Thursday, April 18, 2013

Iron Lady: Rust In Peace

Margaret Hilda Thatcher (1925-2013) once famously said, in an interview to Woman’s Own of 31 October 1987, that "There is no such a thing as society. There are individual men and women, and there are families”. Naturally she was often reviled for such a proposition, including by me as I repeatedly quoted her and criticised her vigorously for it in lectures and seminars.
Taken literally such a proposition is patently false. Clearly the collection of individuals and their families are interconnected in a vast and thick mesh of relationships – through economic, political and social institutions – known as “the fabric of society”. The total is infinitely larger than the sum of its individual parts.
But what Thatcher actually meant is that society is all of us, and is not an external entity distinct from the collection of all individuals and their families, so much so that she went on to say: "And no government can do anything except through people, and people must look after themselves first.” A perfectly simple and innocent call for self-help, and for restraint in the reliance on government transfers from a budget to which in the end we all have to contribute. Sure, she was neglecting the fact that welfare transfers are not necessarily always a disincentive to create income and wealth, that they also represent a stimulation of demand and therefore may generate employment and income, and that a more equal and cohesive society may be worth attaining - at least up to a point - even if re-distribution had a net cost in terms of efficiency. But even these omissions and reservations are legitimate though possibly misguided opinions, for which Thatcher did not deserve to be reviled. Therefore belated but sincere apologies are due and are here unreservedly made.
Nevertheless, there are still many exceedingly serious reasons to revile her. The general principle, that one "not speak ill of the dead", does not apply to influential public figures (as we are reminded by Glenn Greenvald, Guardian 8 April): noblesse oblige. I lived in England throughout most of her political career, from 1962-1982, and intermittently until after her downfall in 1990, and disliked her passionately. Mrs Thatcher - for I could never bring myself to call her a Lady - to me was forever Thatcher-the-milk-snatcher (as in 1971, while Minister for Education in the Heath government, she abolished free milk for school children aged 7-11 years). Never mind the destruction of the British coalmining industry: coalmining is an attractive occupation and culture only in the morbid, romantic literary sickness à la D.H. Lawrence, and miners should have been retired gradually by Labour governments over the previous thirty years, instead of being kept employed artificially as a reserve army of Labour voters. But there was no reason to confront them as Thatcher did and unleash riot police on horseback assaulting them: she could have easily bribed them instead with the proceeds of North Sea Gas.
Nor was there any need to start a class war using a regressive and odious poll tax, or to deny Irish hunger strikers in the Maze prison their political status thus leading to their death. She lowered taxes and cut welfare expenditure and industrial subsidies, promoting de-industrialization and unemployment (that rose to a record of nearly 13 per cent under her watch); she privatized council houses without building new ones, and sold off all kinds of public assets, including public infrastructure (steel, airways, etc.) and utilities such as water, telecoms, gas and electricity, transferring massive public wealth to the private sector. She de-regulated economic activities, especially finance, and shrunk the size of the state. In doing this she somewhat revived competition - which she could have done if she had wanted to even without privatization - but did not promote economic growth in the UK, as she is widely credited to have done.
Thatcher never understood any macroeconomics - or she would not have written (in her Path To Power, 1995): "There is no better course for understanding free-market economics than life in a corner shop." With infinitely greater confidence than that applicable to her assertion about society, we could say that "There is no such a thing as a market system". For in order to substantiate the naïf, oversimplified market vision of her mentors (Milton Friedmann and Friederich von Hayek, Alan Walters and Keith Joseph and the whole of the Mount Pelerin Society) as a system of self regulating equilibria we would need a system of complete markets, i.e. of exclusive, spot and inter-temporal, instantaneous and non-sequential markets, for all dated and contingent goods and services. Instead of which we only have a relatively small number of spot markets, a handful of forward markets except for labour and mostly for homogeneous primary commodities as well as money, all sequential and rarely contingent on the states of the world. In the market system as we know it economic agents act on the basis of expectations as well as prices in a typical, incontrovertibly Keynesian world of inadequate and unstable effective demand and involuntary unemployment.  
Policies based on such hyper-liberal (then labelled monetarist) approach, which she shared with Ronald Reagan who gained power in 1980, had massive adverse consequences over time and space. They contaminated and corrupted the New Labour approach of Tony Blair and Gordon Brown, they deeply affected the transition path of the Soviet Bloc from central planning to market economies and caused its immense unnecessary costs, and they paved the way for the global Great Recession of 2008 which is still causing our misery to date. 
Internationally, she strengthened her failing domestic support by declaring war on Argentina over Britain colonial possession of the Malvinas, instead of conducting political negotiations; her tears over the accompanying loss of lives, revealed by recently published War Cabinet papers, are only evidence of hypocrisy. She played a key role in bringing about the first Gulf War, and advocated the 2003 attack on Iraq. She denounced Nelson Mandela and the ANC as "terrorist", while she befriended dictators like Augusto Pinochet, Saddam Hussein and General Sukharto ("One of our very best and most valuable friends"). She opposed German re-unification and the euro but fortunately she was defeated by Germany and France trading one for the other.
For somebody so opposed to the state taking care of its citizens "from cradle to grave", it is ironical that she should be given a lavish “ceremonial funeral with military honours” yesterday in St. Paul’s Cathedral at an estimated cost of £10-12mn. It is only fair that Ken Loach should have suggested that her funeral should have been "privatized": "Put it out to competitive tender and accept the cheapest bid. It's what she would have wanted".


