The contested and contingent outcomes of Thatcherism in the UK

Abstract

The death of Margaret Thatcher in April 2013 sparked a range of discussions and debates about the significance of her period in office and the political project to which she gave her name: Thatcherism. This article argues that Thatcherism is best understood as a symbolically important part of the emergence of first-phase neoliberalism. It engages with contemporary debates about Thatcherism among Marxist commentators and suggests that several apparently divergent positions can help us now reach a more useful analysis of Thatcherism’s short- and long-term outcomes for British political economy. The outcomes identified include: an initial crisis in the neoliberal project in the UK; the transformation of the party political system to be reflective of the politics of neoliberalism, rather than its contestation; long-term attempts at the inculcation of the neoliberal individual; de-industrialisation and financial sector dependence; and a fractured and partially unconscious working class. In all long-term outcomes, the contribution of Thatcherism is best understood as partial and largely negative, in that it cleared the way for a longer-term and more constructive attempt to embed neoliberal political economy. The paper concludes by suggesting that this analysis can inform current debates on the left of British politics about how to oppose and challenge the imposition of neoliberal discipline today.

Keywords

Thatcher Thatcherism New Labour neoliberalism

‘Thatcherism … should be judged in terms of its success or failure in disorganising the labour movement and progressive forces, in shifting the terms of political debate, in reorganising the political terrain and in changing the balance of forces in favour of capital and the right.’ Hall and Jacques (1983: 13)

Introduction

The death of Margaret Thatcher in April 2013 marked something of a symbolic milestone for British politics and political economy. Thatcher is held up by supporters as the agent of transformation of the British state into a modern flexible economy. To her detractors, she is a hate figure, blamed for multitudinous and damaging effects on politics, society and the lives of many – especially poor – people. This article reflects on Thatcher’s legacy through the ruling ideology that her period in office spawned: Thatcherism.

While Rogers’ contribution to this issue looks back to identify trends in political economy that are commonly associated with Thatcherism, but can arguably said to have longer roots, this paper looks beyond Thatcher’s time in office to show the longer-running effects on British politics and political economy. The paper traces five prominent outcomes of Thatcherism in the UK: (1) a crisis in the neoliberal project; (2) the transformation of party competition such that all mainstream parties are avowedly neoliberal in orientation; (3) the inculcation of the neoliberal individual; (4) de-industrialisation and financial sector dependence; and (5) the fractured and unconscious working class.

The purpose of identifying these outcomes is that, at the very least, the various attempts underway to unite¹ against contemporary manifestations of capitalist hegemony need to take these into account in the British context. This is important because challenging these legacies would need to be part of any emergent political, economic and social alternative to neoliberalism. At a time of crisis when the possibilities of such alternatives emerge, it is perhaps useful to look back in this way to understand the roots and constraints of the current political conjuncture.²

This paper starts by questioning and qualifying (rather than rejecting outright) the idea that Thatcher was as potent a political agent as popular sentiment might have it. It then goes on to interrogate the meaning and definition of Thatcherism before moving into an analysis of the one short- and four long-term outcomes of Thatcherism. In each, it concludes that Thatcherism’s direct outcome was largely limited to the destruction of pre-existing social and institutional structures. In particular this was focused on the deconstruction of the social, economic and political structures of working-class power. However, Thatcherism was much less successful at articulating a new accumulation, governmental or ideological regime capable of sustaining the neoliberal project that it sought to promote. The problems associated with this were bound up in a short-term crisis in accumulation, legitimacy and social reproduction associated with Thatcherism. Indeed, in attempting to resolve these crisis tendencies, while distancing itself rhetorically from the confrontational politics associated with Thatcherism, New Labour perhaps did more than Thatcher’s governments to advance the neoliberal project. The final section sketches out some of the implications of this analysis for left strategy today.

What is/was ‘Thatcherism’?

