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Margaret Thatcher and Thatcherism: Dead but not buried

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Abstract

The article divides the history of Thatcherism into seven main stages from its pre-history before 1979 through to the revival of the neoliberal project by the Conservative-Liberal Democrat coalition of 2010–2015. This periodization is based on the changing strategic line of Thatcherism and is related not only to Mrs Thatcher’s practice of conviction politics as a political leader but also to the defining features of neoliberalism considered as an economic and political project. The analysis then reviews the features of the neoliberal regime shift instituted under Mrs Thatcher once it had been consolidated, including the strengthening of the City of London and a finance-dominated accumulation trajectory at the expense of uneven development elsewhere in the United Kingdom and, eventually, the financial crisis that undermined the New Labour Government in 2007–10. This crisis was the pretext for the previously noted revival of the Thatcherite project. The article then considers the dialectic of authoritarian populism and statism and ends with brief remarks on how the recent and continuing fisco-financial crisis has provided an opportunity for the revival of a ‘two nations’ neoliberal austerity politics.
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Margaret Thatcher and Thatcherism: Dead but not Buried
Bob Jessop
This is a post-peer-review, pre-copyedited version of an article commissioned for
British Politics. The definitive publisher-authenticated version, appears in British
Politics, 10(1), 6-30, doi:10.1057/bp.2014.22; published online 5 January 2015. It is
available at http://www.palgrave-journals.com/bp/journal/v10/n1/pdf/bp201422a.pdf
Abstract
The article divides the history of Thatcherism into seven main stages from its pre-
history before 1979 through to the revival of the neoliberal project by the Conservative-
Liberal Democrat coalition of 2010-2015. This periodization is based on the changing
strategic line of the Thatcherism and is related not only to Mrs Thatcher’s practice of
conviction politics as a political leader but also to the defining features of neoliberalism
considered as an economic and political project. The analysis then reviews the
features of the neoliberal regime shift instituted under Mrs Thatcher once it had been
consolidated, including the strengthening of the City of London and a finance-
dominated accumulation trajectory at the expense of uneven development elsewhere
in the United Kingdom and, eventually, the financial crisis that undermined the New
Labour Government in 2007-10. This crisis was the pretext for the previously noted
revival of the Thatcherite project. The article then considers the dialectic of
authoritarian populism and statism and ends with brief remarks on how the recent and
continuing fisco-financial crisis has provided an opportunity for the revival of a ‘two
nations’ neoliberal austerity politics.
Keywords: authoritarian populism; authoritarian statism; financialization;
neoliberalism; New Labour; periodization; Thatcherism;
Introduction
Margaret Thatcher is widely reputed to have opined, possibly on more than one
occasion and perhaps mischievously, that her big political legacy was Tony Blair and
New Labour.
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This initially surprising claim can be understood in terms of some
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significant continuities between radical Thatcherism and the New Labour project. This
article focuses in this respect on the legacies of the neoliberal regime shift instituted
under Mrs Thatcher, the strengthening of the City of London and transnational capital,
and the dialectic of authoritarian populism and statism. One might add here and not
so mischievously that New Labour’s legacy has been the chance it gave the
Conservative-Liberal coalition to invoke the spirit of Margaret Thatcher and revive her
radical neoliberal project. These remarks frame my contribution to this special issue
of British Politics. It begins with a brief periodization of Thatcherism from its prehistory
to the present conjuncture and proceeds to the defining features of neoliberalism and
their changing fortunes. It then focuses on the relatively one-sided privileging of City
interests that culminated in the North Atlantic Financial Crisis. Some comments follow
on the dialectic of authoritarian populism and statism that sustained the initial ‘two
nations’ project of Thatcherism and its resurrection under the Conservative-Liberal
Democrat Coalition Government. In both cases, profits have been privatized, losses
have been socialized, and private affluence is secured on the back of public squalor.
Mrs Thatcher and Thatcherism
The term Thatcherism began life as a Kampfbegriff, that is, one used in struggles
against Margaret Thatcher’s conviction politics and neoliberal policies rather than as
a self-description of what was initially an ill-defined economic and political project. The
term’s scientific validity as opposed to political usefulness has long been debated.