David said...

You are being much too charitable to Thatcher in your interpretation of her statement on society. If that is what she had meant she would have clarified her intentions in the course of the following 26 years, but she did not. She simply had an atomistic view of society.

D. Mario Nuti said...

It simply makes more sense to me the way I now read it. Probably Thatcher liked to have it both ways, an atomistic view of society and the notion that WE are society.

And why should have she bothered to clarify what she meant? Much too arrogant for that, take it or leave it...

Stuart Holland said...


You are right on all scores and the reference to the Woman’s Own piece is useful for those of us who have been quoting her on “there is no such thing as society” incorrectly. Your title “May She Rust in Peace” also is stunning, and deserves to become as familiar.

I think I am the only person among thousands who may have wished to hit Thatcher so hard that she fell over. It was in the ‘No’ lobby in the Commons when both Labour and Tories were voting against a motion, when John Prescott called to me so loudly that I turned quickly and my elbow struck someone hard – bone in the ribs. It was Thatcher who was being supported by her parliamentary private secretary. The words ‘I’m so sorry’ were coming out of my mouth before I had fully turned and could see it was her. To her credit she tried to smile and said ‘It doesn’t matter. I’m all right’. The last three words of course were not ideological though, as evidently, she was.

Another encounter was nearly as remarkable. In one of the rounds of cuts the head of the cancer unit at St Thomas’s Hospital in my constituency told me that the Minister of Health planned to close it. I managed to get a late night adjournment debate. Far from being Prime Minister’s question time with a packed House, there normally is only the member moving the motion that the House should not adjourn, a parliamentary under secretary on the government bench, and a junior whip for the government waiting to alert those Tories still in the House, and whether asleep in the library or near incontinent in the member’s bar but on a 2 line whip in case the convention is broken that the motion will be heard, but not actually moved.

It was just after 11.00 pm when to my astonishment and that of the parliamentary under secretary who probably never had spoken to her, since junior ministers are told of their appointment by whips, not the Prime Minister, Thatcher walked in and seated herself on the government front bench. I deployed all the customary routine such as that “I am so glad that the Rt. Hon. Lady has chosen to recognise the significance of this issue and chosen to attend this debate” which nonetheless would be no more than likely to gain a mention in the South London Press unless she then left before I had finished speaking.

But she stayed and I then – if in simpler terms – gave her what I suspect was her first introduction to the circularity of expenditure and income, i.e. that there is not a public hospital built that is constructed by public enterprise, nor an operating theatre equipped other than private enterprise, nor a drug prescribed in a cancer unit that is not supplied from the private sector. When I had finished my allotted 15 minutes, she leant over to the parliamentary under secretary, by then near wetting himself, and said a very few words. It crossed my mind that these perhaps might be ‘save’ or ‘don’t close’ the unit, but dismissed this as improbable. Yet, in fact, the unit was spared, and survived.

Stuart Holland said...

(continued from the previous comment, which exceeded permitted length!)

There could have been several reasons, and not least that St. Thomas’s Hospital was directly opposite the House of Commons across the Thames. Another was that she knew of me not only since I had knocked her over in the ‘No’ lobby, but since Neil Kinnock had proposed me as a European Commissioner, which she vetoed.
Also that this was during the time that I was considering leaving the Commons to help Jacques Delors devise financial instruments for economic and social cohesion to realise the commitment to this in the 1986 Single European Act and on which there is indirect evidence that my home phone was being tapped in that one of the Tories closest to her declared on the debate on my resigning that his Honourable Friends were wrong in assuming that I had lost faith in Labour since I was going to help Jacques Delors design a blueprint for a Social Europe.