For some, despite the widespread use of the term, Thatcherism never was anything distinctive (see Schwarz 1987, for example). For others, it required careful political, social and economic analysis. In an influential account, Andrew Gamble (1988) saw Thatcherism as the alliance of free-market economics with the strong state discipline that was needed to impose property rights, stable money and to counter special interests such as trade unions. For Stuart Hall (1983), Thatcherism was a political process of narrating the troubles facing the British economy and society in the 1970s in a way that gave rise to popular support for Thatcher’s reforming and authoritarian government. For Hall, the success of Thatcherism was in shifting the terrain on which class struggle unfolds to the right. Jessop et al. (1984) took issue with this interpretation, claiming that it presented Thatcherism, its supporting coalition and ideological predominance as overly potent. Instead, they drew attention to the contradictions and weaknesses in Thatcherism. They argued that Thatcherism represented a ‘two-nations’ attempt to divide the working class between those who would benefit from popular asset ownership, the right to buy (council housing) and new service-sector job growth, and those who would be negatively affected by de-industrialisation, public-sector spending cuts and increased market discipline. They also suggested that economic weaknesses resulted from the failure to be able to identify a specific national economic project (or accumulation strategy), a problem grounded in the internationalisation of British capital (Radice 1984).

Despite the slightly terse debate (Jessop et al. 1984; Hall 1985; Jessop et al. 1985) between Hall and Jessop et al., the terms of their shared analysis provides a useful yardstick by which to analyse Thatcherism’s long-term outcomes. Both stressed the background to Thatcherism as a multi-faceted crisis in post-war social democracy. Both also stressed the importance of the shifting ideological ground of British politics, but despite this the failure of Thatcherism to propose a full – hegemonic – solution to the problems of the collapse of social democracy (for instance, see Hall 1985: 120). The discussion below offers an interpretation of the long-term outcomes of Thatcherism that focuses on the extent to which it laid the ground for subsequent developments that attempted to confront the economic, social and ideological weakness in the neoliberal project it left behind. Those attempts, though, would be undertaken on a political terrain that had shifted decisively in support of neoliberalism in relation to party politics, class politics and consciousness.

It is therefore useful to identify Thatcherism’s contribution to the wider programme of neoliberal reform, though this too is often an ambiguous concept (Boas and Gans-Morse 2009).³ Overall, following the likes of Harvey (2005, 2010) and Cammack (2002), neoliberalism can be defined as a class project to (a) restore the ascendency of capitalist class power over labour after a period during which labour had made substantial relative gains, and (b) to promote financial capital over other capitalist interests.

As Harvey (2010: ch. 1) notes, neoliberal political projects have employed a number of different strategies including off-shoring, increasing competition among labour through increased migration, and the development of new labour-saving technologies such as automation. In this context one necessary, but not sufficient, part of what Thatcherism means is a specifically state-led project to advance neoliberalism as distinct (but nevertheless associated with) the private strategies adopted separately and as a class by capitalists themselves (such as shifting production to cheaper wage locations, investing in labour saving technology, and switching operations to financial activities).

In order to understand the next part of what Thatcherism means, it is necessary to think of neoliberalism as having two distinct aspects, variously referred to as its first and second phase; and as roll-back/roll-out (Peck and Tickell 2002; Nunn 2005; Craig and Cotterell 2007; Nunn 2007). Here ‘roll-back’ or ‘first-phase’ restructuring refers to the destruction of the social and institutional structures of post-war social democracy. Essentially, these types of reforms are a prime example of what Polanyi (1957) described as the extension of market discipline. By contrast, second-phase strategies can be associated with attempts to contain the negative effects of market discipline in ways that can sustain it. This is analogous to the second part of Polanyi’s ‘double movement’ or socialisation.

Thatcherism can thus be understood as being principally oriented around the extension of market discipline in a decisive intervention in the pre-existing tensions in post-war class relations to fundamentally weaken the position of the working class. This was embodied in the adoption of monetarism, public expenditure cuts, privatisation, attacks on the position of (especially organised) labour, and openness to the international economy in place of a preference for sheltering labour markets and prices in the post-war Keynesian style (Gamble 1989: 352-6; Jessop 2003: 139-40). Indeed, when discussing this two-phase description of neoliberalism, it is easy to use ‘Thatcherism’ (or ‘Reaganomics’) as a short-cut semantic descriptor for first-phase strategies.⁴

Without rejecting outright the idea that Thatcher was a very significant post-war politician, the neoliberal revolution in the UK had started before her (as Rogers’ contribution to this issue demonstrates), and has continued apace since. As charismatic and forceful a politician as she undoubtedly was, we need to be wary of simply accepting the narrative that Thatcher was the sole agent of change in neoliberal reform in the UK. That said, it has suited politicians of both left and right, in the incredibly narrow spectrum of British politics, to present Thatcher as the specific embodiment of the neoliberal project in Britain. Conservatives have used this to contain the image of ‘nastiness’ (as Theresa May put it) in the persona of Thatcher and her governments. Blair, Brown and the New Labour contingent found Thatcher a ‘straw woman’; by caricaturing neoliberalism as Thatcherism on the one hand, and portraying a ‘discredited’ socialism on the other, they were able to define their own project as being between these polar opposites (Cammack 2004; Nunn 2006). Put simply, it suited politicians of all colours to associate Thatcherism with the divisive and unpopular elements of the class confrontation over which she had presided, while simultaneously pursuing an agenda designed to carry the wider political project forward.⁵