Here it refers to ‘[t]he development and specificity of the emergent strategic line
pursued by Thatcher and her various circles of political and ideological supporters’
(Jessop et al.,1988: 8). Developing a strategic line involves selecting and ordering
objectives; deciding on a pattern and sequence of actions deemed appropriate to
attaining these objectives; monitoring performance and progress; and adjusting tactics
and objectives as the conjuncture changes. It does not require (or imply) logical
consistency taken out of time and place. If a strategic line does emerge, it is more
through trial-and-error experimentation on a changing strategic terrain than through
systematic pursuit of a pre-planned course of action (Foucault 1979; Poulantzas
1978). At stake below is how specific governmental strategies, tactics, and practices
that varied over time and across social fields were articulated into a broader approach
to neoliberal governance. Some commentators regard Thatcher’s politics and policies
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as part of wider neoconservative and/or neoliberal trends in the 1970s and 1980s and
as just one (if exemplary) case of a neoliberal regime shift. If so, as a distinctive British
variant, Thatcherism attracted attention because Margaret Thatcher was the first (and,
as yet, only) woman to become prime minister in Britain; had a domineering
personality; won three successive election victories; and exploited more fully than
most the powers available to the premier in Britain’s unique form of unwritten ‘elected
dictatorship’ in a highly mediatised age.
In this context, Thatcherism’ initially characterized Thatcher’s distinctive style of
campaigning and political leadership with its right-wing authoritarian populism,
reactionary common sense, and advocacy of a free economy and strong state (Hall
et al. Gamble). After she became Prime Minister, the range of meanings expanded to
include: (1) Margaret Thatcher’s personal qualities and values; (2) a ‘conviction
politics’ approach to campaigning, party leadership, and prime ministerial power; (3)
the changing economic and political strategies pursued by Thatcher and her close
advisers during the Thatcher premiership; and (4) a distinctive set of neoliberal
economic policies as applied in the United Kingdom. This article focuses on the fourth
aspect. This reflects the fact that Margaret Thatcher’s overthrow as leader of the
Conservative Party did not spell the end of Thatcherism but simply drew the curtain
on the first three aspects, tied to the 'iron lady' herself.
The Periodization of Thatcherism
The preceding remarks and the more general strategic-relational approach adopted
here indicate the need for a periodization of Thatcherism. There can be no general
periodization because this approach to historical analysis must refer to specific sets of
actors, specific issues, specific strategies, specific institutional contexts, and specific
spatio-temporal constraints and horizons of action (Jessop 2007b). The schema
proposed below addresses the consolidation of Thatcherism as a specific economic,
political, and social project oriented to producing and sustaining a neo-liberal regime
shift (cf. Jessop et al. 1988; Jessop 2007a). Analyses constructed for other purposes
might well distinguish stages, phases, and steps.
Seven phases of the period in question, marked by a neoliberal regime shift, can be
distinguished: (1) its pre-history; (2) an initial stage of consolidation when the
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institutional framework and compromises associated with the post-war settlement in
Britain were rolled back in the name of the free economy and strong state; (3) a
consolidated stage when the neoliberal policy approach was rolled forward, in a more
radical, confident manner; (4) a stage of blowback’ when unexpected negative
economic, social, or political externalities began to accumulate and/or resistance
mounted to the roll-forward phase; (5) a stage of modifications initiated under John
Major and continued under New Labour, when they were construed and justified under
the rubric of the ‘Third Way’, which provided flanking and supporting measures to
maintain the neoliberal momentum; (6) as a result of cumulating pathologies, the crisis
of the finance-dominated accumulation that grew out of the neoliberal regime shift and
an associated crisis in neoliberalism that, together, represent both a threat and an
opportunity to the neoliberal project; and, in reaction to this, (7).a state marked by a
rassemblement of economic and political forces to defend neoliberalism and roll it
forward again a phase that can be called radical Thatcherism redux. It may be
necessary to distinguish further phases and stages in future.
