Thatcherism: A Complex Legacy Rooted in Post-War Economic Shifts

The standard narrative surrounding post-war British politics often points to 1979 as a turning point. Before this, Labour and Conservative governments generally agreed on Keynesian economic policy, active industrial strategy, and keeping unemployment low. However, in the 1970s, inflation became unmanageable and relations between trade unions and government deteriorated.

The arrival of Thatcher, bolstered by an ideological cabal, aimed to drive down inflation and smash the unions, regardless of consequences. For some, this was necessary to save the country; for others, it led to disaster and many of today's woes. However, those with a more detailed knowledge of political history know that the story is not quite that simple.

The Labour government preceding Thatcher were forced into cutting spending after borrowing money from the IMF while trying to manage inflation. James Callaghan's 1976 speech to the Labour party conference warned delegates that the country could no longer spend its way out of a recession. This shift away from post-war approaches happened not just in the UK, but also in European countries with left-wing governments.

The true story behind Thatcherism dates back further, to the unplanned post-war revival of the City and its global consequences. The Conservative government adapted to circumstances outside their control, which were often poorly understood by Thatcher herself. The end result was not what she had hoped for, and New Labour's attempts to modify the approach were also distorted by structural economic changes that weren't fully appreciated at the time.