Love her or hate her, most commentators have
agreed that Margaret Thatcher was a towering figure - for good or ill - who
helped to shape Britain and the world. It is, perhaps, not surprising that, on
the occasion of her death, and in line with the modern tendency to lionise and
exaggerate the importance of individuals, many features of today’s world are
attributed to what is called Thatcherism.
The reality, however, is that Thatcherism was
destined to become the dominant ideology of the past four decades, with or
without Thatcher herself; indeed, if we fail to recognise the true nature of
that ideology, and the forces that brought it about, we will be less able to identify
and remedy its failures.
This is not to say that the triumph of
“free-market” economics and of an aggressive emphasis on the individual as
opposed to community owed nothing to the personality of Margaret Thatcher. It
is doubtful whether that triumph would have been as rapid and complete, or
would have had such a long half-life, without her. But the ideology which prevailed
was essentially the product of many other actors and factors.
The first of these was the perceptible sense that
the post-war consensus, celebrated for example by Tony Crosland in The Future of Socialism and focused on
full employment, public services and community, had run its course, and that it
no longer offered a reliable guide to economic success. When Jim Callaghan told
the 1976 Labour Party conference that “you can’t spend your way out of
recession”, he was announcing the death-knell of what had been regarded as one
of the essential characteristics of post-war policy.
We can now see, or should, that the problem that
Callaghan was trying to describe was not the supposed failure of Keynesian
economics, but a refusal to understand that - if we wanted to match the
economic achievements of other countries, defeated in war, who had set about
with gusto the task of rebuilding their economic strength, and even more of yet
other countries that were rapidly industrialising - we needed to stop assuming
that we were entitled to economic success and to think of ourselves as an
economy that also needed to change rapidly if we were to keep up.
Our problem was, in other words, one we refused
to recognise - that in the face of others becoming hugely more competitive, we
were locked into comparative decline, epitomised by our focus on defending the
value of sterling rather than recognising our loss of competitiveness; indeed,
the whole subject of competitiveness and exchange rates was at that time taboo,
as I learnt at first hand when I attempted to table parliamentary questions on
the subject.
That loss of competitiveness meant that we could
not grow without other problems, like the constant threat of inflation and a
perennial balance of trade deficit, holding centre stage. This led many to
conclude that some of the central aspects of what had been bipartisan policy
were at fault and - as obstacles to a better performance - would have to be
abandoned. So, public ownership, government responsibility for securing full employment,
a welfare state that guaranteed basic services, were tacitly targeted as
necessary sacrifices.
By the time Thatcher won the 1979 election, there
was no shortage of pundits to tell us what needed to be done. Political
philosophers like Hayek and Nozick, with their emphasis on small government,
became newly popular. Milton Friedman and the Chicago school advanced the
merits of monetarism - a painless and foolproof way, it was thought, of dealing
with inflation that also had the advantage of getting government out of the
picture and handing economic policy over to bankers.
These doctrines came together in the minds of
ideologues like Keith Joseph and Nicholas Ridley, who had already prepared a
“free-market” agenda for an incoming Conservative government, and were
enthusiastically supported by proselytisers like the then editor of The Times,
William Rees-Mogg. Significantly, even Denis Healey, from 1976 onwards, had
accepted the Treasury’s advice that monetarism was the way of the future.
Developments in the real world pointed in the
same direction. The rapid increase in the volume of world trade, and the
accumulation of large volumes of investment capital in private hands, coupled
with the alluring prospect of the profits to be made from taking advantage of
low labour costs in undeveloped countries, produced an irresistible pressure
for the removal of exchange controls. When the pound “floated free”, as the
Daily Express had it, the advent of a single global economy became inevitable
and the power of international investors, as the masters of that global
economy, grew exponentially at the expense of elected national governments. It
seemed virtually impossible for democratic governments of whatever persuasion
to defy the precepts that governed the “free” and unregulated market.
It is safe to say that Margaret Thatcher
essentially responded to, rather than created, these powerful trends. Indeed,
before she became leader, there is little evidence that she possessed little
more by way of ideology than the set of everyday Tory values she had inherited
from her father.
She must have been amazed, having negotiated a
period as a less than impressive Leader of the Opposition, and an initial year
or two as one of the most unpopular Prime Ministers in history, to find that
the battleground on which she was required to fight had been virtually vacated
by her opponents, who had on the whole retreated to their own ideological
fastnesses while they waited - as it turned out, in vain - for the political
pendulum to swing.
She found that the shift in opinion that had
taken place over the previous decade meant that there was now little obstacle
to the implementation of the agenda offered by her lieutenants; and, emboldened
by her success in recapturing the Falklands, she began to flex her muscles -
and to enjoy it.
In the event, contrary to some of the more
fulsome tributes paid to her, she muffed the opportunity provided by the
absence of effective opposition and by North Sea oil coming on stream, and - in
thrall to monetarism - ensured that any benefits from the oil were immediately
offset by the decline of manufacturing that monetarist theory asserted was
inevitable. Far from “saving” Britain, she was responsible for a huge missed
opportunity and, by treating manufacturing as expendable, compounded our
competitiveness problem.
It must have been, nevertheless, a thrilling
experience for her to discover that - contrary to so many expectations as to
the difficulties that would be faced by a woman leader - she was able to wrong
foot and discomfort both colleagues and opponents by simply insisting, with
increasing stridency and certainty, on getting her own way. It was in this
respect that Margaret Thatcher made her contribution to Thatcherism; she did
not invent it, or even necessarily foresee it, but when it became apparent, she
liked what she saw and, by serving as its instrument, discovered her destiny.
Those powerful forces that were unleashed by the
triumph of the “free” market - a triumph in a battle that is constantly fought
between the powerful and the ordinary people, but in which the powerful have
for the time being prevailed - were extraordinarily lucky that the person who
headed the government at the critical time and to whom it fell to bring about
the change that they saw as necessary may not have been a great political
thinker, still less a ground-breaking economist, but had the force of
personality to drive that change through. It was a change defined and willed by
others but delivered by Margaret Thatcher.
With her passing, nothing much changes. Those
same powerful forces are still in charge, perhaps fighting a rearguard action
in the aftermath of the global financial crisis, but using their power to
entrench their advantage. So let us be clear; to elevate Thatcher to the
stature of a one-woman revolution is to miss the point and to divert attention
from the real forces ranged against us - still very much in evidence - and the
battles that still have to be fought.
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