From union legislation to financial reform: a reflection on Thatcherism, capital and the British state.

Author:Rogers, Chris
Position::Back to the future? Thatcherism, capital, labour, and the British state


The death of Margaret Thatcher in April 2013 triggered numerous articles in media outlets and popular forums reflecting on her legacy. Many were either hagiographic or vitriolic, with the latter manifesting in the form of 'celebrations' of her passing in Bristol, Brixton and Glasgow. Within the academic literature, it has long been claimed that Thatcherism was significant because of its role in the hollowing out of the state (Rhodes 1994), for ending the era of consensus politics (Kavanagh 1987) and for having reinvented political statecraft (Bulpitt 1986). For better or worse, it would seem, Margaret Thatcher's governments and the ideology bearing her name were significant in changing the United Kingdom.

This paper challenges claims about the significance of Thatcherism by highlighting the continuity between Thatcher's governments and other 20th-century governments. It shows how attempts to subordinate the interests of labour to capital through the institutions of the British state stand out from similar attempts by previous governments principally in terms of the form this action took, and their unprecedented degree of success. The paper therefore shows that it was labour's high point from 1945 to the mid-1960s, when a favourable international context institutionalised in the form of the Bretton Woods system allowed the state to mediate relations between labour and capital, that represents a period of exceptionalism in British political economy, and not Thatcherism. On this basis, it argues that the demonisation of Margaret Thatcher and Thatcherism divert attention away from more fundamental questions about the exploitative and crisis-prone nature of capitalist social relations by virtue of their implication that the death of an individual and the death of an ideology are sufficient conditions for progressive change.

As such, the article suggests that an emphasis on the exceptionalism of Thatcherism is not progressive. However, this should be read not as a defence of Thatcherism, but as a critique of the capitalist state form more broadly conceived. The paper is structured as follows. The first section examines three areas in which it has been argued that Thatcherism was significant, in order to demonstrate continuity in the character of policy between Thatcher's governments and those of her predecessors. These relate to the attack on British trade unions, macro-economic policy, and the deregulation of finance. In light of this analysis, the second section contextualises Thatcherism by reflecting on the relationship between Thatcherism, capital and the British state, and on the implications that the demonization of Margaret Thatcher and Thatcherism have for progressive politics, and in particular for the perpetuation of the exploitative and crisis-prone characteristics of capitalist social relations.

From union legislation to financial reform

The trade unions

One of the central claims about the significance of Thatcherism relates to Margaret Thatcher's governments' systematic and successful actions to erode British trade union power, both through confrontation with the National Union of Mineworkers (NUM) and by legislative means. The legislative assault on the unions began in 1980 with the Employment Act, which was 'a moderate measure intended to forestall further attacks on union power' (Morgan 2001: 449). The Act provided for public funds to be used in order to facilitate the balloting of members for the purposes of deciding on strike action, placed limits on the extent of closed-shop arrangements, and prevented secondary picketing (ibid: 449). This was supplemented in 1982 by measures to end union immunity from financial liabilities incurred as a result of illegal strike action, increase the penalties for the organisation of a secondary picket, and to provide for compensation to be paid to those made redundant because of closed-shop arrangements (ibid: 449). In the interim, concessions were made to unions to support Welsh mining and railway workers (ibid: 450).

The decisive moment for the Thatcher governments' relationship with the trade unions came in 1984-85, as confrontation with the NUM escalated. This stemmed from the reaction to plans to privatise the industry, the development of the nuclear fuel programme, and the maturity of targets set in the 1980 Coal Industry Act for the industry to be profitable by 1983-84, at the cost of a further 65,000 jobs (WCCPL & NUM 1985: 10-11). This prompted strike action by miners across the nation in 1984, with the exception of those in Nottinghamshire (see Clarke 2004: 378), since in some communities, 'over half the male population would be out of work' (WCCPL & NUM 1985: 13). After a year, and with many strikers and their families suffering, 'privation drove increasing numbers of miners back to work at the beginning of 1985 and the strike petered out (Clarke 2004: 378).

These events show that Thatcher's governments clearly had a significant impact on Britain's industrial relations climate. However, the intent to subordinate the unions and undermine their influence was hardly different in character from attempts by any previous British government. As Ralph Miliband (1972) noted, as early as the interwar period the Labour Party's National Executive Committee 'was content to leave the initiative [on direct action] to the trade unions themselves' (ibid: 68), and this commitment to parliamentarianism meant that the potential for trade unions to affect fundamental change was muted by the Labour Party within and through the state. Away from the Labour Party, the approach to unionism was laissez-faire, and while 'the liberal tradition could accommodate trade unions, it was characterised by an instinctive hostility towards them' (Moran 1977: 20).

The intention to temper the activities of the organised labour movement by the British state, however, has not simply been limited to a general hostility or broad scepticism in the interwar period. Historically, the principal purpose of trade unions has been to negotiate rates of pay and standards of working conditions with employers on behalf of their members, but throughout the post-war period, this purpose has been diluted through co-option by the state, by either legislative or corporatist means. One of the main areas in which the state has attempted to do this is by limiting the rate of increase in pay settlements. In other words, the belief in the Phillips Curve trade-off between inflation and unemployment after 1958 effectively legitimised the subversion of the interests of workers to the doctrine of 'sound money' (outcomes which are, ironically, often framed as goals in competition with one another, as if workers had no interest in the latter).

Despite the impression of partnership implied by corporatism, the post-war British state persistently attempted to exert control over the unions' ability to negotiate wage settlements in the form of incomes policies. In the 1970s there were numerous examples. The Conservative governments of Edward Heath operated two such schemes, the first of which was the public-sector policy of de-escalation known as 'n-1', and the latter part of the three-tiered Counter Inflation Act. The operation of this scheme ultimately precipitated the miners' strike that saw the instigation of a three-day week and the fall of the government over the issue 'Who Governs Britain?' Only a short time after, and in spite of commitments to return the power of free collective bargaining to the trade unions, the Wilson government instigated the 6 [pounds sterling] flat-rate pay policy in July 1975, which was principally justified by appeals to pressure on sterling in the foreign-exchange markets (see Rogers 2013). The relative gains made by labour in the period 1945 to the mid-1960s can be viewed as an exception; however, the international context was arguably the most significant factor in facilitating these gains, because during this period, the fixed exchange rate under Bretton Woods saw Britain's higher-than-average rate of inflation reflected in periodic balance of payments crises, rather than in pressure on the exchange rate (see Ball & Burns 1976: 477; Laidler 1975: 46; Laidler 1976: 488). In other words, the apparent reconciliation between capital and labour was made possible by favourable international conditions that temporarily muted the difficulties of credibility and competitiveness, and came to an end as the international monetary system came under stress in the late-1960s and early 1970s.

While the long boom of the post-war period appeared to mute conflict between capital and labour and provided for the ascendency of labourism, this period was nonetheless also underscored by constraints on the labour movement. This is because the system of voluntary collectivism, based on the idea of the state as mediator between labour and capital, fundamentally accepted the wage relation. It therefore perpetuated the idea that the fate of labour was to be determined by the market, and was in essence an informal co-option of labour based on unions' acceptance of the logic and legitimacy of accumulation. The tripartite corporatism that Conservatives had aimed for since the 1947 Industrial Charter was...

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