1. Thatcherism as a Social Movement, 1965-79
The pre-history of Thatcherism can be traced to 1965-75, which saw diverse
phenomena and events from which lessons would be drawn in its subsequent
development. These included failed efforts under Heath’s One Nation Conservative
government and Wilson’s Labour Government to modernize Britain; the breakdown of
the post-war settlement and the rise of new social movements; and the rise of the new
right and little Englandism. Following Margaret Thatcher’s successful challenge to Ted
Heath to lead the Conservative Party, a new stage in this phase emerged. Thatcherism
was a dissenting social and political movement outside and opposed to the bipartisan
and corporatist post-war settlement, 1975-1978/9. Significantly, during this period, the
Labour Government made a series of pragmatic neoliberal policy adjustments that the
Thatcher regime would later pursue on principled grounds. The ‘Winter of Discontent’
in 1978/9 marked the point of no return when Mrs Thatcher’s party benefitted from a
formidable rassemblement of social forces fearful of further unrest and therefore
seemed destined to win the forthcoming election.
2. Consolidation Efforts, 1979-82
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Following the Labour Government’s defeat in the June 1979 election, there was a
fraught and messy phase of consolidation. Factionalism and sectionalism re-emerged
in the Conservative Government and Party, pitting the City against profit-producing
capital, international capital with global horizons against capitals with strong interests
in European integration, and North against South. These divisions were expressed in
conflicts between One Nation wets and Thatcherite ‘dries’. Failure at this stage would
have restored (at least for a time) One Nation Conservatism and left no distinctive
Thatcherite legacy (apart from a cautionary lesson about the art of the possible). The
challenge was to translate formal control into real control of the state apparatus (Party,
Cabinet, machinery of government), to stabilize electoral support, and to secure
broader-based support within Establishment not just based on ‘holding on to nurse for
fear of something worse’. Unsurprisingly, it took time for a distinctive Thatcherite
economic strategic line to evolve. The initial economic programme was based mainly
on tight control over the money supply, public spending cuts, attacking trade union
privileges, and trusting in the regenerative powers of market forces. Monetary
targeting had mixed success and the overall impact of Thatcher’s policies was likewise
mixed -- they produced a severe recession, mounting unemployment, and growing
unpopularity. A full-blooded neo-liberal economic and political project had not yet
emerged. The British defeat in 1982 of Argentinian forces in the Malvinas/Falklands
War helped to consolidate Thatcherism by making Margaret Thatcher unassailable
within her cabinet and party (for a good overview of this phase, see Fry .2008).
3. Consolidated Thatcherism, 1982-87
More important to the consolidation of Thatcherism in the following months than the
Falklands victory were at least three other factors: a covert relaxation of monetary
policy in favour of a medium-term financial strategy, an electioneering boom, and a
suicidally split opposition. A second general election victory in 1983 encouraged the
Thatcherite wing to embark on a more radical programme to transform this favourable
conjuncture into deeper-rooted, if not irreversible, structural shifts in the post-war
economic and political order. The distinctive features of this project were: (1) a neo-
liberal accumulation strategy; (2) a centralizing 'strong state' project, and (3) a 'two
nations' authoritarian populism. Together these entailed a more radical economic
programme to roll back the post-war settlement based on a Keynesian commitment to
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full employment and a social democratic welfare state (Jessop et al., 1988; Jessop et
al., 1990). Privatization was intensified, further steps were taken to shackle organized
labour economically and politically, six Labour-controlled councils were abolished,
local government was weakened, and the government triumphed in a gruelling
yearlong miners’ strike. The Conservatives also sought to roll out the conditions for
supply-side flexibility, entrepreneurial spirits, and popular capitalism.
Following the initial consolidation in 1982-4, a stage of relative stabilization followed.
One reason could have been preoccupation with miners’ strike in 1984-5, a battle
played out at a time and on grounds prepared in advance by the Government.
However, many neoliberals in the Conservative ranks within Parliament and the Party
and in allied think-tanks regarded these as years of drift. In response, from the Annual
Party Conference in October 1986 onwards, Thatcher committed the government to a
more radical, neoliberal project aimed at restructuring the whole society through
measures to restructure a wide range of institutions in civil society: education, the
health service, the professions, the mass media, the culture industries, and religion.
Following a third election victory in 1987, the Chancellor of the Exchequer, Nigel
Lawson, introduced a radical tax-cutting budget that was excessively favourable to the
rich. This marked the highpoint of radical Thatcherism. By autumn, the Lawson boom
turned to bust, affecting home-owners, shareholders, and jobs. Further neoliberal
measures were pursued to tackle the economic crisis, momentum was dissipating as
problems accumulated at home and abroad.
