1975 as the mirror image of 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

65 thoughts on “1975 as the mirror image of 2013

  1. But the power of our finance sector is different from the power of the miner’s union in both degree and kind. The miners had power from their political organization but (far more crucially) through direct action. Unfortunately, direct action is always subject to the application of state force. The state only needs sufficient coercive force to overwhelm that of a union for direct action to fail, and the application of such force is built into our system from the ground up.

    The financial class, meanwhile, has power because it has money. That control, too, could potentially be disrupted by state action. But we have neither a functioning legal and practical apparatus to discipline capital in this way, nor a culture that is currently ready to accept the imposition of force to counteract the power of capital. As much as the 70s might have been a time of labor power relative to today, the state already had systems in place to clamp down on labor, including through the application of actual force. There’s nothing in our system or our culture, currently that could do the same against the banks, or even more, the bankers.

    I hope what you envision is possible, but smashing unions was a tried-and-true activity of power in the 1970s Anglophone world. A similar kind of direct imposition into our financial system– like, say, nationalization, whether partial and temporary or otherwise– is possible, but not at all ingrained in our systems today. So I’m pessimistic.

  2. I agree with you John there is no clear alternative on the horizon – other than more and worse of the same as illustrated by the recent events in Europe e.g. Cyprus – beyond outrage at the injustices developing there.

    What’s missing I suggest is a coherent alternative or at least a full theoretical framework ? a workable political and economic philosophy arising from a green/progressive push? If there is one, it is still evolving and not at all coherent yet at least that I can see. The current Australian Greens seem more a throwback to traditional social democracy, some of which is desirable, much of which is outdated. And they arent dealing with deeper conundrums like how do you eliminate want while not pushing the planet’s ecosystem beyond its limits. In contrast to Marx they seem averse to doing the ecological and economic sums together.

    This stands in contrast to the rise of Thatcher and Reagan which didnt come out of the blue. In respect to the latter there is a nice potted history via one of your cousin sites which fits with my memory of events . http://www.nakedcapitalism.com/2013/04/michael-hudson-thatchers-legacy-of-failed-privatizations.html. She knew what she wanted and went for it and her successors are far from spent in pushing this project even it is clearly irrational.

  3. I don’t think we really have any dominant ideology in power today. What we have is a hodge podge of policies and people in power that belong to a variety of ideological outlooks and traditions (or in some cases none at all). The government arguably owns less than it used to but also arguably controls more. I’d venture to call our current situation “social democracy” but many who call themselves “social democrats” would probably reject that. Probably few people with a clear ideological outlook regarding politics and economics would claim ownership of the state of affairs that prevale today. It was probably ever thus and it is only with hindsights and in relative terms that we could start to find much concesus on whether an era was dominated by a particular ideology. And even then I suspect there would be much disagreement.

    I regard Margaret Thatcher as a heroine of the 20th century. Certainly not a perfect leader or person but a courageous one who achieved many great and good things and overcame great odds and faced serious and powerful adversaries. She is a contentious figure but I think history will ultimately be kind to her.

    On a personal level she, along with Bob Hawke and Ronald Reagan were high profile figures in my formative years and will probably always attract a certain reverence in the way that much 80’s music still tickles my fancy. Love them or hate them they were all charismatic intelligent figures who were true to their vision and strong in their conviction.

  4. One other economic ‘parallel’ at least with current Australia that JQ doesnt mention is the role of North Sea Oil in Thatcher’s “success”. There is a nice picture here of this short term gain + lousy longer term reinvestment : http://www.theoildrum.com/story/2006/11/19/135819/75

    Could Thatcher’s ‘success’ be merely (like its Australian counterpart case studies) the product of short term gain through income from a resources boom plus liquidization of government assets from selling the farm – thus keeping voters happy and replete with colour televisions. Both fudge options of course have time limits and will come to an end – which begs the question of how Government quick fixes will be achieved in the subsequent future? Maybe from reconceptualizing superannuation?

  5. I’m reading an essay by Llewellyn Johns, “The Power Of The Political”. He writes “Governing becomes ‘managing the economy’ and administration, with issues to be solved by experts and bureaucrats. What struggle there is involves competing for the top job: CEO of the country.”


