In the mid-19th century, Britain provided Marx with his model of developed industrial capitalism, which showed the way forward to the rest of the world. In the 1970s, as it stumbled wearily from one economic crisis to the next, Britain seemed on the verge of becoming the first developed industrial capitalist country to set out on the downhill road to underdevelopment, through deindustrialisation, capital flight and the degeneration of bourgeois democracy (the Argentinian case is different, since its peak level of relative development was based on agriculture). Then along came Mrs. Thatcher, offering Britain once more as a model to the world--but this time, a model of capitalist renaissance.
Although the time-scale of the Thatcherite programme has had to be revised, there has still been no 'U-turn'; the policies of 'rolling back the state' and disciplining labour remain firmly in place, with every chance that a third successive electoral victory will follow in 1987 or 1988, given a divided opposition.
What, then, is 'Thatcherism' seeking to construct in Britain? Will it work, and if not, what alternatives are there? In this paper, I shall set out the main features of the programme, consider its successes and failures thus far, and offer an evaluation that will, I hope, at least narrow down the range of possible futures. Since my focus will be on economic policies, however broadly conceived, I can realistically only offer the political-economic foundations of an evaluation of Thatcherism. I hope nonetheless to avoid the pitfalls of economism, and take due account of ideological and more specifically political factors. In particular, I do not think that Thatcherism can be understood as the rational economic strategy of the 'dominant fractions' of British capital, important though such a strategy might be. It follows, also, that a counter-strategy for labour cannot simply be arrived at by uncovering such a capitalist strategy. On the other hand, the disposition of capital and labour within Britain does place very real constraints on the strategies that can be proposed and acted upon in our given political institutions.
The policies of Thatcherism
The Thatcherite programme was well summed up at the outset by Andrew Gamble as being 'the free economy and the strong state' (Gamble 1979). The 'free economy' element is the neo-liberal package of measures aimed at restoring market guidance of resource allocation, in order to give capital the freedom to circulate in quest of profit, and to dominate labour in the sphere of production. The 'strong state' denotes, first, the strength of purpose required to reduce dramatically the economic functions of the state, to release resources for private reallocation. It also indicates the need to enforce the rule of capital in the spheres of production proper and of politics--that is, outside the sphere of exchange which alone can really be 'left to the market'. The policy measures pursued since 1979 can be summed up under four headings: macroeconomic policy; privatisation; the assault on labour; and internationalisation. Of course, these areas overlap and interact.
The conventional Keynesian goals (especially that of full employment) have been replaced by the pursuit of monetary targets (the Medium Term Financial Strategy) coupled with fiscal austerity. The aim is to produce a predictable macro-policy environment, by stabilising the value of money and by foreswearing interventionism at the level of aggregate demand. In addition, cutting back state expenditure is intended to release resources for private sector accumulation. In principle, this approach requires that interest rates be determined by the market, i.e. in the City, and this ties in with the deregulation of the financial sector. On the fiscal side, state expenditure cuts required a radical centralisation of control, including tighter Treasury control over spending departments, and central government control over local government. This last trend has culminated in the abolition of middle-level local authorities (all under Labour control).
This term is commonly used in a narrow sense to refer to the sale of publicly-owned assets (e.g. British Telecom), and the enforcement of competitive private tendering for public service provision. But it seems sensible to view cuts in industrial subsidies, in individual and corporate taxation and in welfare provision as part of the same strategy (overlapping with macroeconomic strategy). The general aim is to restore and enlarge the scope for private capital accumulation by the 'recommodification' of the public sector. This ties in also with deregulation of industry and finance. Privatisation has played a major ideological role in Thatcherism (the 'property-owning democracy').
The assault on labour
A series of trade union laws has been aimed at weakening the statutory rights and practical effectiveness of the unions. Whereas the Heath government in 1971 attempted a single comprehensive package of 'reforms', the Thatcher government proceeded step by step, eroding the unions' immunities from prosecution first, and then limiting their right to organisational autonomy and political representation. Where necessary (notably in the 1984-5 miners' strike), the attack on labour has made direct use of physical force and common law: both the police and the judiciary have been expanded, centralised and given powerful backing by the deployment of a 'law and order' ideology. At the same time, the labour market is also being 'freed' by the abolition of wages councils (in unorganised sectors), statutory minimum wage levels and the 'fair wages resolution' which governed public sector purchasing. Reductions in welfare benefits are aimed at enforcing the 'natural' market-determined wage level. The sharp rise in unemployment, directly caused by deliberate deflation, has reinforced the pressure on labour.
An early measure in 1979 was the abolition of all remaining controls on the movement of capital in and out of Britain. This enabled the 'orderly' investment of North Sea oil earnings abroad, by British multinational companies and especially by financial institutions, in 1980-83. It also fully subordinated interest rates in Britain to world market forces: this allowed the government to claim that its austerity policies were the result of events beyond its control. The government has strongly supported the spread of such policies across the world under the auspices of the IMF and World Bank: however, it has insisted that the world debt crisis can be resolved by the private international banks, and does not support any new public international initiatives ('New Bretton Woods'). Protectionist responses to the further penetration of British markets by imports have been ruled out, although some restrictions have been placed on foreign ownership of newly-privatised firms (British Aerospace in particular). Within the EEC, the government refuses to join the European Monetary System, believing that exchange rates should be market-determined, and has opposed reflation initiatives.
Successes and failures
First and foremost, the fiscal and monetary objectives of Thatcherism have been seriously damaged by the effects of mass unemployment, which has been greater and much more persistent than the government expected. Only the equally unexpected bonus from the rise...