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1975 as the mirror image of 2013

April 9th, 2013

There’s already plenty of commentary, here and elsewhere on Margaret Thatcher. Rather than add to it, I’d like to compare the situation when she assumed the leadership of the Conservative Party with the one we face now. As Corey Robin points out at Crooked Timber

In the early 1970s, Tory MP Edward Heath was facing high unemployment and massive trade union unrest. Despite having come into office on a vague promise to contest some elements of the postwar Keynesian consensus, he was forced to reverse course. Instead of austerity, he pumped money into the economy via increases in pensions and benefits and tax cuts. That shift in policy came to be called the “U-Turn.”

Crucially, Heath was defeated mainly as a result of strikes by the coal miners union.[1]

From the viewpoint of conservatives, the postwar Keynesian/social democratic consensus had failed, producing chronic stagflation, but the system could not be changed because of the entrenched power of the trade unions, and particularly the National Union of Miners. In addition, the established structures of the state such as the civil service and the BBC were saturated with social democratic thinking.[2]

Thatcher reversed all of these conditions, smashing the miners union and greatly weakening the movement in general, and promoting and implementing market liberal ideology as a response to the (actual and perceived) failures of social democracy. Her policies accelerated the decline of the manufacturing sector, and its replacement by an economy reliant mainly on the financial sector, exploiting the international role of the City of London.

Our current situation seems to me to be a mirror image of 1975. Once again the dominant ideology has led to economic crisis (now about 4 years old), but attempts to break away from it (such as the initial swing to Keynesian stimulus) have been rolled back in favour of even more vigorous pursuit of the policies that created the crisis. The financial sector now plays the role of the miners’ union (as seen in Thatcherite mythology) as the unelected and unaccountable power that prevents any positive change.

Is our own version of Thatcher waiting somewhere in the wings to take on the banks and mount an ideological counter-offensive against market liberalism? If so, it’s not obvious to me, but then, there wasn’t much in Thatcher’s pre-1975 career that would have led anyone to predict the character of her Prime Ministership.

fn1. I was too far from the scene to be able to assess the rights and wrongs of these strikes or the failed strike of the early 1980. It’s obvious that the final outcome was disastrous both for coal miners and for British workers in general, but not that there was a better alternative on offer at the time.

fn2. The popular series, Yes Minister, was essentially a full-length elaboration of this belief, informed by public choice theory

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  1. kevin1
    April 11th, 2013 at 20:33 | #1

    @John Foster #41
    Re your teachers at Manchester, Michael Parkin sounds like the same (Canadian?) guy who produced the widely used first year econ text (yes it’s called Economics) with Christopher Findlay and Doug McTaggart ( head of Queensland Investment Corp and collaborator with Peter Costello on his recent Audit of Qld govt finances). It’s a good book compared to the competition IMO.

  2. April 12th, 2013 at 00:22 | #2

    Looking at the Kissinger Cables, a familiar pattern forms on so many issues.

    Just looking at “OMEGA”, for example. Omega was the VLF radio navigation system that gave the US Nuclear Submarine Fleet whole world navigation. It comprised 8 stations and Australia was the last to get on board. Without Australia they had a black hole in their world coverage from the eastern Indian ocean down through the southern ocean and out to the south-western pacific.

    Problem was, in the early ’70s Australian sentiment was against US hegemony/agression/nuclear war to such an extent that they (and our ALP/LNP) governments had to lie that it was simply a navigational aid.

    We only know it was a lie, now, thanks to Wikileaks. Although so many people believed it to be untrue in the ’70s that it caused serious headaches to both sides of politics (both, of course committed to getting it set up!).

    Even after Fraser got elected, they were still battling against popular opinion to get this essential piece of US military hardware operational in Australia.

    Luckily, the “militant” (ha, ha, ha!) wharfies were on board with the Liberals to try to get “OMEGA” done:

    6. ON THE TRADE UNION SIDE, JACOBE NOTED THAT THE
    GOA ALWAYS HASD SOME DIFFICULTIES WITH THE TRADE UNION
    MOVEMENT ON ISSUES OF THIS NATURE. HE PLANNED TO AP-
    PROACH CHARLES FITZGIBBONS, THE FEDERAL SECRETARY OF
    THE WATERSIDE WORKERS FEDERATION AND ONE OF THE VICE
    PRESIDENTS OF THE ACTU, TO DISCUSS OMEGA WITH HIM.
    CONFIDENTIAL

    CONFIDENTIAL

    PAGE 03 CANBER 06299 310844Z

    HE THOUGHT THAT WITH FITZGIBBON’S HELP LABOR OPPOSITION
    TO OMEGA COULD BE CONTAINED AND THE PROJECT COULD PROCEED.

