My latest piece in Inside Story. Standfirst is Has the Coalition learnt the wrong lessons from Margaret Thatcher?
Thatcher saw that the existing system has failed and proposed a radical alternative. In that sense, we need to emulate her.
We don’t need to trawl through the leftovers of her program: an uninspiring ragbag of policies that turned out to be either unworkable (money supply targeting, for instance) or so politically toxic that they are unsaleable even forty years later (notably the poll tax, which destroyed Thatcher’s prime ministership).
John Quiggin 
J.Q.,
You are generous… to a fault. Here you perhaps go too far in generosity towards reputation and legacy. Your article gives far too much credit to Margaret Thatcher. Why does the acceleration of financialization garner any credit or respect? Are we not here all opponents of excessive neoliberal financialization? Thatcher held office from 4 May 1979 to 28 November 1990. Look at “Figure 2 – Real Wage Growth (UK) since Q1 1964” in the following link.
https://www.primeeconomics.org/articles/the-decline-and-fall-of-real-pay-under-the-uks-flexible-labour-market-system
There is no sign that Thatcher helped wage earners at all. Indeed, the graph is very open to drawing the contrary inference. There is only discredit in “radical” action if it is radically wrong and inequitable. That the new Tories are even worse than Thatcher is hardly any endorsement of her government.
I like the article a lot. It is a nice twist to say we need radical action now like Thatcher was willing to take. Just how much good and bad there was in Thatcherism I am willing to leave to history. The last 4 paragraphs of the article point out some of the radical things we need urgently to do ( and what we don’t).
I’m thinking of renaming myself Rant O’Day. 😉 Kidding of course. This below is related to this topic about crises.
DIFFERENT CRISIS – SAME SYSTEM.
“GDP measures only the flow of currency through the production-and-consumption economy.” – Ed Zimmer.
Currency is nominal not real. The corollary of Ed Zimmer’s statement is: “GDP measures nothing real.”
GDP measures the flow of the nominal numéraire. The numéraire measures the social-fictive, market-mediated dimension of “value” in the floating base unit of the numéraire, usually dollars. The only way to accurately measure anything objectively real is to measure in a scientific dimension and to use an rigorously defined and fixed base unit. (See the SI (International System of Units) table.)
The above argument does not state that money is unusable. Clearly, it is usable. We have the empirical proof that it is established and produced by state fiat and is used by people for purchases and trades of goods and services, including labor services, in our extant political economy system. This kind of reality of money, its use in exchanges, is a constructed and extensive, processual and complex-system, sociopolitical fact in modern economies.
Leaving aside the ontological “value mistake” in microeconomics, the scientific mistake in macroeconomics and national accounts is to assume that numéraire amounts can be used in aggregation and used to aggregate unlike things in the (fictitious) dimension of “value”. Collections of objects and processes may only be validly aggregated in the same dimension. The base unit for measuring the aggregation dimension must be scientifically objective, reliable and stable. Money is none of those things. (See Blair Fix – “The Aggregation Problem – Implications for Ecological and Biophysical Economics.)
What does this mistake of aggregating in money (as in GDP calculations) mean in practice? While it is pragmatically possible to use money for trade and exchanges, it is not scientifically valid to aggregate in the money “dimension” to get a true picture of the overall real economy system or to get a true picture of the effect of the real economy system on the real systems of ecology and biosphere. The only way to get a true picture in those arenas is to measure real things in real dimensions and categories and do so scientifically. This alerts us to the true nature of GDP and other macroeconomic numbers. They are tools of propaganda and control and nothing more. They are among prime tools of the capitalist system. If any non-objective or doctored “picture” is used to “inform” people then the only purpose can be indoctrination and subsequent control. These numbers are used to justify decisions, not to make decisions and to lend authority to edict.
The political economy system of capitalism makes a priori assumptions and decisions and then uses macroeconomic numbers to justify the decisions. That the decisions precede the number calculations is clearly demonstrable by real examples. Conditions of war and of civil crisis demonstrate this fact most clearly. These are conditions where, as in the Wizard of Oz, we see the curtain of “good governance” and “fiscal responsibility” twitched aside to reveal the true sequence in which the levers of power governance and fiscal governance are pulled. The political power lever is pulled first. The fiscal lever is pulled afterwards to ring up the necessary doctored numbers to justify the decision.
