When Margaret Thatcher was returned as Britain’s Prime Minister for her third consecutive term in June 1987, there was both outrage and admiration by the British public. Whilst the economy was showing signs of improvement after legislation had curbed trade union power and state owned industry had either been sold off or privatised, unemployment was high, and her ruthless closure of some heavy industry had led to vast socio-economic inequality. In the depressed north, the mere thought of her roused seething hatred culminating in the idea she endorsed the, ‘the rich getting richer while the poor got poorer’. Did the British public really know what they were voting for when she won her first term?
Notions of a twentieth century British ‘decline’ received widespread attention by mid-century as British military power waned in the face of the United States and the Empire de-colonized. In the late 1950’s and early 1960’s however, a new, more specific notion of British ‘economic decline’ appeared, as similar sized west European countries such as Germany and France came to outperform Britain. In 1959 a series of lectures given by C.P. Snow published in the New Statesman argued education and a lack of scientific knowledge and understanding amongst those who rule was the key to Britain’s problems, which resonated with a large audience not typically familiar with economic analysis. This literature, along with the media, precipitated a widespread contemporary belief in declinism across a broad range of public opinion in the 1970’s. Conservatives started to question whether the post 1945 ‘consensus’ of Keynesian economics -whose policies all the leading Western economies adopted before the outbreak of World War Two and in the two decades following, and the mixed economy had succeeded in turning the country around. These policies attached a low priority to the increase of production and the pursuit of material gain in favour of equality and the security of all people by the guarantee of employment through policies of demand economics and the provision of a welfare safety net.But with inflation soaring and the trade unions exerting powerful influence with strikes disrupting all aspects of everyday British life,none revisionist economist in 1976 was prompted to write, ‘Keynes’s writings set the economically literate in Britain on a course where hard work, efficient industrial organisation and the employment of a high fraction of the labour force on productive and profitable work were considered to be of only secondary importance’. Within heavy industry, strikes were allowing foreign manufactures a way in, winning a percentage of domestic sales and negatively impacting the balance of payments and with unemployment rising, all signs pointed toward a general worsening of economic conditions.
Thatcher’s Conservatives promised a new plan, opposing the ‘I’m all right Jack’ attitude of Britain’s belligerent unions and in it reflecting the impatience of not only many British ‘petit bourgeois’- the middle class, but some of the much courted deferential working class voters, both who felt the time had come for a strong leader. But Thatcher was cautious. She was aware that most of her party, let alone the rest of the country, would not be comfortable with a radical break from the past so instead relied on the discontent of the people. By 1978, it was clear government led initiatives had undoubtedly failed. Without a growing economy, public spending which had sustained the post war ‘consensus’ was compressed and with no corresponding rise in real wages the year culminated in the worst strike since 1326. What is now known as ‘The winter of discontent’ saw rubbish in London piled high on the streets, the dead go unburied and critically ill patients turned away from hospitals by pickets, undermining the moral standing of the unions. It was to this landscape the British public turned to a new way forward, and with Labour seen as out of ideas, in 1979 Margaret Thatcher’s Conservatives won their first term.
Thatcher came to government with a strong set of traditional values founded on her early life. These were based on a free-market system under the expectation a well ordered economy and capitalist system would give more opportunity to everybody, a strong prejudice against government intervention, a loathing for socialism and a backing for police, order and the law. Growing up as the daughter of a shopkeeper, her father taught her the meaning of hard work, self-reliance and deferred gratification- prosperity meant saving, and spending no more than you earn. Her early life had also been marked by an experience with a Jewish girl who was taken in by the Grantham Rotary as her Austrian father foresaw the way events were leading in Germany. After reading a book forbidden by her father, Out of the Nightat 16, she formed growing beliefs about the link between Nazism and communism as ‘two sides of the same coin’.