Five outcomes of Thatcherism in Britain

Short-term outcome: A crisis in the neoliberal project

By the end of the 1980s and early years of the 1990s, the immediate outcome of first-phase neoliberalism was becoming apparent in Britain and elsewhere.⁶ This consisted of crisis tendencies in accumulation, social reproduction, ideological legitimacy and the supporting political alliance. In relation to accumulation, de-industrialisation was accompanied by the growth of low productivity services as well as the heights of finance. High and structural unemployment, low wages and low productivity in a low skill-equilibrium (see Figures 1 and 2) were symptoms of this. A crumbling transport and public and social infrastructure intensified by public spending cuts and privatisation contributed causally (Nunn 2006; Nunn 2007). It became commonplace to talk of Britain being ‘in decline’ (Gamble 1990; Hutton 1995; Coates 2000), and as the Major government of the early 1990s tried to distance itself from Thatcher’s personal politics, it struggled with the effects of the second Thatcher recession, a difficult fiscal position and a monetary and exchange-rate crisis that ultimately led to ejection from the European Exchange Rate Mechanism.

Figure 1.

Working age* unemployment (1971-2012).

Figure 2.

Labour productivity (1970-1991).

In relation to social reproduction, the effects of the two-nation strategy: of rising inequality and ‘dropping out’ and disengagement from the formal economy (worklessness, homelessness, drug misuse, informal economy, rising crime [see Figures 3 and 4]) meant that it was difficult for significant sections of the potential working class to reproduce their labour power (in day-to-day and inter-generational terms) in a way that was attractive to capital, or that sustained existing communities. An occupational pyramid was replaced with an hour-glass structure, with those at the bottom in insecure and low-paid employment particularly in unskilled manual and even high-skilled service sector employment (Gallie 1998; Gallie and Paugam 2002; Smith and Middleton 2007; Shildrick et al. 2012). This polarisation has been a noted feature of the UK labour market for some time (Goos and Manning 2003), but has recently increasingly been noted in Europe and internationally also (European Commission 2011; Standing 2011).

Figure 3.

House repossessions (1969-2009).

Figure 4.

Crime and recorded crime rate (1950-1997).

Large sections of the potential workforce were completely excluded by the increased labour market discipline of the Thatcher era. Socially and spatially⁷ concentrated pockets of what would become termed ‘worklessness’ emerged among disadvantaged social groups and in spatial communities affected by economic restructuring. This was all concentrated still further by the ‘sorting’ interaction between housing and labour markets, as those who were less successful in the labour market were gradually concentrated in ‘residual’ public and social housing (Hills 2007: 86-111), urban ghettos and regions left behind by the ‘switching’ effects of Thatcher’s first and second recessions and the de-industrialisation they spawned.

The roots of these problems in the Thatcherite two-nation class project are clear. Economic restructuring was driven forward by a combination of the capitalist strategies of technological innovation and offshoring and a series of consciously pursued policies of the Thatcher government, including its famed ‘cold bath’ labour policies, opening up to international competition, market deregulation and privatisation; and legislation curtailing the power of organised labour (Gamble 1990; Overbeek and van der Pijl 1993). Reforms to disinvest in public housing, promote mortgage markets and to ideologically promote owner-occupation as the housing tenure of choice were also responsible.

The failure to implement a credible accumulation strategy and collapsing social reproduction clearly affected legitimacy among those directly affected – the second nation. However, by the early 1990s they also affected those sections of the working class targeted by Thatcher for inclusion in her first nation. The new property owners of the working class who bought their own homes, encouraged by the promotion of mortgage markets and state property sell offs (e.g. the Right to Buy) were suffering from negative equity and an increase in home repossessions (Nunn 2005: ch. 3.).