4. Blowback and the Decomposition of Radical Thatcherism, 1988-90
Economic trends began to move against the government. Inflationary pressures
fuelled by an escalating money supply (which were partly masked by rising imports
and made palatable by rising asset prices) were expressed in continued growth in the
trade deficit, rising interest rates, resurgent wage demands, and then collapsing asset
prices, including housing. Political matters also turned sour. A shock defeat in the 1989
elections for the European Parliament and Lawson’s resignation as Chancellor of the
Exchequer was followed by growing discontent with the handling of such diverse
issues as National Health Service reform, road and rail transport, water and electricity
privatization, and European integration. The final straw was the massively unpopular
and undeniably Thatcher-inspired poll tax introduced to replace the local property tax.
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The government became increasingly defensive, faced growing disenchantment, and
feared the resurgence in Labour fortunes. 1989-90 proved the undoing of Margaret
Thatcher and she was forced to resign in November 1990 to be replaced, after a
bruising leadership battle, by John Major.
5a. Thatcherism with a Grey Face, 1990-97
The Major government retained the main thrust of the consolidated Thatcherite project,
albeit without the hectoring tone and erstwhile charisma. Neoliberal policies were still
pursued but less vigorously and problems accumulated on the political scene. The
Conservatives came under attack for 'sleaze' (a catchall media term for the financial
corruption, political malpractice, and sexual misconduct that were linked to a
Conservative Party that had been too long in power) and on the growing signs of party
disunity and weak leadership during the final years of the Major government. Public
support declined and there was a widespread feeling that ‘it was time for a change’
and to give a much altered opposition another chance. This greatly facilitated the
emergence of the ‘New Labour’ project in the Labour Party and wider labour
movement and led to another phase of Thatcherism.
5b. Thatcherism with a Christian Socialist Face, 1997-2010
Four successive electoral defeats had forced the Labour Party to launch its own
socialist perestroika under Neil Kinnock and then John Smith. Tony Blair then
subjected the Party to radical changes in political identity (‘New Labour’); political
rhetoric (symbolized in the rejection of the Labour Party’s Clause 4 constitutional
commitment to nationalization and in a media-savvy emphasis on a compassionate,
multicultural, youthful, and modern image compared with the uncaring, xenophobic,
middle-aged, and old-fashioned image of the Tories); and political organization
(evidenced by struggles to centralize power in an authoritarian mass partyin which
grass-roots representation was marginalized in favour of a more plebiscitary
approach). While New Labour’s landslide victory in 1997 can be attributed in part to a
cunning combination of floating signifiers and an organizational fix, it also benefitted
from growing public dissatisfaction with a tired incumbent regime. Many on the left
hoped for a return to a distinctive British variant of European social democracy. More
worldly observers recognized the successive accommodations to the legacies of
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Thatcherism (on which see, for example, Hay 1999). Indeed, the general strategic line
of the three Blair governments was to press on with Britain’s neo-liberal transformation
rather than call a halt, let alone reverse it. What distinguished them from earlier neo-
liberal governments was the political and social necessity in this particular conjuncture
to provide ‘Third Way flanking and supporting measures to keep the neo-liberal show
on the road. This was not confined to Britain but part of the continuing reinvention of
neoliberalism (cf. Peck 2010). But the Third Way had a distinctive British inflection
because of the distinctive legacies of Labour politics, the growing North-South divided,
and the importance of Labour’s northern heartlands to its electoral success even as
New Labour grew more metropolitan.
To the extent that there was a ‘break' with the broader strategic line of Thatcherism, it
concerned Thatcherism’s hegemonic vision more than its state project (see further
Jessop 2007a, 2007b). Tony Blair and Gordon Brown favoured a more one nation
social imaginary over the Thatcherite two nations approach. This could be interpreted
as a remoralization of neoliberalism in line with Labour’s Christian socialist tradition
and/or as a Polanyian turn in response to Thatcherite overemphasis on market forces
to the detriment of social cohesion (Polanyi 1944). But this ‘nation’ would not be re-
unified under the protection of the Keynesian welfare national state. Instead the
emphasis was on securing cohesion mainly through labour market attachment (i.e.,
workfare rather than welfare) and regenerating marginalized communities; in addition,
individual, family, and child poverty would be alleviated mainly through a series of
'stealthy' (rather than proudly proclaimed) and targeted measures that would redirect
welfare spending within otherwise rigid fisco-financial parameters. This conformed
with, rather than challenging, the profit-oriented, market-mediated logic of neo-
liberalism. Thus New Labour administered the legacies of Thatcherism as so many
economically or politically irreversible faits accomplis. This involved more than an
initial prudential desire not to frighten the press and (through it) the electorate with the
prospects of radical change. Instead it reflected the New Labour commitment (notably
from Tony Blair and Peter Mandelson) to advance the neo-liberal accumulation
strategy in the name of modernization. Even Gordon Brown, who had a residual
affection for the welfare state, lined up behind this strategy, endorsed financialization
and globalization, increased the resort to the Private Finance Initiative (an expensive
means of purchasing capital goods via rental and service contracts whilst keeping
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these spending commitments outside the market-sensitive public sector borrowing
requirement), and pursued targeted welfare redistribution without great fanfare.