    The ‘end of ideology’ hasn’t happened. If anything, the power of some ideologies has increased. Part of neo-liberal capitalism’s strength lies in the fact that many who live under its regime now no longer think of it as ideology: it’s just the way things are – or have to be.

  6. what did Thatcher actually do?

    But by discrediting socialism so thoroughly, she prompted in due course the adoption by the Labour Party of free market economics, and so, as she wryly confessed in later years, “helped to make it electable”.

    from http://www.telegraph.co.uk/news/politics/margaret-thatcher/8093845/Margaret-Thatcher-obituary.html

    But what did she do? she stopped taxes and spending growing further as a share of GDP.

    The post-1980 economic and fiscal reforms are an example of a political system converging onto more efficient modes of income redistributions as demanded by the middle-of-the-road voter as the deadweight losses of taxes and regulation grew.

    Improvements in the efficiency of taxes, regulation and spending reduce political pressure to suppress the growth of government. this increased or prevented cuts to both total tax revenue and spending. Economic regulation lessened after 1980 but social regulation grew unabated. The post-1980 reforms by Thatcher and co. saved the welfare state.

  7. “Ideology always looks like common sense from the inside”

    That would then be the reason that ideology is not self-recognized as an ideology.
    That’s why neoliberals do not see themselves as ideologues but pragmatists.
    When Maxists see Marx’s writings as a solution then that is an ideology, instead of as well meaning critique of capitalism.

    Since Keynes gave the solutions in special circumstances which come out of inheret instability of capitalism, his solutions proved as effective at producing the best outcomes, then that would not be an ideology.
    MMT follows from Keynes with addition that there is no more of a gold standard and that there is a digital money which changed the possibilities making it more efective at producing the best outcomes.

  8. For the 1975/2013 analogy to work you would need a public figure on the same level as Arthur Skargill. We may have such a person but we don’t have that degree of social and economic divisiness for such a person to flourish.

  9. @Jim Rose

    But what did she do? she stopped taxes and spending growing further as a share of GDP.

    Thatcher changed the focus from the real problems onto the fake ones.
    The fake problems were taxes and size of the government.
    The real problem was dependence on oil which price of oil pointed to and the failure of crops in Soviet Union in 1972 which both together raised prices / caused stagnation.

    The fake problem was a problem for only small portion of the population, the rich, so it was their focus. Thatcher was succesfull in bringing their focus onto the large masses.

    And J.Q. tells you that here

    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)

    That real problem of oil dependence is still not solved while her solution caused the delay in solving it and also made new problems. The new problem is overwhelming indebtedness of public and private sectors.

    Her solution to non problem of supporting agregate demand and supply side directly via redistribution through taxes was replaced by supporting it indirectly, through increasing debt. That debt increase hit the ceiling so now we have additional problems.
    That Nominal Surplus Circulation was switched from redistribution via tax to redistribution via debt which few years ago hit the limit.

    Her solutions gave us additional problems without solving the original problem.

  10. The Thatcher government was marked by largely the same economic trends as has characterised neoliberal ideology all over the world: huge deficits and increases in poverty being the most notable. Thatcherism was a more extreme application of the Phillips curve – not merely content with interest rates topping out at 17%, the wholesale dismantling of unions and government businesses occurred with unemployment attaining its highest point since the Great Depression at 12% and a double-dip recession that took unemployment past 10% (for comparison unemployment in the UK is currently a shade under 8%).

    High unemployment, huge increases in deficits, increases in poverty and inequality……why exactly anyone would support this madness is beyond me.

  11. Thacher presented a previous solution as a new problem. That solution to the Great Deppression, which worked great then and it would work great now was presented as a real problem.

  12. She gave UK democracy to Murdoch.

    “It’s The Sun Wot Won It”

    The headline referred to The Sun’s contribution to the unexpected Conservative victory in the 1992 general election.[3] What influence the newspaper had on voters in the narrow Conservative victory is unclear, but in the leading up to polling day, the newspaper led a campaign against the Labour Party leader, Neil Kinnock, which culminated in the election day headline, “If Kinnock wins today will the last person to leave Britain please turn out the lights”. This was to deter voters from electing Labour, as opinion polls during the three years leading up to the election had mostly predicted that it would end in a hung parliament or a narrow Labour majority. The Sun had backed the Conservative Party for well over a decade by this stage.

