Rebel With a Cause
Margaret Thatcher, revolutionary.
Jul 13, 2009, Vol. 14, No. 40 • By JOHN O'SULLIVAN
Full disclosure seems required here: I was one of the small team that helped Lady Thatcher on the writing of her memoirs. Another member of it was the Oxford history don Christopher Collins who has since graduated to publishing a CD-ROM of all Thatcher's public papers--a "unique resource" as Campbell rightly says--and to editing the website of the Margaret Thatcher Foundation, www.margaretthatcher.org. The value of this work cannot be overstated. The website makes available, again uniquely, all the papers concerning Thatcher and the controversies of her times from her own files, from official records in Britain, the United States, and other countries, from presidential libraries, from memoirs, and from other sources as they become available. It makes research a diversion rather than a duty. All scholars of political history are greatly in the debt of the MT Foundation, and of Collins, in particular.
Of the making of books on Thatcher and Thatcherism, therefore, there is apparently no end. Taken together such books show the strengthening of Thatcher's reputation as time goes by. And this trend had been established well before the publication of two important books about Margaret Thatcher that are likely to be both authoritative and largely favorable. These are her official biography by the former Daily Telegraph editor Charles Moore and a study of her premiership by the historian and former aide Robin Harris, both timed to appear after her death.
Whether good or bad, therefore, Margaret Thatcher seems to be increasingly significant. But why?
Of the books mentioned here the one that sets out to answer that question most directly is Claire Berlinski's There Is No Alternative: Why Margaret Thatcher Matters. It is otherwise a book that is hard to classify: an odd, sprawling, scattershot exercise in contemporary political history by a young writer who was an unsympathetic Oxford undergraduate when her subject was defeating the miners and winning the Cold War.
In those days Berlinski would have scorned any suggestion that, 20 years later, she would admire Thatcher.
To explain the mystery of her own change of mind Berlinski revisits the main controversies of Thatcher's premiership by interrogating those involved on both sides of the argument. They include Thatcherite ministers such as Nigel Lawson, senior civil servants such as Charles Powell, advisers imported into government from the private sector such as John Hoskyns; but also critics of Thatcherism such as the opposition leader Neil Kinnock, an anti-monetarist Oxford don, Andrew Graham, and Linda Sheridan, a member of the small socialist party close to miners' leader Arthur Scargill (Arthur himself seems to have escaped Berlinski's attentions).
This is the Rashomon school of history, telling the same story from different standpoints. It is open to the usual objections to that method--glaring contradictions, unresolved disagreements, stories whose meaning you can change by changing the story- tellers--but the result in this case is a fast-paced, highly readable, and fair-minded study in which Berlinski usually ends up settling disputes in Thatcher's favor after a spirited tussle with opposing views. Which means that her final judgments are that Margaret Thatcher substantially helped Ronald Reagan to win the Cold War, entrenched democracy by defeating the miners, made the British economy genuinely competitive, and so on.
These conclusions shore up Thatcher's reputation, but they explain why she mattered rather than why she still matters. If Thatcher still matters, it must be because she represents something significant in current politics. What? Given the combative nature of Thatcher's reputation, one obvious answer would be something to do with radical Islamism or the war on terror. But Berlinski rejects that pretty briskly: Was Thatcher, she asks, especially prescient about international affairs? No, she replies, because she failed to foresee the rise of Islamic radicalism; it simply wasn't a topic on the Downing Street of her day. Besides, she got the solution (the Iraq war) wrong.
This criticism goes too far. Thatcher was not a speculative historian but a practical statesman. She could hardly take time out from maneuvering the Soviet Union into voluntary liquidation in order to ponder what radical Islamists might do some years in the future. Winston Churchill, whose foresight Berlinski praises by way of comparison, helped Stalin reach the center of Europe in order to defeat Hitler. His Iron Curtain speech came one year after the Yalta settlement he helped shape.
Strategic threats impose their own priorities on statesmen. And whether or not we think toppling Saddam Hussein was a strategic mistake, Thatcher's rhetorical support for it 12 years after she left office tells us little about her likely calculations in power. She favored fighting the miners (and did so in 1985), but she backed off from a battle with them in 1981 because she thought she would lose it.
That said, Berlinski is right that Thatcher's stance on Iraq and terrorism is of no great contemporary relevance. She is barely associated with these questions in the public mind, in Britain or elsewhere. They emerged as serious threats only at the end of her premiership, or even later. Yet one of Thatcher's deepest beliefs and main achievements--her hostility towards, and defeat of, socialism--is suddenly both topical and contentious again. Though Berlinski was writing before the financial crisis got into full swing, she argues that socialism has been "buried prematurely," that it is "on the ascendant" in Latin America, "on the march" in Europe, is "the real message" of the antiglobalization movement, and that it would be "the fault line of the coming century" in politics, as it has been since the French Revolution. Thatcher's great historical significance was that she had "perceived these forces, and for a time mastered them."
