15 May 2013

Farewell To An Iron Lady


If you want to understand the essential nature of Thatcherism and of Mrs Thatcher – their beating heart, so to speak – it is to be found in some words that she addressed to a television interviewer, Michael Brunson of Independent Television News, towards the close of the 1979 election campaign. Mrs Thatcher liked Brunson whom she knew to be fair and whom she suspected of being favourably inclined to her. Because of that friendly suspicion, she let down her pre-election guard somewhat and exclaimed with unrestrained passion: "I can’t bear Britain in decline. I just can’t bear it.”

Gallons of ink have since been spilled on treatises about what Thatcherism is and about the ideological tendencies on which it draws. More such ink will be spilled below. But this outburst catches the central idea and emotional impulse of Mrs Thatcher’s philosophy when it has been stripped of the particular policies and conservative and classical liberal ideas in which it gradually became clothed over time. A decade and a half later, when she returned to the theme in writing the introduction to her memoirs, she confessed a little more cautiously that while she thought it would be presumptuous to compare herself with Pitt the Elder, the eighteenth century statesman who defeated France in the Seven Years War and laid the foundations of the Second British Empire, she nonetheless had to admit that if she was honest, she felt as he did: „I am sure that I can save this country and that no one else can.”


Human beings are complicated animals, however, and the more intelligent they are, the more complicated they become because they have to reconcile their various impulses both with each other and with the awkward facts of life. In addition to being a passionate patriot, Mrs Thatcher was also an instinctive economist, a devout Methodist, a committed anti-totalitarian, a lifelong student, a highly practical politician and a deeply un-frivolous woman. All of those aspects of her personality found expression in her public policies over time.


Given that the post-war decline of Britain had been principally an economic one, especially in the 1960s and 1970s when she became active in high politics, she gradually developed a critique that explained that decline as a failure of state control and socialist ideas. Her remedies for this failure, while cautious and flexible in dealing with problems as they arose, were drawn almost entirely from the tradition of classical liberal economics. (It helped that this tradition was largely an Anglo-Scottish one.) Yet when British interests were challenged from another direction or on different grounds, as in the Falklands War and the Cold War, she drew both on a tough-minded realistic tradition of national interest and on a more moralistic one of liberal internationalism to justify her patriotic purposes.


If a fierce patriotism drove her, it was governed by a highly practical prudence. Her two central victories in the Falklands War and the miners’ strike illustrated this. She did not expect or plan for the Argentinean seizure of the islands, but a politics of national regeneration could hardly refuse such a challenge. Her conduct of the war thereafter alternated cautious diplomacy with bold military action. She took calculated risks on both halves of the policy but only after she had digested the best expert advice. Once victory was sure, she was adamant in refusing the pleas of her great ally, Ronald Reagan, that its fruits be compromised away. Similarly, she surrendered to the miners’ union demands in 1981 when she was informed that the nation had insufficient coal stocks to resist a strike. But she at once began preparations, including a build-up of coal stocks at power stations, to resist any strike later. When it came three years later, she defeated it hands down.


These two outright victories ran completely counter to the usual post-war British politics of fudge, compromise and splitting the difference. They were a declaration that a new kind of self-confident and determined conservatism was in the driving seat. Together with her prominence in Cold War diplomacy, and her successful economic policy, they established her domestic dominance, entrenched her economic and labour union reforms as the new consensus of British politics, elevated her international profile, and enabled her to influence events from Poland to Namibia that would usually have been outside London’s ambit.


That suited Mrs Thatcher very well since she believed that British influence in world affairs had been exercised mainly for the good of mankind, and in particular for the benefit of liberal civilisation. She was very happy to maximise it for that reason among others. But she was realistic about the limits of British power even if she disliked conceding these limits openly. As Robin Harris points out in his impressive biographical study, Not For Turning: The Life of Margaret Thatcher, she resisted admitting that the local facts of power in Asia had compelled her to yield Hong Kong to China even though that was clearly the case. There may have been method even in this myopia since the outcome of her negotiations with Deng Xiaoping, namely "One China, Two Systems”, has worked to the benefit of China, Hong Kong and Britain itself. But it obscured her fundamental realism of outlook even as it encouraged her to push for more than she could reasonably expect. What helped her actually to get more than she could reasonably expect was the improvement in Britain’s economic and financial circumstances. When the British economy began its spectacular rise in the 1980s, she found Britain revalued upwards and herself hailed as the pioneer of a new worldwide free-market revolution.


In brief Mrs Thatcher set out to save Britain but she ended up helping to save the world too – or at least helping to make it a freer and more prosperous place.


None of this would have seemed remotely possible in 1975 when she was elected Tory leader. All but a handful of her colleagues in the „Shadow Cabinet” were either Tory grandees or Heathite managerialists who regarded her as a narrow, bigoted, suburban woman of primitive views – "Daily Telegraph woman” in a phrase minted by the High Tory writer and politician, Ian Gilmour. She earned this contempt honestly because she was the first major party leader to stand against the social democratic consensus – broadly speaking, a comprehensive welfare state resting on a state-run "mixed economy” – forged by the Labour government of 1945–51, then entrenched by the Tory’s party’s practical endorsement. Even in the final stages of its decomposition in the 1979 „Winter of Discontent”, this consensus could count on the practical support of most members of the Tory establishment even if the party’s grass roots were always hostile to it. Thatcher stood with the Tory rank-and-file on the common-sense grounds that without such firm opposition, Britain would drift deeper and deeper into an enervating statism.


