A Further Perspective

The Socialist Dragon Slayer

Maggie Thatcher did what Churchill failed to do.

By 4.9.13

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Winston Churchill described socialism as “the morbid doctrine that nothing matters but the equal sharing of miseries.” He spoke of the “inexhaustible” follies of socialism. But while Churchill often mocked socialism, he did not dedicate his political career to its destruction. That is where the great wartime leader most differed from Lady Margaret Thatcher, Britain’s prime minister from 1979 to 1990 -- that, and the fact that she came along several decades after him.… which was more than enough time to demonstrate the accuracy of Churchill’s sallies against socialism.

Unlike Churchill (either during World War II or in his second premiership from 1951-55), Thatcher did not seek peaceful co-existence with prevailing socialist orthodoxies. She hated the false pieties of leftwing/socialist thinking and she laid Britain’s long-term economic decline from the end of World War II to the mid- and late-70s squarely at the feet of the baleful influence of socialism.

In well-chosen words that seem eerily apropos to our time and country (from her speech to the Conservative Party Conference in 1978), she spoke of how Britain had been undone, not by “unusually wicked people,” but those with “enough good intentions to pave the well-worn path twice over”:

The root of the matter is this: We have been ruled by men who live by illusion: the illusion that you can spend money you haven’t earned without eventually going bankrupt or falling into the hands of your creditors; the illusion that real jobs can be conjured into existence by Government decree, like rabbits out of a hat; the illusion that there is some other way of creating wealth than hard work and satisfying your customers; the illusion that you can have freedom and enterprise without believing in free enterprise; the illusion that you can have an effective foreign policy without a strong defense force; and a peaceful and orderly society without absolute respect for the laws.

Free enterprise capitalism was not something that Thatcher knew only from books; it was something she had lived and breathed since earliest childhood. She famously “grew up over the shop” -- being part of the family grocery business during her childhood in the working-class city of Grantham in Lincolnshire. By her own description, she had been “inoculated against the conventional economic wisdom of post-war Britain.” She was able to respond to abstract criticism of capitalism through the vivid and deeply felt reality of her own experience, as she wrote in this passage from her 1995 memoir, The Path to Power:

For them [the critics] capitalism was alien and harsh: for me it was familiar and creative. I was able to see that it was satisfying customers that allowed my father to increase the number of people he employed. I knew that it was international trade that brought coffee, sugar, and spice to those who frequented our shop. And, more than that, I experienced that business, as can be seen in any marketplace anywhere, was lively, human, social, and sociable: in fact, though serious, it was fun.

It was the 1945 election -- held less than two months after the surrender of Nazi Germany -- that established Britain’s first Socialist/Labour government -- with a platform calling for the immediate adoption of a cradle-to-grave welfare state, combined with the nationalization of roughly 20 percent of British industry, including coal, steel, gas, electric utilities, and all airline, rail, and bus services, and the introduction of a high degree of central planning and control over the remaining 80 percent of industry under private ownership. In its platform, the Labour Party under Clement Attlee promised to organize production “more efficiently” and to guarantee high wages and full employment.

Churchill responded to his defeat at the polls with characteristic humor, with this description of his sudden departure from power in the immediate aftermath of tumultuous victory celebrations:

On the night of 10 May 1940, at the outset of the mighty Battle of Britain, I acquired the chief power in the State, which henceforth I wielded in ever-growing measure for five years and three months of world war, at the end of which time, all our enemies having surrendered unconditionally or being about to do so, I was immediately dismissed by the British electorate from all further conduct in their affairs.

Actually, Churchill did return to power six years later, but he and his government acted as if they had no mandate to reverse the Labour Party’s nationalizations, to curtail union privileges, or to dismantle the National Health Service or other parts of the new welfare state. He was even slow to end rationing, which was quickly abolished in the United States following the war but lingered on for years in the UK. “The clock has not been put back one single second,” Evelyn Waugh lamented in his Diaries.

A Fortune Magazine cover story (“Britain in Winter”) that appeared in February 1946 painted an unforgettable picture of Britain after six months of peace -- and socialist government. The Britain we see in this time capsule is a desolate place where everything is rationed and (at government direction) built to the cheapest specifications:

The next worst thing to losing a war, the British are becoming aware, is winning it. Victorious and at peace, Great Britain functions almost as if she had won neither peace nor victory. Shop windows, still partly boarded up against a bomb blast, helplessly display austere “utility” clothing, but a third of a person’s yearly ration points must be sacrificed for a dress and about two-thirds of a year’s points for a suit. Except for the cinema, there is no night life worth mentioning.… Housewives queue for 25 cents worth of meat, the weekly ration. Office workers queue for newspapers that talk of better times. Everybody queues for buses, and sometimes it seems that if a barrel of sovereigns were overturned in the street, people would queue for them.

The same Fortune story described the no less onerous and dispiriting restrictions on anyone trying to run a business:

If an industrialist wants to spend $150 or more on factory repairs, he must wait for a Board of Trade license. If he wants to add to his plant, he had better devote a big part of it to export goods; and though the government does not actually force him to do its will, its control over his labor, material, and plant leave him no other course.

