Friday, February 06, 2009

The credit crunch will do for Margaret Thatcher's reputation

Ever since I stared writing about Westminster on a weekly basis for Liberal Democrat News, I have had it mind that Mrs Thatcher will die one day. And I have had a surprisingly magnanimous column to mark the occasion somewhere at the back of my mind.

Although many people profess to hate her, I have been intending to argue, as time as gone on it has become clear that Thatcher's policies, or something very like them, were more or less inevitable. Whoever had been in power in the 1980s, we would have seen the demise of the post-war nationalised industries. The idea that, if Jim Callaghan had somehow contrived to win in 1979, Labour could have gone on subsidising British Leyland and the British Steel Corporation on the same basis was clearly ridiculous.

It would have been especially magnanimous coming from me because the East Midland shop-owning interest from which Mrs T sprang are precisely the people whom I cut my political teeth fighting as a Liberal activist and councillor in the 1980s.

But I don't think I can write that column any more. The credit crunch - which is a mild shorthand for a global economic depression - has made the Thatcher legacy look very different. Though it should not lead us to romanticise the bone-headed aspects of post-war Labourism, her policies no longer look inevitable nor, in many cases, very sensible.

And I have always been interested in what a Marxist would call the "internal contradictions" of Thatcherism. John Gray brought these out well in his Endgames: Questions in Late Modern Political Thought from 1997:

The self-destruction of British conservatism by New Right ideology and policies is best interpreted as an exemplification of a central neo-liberal theme - the importance of unintended consequences in social, economic and political life.

The radical free market policies implemented in Britain since 1979 have had as one of their principal effects an unravelling of the coalitions of economic interests and the social hierarchies on which pre-Thatcher conservatism depended. In sweeping away the postwar settlement which all major parties endorsed for a generation, Thatcherism demolished the social and economic base on which conservatism in Britain stood, and created several of the necessary conditions for a prolonged period of Labour hegemony.

The medium-term effect of neo-liberal Conservative policy in has been to destroy ethos in institutions such as the Civil Service and the National Health Service by remodelling them on contractualist and managerialist lines. In addition to squandering a large part of Britain's patrimony of civilized institutions, this neo-liberal project of refashioning social life on a primitive model of market exchange has speeded the delegitimation of established institutions of such as the monarchy and the Church.

Further, by stripping democratic local government in Britain of most of its powers and building up the unaccountable institutions of the Quango State - the apparatus of committees appointed by central government to oversee the operation of the newly marketized public services, which is now larger in manpower and in the resources it allocates than democratic local government in Britain - the Conservatives have marginalized their own local party organizations and thereby contributed to the steep and swift decline of the Conservative Party itself ...

As for Tory England - that rich network of interlocking interests, social deferences and inherited institutions that Tory statecraft has successfully protected and reproduced for over a century by its skillful adaptation to democratic institutions in Britain - it is now as good as dead.

Central to Margaret Thatcher's world view was the fear that socialism would corrupt the workers by undermining virtues like thrift, hard work and self-reliance. But it looks as though it is the free market, and in particular the easy availability of credit that she set in train, that has done for them.

As Jeff Randall says in this morning's Daily Telegraph:

we are in denial about the causes of recession and therefore cannot face up to the action required to lift us out of it. As Niall Ferguson, professor of history at Harvard University, wrote in the Financial Times: "The reality being repressed is that the western world is suffering a crisis of indebtedness." In which case, pumping out yet more debt will not be the answer. It is simply a short-term fix that in the long-run creates an even bigger disaster, like giving a shivering alcoholic a case of Special Brew.

Yesterday's half-point rate cut was a panic measure from a central bank whose excessively loose monetary policy in the first half of this decade encouraged a catastrophic borrowing binge. Now, desperate to mitigate the consequences of its own failure, it is trying to inflate another bubble. In so doing, as Dr Ros Altmann, a former adviser to Number 11, points out: "They punish those who actually did the right thing [savers], while benefiting the very groups (the banks in particular) whose actions caused this mess."

5 comments:

dreamingspire said...

Jeff Randall's article would be a great deal more useful if he suggested what we should really be doing. Have you, Jonathan, got any ideas?

Frank H Little said...

the East Midland shop-owing interest
But I thought Alderman Roberts never gave tick?

Jonathan said...

Ho, ho.

Suitably corrected.

Tristan said...

Your analysis falls down in point - it is not the free market which has caused this because there has not been a free market, just a differently managed one...

Again, when it comes to the marketisation of public services - they have had a pseudo market imposed as another attempt at central planning.

toronto condos said...

What does have the free market to do with easy availability of credit? That's two different things. Free market as seen by the EU was created to let goods, persons, services and capital to move freely within the EU (see http://en.wikipedia.org/wiki/Four_Freedoms_(European_Union)). It has nothing to do with borrowing money to those that cannot afford repaying the debt.
Regards,
Elli