As she says in the introduction to her memoirs about her colleagues in the post-war Tory establishment:


What they said and what they did seemed to exist in two separate compartments. It was not that they consciously deceived anyone; they were in fact conspicuously honourable. But the language of free enterprise, anti-socialism and the national interest sprang readily to their lips, while they conducted government business on very different assumptions about the role of the state at home and of the nation- state abroad. Their rhetoric was prompted by general ideas they thought desirable, such as freedom; their actions were confined by general ideas they thought inevitable, such as equality.


Thatcher was in small but good company against this social democratic consensus. In 1975 when she stood for the Tory leadership against the former Prime Minister, Edward Heath, she was backed by only one other member of the Shadow Cabinet, the noble Sir Keith Joseph. In her four years as Opposition Leader, she was in a Shadow Cabinet dominated by rivals and opponents. Even so, she gradually edged them towards a more robust election manifesto than most wanted. And when the election came, she had the spirit for it.

 

Maggie Thatcher? Reactionary?” she asked in a 1979 speech; "Well, there’s a lot to react against.” But she did more than simply react. She won three elections against the social democratic consensus. She defeated it „in the fine print of policy, especially in government”, and on key issues: the abolition of exchange control, labour union reform, the defeat of inflation, the „Big Bang” that made the City of London the main financial centre for Europe, the sale of one million council houses to sitting tenants, the privatisation of twenty-six major state-owned industries … the list goes on and on. But her domestic achievements can be summarised in a single statistic: one decade after she took office, ten years after Britain’s "winter of discontent”, the British economy had become the fourth largest economy in the world.


Her domestic success was not total. It did not include the welfare state, where she left reform too late, or Europe, where she was brought down in part because she was beginning to oppose the same leftwards drift she had fought in her own country. Still, in the end she created a new consensus – not quite what she wanted, but better than what she had fought in 1979, and far better than if the Tories had continued drifting thoughtlessly left under an uninterrupted succession of Heaths, Majors and Camerons.


Maybe the most persuasive judgement comes from one of her opponents in the 1987 election. Writing in the London Review of Books, he said: "Mrs Thatcher clearly regards herself as a dea ex machina, sent down from on high to ‘knock Britain into shape’. She will wield her powers over the next few years dictatorially and without compunction. On the other hand, there is a tremendous danger – to which Dr [David] Owen has succumbed – in believing that ‘Thatcherism’ is somehow now invincible, that it has established a new consensus and that all the rest of us can do is debate alternatives within its framework. It is essential to demythologise ‘Thatcherism’.” What makes this persuasive, in a way contrary to its argument, is that its author is Tony Blair who ten years later had persuaded Labour that Thatcherism had established a new consensus and that the party could win power only by debating alternatives within its framework. Her final achievement was to convert the opposition.


Those achievements explain why Mrs Thatcher was generally described in media reports as "the most important peacetime British Prime Minister” of the twentieth century and perhaps of all time. But that description, though flattering, risks being misleading and even inadequate. It implies that she was an Attlee rather than a Churchill and that her achievements were confined to domestic policy. In reality she had a strong impact abroad as well. This is not merely a reference to the Falklands. Her success in that war does not make her a great wartime leader on the scale of Churchill or Lloyd George because it was on too small a scale. But wars are far from being the sole test of international power and influence. Preventing wars and winning decisive conflicts without the mare even better indicators.

 

And Mrs Thatcher’s record here was stellar. Unlike Churchill who sorrowfully conceded late in life that Britain was weaker following his stewardship than beforehand, she left her country stronger than she found it on entering office. How so?


She was President Reagan’s most reliable ally in the last stage of the Cold War. She played a decisive role in helping other West European governments to resist the powerful peace movement – it could put millions of protesters onto the streets of their countries – and thereby getting US missiles stationed in Western Europe. When that was achieved in 1984–85, it produced an almost instant if disguised change in Soviet policy. It persuaded the Soviets that they could no longer win the Cold War by military intimidation. At the very least, therefore, she was an active force in ensuring that the West did not lose the Cold War.


She then played her second important role in the Cold War, acting as a go- between for Reagan and Mikhail Gorbachev in their crabwise dance towards its peaceful solution. Her search for a new type of Soviet leader settled on Mikhail Gorbachev in 1984 when he visited Chequers on a stop-off air-flight. She debated him over the lunch table – Mrs Thatcher famously enjoyed arguing with people and generally liked them the better for it – pronounced him "a man we can do business with”, and recommended him warmly to the President both publicly and privately. Reagan reached the same conclusion and acted accordingly. For the next three years he worked with Gorbachev to end the Cold War peacefully in a series of Soviet–American summits. Though absent from these events (somewhat to her frustration), Thatcher had helped set the stage for the gradual Soviet surrender on arms control at the Geneva, Reykjavik and Washington summits. She therefore helped win the Cold War – and to do so peacefully.


