There is still no economic liberalism (despite Mrs T’s efforts)
Is it safe to go on Twitter yet? Has the 24/7 reporting of the death of an octogenarian ceased? I’m sure the whole population of the UK, including the late Prime Minister’s most ardent supporters, have reached Thatcherisation point. But amongst the litany of tributes and critiques, a lot of the comments surrounding the Government of Margaret Thatcher are clouded in myth. Both left and right share in the mythology of Thatcher as some sort of economically liberal Boudicca who challenged the prevailing economic orthodoxy and shrank the size of the state. If anything, Margaret Thatcher was insufficiently liberal.
The Mythology of Left and Right
In the spring of 1986, Jo Grimond penned an article for the IEA entitled ‘Still No Economic Liberalism’ in which he argued:
“Statism, though dented, remains the dominant political and economic philosophy in the UK…we live in a corporate state in which the organisation has become more important than the individual. Government takes a higher proportion of the national income than ever…The flood of legislation and government expenditure is out of control…So we who hoped for radical measures must be disappointed by acts and omissions.”
Whilst there were many positive liberalising measures such as privatisation, curbing the over-wielding power of trade unions, her signing of the Single European Act, the sale of council houses (MT was initially sceptical about this measure and was persuaded of its merits by the decidedly ‘wet’ Peter Walker), statism did indeed remain dominant:
- Government expenditure rose throughout her premiership, standing at 41.5% of GDP in 1991-92. In his book Paradoxes of Power, Alfred Sherman, a former adviser, aptly named the Thatcher period as an ‘interlude’, with the post-war consensus largely remaining intact: “we are back to where we started”.
- State monoliths like the NHS were safe in her hands – spending on health increased 32% in real terms.
- In the aforementioned article, Grimond lamented the lack of choice in education and social services. For all the talk of radicalism, there were no moves toward education vouchers advocated by Liberals such as Arthur Seldon, Professor Alan Peacock and John Pardoe MP.
In many ways, Margaret Thatcher was a pragmatic conservative. Heath’s 1970 Manifesto was far more orientated toward the free market than Thatcher’s in 1979 and for someone who was so set against ‘consensus’, her first Cabinet looks remarkably conciliatory with its balance of ‘wets’ and ‘dries’. Moreover, the doctrine that became known as ‘Thatcherism’ owed more to Conservatives like Enoch Powell (who questioned if Thatcher actually understood monetarism) and Keith Joseph than liberals like Hayek. Margaret Thatcher allegedly slammed a copy of The Constitution of Liberty on the table proclaiming ‘This is what we believe!’ but there is precious little evidence of Hayekian thinking making its way into policy, especially in monetary terms [The Denationalisation of Money anyone?]. Presumably she skipped ‘Why I am not a Conservative.’
For all the bluster of many supposedly ‘economically liberal’ Thatcherites, liberalisation certainly did not extend to sexuality or race. Today, many self-proclaimed Thatcherites will rail against state spending whilst championing wasteful defence spending and Château Lafite options like Trident. Then as now, they lack consistency.
Economic Liberalism Beyond Thatcher
“The disappointing record of the Government has quite wrongly been seen as discrediting these [economically liberal] doctrines. There is a feeling that liberal political economy has been tried and failed. That is not true.”
Grimond’s words in 1986 were as true then as they are now: in 2013, there is ‘Still No Economic Liberalism’. Contrary to popular perception, public expenditure is rising not falling: like with Thatcher, we are merely controlling the rate in which it is rising. Despite the birth of free schools, there is still insufficient freedom and choice in many public services.
As David Laws wrote in the too often misunderstood ‘Orange Book’, Liberal Democrats need to reclaim economic liberalism (the Conservatives merely embraced the language and some of its substance) and our Liberal heritage. The likes of the Jeremy Browne and Liberal Reform fighting for a genuine four-cornered liberalism offer me hope of a more liberal future.
Tags: F. A. Hayek, Jo Grimond, Margaret Thatcher