    7. EMBOFFS NOTED THAT TWO OF THE UNIONS WHICH OPPOSED
    OMEGA WERE COMMUNIST-LED AND ASKED HOW JACOBE COULD
    ASSUME THAT COMMUNIST LABOR LEADERS WOULD CHANGE THEIR
    MIND ON OMEGA. JACOBE RESPONED THAT THE ONLY TRADE
    UNION LEADER HE KNEW WAS FITZGIBBONS WHO HAD BEEN HELP-
    FUL IN SOLVING SIMILAR PROBLEMS IN THE PAST.

    Of course, now anyone can get a better “fix” on their i-phone (thanks to the entirely peaceful US GPS system) than “OMEGA” could ever offer, but that’s not the point. Omega was always a US military system to allow world-wide coverage for its nuclear armed submarine fleet – and everyone lied to us about it.

    They lied to two parliamentary committees about it. But business, the unions, the media, the ALP/LNP were all in on it.

    Strangely, the only indication in the cables of anyone getting cranky is from the public service when it looks obvious that it is not peaceful but actually the very military installation the “communists” were claiming all along.

  3. Nathanael
    April 12th, 2013 at 11:54 | #3

    It is unfortunately pretty clear that the coal miners union *was* a problem. The rest of government policy? Not so much.

    Now, what was the actual problem of the coal miners union? The fact that they identified themselves as a coal miners union. The tech for coal extraction was changing (which should reduce jobs in coal mining), coal was being phased out as a fuel (which should reduce jobs in coal mining), et cetera…. and they were perceived as a special interest who didn’t give a damn about anyone else, not even about whether homes had heat.

    What might have prevented this outcome? The IWW would suggest that the correct response would be “one big union”, so that the coal miners could be reaccomodated with other good-paying jobs, and would consider the needs of everyone else. At least that makes some sort of sense as an idea. Thatcherism doesn’t make sense.

  4. April 12th, 2013 at 12:09 | #4

    this madeit!

  5. Newtownian
    April 12th, 2013 at 13:28 | #5

    @Nathanael

    Regrettably your suggested solution is undermined by various factoids about the UK e.g.

    - What other good paying jobs after 1973!? While post war Germany showed what is possible for an advanced country with limited natural resources, Both sides of Britain seemed to have chosen de-industrialization, promotion of ‘service industries’ south of Watford, such as finance, whose value to the country as a whole and to these communities especially was and has proved problematic.

    - Is/Was such a ‘one big happy family’ viable in any way while the UK framed/s itself in terms of class? An ongoing flaw in UK society is the continued promotion of archaic class division internally through both policy and general behaviour. Its interesting that despite their differences both the miners and Thatcher drew their strengths from class division rather than civilized reconciliation post 1973 a battle which of course Thatcher won in 1985. Blair and Brown notionally promoted a Third Way but ended up just reinforcing Thatcher’s model.

    - Is there a serious force for change in the UK of 2013? Today and the most virulent force in UK politics appears to be the UKIP trogs??!! Separately there is the continued dominance of political leadership by the UK ‘Establishment’. All three mainstream party leaders are Oxbridge alumni (Mafia?) as were most of the PMs since 1900 – Atlee, Wilson, Hume, Eden, MacMillan, Heath, Baldwin, Asquith, Campbell-Bannerman, Balfour, the Marquess of Salisbury and of course Maggie Thatcher. Brown harks from the Scottish equivalent, Edinburgh, Chamberlain harked from Rugby and Winnie Churchill after hanging out at Eton and Blenheim Palace chose the university of imperial warriorhood for his education. Only MacDonald, Lloyd George, Bonar Law (who?!), Callaghan and Major hark from non-establishment backgrounds. The first two left their marks but this was 100 years back and the other 3 are now pretty much unremembered.

  6. Newtownian
    April 12th, 2013 at 14:22 | #6

    @rog
    Talking about Thatcher myths one economic question is what was the role of North Sea oil in this UK story. Was her ‘success’ the result of a combination of bull, this temporary honey pot, and her cottoning onto the narrative of imperial nostalgia through the Malvinas/Falklands accident. This piece below from Ken Livingstone indicates fully 16% of government revenues were derived from this source – and presumably there was a multiplier of 2 to 3 (economist comment welcome here) – without which she would have been seen as managerial incompetent and history footnote rather than being lionized as a modern day Boudicca.

    http://www.guardian.co.uk/commentisfree/2013/apr/11/throw-out-myths-margaret-thatcher

    @kevin1

    No real disagreement with you. As much your comment gave me an excuse for listing the options about how change has happened in the past and what seemed to be the drivers, and hence what we might see in the future.