This also contributed to a collapsing political alliance. The terms of this were clear inside the Conservative Party that ultimately expelled Thatcher as its leader. It was evident also in the political miscalculation over the imposition of the Poll Tax which was characteristic of the weakening hold of authoritarian populism (Jessop et al. 1990). Finally, it could be seen in the increasing resistance of public-sector managers to the imposition of privatisation and elements of the new public management. Here, the increasing successes of Labour-led municipal authorities in resisting privatisation through compulsory competitive tendering (CCT) as they mastered the strategy of the in-house bid is illustrative. What all this added up to was a sense of crisis in the implementation of the neoliberal project in the UK (Jessop et al. 1990: 98).

Long-term outcome I: New Labour and the transformation of mainstream party competition

The weaknesses of Thatcherism did not go unrecognised at the time by those who would be at the heart of the process of carrying on the neoliberal project in Britain, albeit in a different way:

The limitations of Thatcherism are clear. The claims of an economic miracle have evaporated. Society is divided. The people are insecure. The public is once again ready to listen to notions associated with the left. (Blair 1994: 2)

New Labour would use this backdrop to generate a politics of legitimacy and consent for further neoliberal restructuring. They were acutely aware of three things: 1) the need for state intervention to promote innovation and competitiveness; 2) the problems generated by the extension of market discipline without the corresponding social and institutional infrastructure that could contain it; and 3) the need to broker legitimacy. But they tackled these problems in a way that took full advantage of the conjunctural class victory secured by Thatcherism, particularly the curtailment of the power of organised labour from the process of policy making and implementation. Once reinforced by the corresponding curtailment of the power of organised labour inside the Labour Party itself, this has had profound implications for the rather limited debate about, and extremely limited pressure for, a revised accumulation regime, that continues to be a problem for the UK economy.

It is tempting to think of the New Labour project (NLP) as the construct of Tony Blair and Gordon Brown, with intellectual encouragement from the likes of Anthony Giddens (Cammack 2004; Nunn 2006; Jessop 2007; Nunn 2007). It is worth noting, though, that the Labour Party had been moving toward the central positions of the Third Way for several years prior to Tony Blair’s becoming leader in 1994. After the election defeat of 1987, the party instituted a ‘policy review’ process that resulted in its ending its commitment to unilateral nuclear disarmament, strongly redistributive taxation and nationalisation (Labour Party 1989). Before his death, John Smith, then leader of the party, had established a Commission on Social Justice which resulted in the publication by the IPPR (1993) of Social Justice in a Changing World, which elaborated a remarkably Third Way social, economic and welfare agenda. By the time of the 1997 general election, Blair was able to confirm confidently that the party had adjusted itself to the economic ‘realities’ of neoliberalism:

The key to New Labour economics is the recognition that Britain … [has] to compete in an increasingly international market place … Today’s Labour Party, New Labour, is the political embodiment of the changed world – the new challenges, the new economics and the new politics. (Tony Blair in a speech to the Bundersverband des Deutschen Industrie Bonn, Germany, June 1996, quoted in Hay and Rosamond 2002: 152)

The NLP recognised that the pursuit of competitiveness required more active state intervention, and that this meant that more consensual relations were required with a whole cadre of public-sector managers. The blunt hammer of CCT was replaced with ‘best value’, and ultimately with increased public-sector investment. The NLP saw weaknesses in the physical and social infrastructure as a drag on competitiveness, and recognised the need for a more skilled and productive workforce (Nunn 2006, 2007). The project sought to secure support for increased social investment in the context of neoliberalism through ‘corporate welfare’ and channelling increased investment through the private sector in the Private Finance Initiative (PFI) and similar mechanisms (Whitfield 2001). Firms would be encouraged also to spend more on research and development, to innovate and be more productive, and, through new Regional Development Agencies, were incentivised to form clusters. These strategies saw the structural unemployment created by Thatcher’s ‘cold bath’ labour policies as unhelpful, and set about the ‘activation’ of the unemployed and inactive through Active Labour Market Policies (ALMPs) and pay subsidies to overcome benefit dependency traps and support working families. This was all tied together with a political ideology that suggested that the programme of reform was pragmatic rather than ideological, focused on national renewal for the benefit of all and based on a balance of rights and responsibilities. As Jessop (2007) has it, this was an attempt to shift from Thatcher’s two-nation to a one-nation approach, but noticeably without the reintegration of organised labour into the policy-making process in any serious way. Indeed, organised labour was to be circumvented by the direct appeal to the neoliberal individual and household through the electoral system and an obsession with media management. An illustrative example is the direct attempt to secure the continued material and political support of low-paid families through wage subsidies (in the form of tax credits), rather than by engaging organised labour and capital in a debate over wages and working conditions. The result was a rather shy, if real, form of backdoor redistribution that left the balance of power between capital and labour undisturbed.