    Murdoch’s hubris tends to be a little more veiled these days, but he still runs “western capitalist democracy” by his mono-media cartel’s power, and voila, we get the neo-liberal problem.

    Holding up the neo-cons infesting the “Left” as proof that “we” (the citizens) have toddled off to the extreme “right” is disingenuous at best.

    Thatcher was just person – like Hawke, Howard, Bush, Blair, Harper, Reagan etc.. – and she died. No big deal, the damage has been done and the operatives continue to do more.

    Now, the death of Murdoch will be an entirely different matter in my view. Imagine a whole bunch of Andrew Bolts, Roger Ailes, Kim Williams, Peter Chernins, not to mention the heirs, all going Shakespearian on each other and still managing to do to democracy what Murdoch has so “successfully” done to it for the last 40 years. Now that would be a shuffling off that could actually mean something.

  13. JQ asks: 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?

    The problem is that the leadership of the political and industrial centre-left were responsible for implementing neoliberalism in Australia – with the Coalition playing catch-up. Having done so, the left effectively demobilised credible opposition to the Australian version of Thatcherism. As a result anti-neoliberal politics has no significant political voice at the electoral level. Instead we have the nausaeting spectacle of Labor MPs claiming that those on $250,000 deserve public policy support and that attempts to render the taxation of superannuation slightly less unjust constitute ‘class war’.

    In short, there is no credible anti-neoliberal politics because the institutions capable of mounting such a politics were complicit in establishing neoliberalism in the first place.


    From the latest WikiLeaks effort. A US embassy cable from November 16, 1974.

    Murdoch shills have been denying that he has any influence or power for decades, at the same time he has been caught out serially lying to “regulators” about his intentions for greater consolidation and concentration of media in his hands. And our PM and Leader of the Opposition still have secret meetings with him and his main heavies in this country to make sure they please him.

    That is not democracy. It’s a sad and sick joke.

    I love the internet.

  15. I’m a bit confused by JQ’s description of today – “we” (he talks of 1975 in Australia so I presume he means here) are in crisis? Not economically, according to his previous commentary (and I agree) – as others have said, this is a fake conservative meme substituting the cost of “lifestyle” for the cost of “living”. Yes, the international financial sector now behaves like the robber barons of 100 years ago, courtesy of captured and insipid regulators in Europe and the US and (to a slightly lesser degree) in Australia: Australian finance sector experts Justin O’Brien and Pat McConnell have documented this at length recently. They also seem to hold out little hope of regulation or inquiries taming the beast, but hard to see collapse happening in Australia.

    If JQ’s talking internationally, seeing the finance sector in the role of the 1980s Miners’ Union seems ridiculous: two opposing worldviews in a conjuncture where they could draw swords is not replicated today, where any ideological battle is within capitalism, and more muted as a consequence. TINA is still dominant and social democrats lack conviction (Gillard rejected the label in her AWU address), having rejected a working-class bias in favour of the more secular “fairness” and “inclusion” objectives and, above all, the pursuit of power at any price. And the paradox of privatisation – inevitably more regulation – preserves a governance role for the state in most nations, though collaborationist and corporatist rather than oppositional. All of this mutes confrontation and yet, the spiral downwards in Europe continues, with no evident way out. However the helicopter view doesn’t measure the tremors at ground level – it is possible that a “single spark can ignite a prairie fire” and it would not surprise to see latent discontent turning into widespread rebellion.

    But there are other parallels between 1975 and the present, such as the behind-the-scenes US/Israel/spy factor. New Wikileaks docs (SMH, “The real word about Whitlam” by Philip Dorling, April 9, 2013) show the ingratiating behaviour of union and ALP figures such as Hawke, described by the US Ambassador as ”a pro-Israeli fanatic”, in leaking against Whitlam in 1975. More recently, Israeli discontent with PM Rudd’s objection to Mossad activities was not transferred to Gillard. Considering that the Israel lobby tends to be rightwing Labor – Danby, Carr, Arbib, Roozendahl – it’s surprising that G is from the left. In 2010, a former Australian ambassador to Israel, Ross Burns, accused Ms Gillard of being silent on the ”excesses” of Israel, at the time her partner Tim Mathieson was offered a property sales job by the founder of the Australia Israel Leadership Forum.