Overall, New Labour committed itself to further liberalization and de-regulation in many
areas; to the privatization or, at least, corporatization, of most of what remained of the
state-owned sector as well as to the extension of market forces into what remains of
the public and social services at national, regional, and local level. It was also firmly
attached to internationalization, especially the free flow of capital, and supported the
interests of international finance and transnational in line with the Washington
Consensus. An interesting shift was greater emphasis on promoting the knowledge-
driven economy and the creative sector, albeit in a neo-liberal manner, as a future-
oriented response to de-industrialization. Paradoxically, this benefitted the City of
London, which was seen as a dynamic centre of globally-competitive, knowledge-
intensive business skills and a hotbed of cutting-edge financial innovation. Thus New
Labour policies reinforced the structural bias in the economy towards London, the Rest
of the South-East, and (debt-led) consumption. In addition, the tendency to
authoritarian populism and a love for the strong state were not so much diminished as
reinforced over three New Labour governments.
6. Financial Crisis and Radical Thatcherism Redux, 2008-
The defeat of New Labour in the wake of the North Atlantic Financial Crisis restored
the Conservatives to power, albeit in coalition with the Liberal Democrats. They have
pursued neoliberal austerity politics and used the crisis as an opportunity to make
further inroads into what remains of the institutions that embodied the post-war
settlement. Since much of the remainder of this article addresses this period, directly
or indirectly, no further comments are made here.
Consolidated Thatcherism and the Neo-Liberal Agenda
In terms of legacies, the most important policy continuities in successive stages of
Thatcherism concern the neo-liberal agenda and its adaptation to changing
circumstances at home and abroad. In the consolidated phase, its six principal
elements comprised:
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(1) Liberalization to promote free market (as opposed to monopolistic or state
monopolistic) forms of competition as the most efficient basis for market forces or
at least to promote greater market competition to the detriment of monopoly or
state monopoly competition where the latter two forms are deemed non-
contestable.
(2) Deregulation, giving economic agents greater freedom from state control and legal
restrictions, based on a belief in the efficient market hypothesis and the prudential,
self-preserving instincts of companies and financial institutions.
(3) Privatization of state-owned enterprises and the contracting out of public services
to roll back the frontiers of direct or indirect public sector provision of goods and
services in favour of the profit-oriented, market-mediated economy and the
efficient allocation of resources and dynamic innovative potential that markets are
expected to deliver.
(4) Introduction of market proxies and/or user charges in the residual state sector to
promote, allegedly, efficient, effective, and economical delivery of public services,
thereby reducing the scope for non-market logics in the public sector, especially
when combined with cuts in state budgets.
(5) Reductions in direct taxation on corporate income, personal wealth, and personal
income especially on (allegedly) entrepreneurial income in order to boost
incentives for economic agents to earn, save, invest, innovate, create, and
accumulate individual and corporate wealth rather than to allow the state to
determine the level and content of the national output.
(6) Promotion of internationalization to boost the free flow of goods and services,
profit-producing investment and technology transfer, importing more advanced
processes and products into Britain as a means of economic modernization, and
stimulating the mobility of interest-bearing capital, all with a view to completing the
world market.