Long-term outcome II: The neoliberal individual

Thatcherism is widely associated with the possessive individualism of neoliberal politics. Consumerism was the field in which identity could be affirmed and expressed outside of the shackles of class positions. Advancement in the hierarchy could be gained through the possession of material goods, starting with homes and moving through personal transport to consumer goods and clothing. Those promoting the transformation of the left to accept rather than reject this notion of the possessive and consumerist individual suggested that these were permanent and even welcome changes (Leadbeater 1988). Two sets of significant implications arose from this: the pursuit of consumerist aspiration through labour market success, and New Labour’s acceptance and manipulation of the idea of the citizen-consumer in public-service reform.

The way in which the NLP confronted the labour-market problems left over by Thatcherism (as above) is interesting and thoroughly revealing for the purposes of trying to understand Thatcherism’s long-term outcomes. The NLP confronted useless long-term and structural unemployment through policies designed to ‘activate’ the unemployed and inactive. It worked to combat ‘social exclusion’ and promote the legitimacy of the new labour-market competitiveness. It tried hard to draw in deprived social groups and spatially disadvantaged communities through very carefully targeted initiatives. For evidence, one only need look at the evolution of Public Service Agreement targets focused on specific social groups and the proliferation of ‘Area Based Initiatives’. But it did not seriously confront inequality, labour-market polarisation or the insecurity faced by those at the bottom of the labour market. It recognised the low-pay no-pay employment cycle, but did very little about it – and possibly even accentuated it – by continuously working to activate a latent labour force rather than improving the working conditions and pay of those in the labour market. If a ‘one nation’ vision was to be realised, it would be through the excluded transforming themselves – with state help – so as to resemble the included, rather than by transforming the conditions that gave rise to inclusion/exclusion in the first place. The only conclusion to draw from this is that long-term inactivity and unemployment were seen as bad (for everyone, but including capitalists wanting to access a ready supply of cheap labour), while cyclical poverty, low pay and unemployment were less of a concern, because they kept the labour force competitive. Put simply, they generated discipline on labour.

This process required the very clear attempt by New Labour (especially in its later period in office – see Nunn 2008; Nunn and Johnson 2008) to drive down the concern with competitiveness and individual risk bearing to individuals and households. This is symbolised by the increasing political take-up of the idea of ‘social mobility’ (Nunn 2013). This is partially because it allows all of the mainstream parties to talk about concerns with social justice and the distribution of resources without actually focusing on original inequality (though this is nonsensical: one generation’s inequality of outcome is the next generation’s inequality of opportunity). It was also taken up as a legitimation of the aggressive pursuit of an individual politics of aspiration.

Indeed, it is often argued by politicians – including now Cameron (Telegraph 2013) – that one of the main causes of labour-market polarisation is not structural economic or political factors, but a lack of aspiration among the working class themselves, both individually and for their children (Nunn 2012). As such, schools and educational providers are encouraged to promote aspirational behaviours amongst children. Those familiar with childrens’ school reports in the UK will no doubt be fully aware of the efforts built into the fabric of the education system to inculcate this aspirational aptitude amongst children. Parents are cajoled into promoting it at home (it is a quality assumed to be present in middle-class and functional working-class households, but not in dysfunctional ones). University lecturers are not immune either. A combination of consumerist (through the Key Information Sets [KIS] that are made available to prospective students to facilitate their ‘choices’) and institutional pressures (by managements wanting to improve KIS⁸ profiles and league table positions) are brought to bear to promote employability skills (for a review, see Nunn et al. 2009) and aspirations not just for work, but for employment deemed to be of graduate standard.

