1990s >> 1997 >> no-1115-july-1997

Lady Thatcher’s Shadow

Margaret Thatcher casts a long political shadow. She may have failed to fully transform the Tory Party but Thatcherism had a far-reaching effect on the Labour Party.


A remarkable political unanimity existed for three decades following the end of the Second World War. Both major parties followed broadly similar policies aimed at creating full employment through government intervention in the working of the economy. Additionally both parties were committed to the so-called welfare state and accepted the economic theories of Keynes which claimed that the boom and slump cycle of capitalist economic activity could be smoothed out by government intervention. Conservatives willingly dropped their minimal intervention political stance and bid for support on an openly reformist platform. There was a general shift in politics towards collectivist thinking. However capitalism remained as anarchic as ever and was not to be controlled and run smoothly to order.


General economic expansion in the post-war period was punctuated by increasingly severe economic recessions, and Britain’s share of world trade continued to decline. By the time the OPEC cartel quadrupled oil prices in the early 1970s a section in the Conservative Party was ready to accept the ideas of the New Right. Less state intervention in economic life, complete free trade, and strict control over government spending as advocated by the New Right theorists drew an increasing number of adherents, among them Thatcher. Here at last was a body of ideas that could provide the movers and shakers in the party with an intellectually respectable anti-statist ideology despite the fact that Conservatives saw themselves as resolutely non-ideological.


It had been the achievement of Conservatism in the nineteenth century that it adapted the strong individualist tendencies of Liberalism (the ideas associated with laissez-faire economic policies) to the more traditional aristocratic values of social order and cohesion, deference, community and reciprocity. Thatcherism was a revival of this earlier strand of Conservatism emphasising self-reliance, self-discipline, competition, free markets, and small enterprise. It was intolerant of other, paternalistic, strands of Toryism typified by those she called the “wets”. Many in the party were appalled by these developments and Lord Alport was moved to write to the Times in 1985 expressing his opinion that “Thatcherism is not Conservatism.” But her strong leadership qualities were attractive to large sections of the working class and she became the Conservative Party’s strongest asset.


Success and failure


Some of the changes implemented between 1979 and 1990 were obvious successes for Thatcher’s programme. The sale of council houses and the privatisation of state enterprises are not going to be reversed. Control of local government finances is too useful a tool for Labour to want to abandon and in any case was something they themselves had been attempting to do while last in office. Similarly, the laws restricting trade union rights and controlling their internal organisation are likely to remain with only minor modification. Again this is something Labour had been trying to address, and they have recently again distanced themselves from the trade unions.


But Thatcherism failed to fully convert the workers in Britain to acceptance of the joys of popular capitalism. The sale of state-owned industries saw millions buying shares just to sell them shortly after to realise a quick profit. However the number of shares held by private investors continued to fall—a trend which went against the Conservative policy on share ownership. Capitalism was for Thatcher a system designed to bring wealth to the many, and her ideal was an obvious impossibility—’’Every man and woman a capitalist” (Observer, 8 May 1983). (If we were all capitalists who among us would continue to suffer the indignity of having to sell ourselves for a wage or a salary?)


By late 1984 the British public had become largely indifferent to privatisation. Unemployment was stated to be the top priority by 75 percent of respondents in an opinion poll in August 1984, as opposed to curbing inflation which was given top priority by a mere 18 percent. The “drag up” effect by which Thatcher expected a general rise in economic prosperity through the promotion of “enterprise” also failed to materialise. A report by the Joseph Rowntree Foundation in the 1990s revealed that “the gap between rich and poor is at its widest for 50 years . . .  millions of people have no stake in future prosperity” (Independent, 10 February 1995). Howard Davies, Director General of the CBI, and a member of the report team, said it was a problem which could not be ignored and a solution would have to include more government intervention. (Financial Times, 10 February 1995.)


The “Thatcher revolution” was not delivering the economic goods any more successfully than the abandoned interventionist Keynesianism. Indeed, the policies were increasingly out of favour among the leaders of British industry for whom the “red meat” was getting a little rancid. Peter Morgan, Director General of the Institute of Directors complained that British business recovery had been “. . torpedoed by runaway inflation . . . This awful recession . . .  is a failure of government economic management. It is a government failure.” (Financial Times, 24 April 1991). The Iron Lady had become a political liability.


John Major’s first move on succeeding her was to reshuffle the cabinet. He appointed to it the arch interventionist Heseltine. Political commentators expected Major “ . . .  to listen less to the political theoreticians and gurus beloved of Mrs Thatcher [the] radical right-wingers who campaigned for him knew perfectly well that he was not ‘one of us’.” (Economist, 11 December 1990). While advocating “prudence” in public spending (“We must not . . . run in with our chequebooks flapping” (Economist, 1 July 1989)). He struggled with the economic recession he had inherited declaring that “a strategy for growth is what we need . . . ” Inflation was running at above 10 percent, industrial output falling at the rate of 11.5 percent, retail sales falling at 5.75 percent, with unemployment again rising.


Labour Mark Two Tory Party


Margaret Thatcher’s real significance lay in the agenda she set for political  debate. If she failed to fully transform the Conservative Party Thatcherism had a far-reaching effect on the Labour Party. Labour consciously and deliberately set about transforming itself into a Mark II Conservative party by ditching any pretence of having anything to do with changing society. Accepting the values dictated by a market economy Labour now talked of “ . . .  efficient, competitive industry . . .  capturing the markets at home and abroad” (Neil Kinnock: Making Our Way: Investing in Britain’s Future, Blackwell. 1986, p.60). Labour more  than ever before accepts the market as the arbiter in the setting of economic goals. Clause 4 has been totally abandoned only to be replaced by the  anodyne commitment to “ . . .  a united  and prosperous society and to the fair distribution of wealth and opportunity . . .” (Guardian, 30 January 1995). Blair has dedicated himself to the promotion of a “dynamic modern economy (Economist, 14 January 1995).


The harsh realities of capitalist economics have forced the Party to realign their policies to the new consensus to such an extent that the Institute of Directors were pleased to report that “Labour has moved massively toward the Conservative agenda” (International Herald Tribune, 2 May 1997). In addition we have been reassured by no less a person than Lady Thatcher that Blair will “not let Britain down” (Guardian, 14 March 1997). It is little wonder that ’Bagehot’ could note in the Economist (7 January 1995) that one could forget accusing the “new” Labour Party of “being socialist” because “sometimes it is stretching things to describe it as left wing.”


Those who voted for the Labour Party cannot say that they were not warned in advance that Labour intends to run capitalism. We predict that Labour will fail to run capitalism in the interest of the vast majority who make up the working class in Britain, just as Lady Thatcher did.


Gwynn Thomas