Individually and in combination these policies have different effects in different policy
areas. In the field of labour market and labour relations, for example, the effects
include: (1) de-industrialization, which weakened the strongest and most militant trade
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unions; (2) legislation directed at trade unions' capacity to engage in collective
bargaining and strike action as well as to represent members in other respects; (3) a
general de-legitimation of corporatism and tripartism as approaches to economic and
social policy; (4) greater flexibilization and de-regulation of labour markets; and (5)
neo-liberal 'welfare-to- work' strategies. These policies continued under New Labour,
whose Blairite wing was also enchanted with entrepreneurs, business leaders, and the
business community more generally. These forces enjoyed privileged access to the
Labour Government, playing a key role in policy advice and evaluation, securing
critical positions in an increasing range of public-private partnerships, and providing
lucrative employment and consultancies when ministers and civil servants retired.
Strategies to Promote or Adjust to Global Neoliberalism
Monetarism was a key element in the initial approach to neoliberal restructuring in
1979-81. Some have claimed that this doctrine is the expression of money as the
elemental form of 'capital in general' (e.g., Clarke 1988). The emergence of
Thatcherism certainly received 'general support from the City, mixed blessings from
industry, and divided opposition from organized labour (Jessop et al 1988: 92). But,
as noted above, monetarism was counter-productive economically and politically and
was quietly abandoned in the consolidation phase of the first Thatcher government.
However, this did not side-line issues of money and credit, taxation and spending or
marginalize the interests of financial capital.
No other major capitalist economy had such marked internationalization in its leading
sectors as Britain and the Conservative governments sought to strengthen this
supposed competitive advantage through their neoliberal agenda. New Labour also
asserted to all and sundry at home and abroad the inevitability, desirability, and global
benefits of neoliberal globalization. The market-led recovery from the crisis of Britain’s
flawed Fordism favoured by the Thatcher regime further reinforced British de-
industrialization and balkanized Britain's industrial core among sectors tied to
American, Japanese, German and UK multinational capital (Jessop et al., 1988;
Jessop et al., 1990).
2
An interesting paradox here is that privatized utilities and
infrastructural services were often taken over by foreign state-owned industries. The
disintegration of the economy as a coherent national economic space means there is
no significant economic, political, and social basis for a national economic strategy.
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Thatcherism was entrenching a rentier British economy, with a secondary industrial
role in the world economy and a low wage, low-tech service sector at home. This would
consolidate the dominance of City financial interests and multinational capital at home
and abroad but also posed economic and political strategic dilemmas.
Whether neoliberal policies and the promotion of City interests would really advance
long-term economic growth in the general economic interest was less certain. This
question was a long-running theme in scientific and political debates about Britain’s
economic performance and was posed again during the Thatcher years. Indeed, a
1989 report in the Bank of England's Quarterly Bulletin raised doubts about the
benefits of London's role as an international financial centre. Its authors noted:
There may of course be disadvantages in hosting a major financial centre.
Salaries and wages may be forced up, thus driving up rents and house prices,
with undesirable social consequences. Regional disparities may be exacerbated
and the congestion of local transport systems may be aggravated. The economy
may face risks due to over-dependence on a single sector. The operation of
monetary policy may become complicated by the need to nurture the financial
sector. Regulation may need to be more complex than otherwise. Finally, it has
sometimes been argued that the financial sector merely preys on the rest of the
economy, adding to costs and distorting other markets - by, for instance,
attracting able individuals who might be more socially productive in other areas
such as manufacturing (Davis and Latter 1989: 516).
Having conjured up this spectre, however, the Bank’s researchers sought to exorcise
it with various counter-arguments.
3
They concluded that, 'on balance, the financial
sector may be judged to offer substantial net benefits to the economy’ (Davis and
Latter 1989: 516). With hindsight, however, these worries were well-founded. indeed,
the tendencies identified in the report have intensified in the intervening decades.
These cumulating asymmetries have made it increasingly hard to reverse the UK
economy’s dependence on international finance and intensified uneven development
to the benefit of London and South-East to the detriment of other regions. In short, the
problems that become evident in the financial crisis in 2007-8 did not suddenly emerge
they are rooted in changes that occurred over more than 30 years and were
anticipated more than 25 years ago.
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I now discuss six ways in which Thatcherite policies reinforced Britain’s flawed mode
of growth.