There are clear examples of this from recent Australian history. One example occurred when Australia was embroiled, in a somewhat token manner, in the Middle Eastern Wars in an effort to ingratiate itself with its ally and master, the USA. At the time in question, the low level of unemployment payments in Australia was a political issue and indeed it had been a perennial issue. The government’s line was that it had to balance the budget. No extra funds could be found for unemployment benefits or other social issues for that matter. Then, the USA put pressure on Australia. We were not doing enough in the War on the Arabic Peoples, otherwise known as the “War on Terror”. Suddenly, our government found $500 million extra Australian dollars to fly missions and drop bombs in the Middle East using our small but relatively high-tech Air Force.
The next clear example comes from the COVID-19 pandemic and we will all be able to relate to this. Once again, pre-pandemic, the goal was a balanced budget and no government debt. No monies (and thence no real resources) were available to lift the miserable rate of unemployment benefit or improve other social programs. Suddenly, when faced with economic and societal breakdown due to closures necessarily enforced to deal with the dangerous pandemic, the dollars were found (electronically “printed”) to pay “jobseeker” (a much raised unemployment benefit) and “jobkeeper” (a benefit really paid to employers to help keep people on). We can note that business people (big firms and small petite bourgeois owned firms alike) are in favor of subsidy dollars when they flow through them.
The point is that the flows of the real resources, real goods and real services of the nation can be adjusted, by political fiat, in times of crisis existential or political, to any level and in any direction at political will, within the parameters of what is possible in the real and machtpolitik (power politics) spheres alone. Consent of the people is often preferred but not absolutely necessary. Money has nothing to do with the decisions or the feasibility of the decisions. It only has to do with facilitating exchanges necessary to implement the decisions. In this sense, money is logistics consequential on government strategic command and control; simply part of the delivery system of decisions for all that is usually, or suddenly and in a novel fashion, declared within the ambit of government fiat.
There is no reason that radical changes to the flows of real resources, real goods and real services of the nation should be limited to war and pandemic crises. Many enduring social ills have festered and become chronic under the rule of neoliberal or late stage capitalism. There is no reason not to make radical changes to solve these chronic ills and then keep these radical changes in place permanently.
Managing the economy and the environment must be made subject to science, for production and impact options (using the production and impact sciences), and then subject to democratic and ethical decision making for the choice of options. Thence decisions must be made as to what real resources are available, what the priorities are and where the real resources are to be deployed. This must all be done at the statist, dirigist and command level. In crucial matters (like halting climate change) we do need to institute new command economy elements. A command economy in a democracy is not the same sociopolitically as a command economy in an authoritarian state. If you hold the view that it is then you must hold the view that both sides of WW2 were indistinguishable, as they both ran command war economies, and that for the post-WW2 era it would have made no practical difference for human rights who won WW2.
Advances in science, technology, computing power and data gathering capacity now make it possible for a command economy system, using accurate data about real parameters (not nominal numéraire data about fictive values unrelated to science or ethics) to plan the essential real aspects of the economy and to meet real human and ecological needs. for the very purposes of civilizational and existential survival. Again, if your thinking recoils from this conclusion, it means essentially you are rejecting the possibility of democratic command of the economy and ceding that command to cartels of corporations under our ever-increasing conditions of global corporate monopolistation of the economy.
You are acquiescing and acceding to corporate dictatorship as the rising corporate monopolies take over more and more of the world economy. The power vacuum left by ceding such democratic command and control via neoliberlism and minarchism will be and is being filled by corporate capitalist governance of the world. It is under that system that the real power decisions are already being made behind the cloak and veil of money. It is under their aegis that the common people and the entire biosphere environment are being destroyed. Money is propagandistically reified as the highest “reality” which logically and imperatively justifies the diktats of corporate capital.
Money is properly a tool of the exchange system and nothing more. It is not a measure of “value”, nor a measure of anything at the macro and real levels, nor a decision metric useful for managing real systems. Any decision for the command, control and management of society by money, as cover and control, is a decision for corporate capitalist dictatorship.
