British Politics: Thatcherism & beyond

Background Economic stagnation Diminishing growth Accelerating inflation Industrial decline Older industries (shipbuilding, heavy metal) less viable than before Restructuring Labour unrest

Both Labour and Conservatives try similar solutions Keynesian demand management Planning Regulation of trade unions ‘Battle of Downing Street’ in 1968 Industrial Relations Act, 1971 Indexation Deals with the trade unions: Labour’s ‘Social Contract’,

Increased polarization: Labour moves to the left Responding to trade unions & increasingly militant left, proposes increased state ownership, trade restrictions – an alternate economic strategy In contrast to 1950s, 60s, leadership less able to contain the left

Conservatives Shift to the right: Tentative moves under Edward Heath, Thatcher ousts Heath in 1975 After1979, remakes not only the Conservative Party, but also British economy

Thatcher’s style: A strong assertive leader: turningNot for turning-II Belgrano Europe

Core elements of Thatcherism Less state: More scope for private initiative Allow full play of market forces Privatize nationalized industries Create ownership society – Sale of council houses to owner-occupiers Promote popular capitalism

Attack on trade unions: Regulation of strikes, internal elections 1984 Miners’ Strike: Protracted struggle with National Union of Mine Workers End result – break power of unions to resist reforms

Attack on public sector Restructure civil service Creation of special agencies Reliance on performance indicators Elimination of metropolitan councils Rate-capping as device to curb Labour councils, restrict spending Also an attack on Labour Party’s remaining bastions of power

Broader attack on welfare state: Cutbacks in benefits Attempted privatization of pensions Reforms to NHS (later on) Reluctance to intervene to manage demand, save failing industries Preference for monetarist economic policies: Manage money supply rather than manage demand

Insistence on strong state Justice system: firmer stance No coddling criminals Harsher sentences International relations Close alliance with Reagan & US Anti-Communist Hostile to EU -- “We want our money back

Shift to the right Part of a broader phenomenon underway in both the UK and US, Later on, in other western democracies Reflect changes in international economy Also diminished ability of earlier frameworks – Keynsian demand management – to find solutions for economic problems Bolstered by right-wing think tanks on both sides of the ocean which provide legitimacy

From Thatcher to Major Thatcher in power from 1979 to 1990 Initially seeks support from all sides of the party Over time, governs from the right of the party, marginalizing ‘wets’ (former one nation conservatives 1990 Michael Heseltine seeks to replace Thatcher as leader Thatcher steps down when forced to a second ballot (failed to get 60%) Replaced by John Major, a Thatcher loyalist

John Major Prime Minister from Presides over an increasingly divided party With increasingly strong Euro-skeptic wing Continues Thatcher program Privatization of British Rail Continued restructuring of public sector Growing insistence on performance indicators

Party battle