This approach to labour-market policy is only one part of the changed relationship between the state and the individual, which is shaped around the idea of the citizen as consumer. The continuation of Thatcherite objectives of privatisation (Marquand 2004: 118) while recognising the limitations of Thatcherism’s disregard of public services was also a key characteristic of the NLP. New Labour borrowed from Thatcherism the idea of the citizen as individualised consumer of public services, but took much more seriously the commitment to use the state as the defender of the public/consumer interest. As such, New Labour could distance itself from the by now unpopular image of Thatcherism as disinvesting in public services, and promote the idea of reforming them to meet the needs of modern consumer culture. Again, just as in the labour market, Thatcherism had provided the role of breaking the coalitions of support for the social-democratic compromise, but not rearticulating a governmental strategy of reconnecting to the changed circumstances. Thus New Labour could simultaneously distance itself from the political image of Thatcherism while continuing to promote neoliberal reform, in this case orienting public services to meet the needs of a consumerist and individualised citizenry, at the same time as opening up opportunities for stable revenue flows for capital in new forms of privatisation through partnership.

Long-term outcome III: De-industrialisation and financial sector dependence

One obvious and commonly cited outcome of Thatcherism is the twin process of de-industrialisation and increased reliance on the financial services sector, despite contemporary defences to the contrary (see Coates 1994: 285-289). However, de-industrialisation is also frequently seen as a continuation of pre-existing trends, some of which could be traced back to the end of the Second World War or even further, to the gradual decline of British leadership of the international system at the end of the 19th century (Radice 1984; Gamble 1990: ch. 1; Coates 1994). Indeed, crisis and decline were the backdrop to Thatcher’s political and economic narrative. Certainly the appeal to monetarism – as sound money: a preference for capital as money rather than capital as production – was set in these terms (Gamble 1979, 2001). As with other aspects of the Thatcherite legacy, though, the adoption of monetarism, the increased exposure to international competition and penetration of the UK economy by overseas capital and the decisive step back from industrial activism on the part of the state, all contributed to accelerating de-industrialisation and the rise of the financial sector.

The corollary to de-industrialisation was an increased and broad-based dependence on finance. Others have dealt with the causes of the current crisis (Gamble 2009; Harvey 2010), but as Morgan (2009) notes, while the US sub-prime housing market ultimately acted as the trigger for the crisis, the same role could have been played by any one of a wide range of structural weaknesses that these industries promoted and exploited. What is worth noting here (e.g. see Figures 5 and 6) is the popular dependence on financial products that has grown out of the declining share of overall economic growth taken by wages.

Figure 5.

Proportion of overall output accounted for by salaries.

Figure 6.

Net household financial liabilities as a proportion of UK GDP.

This dependence on financial products has to be seen as part of the emergence of the current crisis in four main ways. First, reliance on rising asset values fuelled by cheap credit, and the in-built and systemic demand for ever expanding credit (see Figure 6) from financial accumulation has been the basis of enduring if unstable legitimacy for those at the apex of the unstable accumulation regime – those able to realise equity to maintain personal consumption as well as those able to access property ownership for the first time (Hay and Wincott 2012: ch. 7). Second, the widespread reliance on financial products is just one reason why politicians and regulators were so averse to regulating and constraining financial innovation and risky practices in the first place. As state provision of short- and long-term social security has been scaled back, so households have not just covered immediate revenue gaps with loans, they have insured against financial problems with pensions, life insurance and various forms of income and payment protection insurance. Regulators and politicians were well aware that these financial products and the speculation attached to them required greater and more liquid markets to perform, that without this the system could not continue to grow, and that those who were already embedded in it would potentially lose out. They also rationalised – see for instance the concept of financial inclusion promoted by New Labour and continued by the Coalition⁹ – that increasing access to financial services for the poorest and most vulnerable was one way of combating extreme poverty and promoting effective labour market activation. Third, the reliance on financial products and debt-fuelled asset markets (principally property) also gave the wider population an interest in collectively believing¹⁰ in the ongoing propensity of these markets to rise. Fourth, once the crisis hit, the widespread social exposure of the population to financial services meant that the government could feel justified in stepping-in with taxpayers’ money on the reasonably genuine grounds that there was a widely shared and national interest in doing so. In the mainstream political debate following the 2007-8 financial collapse, criticisms of the bailouts themselves have been notable by their absence, disappearing under the entirely questionable logic of austerity offered by the Coalition (Radice 2011; Morgan 2013). Widespread exposure to financialisation is at least partly to blame for the ease with which the Coalition is able to do this.

In both these respects – de-industrialisation and increased financial-sector dependence – Thatcherism was central to securing the conditions in which successors could continue these trends. The shift of the norm toward owner-occupation in property markets made the continuation of the concern with managing inflation, as opposed to managing demand and inflation, a more obvious target for successive governments. The decisive victory secured in symbolically significant industries (e.g. coal mining) and the existing exposure of British capital to international competition meant that rolling back de-industrialisation was much more difficult. The spatial and social effects of de-industrialisation meant that state support for further financialisation and ‘financial inclusion’ was all the more easy to pursue, while the loss of the industrial basis of organised labour has reduced the political pressure for a renewed and broader-based accumulation strategy.