  7. David Irving (no relation)
    April 12th, 2013 at 15:52 | #7

    @Megan
    Just as an aside, the GPS was originally definitely not for peaceful purposes: like its predecessor TRANET it was bankrolled by the US Navy.

    Until Clinton turned selective availability of the higher-accuracy band off, civilians could only get a position to within 100 m or so.

  8. Alan
    April 12th, 2013 at 16:32 | #8

    One of the local electoral problems is that you now have to be quite old to remember what a recession is like. Of course, for the ALP that is compounded by the way the factions offer lifetime employment (no nasty level playing field for them) to its apparatchiks. Labor and its hierarchs are as insulated from the real economy as the commentariat.

  9. rog
    April 12th, 2013 at 16:40 | #9

    @Newtownian Yes North Sea Oil was and still is a wonderful cash cow. Remarkable how all this Thatcher freedom stuff is re circulating without any ref whatsoever to the RRT, excessive company taxes and royalties that redirected cash into govt coffers.

  10. April 12th, 2013 at 18:45 | #10

    @David Irving (no relation)

    Sorry, should have made the sarcasm clearer – Of course GPS is/was always about military, suveillance and intelligence. But, OMEGA was only accurate to about 6km (on the civillian receivers) so even fuzzy old GPS was “better”.

  11. April 14th, 2013 at 00:36 | #11

    This is interesting. Hawke could have come out and called the (then still quite powerful) union moomin (H/T Clarke & Dawe) to “maintain the rage”, but instead he smoothed the way for Fraser to beat Whitlam.

    You ALP people are weird!

    I’d be angry about any group or organisation I had anything to do with if it was even half as dodgy and duplicitous as the ALP is:

    https://www.wikileaks.org/plusd/cables/1975CANBER07579_b.html

    3. THE GOVERNOR GENERAL’S DECISION TO DISMISS WHITLAM CAUGHT ALL AUSTRALIAN POLITICAL PARTIES AND THE CANBERRA PRESS GALLERY BY COMPLETE SURPRISE.

    THE IMMEDIATE BENEFICIARY IS CLEARLY NOW CARETAKER PRIME MINISTER FRASER WHO WAS REELING UNDER WHITLAM’S ATTACKS LAST WEEK. OVER THE LONGER RUN, THE OUTCOME IS LESS CERTAIN.

    THE GOVERNOR GENERAL’S STATEMENT, WHICH INDICATES THAT THE SENATE HAS THE CLEAR CONSTITUTIONAL RIGHT TO REJECT SUPPLY BILLS, IS AN HISTORIC FIRST IN AUSTRALIA.

    THE ALP AND ITS TRADE UNION SUPPORTERS ARE INCENSED AND CLAIM THAT THEY WERE ROBBED BY QTE THE ESTABLISHMENT END QTE ACTU PRESIDENT HAWKE MADE AN IMPASSIONED RADIO PLEA ASKING TRADE UNION MEMBERS TO REMAIN CALM AND INDICATED THAT HE WAS NOT INCLINED TO DISPUTE THE POSITION TAKEN BY THE GOVERNOR GENERAL.

    WHITLAM, ON THE OTHER HAND, DURING AN INFLAMATORY PRESS CONFERENCE, SAID THAT MANY AUSTRALIANS WILL QTE GIVE AWAY ON THE PARLIAMENTARY SYSTEM IF I AM NOT RE- ELECTED. THEY WOULD CONSIDER PARLIAMENT NOT TO BE A VEHICLE FOR REFORM. END QTE.

  12. Jim Rose
    April 15th, 2013 at 17:53 | #12

    So fraser’s strategy of forcing whitlam out was a suprise. Was fraser surprised when asked to be caretaker PM?

  13. April 15th, 2013 at 19:38 | #13

    @Jim Rose

    According to Laurie Oakes (in his 2008 book) CIA and MI5 people working here at the time asked him at a Canberra dinner party what would happen if Whitlam held out against the Libs. He says he told them the Governor General would dismiss the government.

    As with “Cablegate” it’s important to remember that the US cables are not necessarily interesting because they are factually correct, rather it is because they show what the US was ‘thinking’ or telling itself and others.

    Presumably someone had run the idea past Fraser so he wasn’t surprised!

  14. Troy Prideaux
    April 16th, 2013 at 14:03 | #14

    Another interesting detailed critique of Thatcher Economics

  15. Troy Prideaux
    April 16th, 2013 at 14:04 | #15
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