Berlinski's argument is profound, correct, and--ahem--farsighted. But it is not wholly original.
Owen Harries theorized some years ago that Thatcher was seen by many people around the world, foes as well as friends, as being more important than Reagan in spreading the free market revolution, just as Reagan was more important in winning the Cold War. She had successfully transformed a far more socialist, and much weaker, economy. Her most distinctive contribution to the market revolution, namely privatization, was more widely imitated worldwide than any single element of Reaganomics. And she was a more intellectually persuasive advocate of market economics than Reagan because she had initially honed her arguments before a sophisticated and skeptical audience in her own country (and in her own party) in a political culture that greatly prizes debating. She had therefore become an international symbol of free market economics, "neoliberalism," and all the rest--and the system she symbolized had apparently just crashed.
At first it seemed ominously likely that the global financial crisis would halt and reverse the Thatcher boomlet. There seemed to be more socialists emerging everywhere than even Berlinski had suggested. All sorts of people who were not socialists--the staff of the Financial Times, for instance--suddenly began predicting the end of capitalism. Many people of both sorts immediately decided to blame the financial crisis and its accompanying recession on Thatcher (and, of course, Reagan), whom they often distrusted on wider cultural or political grounds. And the cry went up internationally for an end to "deregulation."
What might be called "vulgar anti-deregulationism," however, suffered from a rather obvious error. As Nigel Lawson (one of Thatcher's two great finance ministers) has pointed out in Standpoint: "To declare oneself for or against regulation is as absurd as to declare oneself for or against law. It depends on what the regulations are and what they are about." Many of those who blamed the financial crisis on Thatcher's wider policies of deregulation were arguing, in effect, that since collateralized mortgage obligations had proved a bad thing, then market freedoms were bad across the board.
Thus, wages and prices should be controlled by state bodies and airline routes determined by a federal aviation board. Indeed, insofar as these critics sought a solution consistent with this "analysis," it could only be state regulation of all economic (and even non-economic) activity--which is to say, socialism.
Some critics did seem to be itching for such an absurd response. But this ran up against the fact that Thatcher's broad free-market policies were highly successful. Domestically, they had made Britain the world's fourth largest economy about a decade after she entered office (it has now slipped to sixth). Internationally, through the privatization revolution, reductions in trade barriers, and the power of example, they had lifted literally billions of Third World workers out of grinding poverty and into the world labor market.
No socialist "experiment" begins to compare with success on that scale, or with success at all. More regulated versions of capitalism have lower long-term rates of economic growth and job-creation, and all but a few fanatics soon bowed to this reality. But most critics stuck to a narrower theory that confined anti-deregulationism to financial markets. The most coherent exponent of this argument is George Soros, a successful financial speculator himself, whose theory of "market fundamentalism" places the blame for the financial crisis squarely on Thatcher.
In an interview with Der Spiegel last year Soros declared: "Everything was based on self-regulating markets, which by the way was not an American invention. It started with Margaret Thatcher in the U.K. and was further promoted and pushed here in the U.S. by then-President Ronald Reagan." On this argument, Thatcher and Reagan were enablers of a market fundamentalism that led eventually to disaster.
This is deeply implausible, and for several reasons. First among them is that Thatcher left office a little less than 19 years ago, Reagan 20 years ago. She frequently expressed differences on financial policy with her successors (over exchange rates, for example) but possessed no powers of long-range hypnosis over them. If market fundamentalism is the cause of the present discontents, then John Major, Tony Blair, Gordon Brown, Bill Clinton, Robert Rubin, Henry Paulson, et al. are all market fundamentalists with far more direct responsibility for the financial crash than Margaret Thatcher.
But where is the evidence that she was a market fundamentalist? Sure, she believed that free markets were, in general, superior to state control and regulation. As we have seen, she was right to do so. For that reason she passed some major measures of financial deregulation--notably the ending of exchange control and the so-called Big Bang that opened up London's financial services industry to international competition--and these measures succeeded beyond all expectations. They enabled the City of London to compete with Wall Street for the title of world's financial center. They were implicated in the financial scandals to the same trivial degree that a better road system is implicated in a bank robber's getaway: No one, except possibly the eccentric Nicolas Sarkozy, now proposes to repeal them.
Even if they had been failures, however, they could not show Thatcher to be a market fundamentalist in thrall to the concept of self-regulating markets for the simple but adequate reasons that (as Lawson again points out) the Big Bang extended regulation over the city, and it was supplemented by a 1987 law further regulating the banking industry. Nor was the regulatory system shaped by this legislation responsible for the crash since it was replaced under Blair and Brown by a different system of financial regulation.
