Was Thatcherism just 'old-fashioned' Liberalism?

One of the contributing factors in the ascendancy of Thatcherism within the Conservative Party, was the bitter disillusionment suffered in the General Election defeat of Edward Heath’s government in 1974. Despite entering government with the ideal and conviction to shift away from post-war consensus politics, limit the role of the state and limit the powers of trade unions, these in practice were not upheld or implemented; the early 70s are marked by high inflation and general social unrest as a result of strengthening trade union power. Indeed, Dearlove and Saunders highlight the fact that the Heath government had ‘ended up pursuing policies no less socialist than those of the Labour governments of the sixties’ Hence the search began for a new direction within conservatism which was found in the New Right, the intellectual basis of Thatcherism and strong leadership which was found in Margaret Thatcher, assuming leadership in the mid 1970s and winning the Premiership in 1979. The link between Thatcherite Conservatism and nineteenth century liberalism is found in the New Right. This was a modern expression of many liberal ideas that almost disappeared form the lexicon of political ideas altogether and which inspired the Thatcher government in major areas of policy, in theory at least. The New Right, which is also referred to as ‘neoliberalism’, stressed the importance of freedom, civil liberty and individualism, as well as the crucial point that liberty can only be facilitated by the free market, devoid of any tampering or intervention by the state. In addition the free market is argued as being the most efficient means of allocating resources, such is its responsiveness of (unhampered) market mechanisms, which can even illustrate fluctuations consumer preferences. Liberalism furthermore, through the promotion of individualism, goes hand in hand with the need for incentives to produce and deliver high quality goods and services in an environment of innovation and enterprise. This is expressed in Thatcherism in its objective of improving the competitiveness of the British economy, which in the New Right’s perspective was being stifled by an expansion of state duties and ‘creeping socialism’, encompassing the need to promote competition, reduce trade union power and shifting away from Keynesian economic management. Indeed, although the means of policy should not be seen as entirely neoliberal, the ideals of liberalism are clearly defined in the inspiration of Thatcherite policy.

One facet of Thatcherism, with its justification embedded in neoliberal thinking is that of promoting competition both in the domestic and international economy. The means by which it was decided to pursue this ideal was the supposed monetarist revolution, entailing the strict regulation of the money supply so as to influence demand in the economy, for the purpose of the government’s main goal of controlling inflation. In terms of competition, this anti-inflationary stance was paramount, given that inflation erodes competitiveness, and leads employees to call for higher wages, since their purchasing power has been reduced, leading to increased trade union activities. By 1976, inflation had risen to over 20 per cent, an International Monetary Fund loan was taken by the then Labour government, with the condition that inflation must be lowered by way of regulating the money supply. This monetary regulation was further tightened by the Conservatives in 1979; the introduction of the Medium Term Financial Strategy (MTFS) set out targets for government expenditure and growth in the money supply. Eventually, this was abandoned in favour of interest rate manipulation to counter inflationary pressures. Economically, in the event of rising interest rates, this has the implication of reducing demand in the economy since the cost of borrowing has increased, making consumers less likely to spend. The point that should highlighted therefore that this, although monetary policy in itself is not neoliberal, the idea of shifting the emphasis away from demand management to supply side economics, gives responsibility to the individual, allowing the means to civil liberty, especially in the era of financial deregulation and instant credit. This is a clear facet of liberalism, synonymous with the liberal tradition of freedom in terms of an ‘absence of coercion’, but should nevertheless be seen as part of the combination of doctrines in Thatcherism.