4
This is not just a story of Thatcherism, however: this continued under New
Labour and the new coalition government. First, in pursuing banking de-regulation and
(at least initially) a monetarist counter-inflation strategy, investment in the 'real'
economy was discouraged. De-regulating and liberalizing banking capital promotes
financial innovation in pursuit of profits and also helps banks to circumvent monetary
restraint. This makes it progressively harder for governments to control the money
supply each time that tight money is needed for economic management (Toporowski
1989). This was another reason to abandon monetarism. The inverse effect is seen in
the limits to quantitative easing as an economic stimulus measure. Second, by
encouraging expansion in the financial sector, the neoliberal strategy increased
financial claims on the 'real' economy. This has been aggravated by other government
policies under both Conservative and Labour governments that undermined industrial
investment and growth (cf. Toporowski 1989; Watson 1999; Guttman 2008).
Moreover, in an era when financial investment in global equity markets is increasingly
liquidity-driven and based on opaque forms of leverage, industrial productivity and
output fail to keep pace with the growth of financial claims. Thus, during the past 25
years, there has been a steady shift in the mass and share of profits going to the
financial sector, a polarization of wealth and income in the wider population, and a
boost to ‘privatized Keynesianism’ (see below) to enable those with declining real
incomes to maintain their lifestyle.
Third, in eschewing a modernizing interventionist economic policy, the Thatcher
government systematically reduced its role in training and tried to bring education and
R&D activities closer to the market. Overall, its policies, which were maintained under
New Labour, reinforced the low-skill, low-wage, low-productivity character of much
British industry (Daniels and McIlroy 2009). As the pace of technological innovation
accelerated and ever-new demands were placed on the workforce, this problem
became more severe, especially in the old industrial heartlands as they suffered from
de-industrialization.
Fourth, in promoting popular capitalism and privatized Keynesianism (the increasing
resort by the working and middle classes to credit to finance their everyday needs and
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aspirations), the Conservative and New Labour governments were politically and
economically short-sighted. The Thatcher and Major governments pursued short-term
asset stripping of the public sector for the sake of a share-owning democracy,
cosmetic reductions in the Public Sector Borrowing Requirement and tax-cuts - all to
the detriment of investing in long-term competitiveness. And New Labour accepted the
electoral imperative to keep low tax rates and also enjoyed the (illusory) fiscal and
political benefits of the housing bubble. Indeed, fifth, by privileging owner occupation
in the hope of electoral benefit, both Conservative and Labour regimes boosted the
financial services sector. This promoted a consumer boom fuelled by housing equity,
aggravated the crowding out effects of the housing sector borrowing requirement on
productive investment, and discouraged labour mobility from areas of high
unemployment to those with labour shortages. In addition, both Conservative and
Labour governments suffered electorally when housing bubbles collapsed in 1987
and 2007 respectively.
Sixth, the apparent success of the neoliberal strategy under Thatcher, Major, and New
Labour was regionally concentrated. The package of neoliberal measures was
especially advantageous to the City, rentier, and producer service interests located
above all in London and the South-East (Peck and Tickell 1995). Other government
investment projects also favoured London and the Rest of the South-East the
Olympic Games is another recent example. But the 'north' of England and the
provinces suffered huge job losses in manufacturing (both in absolute and relative
terms) than in the 'south'. This occurred through the combined impact of general
macro-economic policies and specific micro-economic measures to restructure
nationalized industries (which are over-represented in the 'north').
Even in the 1980s and 1990s, then, the seeds of later financial crises and continuing
economic decline were evident. Much of the financial expansion occurred through the
increasing internationalization of the City and its ever closer integration into global
circuits of capital. Regulatory arbitrage played a key role here, when, following the ‘Big
Bang’ that liberalized and deregulated finance, the way was opened for London to
reinforce its position as the leading international centre for international financial
capital. Not coincidentally, many of the biggest financial scandals that have transpired
in 2007-2012 were generated through activities in the City, regardless of the nationality
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or primary seat of the financial institutions involved. This was linked in turn to a pattern
of investment skewed to sectors that service the consumption boom (retailing,
distribution, personal financial services) rather than those involved in internationally
tradable commodities. This trend continued under New Labour.
