Freedom fighter
Only a handful of peacetime politicians can claim to have changed the world.Margaret Thatcher was one.She transformed not just her own Conservative Party,but the whole of British politics.Her enthusiasm for privatisation launched a global revolution and her willingness to stand up to tyranny helped to bring an end to theSoviet Union.Winston Churchill won a war,but he never created an ism鈥?
The essence of Thatcherism was to oppose the status quo and bet on freedom鈥攐dd,since as a prim,upwardly mobile striver,she was in some ways the embodiment of conservatism.She thought nations could become great only if individuals were set free.Unlike Churchill鈥檚 famous pudding,her struggles had a theme:the right of individuals to run their own lives,as free as possible from micromanagement by the state.
In her early years in politics,economic liberalism was in retreat,theSoviet Unionwas extending its empire,and Milton Friedman and Friedrich Hayek were dismissed as academic eccentrics.InBritainthe government hobnobbed with trade unions,handed out subsidies to failing nationalised industries and primed the pump through Keynesian demand management.To begin with the ambitious young politician went along with this consensus.But the widespread notion that politics should be 鈥渢he management of decline鈥 made her blood boil.The ideas of Friedman and Hayek persuaded her that things could be different.
Most of this radicalism was hidden from the British electorate that voted her into office in 1979,largely in frustration with Labour鈥檚 ineptitude.What followed was an economic revolution.She privatised state industries,refused to negotiate with the unions,abolished state controls,broke the striking miners and replaced Keynesianism with Friedman鈥檚 monetarism.The inflation rate fell from a high of 27% in 1975 to 2.4% in 1986.The number of working days lost to strikes fell from29min 1979 to2min 1986.The top rate of tax fell from 83% to 40%.
Not for turning
Her battles with the left鈥攅specially the miners鈥攇ave her a reputation as a blue-rinse Boadicea.But she was just as willing to clobber the right,sidelining old-fashioned Tory 鈥渨ets鈥 and unleashing her creed on conservative strongholds,notably by setting off the 鈥渂ig bang鈥 in the City ofLondon.Many of her pithiest put-downs were directed at her own side:鈥淯-turn if you want to,鈥 she told the Conservatives as unemployment passed2m.鈥淭he lady鈥檚 not for turning.鈥 She told George Bush senior:鈥淭his is no time to go wobbly!鈥 Ronald Reagan was her soulmate but lacked her sharp elbows and hostility to deficits.
She might not be for turning,but she knew how to compromise.She seized on Mikhail Gorbachev as a man she 鈥渃ould do business with鈥 despite warnings from American hawks.She backed down from a battle with the miners in 1981,waiting until she had built up sufficient reserves of coal three years later.For all her talk about reforming the welfare state,the public sector consumed almost the same proportion of GDP when she left office as when she came to it.
She was also often outrageously lucky:lucky that the striking miners were led by Arthur Scargill,a hardline Marxist; lucky that the British left fractured and insisted on choosing unelectable leaders; lucky that General Galtieri decided to invade the Falkland Islands when he did; lucky that she was a tough woman in a system dominated by patrician men (the wets never knew how to cope with her); lucky in the flow of North Sea oil; and above all lucky in her timing.The post-war consensus was ripe for destruction,and a host of new forces,from personal computers to private equity,aided her more rumbustious form of capitalism.
The verdict of history
Criticism of her comes in two forms.First,that she could have done more had she wielded her handbag more deftly.Hatred,it is true,sometimes blinded her.Infuriated by the antics of left-wing local councils,she ended up centralising power inWhitehall.Her hostility to Eurocrats undermined her campaign to stop the drift of power toBrussels.Her stridency,from her early days as 鈥淭hatcher the milk snatcher鈥 to her defenestration by her own party,was divisive.Under her the Conservatives shrank from a national force to a party of the rich south (seeBagehot).Tony Blair won several elections by offering Thatcherism without the rough edges.
The second criticism addresses the substance of Thatcherism.Her reforms,it is said,sowed the seeds of the recent economic crisis.Without Thatcherism,the big bang would not have happened.Financial services would not make up such a large slice of the British economy and the country would not now be struggling under the burden of individual debt caused by excessive borrowing and government debt caused by the need to bail out the banks.Some of this is true; but then without ThatcherismBritain鈥檚 economy would still be mired in state control,the commanding heights of its economy would be owned by the government and militant unions would be a power in the land.
Because of the crisis,the pendulum is swinging dangerously away from the principles Mrs Thatcher espoused.In most of the rich world,the state鈥檚 share of the economy has stubbornly risen.Regulations鈥攅xcessive as well as necessary鈥攁re tying up the private sector.Businesspeople are under scrutiny as they have not been for 30 years and bankers are everyone鈥檚 favourite bogeyman.And with the rise ofChinastate control,not economic liberalism,is being hailed as a model for emerging markets.
For a world in desperate need of growth,this is the wrong direction.Europewill never thrive until it frees up its markets.Americawill throttle its recovery unless it avoids overregulation.Chinawill not sustain its success unless it starts to liberalise.This is a crucial time to hang on to Margaret Thatcher鈥檚 central perception:that for countries to flourish,people need to push back against the advance of the state.What the world needs now is more Thatcherism,not less.