Margaret Thatcher is undoubtedly one of the most divisive people in British political history. But whatever you think of her she’s a woman whose economic policies still reverberate today. She’ll always be known as someone who loved the tenuous idea of linking property ownership to democracy, who valued the economy over society and thought that a big bang liberation of the City of London would deliver untold riches for everyone.
But in reality after 40 years of Thatcherism the UK now presides over austerity, a private debt explosion, financialization, privatization, deregulation, inequality and extortionate monopolies.
So when a proposal to build a Margaret Thatcher museum was put forward many British people asked, “Why do we need a Thatcher museum? Aren’t we living in it?”
Authors and economists Grace Blakeley and James Meadway met up with Renegade Inc. to discuss Thatcher’s legacy, which included economic reforms that culminated in a significant retrenchment of the British state. Both authors concur that a concerted effort was made to diminish the power of the trade unions whilst huge swaths of the public sector were privatized. Thatcher’s vision was to reconfigure society into a property owning democracy where people were encouraged to live within their means. James Meadway notes that, in the first instance, the plan was to reshape British industry:
“So you shake out trade unions; you break them up, you cut them down to size, you introduce legislation to massively reduce the power of trade unions in the workplace, you reassert management control in quite a key way in lots of different workplaces. You do the same thing in the public sector.”
The idea was that by reducing costs, Britain would be in a much more advantageously competitive position than its rivals on the global stage. However, the notion of Britain as the post-colonial capitalist workshop of the world didn’t work. Instead, a new service-based market economy with a deregulated finance element at its core began to emerge which replaced huge parts of the manufacturing sector. This form of deregulated finance was to mushroom enormously to become the leading sector of the entire economy gradually bending the rest of the British economy in order to meet its needs.
Furthering class interests
So although this kind of outcome was an unintended consequence of Thatcher’s policies, the crucial point, as Grace Blakeley, argues, was in whose interests was she acting in. The reason Thatcher thought all those things”, says Blakeley, “was because she was linked to, and influenced by, a set of [class] interests that had a very particular view of what they wanted from the economy… [which was] to make money from that process.
Hence, “the kind of visions and rhetoric that Thatcher had around what a kind of a free economy and a strong state would mean, are in many ways secondary to the question of the class interests that she was acting in.”
Allied to these interests are the committed ideologies of Hayek and, to a lesser extent, Friedman – who saw the USSR – the growth of kind of communism of central planning – as a real affront to human freedom. Concomitant with these ideologies are a set of material interests that are being pushed forward.
Blakeley sees the rise of Keyensianism and the adoption of social democracy – by for example, the Labour Party – as a parallel development. Central to this is the notion that capitalism and civilization are synonymous. So that to save one is to save the other. “These have been taken up by various parties that represent the interests of organized labour”, says Blakeley, on the grounds “that [Keynesian] ideas will support and reinforce the interests of the class that this particular political project is representing.”
Similarly, argues Blakeley, “there are parallels with the development of neoliberalism linked to…international financial and business elites, and a particular set of politicians, who want to see a world where capital is free to move around; where investors rights are protected; where the state play a much smaller role in the economy and where unions aren’t free to disrupt the market mechanism as they see it.”
“Those two groups of people ended up coming together to create an incredibly powerful political project that took advantage of a crisis that ended up taking place in British and global capitalism in the 1970s to push forward their agenda.”
In Britain what emerged from this agenda was largely what was termed, ‘a nation of shopkeepers’, encompassing Estate Agents, buy to let landlords and property owners. James Meadway argues that related to this was Thatcher’s adherence to the concept of a property-owning democracy, “where everybody would end up owning shares and would be their own sort of little capitalist.”
“What actually happens”, posited Meadway, “is by the late 1970s, early 1980s as Thatcher comes to power, 40 percent of shares in Britain are owned by individuals. If you look today it’s round about 10/12 percent. So none of this really happens in the way that the ideology [would necessarily predict].”
“I think there’s a danger in thinking, ‘here is the blueprint to the Mont Pelerin Society provided in 1947 or whenever it was set up, and then it was just implemented by Thatcher from 79 onwards’. You end up with a much weirder story. I mean, a lot of the deregulation of finance, in particular, sort of cross-border international finance, you know, is its ability to trade in and out of the country. That was already happening under the Labour government. Then Thatcher, I think, started to provide a story about what more you could do and where we might get to.”
Grace Blakeley acknowledges the importance of Meadway’s point:
“It shows the extent to which any capitalist model, whether neoliberal, Keynesian, whatever, will be shaped by primarily the struggle between different class forces that is taking place within it rather than simply the kind of institutional framework that’s been set up in order to contain it”, says Blakeley.
These various factors are symptomatic of mega-trends illustrative of a combination of vested and class interests, argues Meadway. “I mean take the euro dollar market. It was outside of US control – so it was offshore for the US – based in London”, says Meadway.