    More broadly on spy agencies, according to Annabel Crabb, 2% of the Canberra workforce is now employed by spy agencies, with ASIO, ASIS, ONA experiencing a 300-500% staff increase since 2010 (“Canberra Confidential”, ABC website). It seems that when these agencies whisper in their ear, PMs jump, so the amount of their mischief-making is potentially greater than ever, with fewer constraints nowadays according to human rights groups.

  16. kevin1 :
    Considering that the Israel lobby tends to be rightwing Labor – Danby, Carr, Arbib, Roozendahl

    Carr??? He publicly stated that he talked the PM into abstaining on the Palestinian UN vote in November last year when she was dead-set keen on voting along Uncle Sam lines.

  17. @Troy Prideaux

    That doesn’t disprove the point. It merely proves Carr to be more politically slippery than Gillard & Co (including her Israeli handler – Hawke) and more astute to the fact that a huge majority of the electorate is heartily sick of blindly pro-Israel-right pandering and wants to see a fair go for the Palestinians.

    Carr is smart, that doesn’t make him decent.

  18. @Troy Prideaux
    I suppose Carr setting up Labor Friends of Israel doesn’t count? Peter Hartcher’s “Right call sees Israel on the outer” (SMH 4 Dec 2012) makes a strong case that recent deviations are to save Israel from itself, and even-handedness has strong support within the parliamentary party.

  19. This comments thread seems to have gone badly off-track. Any further discussion of Israel-Palestine issues will be deleted.

  20. @John Quiggin
    Oh OK, I misread the reference to 1975, I didn’t realise that’s when she became Tory leader. For some of us only one important thing happened in 1975 and it wasn’t that.

  21. smashing the miners union and greatly weakening the movement in general

    Thatcher is over-rated as a union breaker. Union densities are lower in Australia than the union bashing UK by about 5 percentage points in 1999.

    Unions have been in a long-run decline because of the decline of mass employment in manufacturing and greater globalisation.

    Unions do best in capital intensive industries where wages are a small part of costs and product competition is weak. They can hold-up their employers for higher wages. This does not work in the human capital rich economies of the late 20th and the 21st century.

  22. In the UK Thatcher used the police to break militant unionism, in Australia Hawke used the Accord.

  23. Thatcher’s agenda was really that of the Adam Smith Institute and their Omega Report. She was their puppet, stooge and attack dog all in one (to mangle metaphors).


    To imagine that Thatcher developed the ideology and agenda is absurd. Though intelligent enough, she was not an intellectual by temperament or application. She was singing from the Omega Report song-sheet.

  24. @Ikonoclast

    Intriguing – your link to the Guardian highlights the universe of ‘Think Tanks’ from which modern day would be Thatchers can pick and choose ‘new ideas’ (mainly old reactionary ideas dressed up using Orwellian syntax ).

    Given the noise/static this generates with the help of ‘thought leaders’, it must be wondered how a new alternative model can possibly emerge from the primal bubbling ooze of finance to challenge existing economic models such as 1975 neoliberalism, post WWII Keynesianism. Is there perhaps a Greek tragedy or fable that might be a guide?

  25. @Newtownian
    Rather than a Greek fable, better one of those Greek gods if they can be found and disinterred. If radical change happens it will be from a campaign led by mystical demagogues rather than a noisy intellectual writing incisive op-eds. (My tip is a Greek fascist will have a go.)

    In that fine American tradition of a call to greatness, J Stiglitz wrote an ode to a new vision of regulation (Free Fall) but his book seems to have done exactly that ie. sunk without a trace. Hard to see how an “ideological offensive” – as JQ frames it – can be effective. In Thatcher’s 80s period, the fight between “socialism” and “capitalism” was a fight about “which side are you on?” throwing up its own standard bearers, and took place in the streets and workplaces. A sustained frontal assault on the finance sector seems unlikely, with the naysayers – I’m thinking Martin Wolff, Krugman, Brad de Long, Stiglitz – being without a systemic vision of a root and branch alternative (AFAIK) therefore doomed to become pale versions from within tugging at the elbows of the great and powerful.