But she did hear the arguments on circularity of expenditure and income, probably for the first time. Even if learning up from this was too late to save the UK not only from the deindustrialisation against which I had warned before coming in parliament, and in early debates when arriving, and all of which is in Hansard as is the late night encounter with Thatcher. While also, rather than commitment to the economic and social cohesion in the 1986 Single European Act, TINA is decimating not only industry but also social welfare through Europe. Winning a tactical case, such as whether or not to close a unit within one hospital, in one country, by a debate in one parliament, or others such as the commitment of the Economic and Social Committee of the EU on bonds for recovery, modelled on those of the New Deal (www.ces474-2012_ac_en) does not mean winning the war against austerity which needs social mobilisation and protest, not only in terms of sectional interests, but on behalf of the whole of society.

D. Mario Nuti said...

Thanks, Stuart.

I cannot take credit for the post's title, as "Iron Lady? Rust in Peace" was a graffiti that appeared on a Belfast wall shortly after her death, as reported by the Independent.

And thanks for your reminiscences: you clearly left a mark, on her body and mind. Congratulations.

Mike Meeropol said...

Mario, I was on sabbatical at Cambridge during the summer of 1980 and had already smelled that THatcherism (and the right-wing garbage then known as supply-side economics in the US) was the "next big thing." I have been studying, teaching and writing about that stuff ever since.

What drives me crazy is the quick acceptance by journalists (and the so-called opposition) that both THatcher and Reagan "succeeded" --- Yes, they succeeded in increasing inequality, defeating trade unions and forcing the so-called opposition so far to the right that there is no legitimate social democracy at the British center and Dwight Eisenhower looks like a flaming leftist in the American context.

But ON THEIR OWN TERMS - increasing productivity, increasing private investment as a percentage of GDP, lowering unemployment and raising capacity utilization - I know from just cursory research that REagan failed miserably --

I assume Thatcher did the same though maybe the overall economy "revived" sometime before she left office (how could it not?)

So thanks for the reminders -- I wish members of the economics profession had an eye for what you see.

D. Mario Nuti said...

Thanks, Mike, good hearing from you.

On the relative performance of the UK economy see Daveri In 1979-81 GDP per head fell by 3.6% in two years in the UK, as against substantial growth in the rest of Europe (1.5% in France and Germany and over 3% in Italy). By the time Thatcher left office GDP per head in the UK had was 25.8% higher than in 1979, against 21.2 in France, 25.6 in Germany and 30.2% in Italy. UK relative growth performance improved only after Thatcher, with GDP per head in 2012 at 180.4 (1979=100), with the US at 178.5, Germany and France (in 2011) at 168.5 and 149.2 respectively. Difficult to say what has been the specific impact of Thatcherite policies.

I mentioned that Thatcher-Reagan hyper-liberalism "contaminated and corrupted" the New Labour approach of Blair and Brown, but I should have also mentioned its pernicious influence on Clinton, which you documented well in your 1998 book "Surrender: How the Clinton Administration Completed the Reagan Revolution"

Lorraine said...

Such sweet memories of the Iron Lady. I had just started as a (very) junior parliamentary assistant in Whitehall, London, in May 1979 when the new Tory government took over. The same week Margaret Thatcher visited our office, just around the corner of Downing Street. I greeted her and held out my hand, as you do in formal circumstances, but she completely ignored me and shook hands with my male colleague. Enough said ...

D. Mario Nuti said...

Thatcher was not a feminist. You should have dug her in the ribs, Lorraine; but cheer up, Stuart Holland did it for you (see his comment above).

Danny said...

The achievement of Thatcherism is that Britain now has three political parties of the right: see Patrick Dunleavy

Linda said...

"Rust in Peace" is also a 1990 album by Megadeth, of the Thrash metal genre.

D. Mario Nuti said...

Thanks for the info, Linda. But that was neither Mrs T's cup of tea, nor mine...

Anonymous said...

while you are at it, you might want to add the Khmer Rouge and the Afghan Mujaheddin to her list of bum chums.

To the living we might sometimes owe reluctant respect; to the dead we owe nothing but the truth...