Margaret Thatcher: an Economic Appraisal

Ben Green,


Economically, the Left paint her as a viperous, cold-blooded monster whose actions just as readily collapsed the cooling towers of Ravenscraig as the prospects of millions ejected onto the dole. The Right see her as a single-minded Boudicca whose application of ten thousand volts of free market shock therapy to the shabby patient of Britain in the 1970s arrested relative decline. I aim in this article to wave a libertarian magnet over the loose change of opinion and see what sticks.

It should be no surprise that the bulk of perspectives harboured by the commentariat hold little truck with the truth. Following decades of pit closures, for instance, the enfeebling of Britain’s coal industry merely reached a violent crescendo during her reign as proportionally closures accounted for more out of a much-diminished rump. Seldom do we hear of hatchet-man Harold Wilson who in Wales over 1964-70, contrary to expectations, presided over more job losses and pit closures than Thatcher over 1979-90.


Nor should we be persuaded the wholesale rationalisation then privatisation of steel, coal and shipbuilding was pursued solely as a function of Thatcher’s desire to quash trade union militancy. Returning to the context of Welsh coal, from 1972-82, the industry – bleeding on average £2,500,000 a week of taxpayers’ money – generated a profit in only two out of those ten years with a woeful 13% of deep mines covering their operating costs. Understanding – unlike those in the then Eastern bloc or NUM – that it was not for government to prop up jobs with endless public subsidy, Thatcher’s programme was calculated to have been of the utmost importance to free resources for the dynamic private sector to provide a semblance of secure, meaningful employment rather than the cruel maintenance of the illusion of jobs-for-life.

Moreover, if affected communities seriously lamented the passing of their native industries like coal mining why, since there was nothing to prevent miners from buying pits back to operate themselves without the proceeds of state theft, was this pursued only at Tower colliery? Surely this must rank as a testament to the fact that many detested the dangerous, dirty work the extraction of coal presented?

Concerning inequality, the libertarian must entertain qualms as to its causes, not its reality. Egalitarian calls for greater even-handedness concerning the distribution of wealth mirror the absurd calls for higher taxes. If asked what the “right” level of equality or taxation is, we receive anything-but-concrete answers, but are assured of ruin if, in furtherance of whatever constitutes the right amount of either, left-wing philistines expand the foul grasp of the state. In Thatcher’s premiership, which saw the Gini coefficient as a measure of wealth disparity shoot from 0.253 in 1979 to 0.339 in 1990, we cannot escape the nature of the monetary system which, governed by fiat paper money (untethered to any finite resource), effortlessly generated the inflation used by bankers to purchase tangible resources before bidding up prices for everyone else. Those who question the effect of this regressive inflation tax, silently funnelling wealth to a vanishingly small elite in the orbit of the Bank of England, must look to how deep-rooted the phenomenon is, commencing not with Thatcher’s victory in 1979, but with President Richard Nixon’s slamming shut of the Bretton Woods gold window years earlier in 1971.

That inflation during Thatcher’s reign could have created this pernicious effect – which I as a libertarian would with all vigour rail against – is indicative of Thatcher’s less-than-ideal record on fighting currency debasement, that despite being scaled back from in excess of 20% per annum in 1980 while money supply growth was targeted, remained doggedly above 5% for the majority of her time in office, rising once again over 10% by the time she left and money supply targeting was abandoned. All said, the pound surrendered roughly 56.7% of its value over her three terms, no doubt invoking the business cycle with the massive housing bubble and spectacular growth in personal debt symptomatic of the ‘Lawson Boom’ predictably turning to bust in what was then the most severe recession since the Second World War in the early 1990s.

Indeed, the gulf between talk of a sound money policy and galloping price increases is not the only instance of intentions failing to match outcomes. Defying the spectacle of a state whose frontiers were being aggressively ‘rolled back’, as a percentage of GDP, a modest 5.7% was shaved off state expenditure – with vast increases in spending on healthcare and welfare set against an expanding economy – while the trajectory of the total tax take, contrary to the bluster about the virtue of low taxation, also as a percentage of GDP, was an upwards one. Although privatisation notionally turned state assets over to superior market custodianship, in practice private owners were subjected to the demands of new regulatory bodies possessing an unwieldy set of acronyms such as OFWAT, OFCOM and OFGEM that systematically distorted the markets they supervised, breeding most, if not all, of the unsatisfactory experiences customers have encountered since. The deregulatory ‘Big Bang’ of The City also invited further control, fatally leaving deposit insurance intact to foster moral hazard. Thatcher’s most remarkable contribution was (Cameron take note) her annihilation of the budget deficit and her diminution of the national debt which, in relative terms, dropped by 40%.

However, although Margaret Thatcher deviated from the path a commitment to Liberty would have her had trod, at least she had an identifiable path from which to stray. The same cannot be said for her successors and will, I suspect, still go unmentioned of Prime Ministers for decades hence. This is why she is the titan – whose demise is worth lamenting – that her depraved detractors will never be.

B.S.O. Green is a Bourbon Democrat (Anarcho-Capitalist specifically) that doesn’t like bourbon (being more of an ale man). Presently, he is studying for a Master’s in History, aspiring to craft his thesis on the similarities and differences between the politics of Enoch Powell and Margaret Thatcher. Tweets sometimes sprout @BSOGreen.


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