the British economy has been plunged has pushed both up. As more workers are laid off, tax revenues drop, while government spending on benefits automatically goes up.

In a return to the policies of the 1930s, Thatcher has attempted to fight this with more restrictive policies, which have then thrown more people out of work and exacerbated the swelling budget deficit. It is hard to cut the public sector's share of a diminishing cake.

Stockman, Lehrman and Regan all recognize this to some extent. The Stockman memorandum assails the "automatic coast-to-coast soup line" of benefits triggered by a slow-growing economy. But if the remedy is to chip away at those benefits, as the British government has begun to do, it will lead to still lower outputs and worse performance in the economy.

Stockman has also said that Thatcher failed to stick to her tax-cut program and allowed the money supply to grow too swiftly.

The British government has indeed shelved its plans for further tax cuts until the deficit is in better shape. If they had decided to go ahead, the economy would almost certainly be growing faster now. But inflation also would probably be higher, the budget deficit deeper, and the money supply growing even faster. If the Reagan administration -- and the Congress -- are faced next year with still higher inflation and no prospect of a balanced budget, will they press ahead with the second and third stages of the Reagan-Kemp-Roth 30 percent tax cut?

It should also be remembered that the Reagan tax "cuts" are actually from a rising tax burden. In Britain, personal income taxes have been indexed so that they do not rise automatically with inflation. The income tax cuts in Thatcher's first budget left the real income tax burden lower -- rather than merely slowing its rise, as would be the case here. But even this real increased "incentive" did not revitalize the British economy as promised.

Thatcher herself would accept Stockman's criticism about money growth. But even this does not provide a key to why the policies have failed. First, the excessive money growth resulted partly from purely technical causes, with no effect on either inflation or output. Second, it was to some extent a mirror of recession; failing companies went first to borrow more from the bank, swelling the money supply, before they either managed to sell off their stock or were forced to close completely.

Third, as previously stated, the record high interest rates necessary to limit money growth just to the extent that has been accomplished have also helped push up the sterling exchange rate and squeeze the economy. But, finally, the goal of monetary polic -- lower inflation -- is, ironically, the only one which the British government is on the way to meeting.

There are now clear signs that the British inflation rate is slowing (although it is still higher than when Thatcher took office). A high pound and slack markets have encouraged lower prices, albeit at the cost of extremely low profits. And private sector wage settlements are now lower on average than this time last year.

But this has not been brought about by a magic "supply side" boom in production. It has come at a huge cost in unemployment and lost output in the productive economy, through the most drastic use since World War II of a traditional anti-inflation tool: recession. There is little evidence to suggest, moreover, that when the recession finally ends and the economy begins to expand again, inflation will not start creeping up again. its American variation.