Authoritarian Populism and Authoritarian Statism
The social basis of Thatcherism changed over time. Support initially stemmed from
Margaret Thatcher’s ability to express hitherto unvoiced petty bourgeois discontent
with the post-war settlement and exploit disillusion with the Labour government, the
unions, and visible economic decline. Moreover, from Thatcher’s first days in
opposition almost to her final days in Downing Street, the press was overwhelmingly
supportive. However, pace Stuart Hall et al. (1979), the authoritarian populist appeal
of Mrs Thatcher and her Thatcherite colleagues and media supporters was less
important to the long-run resilience of Thatcherism than its ability to consolidate
institutional power through control of a centralized state and to engage in a war of
position with a view to modifying the structural balance of power in state-economy-
society relations.
On the one hand, the Conservatives also used government fisco-financial and
legislative powers to consolidate their social base -- notably among skilled manual
workers in the private sector and the small business and self-employed sectors. Key
elements here were: the discounted selling of publicly owned housing, tax cuts, ending
restrictions on private-sector collective bargaining, and petty gains from privatization
shares. Support was stronger in the prosperous south of England rather than in
Scotland, Wales, and the declining north. These measures to promote popular
capitalism could be seen as part of the authoritarian populist moment of Thatcherism.
On the other hand, there is also an authoritarian statist moment. This refers to the
strengthening of the state, draconian reductions in civil liberties,
Its institutional legacies in the state system (in its broadest sense) and the economic
and social consequences of an excessively internationalized and extraverted British
economy are a further block on radical reform post-Thatcher and Thatcherism. In
short, the legacies are not so much a question of hegemony qua class leadership but
the structural inscription of class dominance in the economic and political system.
16
Between elections working class support was volatile, however, and support from the
professional middle class declined steadily -- especially in the public sector. Moreover,
as signs of economic crisis multiplied and the full horror of the poll tax emerged, more
instrumentally-motivated support began to crumble.
Key features of authoritarian statism comprise: (1) the decline of political parties as
representational organizations and organizers of hegemony as their ties to the general
population and to the power bloc weaken; (2) hence, rather than fulfilling their
traditional functions in elaborating policy through compromise and alliances around a
party programme and in legitimating state power through electoral competition, parties
are becoming merely the transmission belts for executive decisions; (3) the increasing
power of the mass media in shaping social imaginaries and legitimating or contesting
–– power; (4) the decline in legislative power and the concentration of power within
the executive in the office of prime minister; (5) a decline in the rule of law in favour of
particularistic and discretionary regulation; (6) (6) the growth of parallel power
networks cross-cutting the formal organization of the state, exercising a decisive share
in its activities, and promoting a growing material and ideological community of interest
between key civil servants and the dominant mass party; (7) the rise of a reserve
repressive para-state apparatus, parallel to the main organs of the state and serving
in a pre-emptive capacity to police popular struggles and other threats to bourgeois
hegemony (cf. Poulantzas 1978).
Concluding Remarks
How one estimates the legacies of Mrs Thatcher and Thatcherism depends on one’s
reference point and focus. My contribution has neglected the idiosyncrasies of the ‘Iron
Lady’s’ personality and leadership style in favour of examining the specific features of
the neo-liberal policy agenda, its role in perpetuating the weaknesses of the UK’s
flawed mode of growth (especially in reinforcing the economy’s internationalization
and hyper-financialization) and the legacies of changes in the state’s institutional
structure. One conclusion is that Mrs Thatcher was justified in regarding New Labour
as a major achievement of her years in government not merely in terms of its
weakened role as a representative of organized labour and champion of the welfare
17
state but also in terms of its unashamed adoption of her neo-liberal agenda.
Complementing this conclusion, however, is that these continuities have reinforced
the crisis tendencies in the British economy, which is now reflected in the current
financial crisis and its broad social repercussions and their reflection in a renewed
neoliberal politics of austerity with strong ‘two nations’ effects.
Endnotes
1
I cannot trace a direct source for this (not even on the Thatcher Foundation website
but a Google search shows it to be part of conventional wisdom in many quarters
within and beyond the United Kingdom. Even if apocryphal, it contains, as we shall
see, an important germ of truth.
2
More recently, Chinese, Indian and Russian capital along with sovereign wealth
funds have joined in.
3
To wit: growth is always accompanied by local congestion and regional imbalances;
some financial services jobs are being decentralised; neither monetary nor regulatory
policy are dictated or constrained by the City’s international role; and, compared with
European rivals, financial intermediation is relatively efficient.
4
The following paragraphs draw heavily on Jessop 2013.
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18
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