double-digit inflation that made them seem inescapable – seems so remote that it is easy to forget how much courage was required in 1979 – 81 to set about dismantling it. The courage was not hers alone; but she was the leader. Ultimately the balance sheet will demand a judgement as to whether the benefits of that economic and cultural revolution outweighed the social cost.
Up till 2008 it was widely accepted that Thatcherism had not only restored the British economy but – hand in hand with Reaganism in the United States – set the template for the development of the world economy for the foreseeable future. Free market capitalism had triumphed all round the world, socialism was a discredited memory, and ever-growing prosperity was assumed to be infinitely assured on a tide of financial ingenuity and deregulated credit. While a few wise voices warned that the boom was founded on a confidence trick, the Labour governments of Blair and Brown bought into this dangerous optimism, partly because they too were carried away by it, but partly also because they could not be seen to stand against it. ‘New Labour’ regained power in 1997 precisely by accepting the Thatcher revolution, and its continued dominance over the next decade depended on leaving the Tories no political space to their right. The 2008 ‘credit crunch’ – directly caused by the irresponsible lending of deregulated banks and other financial institutions in Britain and the United States – shattered this optimism and plunged the whole world into the worst recession since the 1930s. On the one hand this devastating collapse was specifically the failure of the Reagan/Thatcher model of ‘light-touch’ regulation which encouraged the pursuit of short-term profits at the expense of long-term security. On the other, the measures adopted on both sides of the Atlantic to salvage the situation – by the outgoing Republican administration in Washington as much as by Brown’s Labour government in Britain, as well as by all the economies of the European Union and most of the rest of the world – resurrected almost overnight – with astonishingly little hesitation or opposition – all those discredited ‘socialist’ solutions which were thought to have been forsworn for ever: ‘rescuing’ the banks with large sums of taxpayers’ money (stopping barely short of outright nationalisation) and pumping further large injections of borrowed money into the economy to try to maintain demand. Crude Keynesianism – which Thatcherism was supposed to have buried for ever – was suddenly resurgent, to the great glee of all those old socialists who had never in their hearts abandoned their hankering for state control. Now it was untrammelled capitalism which seemed to have imploded, with banks and building societies running to the state to be saved from the consequences of their own folly.
Seeking scapegoats, some in the media blamed Mrs Thatcher personally. Her defenders pointed out that she had always preached thrift, held that high remuneration should be the reward of hard work, not speculation, never owned a credit card and disapproved of the ‘casino culture’ of the City. One could even see the credit crunch as a spectacular vindication of her repeated warnings that ‘you cannot buck the market’. Nevertheless it was undeniable that her government, by detonating the ‘Big Bang’ of 1986, had unleashed, perhaps unwittingly, all the consequences that flowed from deregulation of the financial sector, including the rocketing of house prices and a huge rise in household indebtedness as under-capitalised banks lent money they did not have to overmortgaged customers who could not repay it. She was, whether she liked it or not, the patron saint of the ‘loadsamoney’ culture, and when it collapsed it was inevitable, in the highly personalised world of modern politics, that she would be blamed, and her reputation as the saviour of British capitalism badly tarnished. Of course it was not just her government which inflated the bubble. One of Gordon Brown’s first acts on taking over the Treasury was to ease still further the framework of financial regulation; Peter Mandelson famously declared that New Labour was ‘intensely relaxed about people getting filthy rich’;72 and for ten years Tony Blair’s overriding priority was to do everything necessary to retain the support of the City. But they were all operating within the climate created by eighteen years of Thatcherism. It was a measure of how fundamentally she had transformed the political landscape that even a Chancellor with such deep ‘old Labour’ roots as Brown – who had made his reputation excoriating Thatcherism in the 1980s – felt obliged in office to press on with her revolution, carrying it to lengths of imprudence at which her innate caution would have baulked. Her influence lived on long after 1990; that was her great achievement. But when the world she had bequeathed crashed, her reputation necessarily suffered with it.
No doubt the world economy will recover, as the counter-cyclical measures taken by all the major national economies – with Barack Obama’s new Democrat administration in Washington in the lead – sooner or later take effect. ‘Socialism’ in the form that Mrs Thatcher banished it will not return. But there is bound to be a serious correction which will last for many years. The substantial stake which all Western governments have taken in their financial institutions will take time to unpick. Having had their fingers badly burned, the ideologues of the unregulated market will not be so arrogant – or so triumphalist again for a long time. Thus as the perspective on Margaret Thatcher’s career lengthens it becomes clearer than ever that history moves in cycles. The solutions of today become the problems of tomorrow. Margaret Thatcher played a bold part in wrenching Britain – and by her example much of the world – out of the failed path of economic planning and stifling state control. Over a period of nearly thirty years Thatcherism released a huge amount of economic energy, created a great deal of new wealth and delivered many social benefits – as well as some enduring costs. That it eventually had to be corrected in its turn will not detract in the long run from her historic importance. For better and worse, the grocer’s daughter from Grantham imprinted her personality, and her name, indelibly upon her era. She will always remain one of the transformative figures who shaped the twentieth century.
Notes and References
1. Dutiful Daughter
1 Private information.
2
3 Ibid., January 1917.
4 Ibid., 8 February 1936.
5 Ibid., 9 October 1937.
6 Patricia Murray,
7 Ibid., p. 21.
8 Russell Lewis,
9 Margaret Thatcher,
10 Ibid., p. 19.
11 Ibid., p. 6.
12 George Gardiner,
13
14
15 Murray, p. 50.
16 BBC TV,
17 Nicholas Wapshott and George Brock,
18 Interview with Brian Walden,
19 Private information.
20 Lewis, p. 11.
21 Thatcher, p. 36.
22 Murray, p. 37.
23 Gardiner, p. 37.
24 Thatcher, p. 39.
25 Interview, Mrs Jean Darmon (nee Southerst).