    Is there any historical precedent for other ruling sectors taking a tough line, and succesfully, to isolate the finance sector?

  26. I suspect there is no systemic vision that will work. The great Reagan/Thatcher triumph was taking a deeply silly and deeply simplistic idea, reversing the New Deal, and somehow making it appear a coherent ideology. If the Krugman/Stiglitz proposals had been adopted they may not have made a systemic vision but they would have built a fundamentally different and better world than what exists.

  27. for those that dream of a different past with no thatcher see http://www.guardian.co.uk/politics/2013/apr/09/britain-without-margaret-thatcher backcasting to nationalisation, unilateral nuclear disarmament and state-run pubs. Waiting six months for a new mobile telephone, only three TV channels and needing a department of trade and industry licence before you could use the internet.

    Imagine, buying your mobile phone from the post office, open 9 to 5, Monday to Friday.

  28. @Jim Rose I think you are missing the point Jim, Margaret Thatcher was a deeply disliked and unpopular leader who was eventually pushed out by “her” party. Only after her death have conservatives rallied around her and reinvented the past.

    Meanwhile the excesses of the reforms that she instigated have yet to be properly addressed. Despite a moment in the sun employment and recession continues to dog the UK.

  29. One of the myths by reinvention is that Margaret Thatcher had a hand in the collapse of the Berlin Wall. According to the following article it seems that this was not so and that Thatcher feared that the collapse would lead to a reunification of Germany – a sentiment reportedly shared by other leaders incl the US.


  30. @Alan
    If I can revert back to Australia for a moment, Geoffrey Robinson has a great article in The Conversation today (Both left and right: Thatcher’s undeniable influence on Australian politics) about the Thatcher influence on Libs and Labor in Australia, which was largely to Labor’s electoral advantage.

    Basically, he says that the Libs got all excited by her stridency so their rhetoric veered to the right, which overlooked the very different Australian institutional and social environment, and enabled Labor under Hawke to wrongfoot them. But the more important reason he was able to do this was because the bogey of Thatcherism caused Labor activists to line up behind him on most issues, allowing his rejection of statism, strident nationalism (how could the Libs match him on that!), and ability to re-direct the union agenda. To compensate for much of the resultant decline in workers’ allegiance, Labor developed emergent constituencies by engaging with multiculturalism, environmentalism and gay rights – a strategy not available to the coalition.

    Am I drawing too long a bow here to say this illustration of the relevance rule – that politics ultimately is local and winners are adaptive – can be applied to reform of the financial sector? Global solutions to financial piracy are unlikely to get much traction, unless they connect with national pressure points. Here, this would mean an ASIC with backbone, superannuation transparency, but I’m not sure what else. The European and US paralysis seems to have not stopped the rest of the world (including Japan) from just getting on with it: short of a heightened risk of systemic collapse, international momentum for sweeping reforms seems to have gone, and the repeat of this cycle of dysfunction just starts again.

  31. @kevin1

    “If radical change happens it will be from a campaign led by mystical demagogues rather than a noisy intellectual writing incisive op-eds.”

    A very good point which needs further exploration. It would be interesting to consider how often radical change has been implemented and resolved by reasonable people v. demagoguery.

    A common situation is grass roots dissent is hijacked by a demagogue – Hitler, Robespierre, Khomeini, Stalin. Thatcher and neoliberalism is clearly not in this class but perhaps illustrates the driver being the rise of a powerful and goal oriented movement as perhaps illustrated by ??Lenin??, the Roundheads and maybe the founding fathers of the US?

    A third variation/driver, perhaps modern, are the liberation movements who dig in for a long fight based on Red Book nostrums – Bolivar, Castro, Mao, Garibaldi?

    Which raises the question of more humane change agents/movements/entities. Does Parkes, the Australian Labor movement and the Australia Federation movements or 100 years back fit this description? Most spectacular is probably the eastern European movements of 1989 which Romania aside achieved their ends pretty bloodlessly.

    The latter seemed to have been able to succeed because the dominant economic systems were greatly wounded (the 1890s depression) or utterly exhausted (Soviet Union/Warsaw Pact) and unable to mount a coherent challenge and there were alternative familiar alternative models (the USA Federal system/ EU and Western Europe).

