Thatcherism Without the Lady

Mrs. Thatcher's Revolution: The Ending of the Socialist Era, by Peter Jenkins, Cambridge, Mass.: Harvard University Press, 417 pages, $25.00

Since Peter Jenkins quotes me with amiable exaggeration as "the supreme ideologist of market forces," he should not be offended if I introduce him to American readers as at least until recently one of the most distinguished journalistic exponents of the postwar conventional political wisdom. As the leading commentator for 20 years in the highbrow, leftist Guardian, his writing was always marked by vivid prose, vigorous analysis, inside information, and supremely self-confident, if not self-righteous, denunciation of the forces of darkness, most often associated with the Conservative Party.

Now with undiminished vigor but in a very different tone of voice comes his powerful account, Mrs. Thatcher's Revolution, revealingly subtitled "The Ending of the Socialist Era." It is a highly readable, well-documented offering of sustained journalistic excitement, despite running to more than 400 pages, including 2 pages of abbreviations, 20 pages of footnotes, 5 pages of select bibliography, and a useful 11-page index to assist the "dipper"! It is the best account I have come across among the growing library of books on "Thatcherism" and will provide future historians with an invaluable source of quotation, detailed records of events, and pointed character sketches of the leading political actors.

Jenkins displays enough of the independence of the serious journalist to overcome his earlier sympathies to liberal Labour Party forces and work his way around to a tentatively favorable verdict on the achievements of the once-scorned Margaret Thatcher. In a sentence, the story he unfolds is of the cumulative failure of socialism due to what appears in retrospect the inevitable conflicts among inconsistent policies, personal rivalries, and warring pressure groups.

Thus the commitment to full employment enabled the legally privileged trade unions to deploy their disruptive power in pursuit of irresponsible wage claims that increasingly inflated costs and prices. This pressure for higher annual increases was exacerbated by mounting taxes on wage-earners to pay the ever-increasing bill for ceaseless extensions of universal state welfare. At the same time, the growth of state employment in nationalized industries, central and local government, education, and health services strengthened public-sector trade unions and their power to enforce restrictive practices, overmanning, and costly pay settlements that set a bad example for workers in the private sector.

Our no-nonsense author does not disguise his mature judgment that the fatal flaw that ultimately made socialism vulnerable to Prime Minister Thatcher's takeover was the abuse of monopoly labor unions. He recounts the successive attempts under Labour and Conservative governments to square the circle between inflationary financial policies at home and a fixed exchange rate for sterling abroad. We are reminded of the first wage freeze by Stafford Cripps in 1947. Then came the escalation from mild exhortation for moderation by Prime Minister Harold Macmillan in 1961 to the full-scale statutory control of incomes and prices by Prime Minister Edward Heath in 1972.

The culmination came after 1974 with the "social contract," which pledged the Labour Party first under Harold Wilson and then under James Callaghan to consult with trade union leaders on policy in return for the promise of moderation on wage demands. It was the collapse four years later of this cynical, corporatist deal into warring factions of strikers, particularly in the "public services," that has become etched into contemporary history as "the winter of discontent." American economist Mancur Olson, quoted by Jenkins, writes that the analogy for these pressure-group conflicts is not so much a wrangling over the division of the "social pie" as "wrestlers struggling over the contents of a china shop." It was the televised reports of pickets turning away hospital patients, rubbish not being collected, and the dead remaining unburied that gave Thatcher her first electoral victory in 1979.

The trouble with Jenkins's extended daily journalism is that it almost presents the triumph of Thatcherism without the lady. It reads at times as though the walls of jerry-built socialism were doomed to collapse, so any old Conservative leader could have brought off the revolution.

This myopic perspective can be traced back to the author's opening page, where he writes: "The consensus Mrs. Thatcher imagined herself to be smashing was founded more in myth than in reality." Tell that to Friedrich Hayek. Tell it to Milton Friedman. Tell it to the early stalwarts at the Institute of Economic Affairs (IEA). These early prophets of the failure of the Keynesian collectivist stampede in the 1950s and 1960s were taken seriously by very few influential journalists or politicians until the 1970s. In 1958—the year after we opened up shop at IEA—all three Treasury ministers resigned from Harold Macmillan's government over the issue of excessive spending on state welfare. Yet it caused not a moment's pause in the onward march of collectivist assumptions that politicians knew what they were up to in spreading their authority wider and deeper into industry, trade, and employment, as well as social policy.

The key question neglected by Peter Jenkins is how it came about that within two decades, monetary and market economics could command attention. Of course, the progressive failures of socialism opened minds to alternative policies. But what determined which policies won their way into political and public favor?

The nearest Jenkins approaches this issue is in describing the conflict between Labour MP Wedgwood Benn and Conservative MP Keith Joseph as standard bearers of the rival state and market philosophies after disillusion with the respective leadership of Harold Wilson and Edward Heath. Then comes our author's most candid and significant admission of error. He writes that if in 1975 he had been asked to choose between Benn or Thatcher, "I think I would have given the future to Tony Benn."

Yet in 1979 Thatcher won support for policies on trade union reform, monetary discipline, and competitive markets that had appeared inconceivable not only to Jenkins four years earlier. This book provides a good account of the decline of socialism, which Hayek in his new book, The Fatal Conceit, has now shown to have been simply "a mistake." We still await the second half of the story, which is how the long-ridiculed ideas of market economics won their way back into the intellectual ascendancy. From the IEA I must declare a special interest in the answer.

Lord Harris of High Cross is chairman of the Institute of Economic Affairs in London.