Margaret Thatcher’s legacy – not the time to retreat

By Anthony Painter / @anthonypainter

Maybe it’s battle fatigue. Perhaps the argument that Labour in office has simply been Thatcherism with a human face has taken hold – wrongly. Maybe while Labour is fighting for its political life the events of thirty years ago seem like a bad dream, the ordinance of today deafening and blinding today’s left to the past. While the right has been busying itself celebrating the glorious onset of the Thatcherite era as it sees it, the left has been relatively quiet.

It’s strange because the governments of Margaret Thatcher have been a collective obsession of the left for three decades now. The broad left’s evaluation of her legacy tends to break down into ‘all bad’ or ‘economically right but socially disastrous’ at the other end of the spectrum – but everyone has a view.

Whatever the settled positions, now is a good time to initiate a discussion about the Thatcherite legacy once more. That’s not to counsel a nostalgic return to pre-Thatcher Britain. Can we really envisage a world of tightly regulated product markets, nationalised monopolies, price controls, and incomes policies again? It seems as other-worldly as BBC Parliament’s re-run of the 1979 election night. It was a reminder of a deindustrialising, post-imperial, corporatist Britain where Ministers sat alongside business leaders and trade union bosses on national television. There was even a moustache-side burn at one point – what do you call those? – and talk about government White Papers on election night. The place names were familiar enough, apart from the multiple references to a strange place: a country, it would seem, called ‘Rhodesia‘. There was even a youthful looking David Dimbleby. Well, as youthful as David Dimbleby ever looked, you have to suppose.

By the time Margaret Thatcher came into office Keynesianism was already dead. Jim Callaghan put the final nail in its coffin at the Labour conference of 1976 when he declared, “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

What Margaret Thatcher did was to go for monetarism on steroids. It was an act of economic masochism that still affects communities where entire industries were lost. That disregard for the negative impact on people’s lives of textbook economic policy is something that can never be forgotten or forgiven.

And it was not a one off hit. Following recovery from the deep recession of the early 1980s – one exacerbated by pro-cyclical VAT rises and public expenditure cuts – the UK economy began to exhibit the structure with which we have become familiar as the credit crunch has taken hold. It has become an economy sustained by liberal and global financial markets, consumerism, and house price inflation. That is a very risky proposition, as we have discovered not just once but twice: now as international financial contagion has spread and in the early 1990s as house price inflation went through the roof.

So the argument that Thatcherism was economically good but socially bad doesn’t really hold any more. A more accurate description would be that it was economically more likely to produce growth but contained hidden risks and had enormous social cost. The laissez-faire, light touch, assumptions at the heart of Thatcherism need to be challenged if the UK is to be set on a more sustainable, less risky, more equitable and inclusive path to growth.

The Government has begun to do this both in its response to the financial collapse and in some of its thinking on long term investment in the UK economy, not least in Lord Mandelson’s BERR.

It is important to remember the cultural consequences of Thatcherism also. The every man and woman for themselves ethos would not have unnerved Margaret Thatcher. But was the ‘greed is good’ conspicuous consumption that became so symbolic of the 1980s the vision that this Methodist, austere Granthamite had in mind? Were they the austere, thrifty, hard-working, abstemious values represented by her father, Alfred Roberts?

What can be said is that for the first time since that election day in 1979, Labour is in a situation where it can finally step away from the long shadow of Thatcherism. In order to do that, it has to confront it, learn from it, and never forget. One thing is for sure, David Cameron is completely incapable of stepping away from the shadow; he is bound to its source. As the Conservative party has continued its recent pattern of flirting with the centre but embracing the right as the dance concludes, the battle of ideas is reaching a critical moment. Now is not the time for cowardly retreat.