Another argument that contests Thatcherism as being wholly liberal as opposed to conservative in nature, is the fact that although many facets of policy had their inspiration in liberalism, elements of traditional conservatism can be identified. Interestingly, neoliberal ideas are abundant in the economic conduct of the Thatcherite government, implementing policy on the lines of civil liberty and individualism, but with regards aspects of the Conservative’s social policy, it should be deemed less liberal and more in lines with traditional Conservatism, in the form of preserving the status quo. Attempts were made to reform elements of social policy, as to reduce the extent of government expenditure, for example the welfare state, but the combination of the need to address specific circumstances of the economy and indeed electoral concerns, many examples of policy did not harmonise with neoliberal thought. The fact that such considerations required attention illustrates the traditional conservative inclinations of pragmaticism. Neoliberal thought regarding state provision and welfare is in essence, one of acceptance. However, but this should take the form of voluntary effort on the behalf of the individual, such as support through the family unit. Any income support by the state should be careful as not to create a culture of dependency and undermine voluntary effort. Furthermore, it is advocated that the exposure to market forces would force people to work thereby contributing to society and reducing the role of the state. As for state provisions for the whole population, neoliberalism highlights that this should be left to market forces to determine or come into private ownership. Consumers should be free to choose the desired service, whether it be health care or education for example, by paying the market stipulated price. This way, they can expect the best possible price for a high quality service. It is argued that the state has little idea of what consumer preferences are exactly, and end up providing an inefficient service and one that was not required in the first place. This is illustrated in the Conservative government with regards its policy on housing. Blocs of flats or council estates were envisaged as the best means to provide housing. However, the environment of little incentives to produce and lack of innovation as well as little means of realising what consumer actually desire, led to the construction of poorly built and equipped accommodation. The Conservatives did try to ‘liberalise’ this in their ‘Right To Buy’ legislation of 1980, in which over one million council home were sold to tenants. Nevertheless, as Dearlove and Saunders point out, Britain remained the largest socialized housing system outside the former Communist bloc. 

Taxation is also key to the neoliberal lexicon. It is argued that competition and incentives to produce needs further facilitation in the ideal of lower taxation, allowing further individualism as well as reducing the role of the state, a hindrance upon civil liberty. Furthermore, individuals must not be prohibited from the rewards of innovation should they succeed. Competition and innovation are justified as being vital in that the benefits of such enterprise would benefit society as a whole. However, it is accepted as a ‘necessary evil’, as the state requires some revenue to execute certain basic functions. It was seen by the Tories that Labour’s punitive taxation stance was merely the ‘politics of envy’, and in coming to power, reduced the basic rate of tax 25 per cent. But despite this, the Thatcherite fiscal record had not been entirely in line with neoliberal thought, as the overall tax burden remained the same proportion of GDP when the Conservatives left office, as when they came into office, eighteen years previously. This highlights the point that preservation of the status quo was indeed all that could be done, given the complexities of radical changes in key policy areas. The argument that Thactcherism is wholly liberal is contradicted in terms of its fiscal policy record. They may have sympathised with neoliberal ideas, but in practice, government proved a different matter than simply implementing neoliberal rhetoric.

Thatcherism being equated with ‘old-fashioned’ liberalism, in ideological terms, perhaps too great a simplification, as in many aspects this ignores its conservatist roots. Some critics have gone so far as to call it a betrayal of traditional conservatism. However, it is the arguments of Gamble that provide great insight into this allegation and indeed of the libertarian tradition inherent in British Conservatism and indeed across political parties. Gamble argues that Thatcherism cannot be seen as wholly liberal or indeed conservative, it was neither. Even in the rethinking of the linear political spectrum to that of a triangle, Thatcherism is placed between liberalism and conservatism, suggesting a distinction and combination of the two political movements. Gamble asserts that ‘there is little difficulty in seeing Thatcherism as an authentic expression of one of the two major strands in the Conservative tradition’ , which consist of ‘one-nation’ Conservatives and doctrinal Conservatives, the latter being the label placed upon Thatcherism by its critics. Furthermore, Gamble accepts that Thatcher and her supports could be seen as ‘reasserting ideals that were dominant in the ninetieth century’, but that the libertarian tradition was not confined to the Conservatives but all parties in that particular context. He highlights that at the heart of liberalism was ‘anti-statism’, the unaccountability of bureaucracy that coerces individuals and erodes political and civil liberty. From this perspective, rolling back of the state was very much a measure made in this liberal tradition. An interesting point is that since Conservatism itself as very little in the way of ideology or doctrine, it is problematic to identify or categorize anything as ‘Conservative’. The argument here is that since Thatcherism encompasses both liberal and traditional Conservatism, for it to be labelled in one perspective or another perhaps inaccurate. Many of its policies were a blend of these two political opinions, policies inspired in a libertarian tradition, but also promoted the idea of a strong state that allowed freedom and individualism. The use of monetary policy, lower taxation, promotion of competition and privatisation and the assault on trade union power, all were justified in the end objective of free market economics and reduced state, but not at the expense of authority, natural hierarchy and indeed the middle and propertied classes. These latter qualities point to the need to interpret Thatcherism not just in a specific political stance, but a blend of two traditions in response to the economic decline of Britain, as a means restore Conservative ascendancy, rejuvenate British economic competitiveness and promote the idea of civil liberty, in the traditional liberal view of freedom being defined in terms of the ‘absence of coercion’.