Thatcher and her mentor Sir Keith Joseph saw Britain’s problems as laying with vested interests of producers, trade unions and state bureaucracy without encouraging and rewarding the risk-takers- the entrepreneurs, who helped generate wealth without which governments could do anything. Once in office, she set about changing not only Britain, but British ideals.
By 1981 she had responded to Britain’s problems. Her belief in supply side economics meant confronting the trade unions and slowly legislation was introduced to limit their effectiveness in industrial disputes. Monetary policy was tightened in an attempt to curb inflation and the currency was allowed to float, both decisive breaks with post-war convention. Industrial subsidies were privatised or cut, sending many coal and steel mines out of business. Christopher Hitchens stated upon reflection of Thatcher’s first term, ‘Thatcher promised sacrifice and pain. She said the country’s been rotting in mediocrity for a long time, it’s been paying itself more than it can earn and I’m going to turn a cold shower on all of you’. Deeply connected to the industrial economy, just how cold Thatcher’s shower would turn out to be for the British people does question whether they really knew what they were initially voting for. In the same year, 364 economists cautioned in a joint letter to The Times her monetary policies would not work, and would unleash social disturbance and a recession. With the returns of privatisation of industry yet to flow through and against the background of a world recession, the result was almost three million people unemployed, with police now battling Molotov-cocktail throwing dissenters on many British streets. Whilst a retreat seemed imminent, she ploughed on. “U-turn if you want to, the Lady’s not for turning,” she had cried the year before. By 1982 Thatcher’s popularity was at its lowest point and this highlighted another, more ideological adversary for Thatcher- distorted public opinion and the revival of the national will.
So she listened. She listened to the people and the undertones of discontent and her common sense approach to the revival of the national will through less government intervention and more popular initiative was central to Thatcher’s success. Bruce Anderson of the Financial Times wrote in 2004, ‘She understood the people, she credited them with much of her own fixity of purpose. She believed that all they needed was leadership from a government which would give them the courage of its convictions’.
Whether by a twist of fate or as an example of her strength of character, in 1983 Thatcher was returned in a landslide to government for her second term. The decisive victory in the Falkland Islands for people who wanted to remain British against an Argentinian invasion inspired a patriotic national elation toward Thatcher, disheartened after years of despondency and gloom, whilst a deeply divided Labour party undoubtedly made the job easier. This second term however, allowed her initial policies time to trickle through and with the public now more willing to take up the entrepreneurial rally she had thrown down, she became more economically radical. The failure to pay down debt on large scale nationalized industries in her first term actually dictated her second term policy to develop privatisation of these industries. Stifled in the past by the power of the trade unions (which she maintained de-moralized management and employers) and a tax structure which punished success and discouraged innovation, regulation was scaled back further with tax cuts whilst the unions were finally defeated in the showdown of the 1984-5 miners strike.A number of small business initiatives set up led to a rise of over 1 million in the number of self-employed during the 1980’s to more than 3 million by late 1988, over 6 times on the previous 30 years.
In 1987 she won her third term and by 1990 Britain had sustained economic growth – but this had come at a cost. The paradox of creating a free state by implementing a strong state has not been lost on Thatcher’s critics. Inflation was lowered but at the expense of employment and what was seen as her causal insensitivity to the suffering of the poor and the helpless in her cutbacks to education services, health and the safety net built by Labour had an impact on the welfare that sustains a liveable society. However, Thatcher wrenched Britain from its preoccupation with economic featherbedding and from what she considered an unnatural relationship with socialism in the passionate belief free enterprise and competition were the key to national prosperity.
Robards, T., ‘Economic Decline is Key Topic in Britain: Fear is Widespread That Nation Faces Greatest Crisis in Many Years’, The New York Times, 12 November 1974.
Hitchens, C., ‘What Did Margaret Thatcher Do for Britain? Iron Lady & British Politics’, [online video], 1987, https://www.youtube.com/watch?v=f8W5Zy-gagU
Weiner, M., English Culture and the Decline of the Industrial Spirit, 1850 – 1980, Cambridge, Cambridge University Press, 1981.