That is not to say that the Thatcher administration made no economic mistakes or was at one with itself over key questions of financial policy. Quite the contrary; it was a continual and contentious seminar on such questions as monetary control, exchange rate policy, tax incentives, and the like. But what emerges from those debates is the fact that Thatcher and her leading ministers, while guided by a rational respect for market forces, regulated financial matters in the light of changing practical circumstances and well-tested general principles rather than obedience to some abstract libertarian doctrine rooted in mathematical formulae.
It is, however, Soros himself who exonerates Thatcher most conclusively from the charge of market fundamentalism. Here is his account of how it actually works:
In other words, "market fundamentalism" wasn't a system of self-regulating markets at all. It was a covert attempt by the regulatory authorities to sustain artificially high asset prices resting on irresponsible credit expansion by arbitrary interventions in the market to save favored financial institutions from the results of their own folly.
It would be hard to invent a system that was more completely at odds with what Thatcher did and represents.
She was, and is, a sound money girl in every respect. In her private capacity she once cut up her daughter's credit card because she thought it was encouraging her in financially reckless behavior; as prime minister she insisted that tenants had to put down some initial capital to buy their council homes when some colleagues proposed simply to give the houses away. (She thought a giveaway would reward fecklessness and discourage those who had made sacrifices to save.)
Her most consistent motif in government was her attempt to defeat inflation by controlling the money supply. She raised taxes in a recession and twice inflicted a severe credit squeeze on the British economy in this cause. She had major disputes with senior colleagues--and probably shortened her premiership--over exchange rate policies that she believed, rightly or wrongly, would import asset inflation. She cut subsidies on a range of failing industries at great political cost. And one of her most famous remarks--"You can't buck the market"--was an argument that an exchange rate fixed at a rate disbelieved by the markets would sooner or later collapse.
Soros can hardly have forgotten either the remark or the context since his most famous coup--namely, his successful speculation that the pound sterling would be forced out of the ERM--was based on exactly the same logic as her (implicit) criticism of "shadowing the Deutschmark."
In short, Thatcher and Thatcherism were in no wise responsible for the financial crash. Indeed, it is overwhelmingly likely that, if she had been in charge of policy, it would never have occurred or, given the uncertainties of market events, it would have been corrected at a much earlier and less disruptive stage.
None of these inconvenient facts would save Thatcher's reputation if the public response to the crash were exactly what most of the politicians and commentators plainly expected it to be: a simple rejection of market deregulation in favor of greater statism, a lurch to the left politically, and an atmosphere of crude class revenge.
Some of these elements were, indeed, present in the public mood, especially in the early stages of the crash. They have continued to influence public policy and economic argument in several countries and in global gatherings. As the crisis has played out, however, they have subsided somewhat and been accompanied, if not replaced, by other trends.
Most significant, in the long term, is that conservative and classical liberal economists have mounted a serious intellectual counterattack on the causes of the crash and on the worth of proposed solutions. It is now all but undeniable that the crash was caused by a combination of factors of which government failure was at least as important as market failure. As debates continue, the early crude antimarket bias is likely to diminish further.
Second, the political lurch to the left has simply not occurred. In Britain the Labour government is universally expected to lose the next election by a wide margin. Across Europe conservative parties are either comfortably in power or comfortably ahead of their left opponents in opinion polls. And in the United States the opinion polls suggest that, despite the personal popularity of Barack Obama, both Republicans and Democrats are losing support to independents. At worst that's a lurch to the middle.
The trend that most involves Thatcher, however, is the change in the public mood. It is more somber, more anxious, more serious, and more realistic than during the long boom. Because conservative parties are seen as tougher and more stringent than the left, other things being equal, they will tend to profit from this change. Because Thatcher has credit even with opponents as a brave, competent, and determined leader, she is likely to benefit more than most Tories from this. And since this change in mood was occurring in the run-up to the 30th anniversary of her 1979 election victory, she was simply more salient. People were constantly reminded by the media (sometimes with malice aforethought) of her sterner, metallic qualities.
So when the center-left magazine Prospect joined with the YouGov pollsters to test her current reputation this past April they discovered--surely with some surprise--that she had high approval ratings. True, the British were split down the middle on whether she had made the country better. A clear majority disapproved of "privatization" despite what Prospect conceded were the "falling prices, more reliable products and better customer service" of privatized utilities. But her business-friendly policies, tax cuts, and labor union reforms enjoyed varying but substantial degrees of popularity. Above all, when people were asked whom they would wish to have leading Britain through the current economic maelstrom, 47 percent preferred her to Gordon Brown and 49 percent chose her over the Tory leader David Cameron. As British politics descends further into the chaotic farce of the parliamentary expenses scandal, Thatcher's stature can only rise by comparison.
So she still matters. She matters because she is one of the very few strong leaders dedicated to freedom. And as long as freedom is a political issue, Margaret Thatcher will continue to matter.
John O'Sullivan, a former special adviser to Prime Minister Margaret Thatcher, is the executive editor of Radio Free Europe/Radio Liberty and the author, most recently, of The President, the Pope, and the Prime Minister: Three Who Changed the World.