Although Mrs Thatcher and Mr Lawson are closely associated in the public mind, their aspirations are very different. Mrs Thatcher, for her part, is not really interested in the economy at all. She has little idea how it works, no notion of its complicated and delicate relationships, and only the most elementary conception of how it might work better. Sceptical would-be supporters of the Government used plaintively to enquire why the Prime Minister allowed herself to be ‘sidetracked’ by marginal matters – why someone so anxious to promote the free market should be so obsessed with secrecy, censorship or the Poll Tax. That is not the right question. The question is: why should someone so obsessed with secrecy and censorship have any interest in the free market? In fact, insofar as her Thatcherism has a clear focus, it is the establishment of a reactionary moral and political order in which the free market performs a disciplinary and not an allocationary function. The free market, as political economists know, is a harsh disciplinarian, the more effective because its tenets are expressed in apparently impartial terms. But free-market ideologies are purely instrumental to Thatcherism: she uses them when they promote her political order and she abandons them when they obstruct it. Indeed, in several important ways Thatcherism is antithetical to the free market. Her principal preoccupations are the restoration of authority and hierarchy, and it is this she means when she speaks of the ‘defeat of socialism’. Her ambition has always been so to entrench the Conservative Party that people will vote for it as of second nature – and not just any old Conservative Party but a particular version of it. The overriding object of her government, to which the free market has always been subordinate, has been political mobilisation, and she has pursued it with determination. It is precisely because their goals are so different that deregulating Antipodean Labour prime ministers get cross when their policies are described as Thatcherite.

Mr Lawson is not in her sense a Thatcherite, not one of us. A form of economic neoliberalism is central to his politics – not, as with her, secondary. He differs also from Mrs Thatcher in other important ways: he is a bon viveur, is not, I would think, an admirer of Mrs Whitehouse, and has openly declared his dislike of the inquisitorial and moralising state which seems to mean so much to the Prime Minister. Mr Lawson has been called the ‘brains of Thatcherism’ in the press: but that he and Mrs Thatcher adhere to an apparently similar economics is partly accidental and partly a matter of convenience.

The years 1979-1981 determined for both of them all that subsequently happened. There is no evidence that the Government intended or anticipated the speed and depth of the economic recession for which its policies were responsible. Yet Mrs Thatcher set the tone and must have known the risks; Mr Lawson as Financial Secretary to the Treasury presumably acquiesced in policies which always threatened to be so damaging. Nor, presumably, did Mrs Thatcher anticipate the collapse of the Government’s popularity, with its implication that support for her kind of politics was highly conditional. It is important to recollect what the position was at the end of 1981: Mrs Thatcher, the Conservative Party and the country were on their knees. The Prime Minister faced further constraints. She could not be seen to ‘U-turn’; the rhetorical basis of her leadership would have crumbled had she done so. She had, therefore, to soldier on or to ‘U-turn’ surreptitiously. She also had to contend, as she had throughout her premiership, with the fact that her own ideological ambitions are not shared by the majority of her people. By the end of 1981 Mrs Thatcher had, therefore, both to convince the electorate that the recession had not occurred, or, if it had, that it was necessary, and to purchase their acquiescence in her ideological goals.

The Government, broadly speaking, adopted three strategies. The first was ideological-rhetorical, and it was here that the free market came into its own. Government policies increasingly came to be justified by market criteria. And they were justified on those grounds because the market purports to be neutral: nothing (bad) was the responsibility of the Government; the consumer was king; the hidden hand would work, not by strangulation, but by gentle massage. They were further justified by the need to ‘transform’ Britain into a dynamic capitalist economy. Unemployment, bankruptcies, the elimination of one-fifth of the country’s manufacturing capacity – all were accompanied by the familiar metaphors of catharsis and purgation. So was born the self-parodying vocabulary of the enterprise culture: ‘wealth-creation’, ‘renaissance’, ‘transformation’. With the happy assistance of the press and others ready to believe, much of it – notably the phrase the ‘Thatcher revolution’ – soon entered public usage. Like all successful ideologies, it had one other function: it convinced its authors even more than the electorate. On the morning of her Chancellor‘s resignation Mrs Thatcher was still uttering it – appropriately in a chocolate factory – with every sign of still believing it.

The second strategy was the attempt to create an alternative welfare state. ‘Socialism’ would, so to speak, be defeated on its own ground: this was the whole point of privatisation. The great state monopolies were sold off not to make them competitive – quite the reverse – but to provide ‘no-risk’ investments for a putative army of first-time Tory voters. Perhaps nothing has been more overt in its intention that these sales: the electorate was encouraged to believe that capitalism was a lottery in which all the ticket-holders won first prize. Those thousands of people who had to be legally coerced by the Treasury into taking up their BP options after the October 1987 crash understood Thatcherism all too well. It was never intended that they should lose and they were understandably aggrieved that Mr Lawson did not bail them out even more generously than he did. Here, as with the free-market ideology, Thatcherism tends not to promote capitalism but to be parasitic upon it.

There is a popular Australian children’s story called The Magic Pudding. The wonderful thing about the Magic Pudding is that, no matter how much you eat, it immediately replaces itself. You have to put in no new ingredients, apply no new heat. The pudding can never be diminished. Thatcherites think of capitalism as a Magic Pudding: the more you eat the more you can have. To Thatcherite Utopians the notion of capitalism-as-pudding is commanding. They envisage the creation of a huge suburban peasantry who will awake occasionally to fondle their share certificates in a privatised monopoly before returning contentedly to sleep. It might be possible to banish ‘socialism’ from their dreams, but it will be impossible to make them wealth-creators.

