Thatcherism

CONSENSUS POLITCS - 1945-79 ' THATCHERISM The government abandoned its commitment to full employment. It rejected Keynesian economics for Monetarism (particularly associated with the US economist Milton Friedman) in the belief that inflation was caused by too much money in the economy. The priority now was keeping inflation low and allowing the free market to regulate employment. Emphasis on deregulation and decentralisation - ‘Neo-Liberalism’. Thatcher’s ‘conviction politics’ as opposed to consensus. The trade unions were now excluded from consultation with the government. The Employment Acts of 1980 and 1982 also limited their rights (i) requirement for prestrike ballots (ii) end of the ‘closed shop’ (iii) unions to be fined for unlawful strikes (iv) ended trade union immunity from financial damages caused by strikes Governments accepted a commitment to full employment using Keynesian techniques of economic/ demand management. Ministers used levers, such as cutting or raising taxes (direct and indirect), controlling interest rates and increasing state spending, to manipulate the economy. Acceptance of the role of the trade unions – the government consulted the trade unions on industrial relations and economic policy especially after 1961 as governments tried incomes policies as a method of reducing inflation. A mixed economy – with state ownership of gas, electricity, coal, railways, iron and steel and government intervention in the economy. The welfare state – health, sickness, old age pensions, unemployment, public housing – with services provided by taxation or national insurance representing social citizenship. Privatisation altered the balance of the mixed economy – gas, electricity, British Telecom, iron and steel, Rolls-Royce, British Airways and then British Rail (under Major) were all privatised. There was also a huge sale of public (council houses) housing to tenants. A broad belief that government could play a positive role in promoting greater equality through social engineering, for example, by progressive taxation, redistributive welfare and social security spending, comprehensive education, regional development and aid. Cuts to public spending and encouragement of private health and insurance/ pension schemes. Increased means-testing of benefits. Thatcher believed in ‘Victorian values’. Absolutely no attempt at social engineering to encourage equality –reduction in income tax as an incentive for ‘wealth-makers’ to stimulate the economy. Government insisted it was no longer a universal provider and more provision should be left to the market, the voluntary sector and self-help.