“The reason that grows up here is because Harold Wilson when he was president of the Board of Trade deregulated banks said, ‘You’re allowed to trade dollars here.’ Now that was not in the anticipation that this would then slowly balloon into this sort of monstrous thing that is the City of London. That was not why he did it. I mean the other detail on that one is part of the reason the market grew up is because the Soviet Union at the time wanted somewhere to put its dollars that was outside of American control”, says Meadway.
Western triumphalism & the end of history
Underpinning all these different factors was Western triumphalism over the Soviet Union that reinforced the perceived supremacy of capitalism – a filtered set of mega-trends that Thatcher not only embodied during a specific moment in time, but was intrinsic to a crisis that she subsequently supercharged.
The said crisis continued to balloon from the mid-1980s onwards. “The recession in 89/90 is nowhere near as high as we got to in 2007/2008 partly because you didn’t have so long to continue, and also I think the sophistication of the financial system to just produce more and more debt”, says Meadway.
The much touted prudent shopkeepers daughter, Thatcher, didn’t want, or intend for, all this private debt, but nevertheless regarded it a price worth paying.
“She was incredibly unpopular right away through really to the Falklands crisis, had a series of major battles – not just the obvious ones with trade unions and labour and everybody else – but also…she was in a minority position inside her own cabinet for much of this period of time”, says Meadway.
“She had a battle with the CBI who didn’t agree with what she was doing. It was everybody, all the time and she still ploughed through it. So by the time you get to the mid 80s you start to generate the Lawson boom; you cut interest rates, you cut taxes. It works very well for a few people. If you’re in work, finally real wages start to pick up a bit. If you’re out of work, you’re done for, your stuffed. And great swathes of the country see none of this. But of course you take it because it looks like it’s economic growth and something’s happening and suddenly your so-called revolution is starting to work.”
New Labour capitalized, politically, on this so called revolution, immortalized in the party soundbite ‘things can only get better’ because, as Blakeley says, for many, “it seemed as though things were only going to get better.” According to the views of political commentators and academics at the time, the ideological battle between left and right had been transcended and talk of the ‘Third Way’ was all the vogue. Embodied in the thesis of Francis Fukuyama, capitalism was deemed to have dumped socialism into the dustbin of history. Growth boomed. But the problem, barely reported, was that the said boom was being driven by monumental levels of private debt.
“Most people don’t really understand the kind of importance of that. You have this kind of massive wave of globalisation which is both bringing consumer goods for the rest of the world and pushing this narrative of modernisation that history is now a question of the rest of the world catching up with the US and the UK and other parts of the global north, and that that is going to be facilitated by more and more globalisation”, says Blakeley.
The ‘mainstream’ establishment consensus was that things could only get better. “There was this idea that they’d tamed the business cycle through inflation targeting”, says Blakeley. “And yes all of these things turned out to be completely and utterly false. But it was very fitting with the kind of millenarian mood of the time and it was even more so given that it was coming up to the end of the century. So I kind of understand, in many ways the assumption that most people had that things would only get better and better and better”, says Blakeley – a view also prevalent on the left.
“We know now in hindsight that that was all premised upon this massive accumulation of debt which ultimately burst in this huge crash in 2008. And that completely changed the parameters for political discourse and everything else. What is not defensible is people who having witnessed and lived through that continue to cling to this idea, this very unique economic moment that created a very unique political moment. This basically said that we aren’t changing any of the kind of basic structures or parameters upon which economic growth depends, we’re just going to play around inside this little box – which is kind of this particular form of capitalism. We’re going to try and make it a little bit less unfair and that model is only gonna get stronger and stronger. Thinking like that is no longer defensible after the financial crisis which is why liberals and centrists – or however they want to describe themselves – are increasingly becoming out of touch with most of the population. They’re clinging onto this 90s – noughties – ideology that has absolutely no place in the kind of post crash economy.”
The political economy of austerity
Equally out of touch, of course, are right-wing politician’s like Philip Hammond who helped to push through the kind of neoliberal policies that perpetuate the illusion that is only through the said form of capitalism that wealth ‘trickles down’. The redistribution of wealth from the bottom to the top exemplified by tax cuts for the rich gives credence to the theory that under neoliberalism it actually ‘gushes upwards’ – a notion reiterated by the UN rapporteur on extreme poverty.
The rapporteur attacked Boris Johnson and Jeremy Hunt’s proposed tax cuts for the rich comparing them to Donald Trump’s fiscal policies. He warned that they would “tremendously increase inequality” in Britain. In other words, austerity, which the UN study claims has resulted in 120,000 deaths in the UK since 2010, is being used as a battering ram against the poorest in order to fund tax cuts for the richest.
In the view of Blakeley, this kind of cruel politics of austerity is used as a pretext in order to reinforce existing power relations upon which financial capitalism rests. “You have this big crisis of capitalism, austerity is used as a mechanism to ensure that that crisis does not become a full fledged kind of confrontation over the future of the capitalist system because it’s used to weaken labour – with a small l – to such an extent that that push-back is muted. But we’re now getting to a point where the kind of constituency that usually elects the governments that are pursuing austerity is actually being harmed by those policies and I think that’s at least partly why those alternative strands of economics are becoming more and more popular”, says Blakeley.
