What Labour can learn from the Thatcherites

Thatcherism wasn’t always as popular as it is today. For David Cameron to be able to introduce the market so heavily into the NHS, universities, even schools, to privatise the Queen’s head, as Dennis Skinner described the Royal Mail sell-off, shows the strength of right-wing politics in Britain. For Cameron to then be re-elected with a majority, and for half of voters to opt either for him or UKIP, a party ostensibly to his right, shows the political consensus remains firmly on enemy terrain.

When the leader who would become ‘The Iron Lady’ took over her party in 1975, she was the insurgent candidate of what Chris Patten called a ‘peasant’s revolt’ against the ineptitude of Ted Heath. She had to confront the wets in her own party while the ruling Labour Party of the 1970s looked more likely to turn to Bennism than triangulate her right-wing politics. Yet by the end of the seventies, Thatcher had conquered her party and her first General Election. By the end of the eighties, she had won over public opinion for her assaults on the unions, the public sector, on social housing, and much more. By the end of the nineties, she had transformed the Opposition party too. Once asked what her greatest legacy was, Thatcher answered, drily, “New Labour.”

Why was Thatcher so successful in shifting the political agenda radically rightwards, and what lessons can Labour take from that? The best diagnosis of Thatcherism still remains the first. The word was coined by Stuart Hall, the Marxist cultural theorist aligned with but never a member of the Communist Party of Great Britain. Writing for Marxism Today, his essay ‘The Great Moving Rightwards Show’ described Thatcherism as offering a diagnosis of the crisis of the seventies in inflation, union ‘militancy’, and a bloated public sector, and had a policy prescription to cure them. For Hall, this made Thatcherism, ‘not simply a worthy opponent of the Left, but in some deeper way its nemesis, the force that is capable in this historical moment of unhinging it from below.’

Thatcherism required the crisis of stagflation to be given its narrative, and the turmoil of the Winter of Discontent to supply its moment. But Thatcherism, and its broader transnational movement, neoliberalism, was not just a sudden, opportunistic response to the collapse of Keynesianism but a political project in and of itself, incubated, developed, propagated for almost forty years before Thatcher and Reagan won their elections at the turn of the decade. In understanding the audacity, the vision and the sheer organisational abilities of the early neoliberals, the Left may be able to better understand the monumental task that it has faced, but never confronted, since at least 1979.

Neoliberalism is not just a slur, and in fact Milton Friedman, a great influence on Thatcher, once used the term to describe himself in an essay titled “Neoliberalism and its Prospects” in 1951. For Friedman, along with Friedrich von Hayek, Ludwig von Mises and others, neoliberalism was a specific transnational project to popularise a reinvention of classical liberalism for the postwar world. Hayek set out constructing a team of liberal academics at the University of Chicago, the world-famous ‘Chicago School’ of free-market economics, and sought much of the funding for salaries from Harold Luhnow, a conservative businessman dedicated to funding a revival in liberal thought, what Philip Mirowski terms, “the neoliberal thought collective”. After helping creating the Chicago School, Hayek founded the Mont Pelerin Society, an international forum for neoliberals to meet, share ideas, and organise politically.

One of the seeds of neoliberalism’s later success was thus sown. It was a constructivist project, one that acknowledged that its vision would not come about through the laws of economics, history or nature, but that the conditions for its success would be created. Thus Friedman advised the extreme right-winger Barry Goldwater on his failed Presidential bid in 1964, seeing his 39% share of the vote as a victory for his ideals, and subsequently went on to see Goldwater’s nominator, Ronald Reagan, elected in 1980 on a very similar platform of low taxes and huge cuts. In those intervening years, the neoliberal thought collective had won over enough of the commentariat, enough of the media, and were supported by a totally unprecedented grassroots conservative movement, organising localised campaigns to lower state taxes, such as the infamous Proposition 13 in California, Reagan’s own state.

In Britain, Thatcher’s vehicle was the Centre for Policy Studies, which from 1974-5 worked in hijacking the Tory party. The most notable output was the series of speeches by MP and All Souls fellow Sir Keith Joseph in 1974. Additionally the Institute for Economic Affairs produced neoliberal literature with a half-million pound budget and a full-time staff of fifteen. They worked carefully to court and influence financial journalists like Samuel Brittan of the Financial Times, Peter Jay of The Times, Patrick Hutber of the Daily Telegraph and Ronald Butt of the Sunday Times. In a period when Keynesian modelling of inflation and growth had come unstuck, and countries experienced both high unemployment and rising prices together, the intellectual vanguard of Thatcherism offered a confused if not bewildered commentariat a root cause for the crisis of stagflation: the greed of the unions, a burgeoning welfare state, and state-owned monopolies. It was wrong, of course, but it was the only analysis they were given.

While the IEA supplied the economic diagnosis, the CPS weighed in with policy prescriptions, many of which later became Tory policy, and where many of Thatcherism’s best known phrases, such as ‘property-owning democracy’ or ‘social market economy’ originated. Monetarism, the abolition of exchange controls, the sale of council houses, the contracting out of government services, the curbing of union powers and the abolition of metropolitan councils all originated in these self-selecting, tightly-controlled propaganda outlets.

What a small group of academics meeting in Chicago and Switzerland had achieved in thirty years was to take a set of extreme ideas and make them the political mainstream, what Stuart Hall called, ‘common sense neoliberalism’. Through influencing the academic world, the media, and public policy spheres, assisted by extremely generous donors, the extreme ideas that the market is almost always best placed to allocate resources, and that welfare creates dependency, became common sense to millions, it had become, to use Gramsci’s concept, ‘hegemonic’.

Thatcherism did not change everyone’s mind, but nor was it as unpopular as others think. What Thatcherism succeeded in doing was getting thirteen million British voters to place more faith in a vision of the market than one of social solidarity. Then it got them to do that again in 1983, and again in 1987. Almost thirty years since that third defeat to Thatcher, fifteen million people voted for either David Cameron or Nigel Farage.

If Labour wishes to see a time come when we too dominate the political landscape, when we can enact our programs and our principles as ruthlessly as the Tories have done, then we need to come to terms with the scale of our defeats thus far, and realise that one cannot triangulate the devil forever, but nor can one be deluded into believing their policies are more popular than they are.

Ideas of common ownership and of the welfare state are not quite as popular as we might like to think. If the General Election in May 2015 was a referendum on the Thatcherite consensus, forty years after “Mrs Thatcher” was elected Tory leader, we were quite convincingly beaten. To make any progress, we need to understand why people have accepted her framework, her reasoning, her principles, and start winning them to an alternative based on our own.