Thursday, April 11, 2013

Thatcher Is Dead. Thatcherism Isn't.

Margaret Thatcher died this week. Unfortunately, the program she advocated hasn't -- at least not yet. Tom Walkom puts the Iron Lady in historical perspective:

The world that Thatcher faced when she became Britain’s prime minister in 1979 was still coming to terms with the events of the post-1945 era.

World War II had produced a great compromise between labour and capital. Under the terms of that compromise, capitalism was allowed to do its magic. In return, through both labour unions and the welfare state, working people were awarded a piece of the action.

It was a remarkably productive period. But it also contained the seeds of its own undoing.

By ensuring that employment stayed at high levels, the great compromise eliminated the most potent weapon bosses had over their workers — fear of joblessness.
As a result, workers were able to win higher wages. But with rising wages came inflation. As inflation rose, the engine of capitalism itself was undermined.

Thatcher and Ronald Reagan came to power on the promise that they would tame inflation. But their prescription just about killed the patient:

[Their] remedy, soon copied by nations like Canada, relied on the deliberate creation of unemployment.

This was accomplished in part by letting central banks boost interest rates to levels that drove weaker businesses bankrupt.

It was accomplished in part by gutting social programs like welfare and employment insurance that provided aid to the jobless.

Where unions were strong, as in Britain, labour rights were severely restricted.

For a while, Thatcherism succeeded. In Canada and elsewhere, unemployment soared, wages stalled and income inequality increased.
But the economy, as measured by output, soared. To the Thatcherites, this was all that mattered. The new orthodoxy was lauded.

The new orthodoxy was best summed up in Thatcher's claim that "there is no such thing as society. There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first."

It was a philosophy that worked well -- if everyone started in the same place. But the green grocer's daughter held a chemistry degree from Oxford. Not everyone was born with her advantages. Her step children -- David Cameron and Stephen Harper -- believe, like Thatcher, that they were born on third base and hit a home run.

The problem with the program, of course, is that most people don't get to play the game. And, when they get angry, they storm the field. That is happening in Europe -- and it will soon happen in The Peaceable Kingdom.


kirbycairo said...

The funniest thing about such capitalist ideology is that it undermines the very society that it seeks to create. Greed works in the short-term. It generates higher profits for corporations and the rich and Thatcher and their ilk get what they are looking for - a society with a small group of wealthy people with all the power. But then demands gradually dries up, more and more people are thrown into a pool of poverty and desperation. The Economy gradually declines, living standards decline and this gives birth to larger and more widespread opposition. Eventually not only is prosperity killed but rebellion raises its sometimes violent head.

It never ceases to amaze me that it is often capitalists who understand capitalism the least.

Owen Gray said...

The old adage that it's wise to share the wealth has always been true, Kirby,

It's simply good policy. Yet capitalists -- time and time again -- arrange their own destruction.

Unfortunately, Joseph Schumpeter has convinced them that such destruction is "creative."