But the question is, how, as a society, do we best synthesis these alternative economic strands into the political realm? For Meadway, there is a failure in the collective imagination to see beyond what we currently have. “I remember”, says Meadway, “the Hungarian philosopher, Istvan Meszaros, doing a talk just after the crash really erupted – and he said, ‘Look the problem we have at the minute is the choice between socialism or barbarism but without the option of socialism’, which is quite a bleak way of looking at it but there is something to that.
We need to reconstruct the idea that things could be different, that there is an alternative despite what Thatcher and the other ideologues would claim about it”, says Meadway.
A re-imagined future
The apparent lack of any real concrete alternatives is consistent with the interregnum in which nothing new is born within a context of the old that is dying. The pessimism that underlies an inability to re-imagine a future is further highlighted by Blakeley’s quotation of Frederic Jameson – that it’s easier to imagine the end of the world than the end of capitalism.
For Blakeley, this barrier to an alternative vision relates back to the period between 1989 and 2007 highlighted above when history was over and there was deemed to be no alternative to capitalism. “There was this really pervasive sense that there was no alternative, not simply because there was no political movement to push against that but because they literally could not imagine a world which could be better and not be capitalist…I think we really have started to see the death of capitalist realism in the period since the financial crisis. It did not happen immediately after Lehman Brothers collapse, it would be bizarre to expect that at would”, says Blakeley.
The economist and author of Stolen: How To Save The World From Financialization, added:
“No one knew how the period after the crisis was going to play out. But you know ten years into austerity and, you know, with an economy that is just not working the way that it should, the way that people had expected it to over most of their lives, you know, with inter-generational equality massive increasing, wealth inequality, all these different inequities. And that has both contributed to the emergence of a movement to replace capitalism with socialism and has been based on the emergence of that movement.”
According to Meadway:
“The space is there to organize different things but how it gets organized and for whom it gets organizes is the question to get into. Donald Trump has his own version of what that organization looks like….But Bernie Sanders has a different vision of it… And I think what you’ve got with Jeremy Corbyn’s Labour in Britain is something quite different to that as well. The notion that we can actually make the economy” – to coin a phrase – ‘work for the many not the few’ is what we need to get to. The bit that accelerates all of this – climate change – that forces all these questions in a real dramatic way, is the fact we now have to deal with a world that’s visibly and obviously getting warmer and all the consequences of that.”
Both Meadway and Blakeley outline concrete policies that could begin to make the economy work for the many. For the former, the emphasis is a reduction in working time: “We’ve had a five day working week stuck there really since the 20s and 30s, it’s just taken as read that this is what we do. I think if we want to give people more freedom, if we want to give people more choice over what they’re doing with their lives you take them out of what are increasingly spaces where they work, where they have almost no control at all. I mean, you’ve seen the Amazon patent where, you know, you’re monitoring someone’s movements the whole time. If you on a zero hours contract, you have almost no control over that. So if you can plausibly give people their time back that is a major major achievement for them”, says Medway.
Blakeley believes that an impact could be made by introducing an intermediary step that moves towards socialization of ownership embodied in what she refers to as something called a people’s asset manager. This asset manager, she says, “would essentially act alongside a National Investment Bank to manage collectively owned assets be that nationalized land, you’d maybe capitalized it with some of the bonds through the QE program. You’d add in various socialized or collectively owned assets that would have been created by that time. And you would invest alongside the National Investment Bank.”
“You would use the kind of resources in that asset manager to invest in companies that the National Investment Bank had lent to and in doing so you would slowly get to a situation where this people’s asset manager, owned more and more in terms of equities, shares in companies and various parts of the economy. And that then starts to reduce the section of the economy that is controlled privately and increased – slowly and steadily as the economy grows – the section that is owned collectively and socially. Eventually you get to a point where that thing can start paying out dividends or doing something that would actively change people’s lives”, says Blakeley.
Once the initial step of the kind outlined by Blakeley is taken, potential democratic socialized spaces can open up to allow people to dream for a different kind of future. “The first thing obviously is just breaking the hegemony of private ownership over the most important resource”, says Blakeley.
Meadway provides additional positive input to the notion of creating more democratic spaces in the real economy:
“It’s perilously easy to fall in the trap saying, ‘Everything is bad and we can do nothing’. Well what’s hopeful at the minute is a sense for a very large number of people that they can do something whether it’s extinction rebellion, whether it’s a load of people joining the Labour Party and supporting Jeremy Corbyn, there’s all sorts of things happening. There are good reasons to hope”, says Meadway.
Grace Blakeley concludes by reminding us that it’s the duty of socialists to be optimistic:
“I think the thing that makes me most excited at the moment is the general uptick in concern about the environment. And that has been something that has come up surprisingly quickly. It’s taken a lot of people by surprise and that really kind of upsets the assumption by most people that actually people just don’t care about the environment because it doesn’t affect them in their lives.
If we are able to think differently about the world, about the potential, about the future, then we can start to challenge what seemed to be kind of completely dominant structures of thinking and institutions and start to build something new.”