Long-term outcome IV: The fractured and unconscious working class

If the Coalition government began with controversy over its public spending cuts (Radice 2011), that has become more entrenched as the winners and losers from that process have become clear. Recently, much attention has been paid to the myriad changes to the welfare system, which include increased conditionality for the inactive and unemployed (e.g. the debates over forced work trials and benefit sanctions), increasing activation of lone parents, changes to the indexation of benefits to reduce their relative value over time, the introduction of the ‘benefits cap’, and the new penalties for recipients of housing benefit who are assessed as ‘under-occupying’ their properties (Weishaupt et al. forthcoming, 2014). These policies are widely thought to be regressive and to lead to greater poverty and inequality. Perhaps the most defining and long-lasting legacy of the Thatcher era, unchallenged by New Labour in the intervening years, is that these policies, while divisive, retain a significant amount of public support.

For example, public opinion polling shows considerable support for current welfare reductions. Ipsos MORI polls (Hall 2012) show that 78 per cent support benefit sanctions for jobseekers if they refuse work they are able to do, on the grounds (of the entirely rational and individualist [!] calculation) that they would be the same or worse off than they would be on benefits. The same poll showed that an even larger proportion (84 per cent) believe that greater conditionality should be extended to welfare recipients on sickness or illness-related benefits. 62 per cent express support for capping the benefits of recipients with ‘many’ children, and 57 per cent agree that recipients of housing benefit (which can be claimed while in low-income employment) should be forced to move if they live (and presumably work) in high cost areas. Further, longitudinal research for the British Social Attitudes survey shows a long-term trajectory of declining public support for welfare and increasing public support for personal over collective responsibility, even after Thatcherism. For example, in 2012, 62 per cent thought that benefit levels were too high and that they discouraged work – twice the proportion that thought the same in 1991 (NatCen 2012: welfare chapter). Further still, analysis of this data by Ipsos MORI shows progressively falling support for welfare between the generations, with those born after 1979 being the least supportive (Mori 2012).

There are feedback effects between the different long-term outcomes identified here. For example, as New Labour became progressively less generous toward welfare benefit recipients (see Nunn 2008), so too self-identified Labour supporters moved away from support for welfare (NatCen 2010: ch. 2). What this suggests is that there is a self-reinforcing link (no causal directions assumed here) between the party political transformation, the inculcation of the neoliberal individual and the fracturing of the working class. Furthermore, the BSA evidence also suggests divergent views on welfare by occupational groups, with professionals being less supportive than people in more routine occupations which we know are less secure (Gallie 1998; Gallie and Paugam 2002).

In interpreting this data, two things are notable. The first is that New Labour’s attempt to deal with Thatcherism’s two-nation problem was ultimately ineffective. In times of growth, it may be easier to sustain a limited and superficial façade of inclusivity while leaving the economic structures of inequality and social structures of possessive and aspirational individualism unchallenged. In hard times of increased insecurity, it is much harder to do so. Tensions and contradictions remain within the economic strategies of neoliberalism – competitiveness etc – and attempts to embed it in a social and ideological structure that can sustain it. Second, polling across countries shows that support for welfare is no lower in Britain than in other countries in Europe, and that it is considerably stronger than in the USA (Clark 2013). Other polling evidence, commissioned by the TUC, suggests that public opinion is very badly misinformed on the scale of public spending on welfare and on the level of welfare benefits for individual claimants, and that this is positively related to the likelihood of people believing that welfare is too generous (TUC and YouGov 2013). Outside of the current divisive and misinformed public debate on welfare benefits per se, there is still considerable support for the role of government in supporting the least well off, ensuring opportunities for children and for providing a safety net. If Occupy, UK Uncut, Left Unity, TUC Marches for the Alternatives and opposition to university tuition fees, welfare cuts and the like are added to this, a more complex picture of legitimacy and class consciousness emerges. In sum, this suggests that the fractured working class is still contestable as a political project.

Conclusions

It is argued here that caution should be exercised in extending too much agency to Thatcher as an agent of neoliberal reform. Neoliberal reform in Britain was pursued by both Conservative and Labour governments before Thatcher came to power, and has been pursued since by both main parties, and arguably now the Liberal Democrats also.

