There is Such a Thing as Society: Thatcherism in a Divided Britain

Margaret Thatcher leaves behind a chequered, deeply controversial legacy. Assessment of her performance is one of a few topics still capable of exciting emotions in today’s anaemic British politics. Her legacy ties together so many disparate dichotomies in British politics – the state and the private economy, people’s claims on the state and their claim on private income, Whitehall and local government – that a complete assessment is unattainable in the near future. From a numerical perspective, her economic performance was spotty. She did not halt the long relative decline of the British economy and international position. The scarcity of world leaders on the ground at her funeral is a hint to Britain’s increasing irrelevance, a development hastened by the rise of emerging economies. On the other hand, Margaret Thatcher changed the face of the British economy to an extent that it would have been unrecognisable to those from pre-Thatcher Britain.

Image courtesy of University of Salford, © 1982, some rights reserved.
Image courtesy of University of Salford, © 1982, some rights reserved.

From a numerical perspective, Thatcherite economics did not produce the miracle that some claim it did. Margaret Thatcher’s Premiership composed of two recessions sandwiching a bout of growth in the mid 1980s. During her Premiership, economic growth averaged 2.4%, exactly the same as during the 1970s. In the post-Thatcher 1990s, economic growth averaged 2.2% – a rate that the current government would die for, but hardly impressive in the context of post WWII growth (source). On the other hand, slowing economic growth is the norm in the developed West. Whereas before Thatcher, Britain trailed the Western world in terms of growth in GDP per capita, during Thatcher’s Premiership and the two decades afterwards Britain had the highest per capita GDP growth rate among Italy, Germany, France, Japan, and even the United States (source). In public finances, despite her stated aim of retracting the frontiers of the state, inflation-adjusted government expenditure actually increased by 13% during her Premiership.

Her record of taming inflation is also apparently unimpressive. The inflation rate when she entered office in 1979, at around 10% was at the same level as when she left office. However, between 1991 and 2011, inflation averaged at 2.4%, a fraction of the 10.2% in the preceding two decades. It would be difficult to argue that her monetarist policies had nothing to do with the moderation of inflation subsequent to her Premiership.

However, a numerical discussion of her economic performance does not adequately capture the tumultuous changes the British economy went through under Thatcher. Most writers and readers of the Review would be too young to remember what the pre-Thatcherite economy was like. The government was firmly at the helm – British Airways, British Telecom, British Petroleum and British Steel were all government owned, at least to some extent. The government had great difficulty closing down coalmines that were uneconomical. Writer John Rentoul recalled in the Observer that to install an answering machine, one had to complete an elaborate application form with the post office. The power of the unions was also unimaginable – in 1974 the National Union Mineworkers’ strike brought the country to its knees. For commercial users, electricity was limited to three days per week from January to March 1974. Thatcher effectively brought the unions to heel – days lost to industrial disputes dropped from millions per annum in the 1970s to tens of thousands in the 90s and 00s. Thatcherite economic policies led to a decisive shift from state monopoly to consumer choice, from union militancy to relative harmony in labour relations (and hence, the basic functioning of the economy). It is a change that has withstood the test of the ballot box – no subsequent government has fought or won an election on a platform of reversing these changes.

However, Thatcherite economic policy also widened social and economic gaps between the North and South, the skilled and unskilled. This division is morbidly apparent in the celebrations that followed Margaret Thatcher’s death. ( The Guardian reports one former miner quipping:  “Maggie’s in hell and she’s shut down three furnaces already”.) British politics has never been more geographically divided. Whereas the Conservative party dominates the South, the North of England and Scotland (when SNP is discounted) are dominated by Labour. This political division is likely to be driven by economic forces. While Thatcherite policy did not cause the decline of northern industries – it merely switched off the life-support machine – it also did not do enough to find new sources of income for the affected regions. Meanwhile, the boom in financial and professional services unleashed by Thatcher was concentrated in London and the South. The Labour government temporarily plastered over this division by diverting the fiscal bonanza from the South to support the expansion of the state in the North, leading to unsustainable levels of government deficit. The financial crisis of 2008-2009 and the subsequent fiscal austerity tore away the cosmetics that in good years barely disguised the drift between North and South.

If Thatcher’s economic performance is so chequered, what is left of Thatcher’s legacy that is relevant to today’s economy? First, Margaret Thatcher brought home the basic fact that the problem of economic production had not been solved. For the post-WWII period, the British government and labour unions acted as if the main problem of providing for the nation had been solved, and that the government’s main task was redistribution. Thatcher’s simple housewife-variety of economics reminded the nation that in order for the government to have something to redistribute, someone must first produce goods and services and pay taxes. She says, “people come and say: ‘But what is the point of working? I can get as much on the dole!’ You say: ‘Look” It is not from the dole. It is your neighbour who is supplying it.” This is a simple truth that is sometimes lost in discourses of inequality in contemporary Britain: redistribution and equality is a luxury that comes after production. Government subsidies and welfare payments are not solutions to inequality – they are merely a plaster over it. Real social and economic equality has to come from widespread economic growth.

Second, Margaret Thatcher, for all her belief in individual freedom, had a keen sense of communal responsibility. She never intended person enrichment to be the goal of economic liberalisation. Her vision was a society that would be invigorated by the sense of personal responsibility that individual wealth inspires. She says, “we want the spread of personal property ever wider, not only because we want the material benefits to spread further wider, but because we believe when you have that personal property you get a much greater feeling of responsibility because you have to exercise responsibility towards it. Because you respect your own you respect also other people’s. Therefore, it is a way of bringing about a much greater sort of personal responsibility to a society of which you are a part, and also a way of having some of the means in which you can help people who are unfortunate, or help some of the great things that you have a personal interest in. It may be music, it may be the arts, it may be the ancient churches, it may be restoring some of the rural heritage, so that is the spread of property ever more widely.” Britain is never as divided as it is today, and it desperately needs politicians, businessmen, and individuals to take up personal responsibility for the wellbeing of this country. Debatable as legacy, it is indisputable that Margaret Thatcher could not bear the idea of a declining Britain, and she took personal responsibility to change the course of the country. She may have succeeded or failed – only time will tell – but her spirit of determination and responsibility is greatly needed today to heal our divisions.

One Reply to “There is Such a Thing as Society: Thatcherism in a Divided Britain”

  1. A lot of the arguments in this piece are questionable. A lot of other governments did things very differently during Thatcher’s tenure and got better results. And why do you seem to credit the apparent economic successes of the last two decades with Thatcherism? Finally, why is destroying unions a good thing, or the privatization of state assets? Growth was much more sustainable and widespread before her time in office, and poverty, unemployment and inequality were all a lot lower. Your point about redistribution vs. equality doesn’t stand up when you look at the statistics. I think time has already told exactly what the effects of her policies are.

    If you want a better sense of what I’m talking about, you can read more about my arguments here:

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