The third strategy was the most efficacious but also the most risky: and that was what Keynes called the ‘permanent quasi-boom’. From 1982 on, the Government encouraged and then inflamed a private consumption boom: there was, in fact, a ‘U-turn’. The most obvious manifestation of this was the abandonment of monetarism. Since 1982, Britain has had the loosest monetary policy in Europe and this was, in part, forced on the Government by its own actions. In abolishing exchange and credit controls, it became impossible to regulate broad money: so the Government gave up. As it would have done anyway. The Budgets of 1987 and 1988 were the triumphant climax of such a strategy. It is sometimes suggested in the press that if Government data had been ‘better’, Mrs Thatcher and Mr Lawson would have behaved more prudently. That seems improbable. For both of them, if for different reasons, those Budgets were political and ideological necessities.

At the best of times, it would have been difficult to assimilate the ends as Mrs Thatcher conceived them and the means by which they were to have been procured. In these times, it proved impossible. Mrs Thatcher has rendered the ends even more unattainable by the character of her leadership. Standing, as she imagines, on the outside of her party, surrounded by men of doubtful judgment, seeing challenges where all too plainly there are none, and adopting a utopian rhetoric, it is impossible for her to stay in repose. Her erratic interventions, her endless discovery of new fields to conquer, are designed to make her indispensable to the Party and to justify her continued leadership to the country. Inexorably, therefore, she has driven the Conservative Party into areas where many of its members would not wish to go – the deeply unpopular NHS ‘reform’ is such an area.

More important, however, is the simple inability of the British economy to withstand the strains the Prime Minister and her Chancellor put upon it. Even at full capacity it is doubtful if it could have done so; given the damage done between 1979 and 1981, it is certain it could not. Any significant reflation, that is to say, would throw it out of equilibrium. Mrs Thatcher‘s apparent belief that if you bashed the Unions and cut public expenditure – regardless of anything else the Government did or what expenditure was cut – a world-competing entrepreneurial middle class would emerge from nowhere was always absurd and demonstrates the primitive level at which economic policy has been made over the last ten years. It is, however, now not politically possible for Mrs Thatcher to restore equilibrium by adopting the techniques of discredited governments of the old regime – raising taxes, restoring credit controls – all of which as short-term devices worked perfectly well.

Long before Mr Lawson’s resignation, therefore, a number of disintegrating tensions had developed within Thatcherism – and their development was unavoidable. The society of thrift and saving necessarily became the society of almost negative saving and infinite credit. The society of monetary rigour necessarily became the most monetarily profligate in Europe. The society of enterprise and dash necessarily became the society of the no-risk investment and the privatised monopoly. The government which was to transform British manufacturing necessarily came close to killing it. The land where the weight of the state was to be lifted from the shoulders of its oppressed citizens necessarily became the land where the state now weighs even more heavily. And the government whose ambition it was to restore the grandeur of Britain has necessarily exposed its weaknesses. Ends work against means: the failure of the economy to continue at the levels of 1987 and 1988 meant the failure of the only means likely to make the end acceptable. But the end – the ‘defeat of socialism’ by the engineering of a docile antisocialist electorate – is simply incompatible with a productive capitalist economy. Without that, no end at all. The last two years of the present government have been marked by the use of increasingly desperate short-term measures to pursue fundamentally opposed long-term objectives.

It was precisely these tensions which were responsible for Mr Lawson’s resignation. In the past he and the Prime Minister have clearly quarrelled over tax relief for mortgage-interest payments: she for political reasons wishing to maximise it, he for economic reasons to minimise it. They seem also to have differed over the Poll Tax. It is said that he was the only minister to oppose it, and did so because of its likely political unpopularity. That may be true, but the political argument for the Poll Tax is the only plausible one. Its aim is, by creating ‘ratepayers’ out of people who had hitherto paid no rates at all, to make the new ratepayers as resentful of local councils as ratepayers are supposed to be today: to transform them thus into Conservative voters. The Poll Tax is designed to undermine the Labour Party in local government and to establish the Conservative Party in those local authorities where the Labour Party has a virtual monopoly of representation. Far from being a whimsical deviation from the true purpose of the Government, the Poll Tax is the true purpose of the Government.

The EMS affair is a direct result also of such tensions. Mr Lawson, no doubt for a mixture of reasons, concluded that we should enter it. Mrs Thatcher is more or less opposed. But, despite her opposition, it is clear that she has no real alternative policy, and we should not be surprised by this. Her world is interpreted via crude conventional wisdoms and varieties of folklore. When problems cannot be so interpreted Mrs Thatcher has been all at sea. The arguments over the EMS, however, cannot be reduced to wise sayings. Neither alternative will bring obvious short-term benefit to the Government and both may do it harm. Furthermore, all her attempts to treat the argument in the way she has so often treated other arguments – as she did at Bruges last year – have done her no good. The consequence is not so much hostility to the EMS as political paralysis. There is, thus, an air of permanent provisionality about the present government of which Mr Lawson has been partly the victim.

There has been no ‘revolution’, we may conclude. There have been changes and not all of them bad; in some cases, though, the damage wrought is probably irreparable. A second conclusion is that Thatcherism, despite its ‘structural’ predicaments, will not go away. The well-tried means of electoral debauchery are still at hand and the Conservatives are as ready to manipulate them as anyone. Many people have an interest in perpetuating the present regime if for no other reason than that it is not easy to unhitch one‘s wagon from a falling star without getting burned. A third conclusion is that the inhabitants of the real world have shown themselves unable to judge what constitutes reality. Businessmen, editors, politicians, city gents have all looked the evidence squarely in the face and unflinchingly turned away.

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