Looking back on the radical actions (well, those of which I approve) that some of our former prime ministers were willing to take I am struck by the spinelessness of the current mob.
How about:
(1) Julia Gillard and carbon tax
(2) Kevin Rudd and the economic boost that stopped a recession in 2009
(3) John Howard and gun control
(4) Paul Keating and floating the dollar
(5) Bob Hawke and letting 42,000 Chinese student stay (after Tiananmen) and saving the Franklin River
(6) Malcolm Fraser cancelling the mining lease on Fraser Island and support for multiculturalism
(7) Gough, enough said.
All those council home renters and specufestors who ended distressed and out on the street with ‘negative equity’ and still deepening debt after Thatcher forced/conned them to be home owners (part of the Thatcher calculated con was that as home owners carried more financial risk than council house renters they would become more timid and politically docile).
Well, what plans do Scummo and Depressionberg have in store for what on a much worse scale happens here soon to the so far politically docile?
https://www.macrobusiness.com.au/2020/08/the-specufeckoning-36-of-investor-mortgages-in-deferral/
https://www.youtube.com/watch?v=PHBRjERga38
With respect Ikonoclast’s initial reply to J.Q.’s comments on Thatcher’s record, I was thinking about the opportunity cost. Somewhat of an important theme around here.
One could go through the record of the George W. Bush administration and find things that did not get worse or which even improved, but this would not mean his total administration wasn’t a disaster. One could do the same for Thatcher.
Meaning, the real costs of Thatcher’s programs is the missed opportunity to “make Great Britain great again” (as she is alleged to stated in a 1950s speech: https://www.margaretthatcher.org/document/100858), for example: make it fairer, democratic, more open and more prosperous.
Instead of that, Thatcher merely embarked on the usual program, however done, to divide and further conquer a populace more vociferously than most: keep them down; beat them up; prevent their politics–these horrid, ordinary people; smash their organisations and, when they came out on street, crack their skulls.
Of course, this led to benefits for some and misery for others. The problem is that Thatcher’s legacy of ‘Iron’ is to further divide and conquer the people even in death, and this will continue to divide Britain and others around the world for decades.
Which, if you’ll forgive the vernacular is: like, SO, not helpful right now…
“We don’t need to trawl through the leftovers” – no, but we might consider further what was placed on the menu.
After declaring his undying love for Maggie and Ronnie following his Press Club address, Joshy immediately declared Howard and Costello as the other great examples he sought to follow.
Birds of a feather… Norway set their country up financially for centuries to come by prudently investing the proceeds of the North Sea oil boom, whereas Thatcher rapidly squandered that large revenue windfall on tax cuts and concessions for the wealthy. Howard and Costello similarly squandered the revenue windfall from the mining/China boom here… And by doubling government debt in a much shorter time Joshy and Co. beat Ronnies’ great example hands down!
One measure I would take would be to spend a lot, lot more on research. There are several benefits to this. Firstly our best and brightest would not have to leave Australia to pursue their careers. Secondly, it would provide a lot of employment. And thirdly, every now and then one of our researchers would discover something new, like wifi, better ways to store energy, better ways to contain pandemics, better understanding of the evolution of the universe, better crop yields, etc etc. And some of these discoveries would pay for themselves many times over.
I’m not sure how one would choose which research to fund, but I’d almost base it on enthusiasm. The idea that you must somehow demonstrate that there will be some financial payoff for the research seems downright stupid to me.
COVID has shown us that the more that we dither, the deeper the crisis will be.
Going back to Thatcher and Reagan is going back to a time and repeating the mistakes of Thatcher and Reagan – the deregulated free market era that culminated in lost wars, financial crises and govt bailouts of privatised public services.
Going back to Thatcher and Reagan is dithering in the face of a global pandemic, dithering in the face of sovereign risk due to the devaluing of fossil fuels and dithering in the face of climate change
comments were closed on the c.s.r thingo . (surprise surprise)
off topic but if allowed i will post here.
Terge, where ever you are.
i apologise for comparing that wittering nasty piece of work to you.
we did not agree but you do know the meaning and how to practice common courtesy.