    The difficulty with the latter happening in the present is that Thatcherism/neoliberal philosophy/economics does not seem sufficiently spent – rather they seem have taken the limited grass roots reaction to the 2008 economic slump as a green light to roll out more of the same neoliberal logic that caused the mess in the first place. Perhaps the touchstone for future r/evolution is how Cyprus evolves in the coming year.

    The worrying thing here as evidenced by the Gracchi of the late Roman Republic is there appears to be no reason to believe that democracy and equity should necessarily triumph in the future over a concentration of power like we see today – the relevance of Thatcher is that of course she nursed it and has clearly died as its iconic figure – far more probably than Reagan.

  32. Theres no one-to-one relationship between conservatives and neolibs ,but conservatives have taken a comprehensive smashing on much of their moral agenda . Young generations (and many oldies too) in the West accept gay marriage , euthanasia , agnosticism ,multiculturalism , environmentalism ,etc. In the near future this loss will be total . There is also a growing antiwar and animal rights sentiment.

    A problem is that the postmodern culture that allowed these developments also makes masses of inward looking compliant consumer citizens unsure of much but doubt itself . Afraid to act lest they impose themselves in any way at all upon another (anothers ‘freedom’ ).Not realizing that supporting the status quo IS action .They think short term and focus inward on that which they know and can control – sensory titillation (consumption- ‘freedom’) and family . These citizens fit the neolib dream of selfish actors wonderfully . As people have pointed out above it is an ideology not often recognized as such from within the dream .

    The politicians job becomes merely to manage the economy to continue the dream .
    Doubt is the postmodern lefts big strength but it does not have to work against action .
    The organized right power centers suffer no such doubt .

  33. I was a PhD student in the 1970s at Manchester University. At that time, it was the British centre for ‘Monetarism’ led by David Laidler and Michael Parkin. These Monetarists stated, emphatically, that trade unions did not cause inflation, it was excessive expansion in the money supply. They viewed the industrial unrest in the early 1970s as simply due to unions trying to defend their real wages from the eroding effect of inflation as the foolhardy incomes policy of Edward Heath began to distort the economy.

    When Thatcher tried to implement a Monetarist policy to control inflation in 1980 she found that the Bank of England did not have the ability to control the supply of money. Thus, she adopted an interest target policy which used a demand for money function to find the interest rate that would yield a demand outcome equal to her supply target. But, of course, we all know now that the estimated demand for money function broke down spectacularly and the resultant very high interest rate and strong exchange rate started to destroy UK industry very rapidly. It was this that the famous 365 economists (of which I was one) were worried about. And they had good cause given the fast rate of deindustrialisation in the early 1980s.

    Thus, it is not surprising that the unions were militant, it was all too much too quickly. However, after the events of the early 1970s, Thatcher was in her element getting her revenge against the unions. It was a battle she was bound to win but not one that necessarily made the British economy better. A slower and more conciliatory approach to phasing inefficiencies and excessive subsidies in the public sector would have been much better.

    And now? Trying to cut the budget deficit rapidly is doing nothing to restructure the British Economy away from its reliance on the financial sector- it is on a downward spiral that can be traced back directly to the Thatcher years. Those who say that she ‘saved’ the British Economy are either rusted on conservatives or the don’t know what they are talking about.

  34. @TerjeP
    Describing people as having ‘the courage of their convictions’ usually sounds as if it’s meant as praise. But it can apply to people with harmful convictions just as easily as people with beneficial convictions. Charismatic intelligent people can be true to harmful visions as well as to beneficial ones. People can face serious powerful adversaries and overcome great odds to do harm as well as to do good.

  35. Megan :


    From the latest WikiLeaks effort. A US embassy cable from November 16, 1974.
    Murdoch shills have been denying that he has any influence or power for decades, at the same time he has been caught out serially lying to “regulators” about his intentions for greater consolidation and concentration of media in his hands. And our PM and Leader of the Opposition still have secret meetings with him and his main heavies in this country to make sure they please him.
    That is not democracy. It’s a sad and sick joke.
    I love the internet.

    “dial m for murdoch”takes the reader through the corruption of police,public service and politicions in the UK,written by the MP who was one of the investigators of the intrusions of mobile phones and PC’s by murdoch employees.
    the claim in parliament that he and his son knew nothing of this is a paradox personified.