Thatcherism is understood as part of a ‘first-phase’ in neoliberal reform in the UK, and is symbolically associated with first-phase/roll-back neoliberalism in a wider international context. The significance of Thatcherism, as debated contemporaneously, turned on whether it could be seen as a decisive and potent political force transforming British capitalism and society, or whether it was a rather more contingent, weak and contradictory political project. With the benefit of hindsight, the analysis of Thatcherism’s outcomes offered here suggests that elements of both these interpretations have merit. Thatcherism, like first-phase neoliberal strategies more broadly, was replete with weaknesses and contradictions. In particular, it is suggested here that the absence of a coherent accumulation strategy and the effects of policy on political, social and ideological legitimacy led to a crisis in the neoliberal project. The terms on which this crisis were addressed, however, reflected the embedded shift that had taken place in political economy and politics in the UK. Thatcherism’s primary long-term outcome was a decisive intervention in pre-existing class struggles to fundamentally weaken the working class and its institutions for political and economic representation, most notably organised labour inside and outside the Labour Party. New Labour’s transformation into a fully neoliberal political party, alongside ongoing attempts to develop the neoliberal individual and the resulting fractured working class, are all evidence of this transformation. Where Thatcherism’s outcomes were much more limited and insipid was in the articulation of a revised accumulation regime, governmental strategy and social conditions which could sustain neoliberalism.

But just as Thatcherism failed to put in place a hegemonic neoliberal transition, from the perspective of the current conjuncture, the New Labour second-phase attempt also appears to have foundered. The economic crisis of 2008 and the translation of this into a political and social crisis is once again threatening a collapse of legitimacy. As Morgan (2013) notes, the Coalition government is not so much tackling these weaknesses with its austerity and ‘bleak optimism’ as ‘kicking [the] can’ in the hope that organic solutions might arise that further reinforce the weakening of the social obligations of the state. Crisis, as the discussion of both the emergence and transition from Thatcherism shows, is a time of opportunity for political change: one that the forces of the right are well accustomed to taking advantage of. The Conservative-led coalition has been ready to exploit this opportunity, and the ease with which this has been pursued is symbolic of the long-term implications of neoliberal reform during and after Thatcherism that have been traced here. Indeed, in the absence of effective left opposition, one of the major challenges to the new Conservatism of the Cameron government is from the right of his own party and the UK Independence Party.

In this context, what should the left do? The fundamental shift of politics outlined above suggests that the state may no longer be a credible target for left-advocacy. The state had much more potential as a zone of political struggle when there was a realistic proposition of national growth and significant redistribution of the benefits of that growth to improve the relative standard of living of the working class. In a world beset by a geopolitical transition in the locus of growth eastwards, this is less possible. Opposing the inexorable erosion of the welfare state in response to the competitive threat from the East seems unlikely to be successful. Further complexity is added by the environmental, ecological and resource effects of working to offset the effects of competition through transnational solidarity and equalising the standard of living of the global working class upwards. The quandary that this leaves for the left is substantial, but suggests that, even if it ever was credible, the pursuit of socialism while leaving the institutional forms and practices of capitalist social relations intact is no longer viable. Instead, radical new forms of economic, social and political organisation are required which acknowledge the unlikely nature of support for a genuine socialism through the existing party political process. The starting point is to continue to provide alternative explanations for, and debate about, the current crisis – in its social effects, not just technical accounts of financial market collapse – but to do so in ways that challenge the idea of the neoliberal individual and the fractured working-class consciousness identified above.

Footnotes

Acknowledgements

This paper was previously given as a talk at the Transpennine Working Group () of the CSE Symposium on Thatcherism, in Manchester in April 2013, and at Leeds Taking Soundings (www.takingsoundings.org.uk) in May 2013. I am grateful for the comments, suggestions and queries of participants at these events. I am also grateful for comments from Colin Webster, Jamie Morgan, Dave Robertshaw and two anonymous referees, which considerably strengthened the argument.

Notes

Author biography

Alex Nunn is the founding director of the Centre for Applied Social Research (CeASR) and a reader in political economy in politics and applied global ethics at Leeds Metropolitan University. He is interested in the political economy of competitiveness, crisis and scale, and also undertakes commissioned research and consultancy on behalf of central and local government organisations in the UK, and for international organisations such as the Council of Europe and the European Commission.

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