Coming to terms with Margaret Thatcher

The death of Margaret Thatcher is a sad moment. This is the political figure who has been with my generation throughout our lives – she defines our political psyche in many respects, love or loathe her legacy. She is a dramatic figure in the portion of the national story that we have seen unfold. Across the world, people of my generation and older know her, have a view on her. Margaret Thatcher’s impact on our national politics, culture, economy and society is immense.

With her passing, can the left finally come to terms with this immense national figure? We can hope. The trauma of ideological defeat lives long. She didn’t just win; she eradicated socialism from mainstream British politics. It wasn’t just her and it didn’t just happen in Britain. Across Eastern Europe and arguably in China too socialism collapsed as a viable alternative political economy in the 1980s. But the view that there is an alternative to capitalism for the UK – called socialism – is certainly dormant in any serious sense, if not dead. At this point, many people will perk up and claim that socialism is their creed. If there’s one badly kept secret in politics, it’s that when most people in Labour say ‘socialism’ they mean some variant of ‘social democracy’ (made more confusing by many early social democrats being socialists!)

This ideological victory paradoxically rescued the Labour party from itself. Again, the victory wasn’t Margret Thatcher’s alone – shifts in the global economy, the expansion and deepening of the EEC (for which she was ironically partly responsible!), and technological change all played an equal part. Labour, freed of any flirtation with socialism, was able to inextricably re-establish its relationship with social democracy. It was post-corporatist social democracy but social democracy nonetheless. This paved the way for a return to power in 1997. It should be stated that before Labour ended its flirtation with true socialism, it was not at all clear that it would survive as a party.

However, Labour never properly defined its relationship with Thatcherism. It came to an awkward accommodation – some reform of labour markets such as the minimum wage and welfare to work programmes combined with a massive programme of what was described as ‘social investment’ to compensate the losers of an expanded free market. It made sense as a compassionate left programme in an expanding economy. While New Labour wasn’t simply Thatcherism with a human face, it basically accepted the core economic argument: free markets, deregulation of global capital, and on nature of growth and innovation. It accepted it with good reason – much of it was right. It wasn’t all right – far from it but we’ll come back to that.

The problem was in shifting from an inflation prone corporatist economy to a more deregulated economy open to international capital flows and trade, the pace of change was brutal. Individuals and communities who shared many of Margaret Thatcher’s core principles and values – thrift, hard-work, self-sufficiency, religion, community – were simply flattened by economic change. It is one thing to embark on massive institutional change backed by the full force of the nation state, it is another not to properly consider the impact it will have on millions. What made sense in a monetarist economic textbook, meant a new culture of despair and dependency that equaled in human tragedy what the spread of property and asset ownership meant for upward mobility. They were two sides of the same coin. Once you add in state brutality, humiliation, cover-up (Hillsborough certainly warrants special mention), the deliberate attack on lifestyles and sexuality that weren’t the traditional norm then the record begins to look very tarnished indeed. Reagan with Paul Volcker at the Federal Reserve seemed to achieve similar change without the same social destructiveness. Margaret Thatcher was more Nixon-esque in her strategy than Reagan-esque.

As ever, much of the record is not as simple as it appears at first glance. The drainage of inflation from the system and the reforms of institutions that sustained it – in the 1970s Britain had borne features of ungovernability – were necessary. It could, however, have been done with more compassion and care. Taking on Arthur Scargill is one thing. Taking on millions of working people who share your core values – whether they vote for you or not – is quite another. This devastation must remain part of the record. Proud working cultures were replaced with worklessness, crime, and desolation. The means matter as well as the end.

But nor should we lose sight of the many who benefited from Thatcherite economics. New businesses, new overseas investment, new asset and home ownership; a new sense of opportunity can’t simply be ignored next to the costs.

It was fascinating to hear Lord David Young, one of the architects of large-scale state sell-offs, explained privatisation in terms of access to new investment capital as much as spreading share ownership, on the Today programme this morning. Interestingly, he also raised the question on whether price controls were now necessary for some privatised utilities. So there was a rationale to privatisation and it also turned out to be a political windfall, but underfunded state monopolies were replaced with better-funded private monopolies. For all the belief in free markets and competition, too often the interventions of the Thatcher years failed to deliver a competition that fragmented rather than aggregated power. It was producer rather than consumer-led privatisation. Adam Smith would have been appalled at this aspect of Thatcherism.

Where institutions were uprooted, too little was done to replace them with something that worked better in the public interest. Housing was sold but not replaced. De-regulation and challenging corporatist sclerosis was necessary. But where were the new public institutions to replace them by investing in skills, helping innovative businesses raise capital in a newly financialised economy or providing good quality advice and job brokerage to workers facing economic change, or helping to better fill out domestic supply chains? This is where social democracy can regain its footing. A free market economy provides tremendous opportunity but good institutions can not only develop opportunities further but help spread them wider and deeper – in good times as well as bad. And while change may be necessary, it has to be cushioned to at least give people a fighting chance. To do otherwise is simply wanton destruction.

My sense is that Labour’s developing political economy is now properly coming to terms with Margaret Thatcher rather than simply blindly opposing or accommodating her statecraft – finally. In domestic terms, Margaret Thatcher was radical and pragmatic, believed in free markets and the strong state, and wanted to spread wealth but ended up spreading poverty also. She was as contradictory as she was iconic. Britain has lost a great political figure and leader. That is cause for national reflection and mourning. For Labour, it is an opportunity to revisit its relationship with a politically traumatic era. Hopefully, it can now move on. Let’s face it though, Labour is far closer to moving on than the Conservatives are. But that is their cross to bear.