    “i was let down by those i trusted.” “i knew nothing.” “i am in charge here.” “only i can fix(heh) it.” “only i know what is going on.” “i employ thousands of people,how can i know what is going on.”

    isn’t it about time the australian news paper is recognised as an overseas subsidised political sheet?

    the numbers of people who are members of a union?

    we have most of the conditions–hours of work, safety, living wage ,holiday pay etc,that have been fought for and won in the previous century.
    yes i know there is still heaps to be going on with,but the working conditions now versus 100 yrs ago just don’t compare.

    when these conditions look to be in danger,when the young ones who have never known anything else,see what they take for granted look like disappearing, don’t be surprised if the membership numbers start to rise.

    until that happens membership won’t shift much one way or the other.

    hee hee,the NBN?

    the coalition reckons 80% of Australians are going to be alright with 20% of Australians getting a heap better service than they are?

  36. Talking about systemic vision, why is there a silence about democracy at work. There you have a systemic vision. Can you see it?

    If all of you glorify a democracy, why do you stay silent about the lack of democracy at the place where everyone spends most of the awaken life? At work.

    Truth is that lately democracy is getting attacked from the left and the right in a sense that elected politicians do not follow a majority’s wishes but that follow the elite (aristocracy). Another attack on democracy is that government is too big, that there should be some specific size of government, even tough that is the byproduct of democracy, our decisions.
    Arictocracy (elites) dos not like democracy so they attack it, but also populace does not like it when it fails. And when it fails, it fails really hard, but it is important to note that it fails becouse democracy was undermined by elites, which wants it in ruins.

    But if you people really care about democracy, why do you avoid it at work?
    Because of some vague notion of property rights?
    Do you hope to become aristocracy and then you would want to have the means to protect your property?

  37. Ah yes, some people are also against democracy in marriage, in family, not only against democracy at work.

  38. @John Foster
    Import and export can also bring inflation, independently of internal forces, but internal forces make import/ export effect. Argentina is exporting too much beef and forcing inflation of beef products in Argentina. Importing oil makes you vulnerable to the price of oil.

    that trade unions did not cause inflation, it was excessive expansion in the money supply.

    due to unions trying to defend their real wages from the eroding effect of inflation as the foolhardy incomes policy of Edward Heath began to distort the economy

    Policy of the Edward Heath had nothing to do with inflation, it was the price of oil that makes the price of everything go up and also 1972 crop failures in Soviet Union which they had to import and caused too much demand for grains on the world market.
    I want to argue against your line of the causation not will all premises.

    Due to the inflation caused from external factors, Unions only defended their real wages by increasing nominal wages which also gave a positive feedback to already present inflation.

    If the professional economists can fall for wrong reasoning and line of the events, why to expect that regular folks would be imune from it and not to fall for charismatic leader that gives them reductionist/ simplistic worldview.

  39. she found that the Bank of England did not have the ability to control the supply of money.

    How is that BoE does not have the abillity to control the money supply?

  40. @John Foster tom sargent wrote a critique of thatcher’s programme in 1981 based on rational expectations and policy credibility.

    Didn’t cpi inflation fall from 18% in 1980 to 5% in 1983? What did that?

  41. @Newtownian #39
    Just to clarify, I’m not suggesting that intellectual opposition which becomes a political movement is inevitably led by demagogues – I suggest your preference for “reasonable people” is relevant to previous discussion here about what ideology means. Democratic movements by definition constrain “hijacks” by unaccountable leaders and elites with different interests, with varying success.

    My point is that “opposition” to the financial sector’s power is from within: ie. more technocratic than sectional or ideologically based and this is not a good basis for achieving change where a struggle over power relationships is required, rather than the force of reason. If this is to become a holistic political movement with muscle in the streets rather than a lobby group, all sorts of millenarian ideas and grievances will be included. In times of crisis, both the left and the right are susceptible to “funny money” ideas, often linked to racism, nationalism, populism: a movement confined to “finance sector reform” is almost an oxymoron. Leaders who have political skills, economic nous and communication skills are rare anyway, but absent an alternative coherent, credible and communicable vision of a new society, what role can they play.

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