R. A. Butler, who became chancellor of the exchequer in the second Churchill government, wrote an influential document, the Industrial Charter, which redefined “modern Conservatism” in a way that made it scarcely distinguishable from socialism, saying: In the interests of efficiency, full employment, and social security, modern Conservatism would maintain strong central guidance over the operation of the economy.”

That pretty well defines the postwar consensus in Britain leading up to Thatcher’s arrival as leader of the Conservative Party in 1975. She made a clean break from the past in her first Party Conference speech as Leader:

Let me give you my vision: a man’s right to work as he will, to spend what he earns, to own property, and to have the state as servant and not as master -- these are the British inheritance. They are the essence of a free country and on that freedom all our other freedoms depend.

The Thatcherite free-market counter-revolution to more than three decades of socialism began in earnest during Britain’s “winter of discontent” -- the winter of 1978-79, when Britain was paralyzed by a series of strikes -- causing trains to stop running, garbage to pile up in the streets, the seriously ill to go untreated, and the dead to go unburied.

This was a time when (in one of Thatcher’s most quoted phrases) government really did “run out” of having other people’s money to spend. After two years of a trade union-supported “incomes policy” that limited wages increases for most works to 5 percent or less, auto workers, truck drivers, and other unionized workers went on strike -- demanding pay increases of 40 percent or more.

In doing so, the unions repudiated the economic policies of their own leaders -- Labour Prime Minister Jim Callaghan and Chancellor Denis Healey. When the Conservative Party held its annual conference in Brighton in October of 1978, Edward Heath -- the former Conservative prime minister -- urged Thatcher to join ranks with Labour Party leaders in calling for a restoration of an incomes policy.

She would have none of that. Rather than agree to a bipartisan confab on yet another round of wage restraints, she endorsed free collective bargaining. Let the chips fall where they may. If the unions chose to make outrageous demands, that was their decision.

Her government would not intervene to stop them through wage and price controls. But neither would it bail the unions out at a later stage of the game -- sending good money after bad to prop up money-losing companies with bloated payrolls and overpaid workers. If she were elected, there would be no more “beer and sandwiches at Number Ten.”

In one part of her speech to the conference, she then addressed herself directly to Britain’s trade union bosses with her usual straight-from-the-shoulder honesty:

Now, you, the trade union leaders, have great power.… But look at the position of your members today and compare it with the position of workers in other free countries. Can you really say, can anyone say, you have used your powers well?

You want higher wages, better pensions, shorter hours, more government spending, more investment, more-more-more. But where is this “more” to come from? There is no more. There can be, but there will not be, unless we produce it.… And here, let me say to trade union leaders, you are often your own worst enemies. Why isn’t there more? Because too often restrictive practices rob you of the one thing you have to sell -- your productivity.

When the general election was held in May 1979, the old idea that “only the Labour Party could control labour” no longer held sway. Thatcher swept to power with a majority of 43 seats and a 7 percent lead over Labour in the popular vote (nearly equaling the 8 percent lead over the Conservatives that Labour achieved back in 1945). Four years later, in the 1983 general election, Thatcher and the Conservatives lengthened their lead to a majority of 144 seats and a 15 percent margin over Labour in the popular vote.

The Thatcher Legacy
Believing that jobs (in a free society) depend not on government but on the spontaneous mechanism of businesses competing with one another to earn a profit and satisfy their customers, Thatcher dispensed not just with socialism, but also with Keynesian economics.

She refused to set targets for “full” employment. Instead, she aimed to create nothing more (or less) than “the right framework” for growth to occur, a framework of low taxes, sound money, light regulation, and flexible markets (including flexible labor markets -- which outlawed the closed shop and assured everyone the right to work).

In her 12 years in office, Britain went from being the perennial “sick man” of Europe into its most improved and vibrant economy. She became the most entrepreneurial by far of Europe’s major economies -- the one where it was easiest to start up a business and see it flourish.

In returning many industries to private ownership (including British Airways, British Gas, British Steel, Rolls Royce, and many others), Thatcher’s Britain inaugurated and spearhead a movement toward privatization in many countries, including the United States.

In the deregulation of the financial sector, her government shook up a slumbering City of London and made it once again one of the world’s great financial capitals (rivaling New York).

Last but not least, she did live to see the day (and regarded it as one of her major accomplishments) when the Labour Party formally renounced the hoariest definition of socialism.

In running for office in 1997, Tony Blair (Labour prime minister 1997-2008) pronounced the creation of a “new Labour Party,” after taking the unprecedented step of repealing Clause IV of his party’s 1918 constitution, which called for state ownership and control of “the means of production, distribution, and exchange.”

As a former foreign correspondent and BusinessWeek bureau chief who spent the first half of the 1980s covering the Thatcher administration and who had occasion to interview her and many of those who were closest to her, I will always think of her as one of greatest leaders of the 20th century.

She put the Great back into Great Britain, and she set a shining example in moral and intellectual clarity and courage for others to follow (notably including Ronald Reagan) in espousing the virtues of free enterprise, limited government, and individual responsibility.

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About the Author
Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, a free-market think tank based in St. Louis, Missouri.