But these summits, though they ratified the West’s peaceful victory, did not bring an end to communism. Indeed, from the Soviet standpoint, they were part of Gorbachev’s strategy to rescue communism from its internal stresses and strains by freeing up resources locked inside his military budget, attracting aid and investment from the West, and thus stimulating and reforming the civilian economy. This was a sensible strategy, yet as we know, perestroika failed and communism collapsed. What brought about the end of reform communism was competition from the revived capitalism in the West – and that was at least as much the work of Thatcher as of Reagan.


Thatcher had been the subordinate partner in the Reagan–Thatcher relationship on military and diplomatic policy. She fought and even won some battles with Reagan – for instance, on the Soviet gas pipeline – but in general he laid down the broad lines of policy to which she largely conformed. Given the relative size of their two economies, that should also have been true of economic policy. Yet it was not so. Owen Harries, the distinguished Australian editor of the National Interest magazine, once argued that where Thatcher and Reagan differed on economic policy, she would probably be regarded by history as the more important and influential economic reformer. That looks increasingly likely. Again, how so?


In the first place the recovery of the British economy in the 1980s was more impressive because it started from a lower economic point and occurred in a more left-wing country. Then, Thatcher had harder opposition to overcome – her labour market deregulation, for instance, had to overcome resistance from timid Tory "Wets” as well as from Labour MPs. Next, as we have seen, the reforms had to defeat major non-parliamentary challenges from the labour unions, above all, the 1984–85 miners’ strike. Once the miners were defeated, the British economy began its long boom combining economic growth with price stability.


That transformation did not stop at the Atlantic’s edge. Both the British and US economies became demonstration effects of what free market reforms could accomplish in a remarkably short time. The birth of the information economy was one among these accomplishments. But though very similar ideologically, these two demonstration effects were not identical in terms of policy: tax cuts were America’s principal intellectual export; privatisation was Britain’s. Of the two, privatisation turned out to be the more important globally since both Third World and post-communist economies were burdened by large inefficient state industries. Once embarked upon, privatisation succeeded with surprising speed. The Soviets, and still more remarkably, West European communists and social democrats were forced to change course by increasing evidence that it promoted greater efficiency, a wider spread of capital ownership, and a cultural spirit of enterprise. The most unlikely converts were forced to take note.


While researching my book on Reagan, Thatcher and the Pope, I found this unwitting tribute to the Iron Lady in the Soviet Politburo archives: a 1986 conversation between Gorbachev and Alexander Natta, the General Secretary of the Italian Communist party:


Natta: At the same time we, the communists, having either overestimated or underestimated the functions of the "welfare state”, kept defending situations which, as it became clear only now, we should not have defended. As a result, a bureaucratic apparatus, which serves itself, has swelled. It is interesting that a certain similarity with your situation, which you call stagnation, can be seen here.

Gorbachev: "Parkinson’s law” works everywhere ...

Natta: Any bureaucratisation encourages the apparatus to protect its own interests and to forget about the citizens’ interests. I suppose, that is exactly why the Right’s demands of re-privatisation are falling on a fertile ground in Western public opinion.


For that reason Thatcher, even more than Reagan, posed an economic challenge to the Soviet Union. The challenge was: either reform or fall ever further behind the capitalist West. The comparison between the British recovery after a decade of free market economics and the continuing stagnation of the Soviet economy after seventy years of statist communism was simply too embarrassing to ignore. When Gorbachev’s perestroika was introduced, however, it destroyed the communist system it was designed to save. Gorbachev therefore, while he deserves credit for not employing brute force to sustain Soviet power, was not really an active mover and shaker in the transition to post-communism. He was essentially an effect rather than a cause, a response to Thatcher, Reagan and the policies of strategic and economic competition that they promoted. Without Reagan and Thatcher, there would have been no Gorbachev.


Once the command economies of the Soviet bloc collapsed in 1989, revealing the extraordinary wasteland of state planning, moreover, it was the Thatcher model that the new democracies mainly sought to emulate. She, Reagan and John Paul II were all heroes in post-communist Europe, but it was Thatcher to whom the new economy ministers such as Poland’s Leszek Balcerowic, Czechoslovakia’s Václav Klaus and Estonia’s Mart Laar looked as their model of how to reform a bankrupt socialist economy. And the more that they followed the Thatcher model, the more quickly their economies rose from the dead.


Yet it was not only in the post-communist world that Thatcher was seen as an inspiration. Thatcherism had an important impact both in the lagging Third World economies and in the rising NICS (or newly industrialising countries) in Africa and Asia. Privatisation, the better control of public debt, lower taxes, and the reduction of barriers to trade and capital movements – these became the new conventional wisdom in Ministries of Finance around the globe. Their result – "globalisation” – became the watchword of World Bank and IMF reports. Mrs Thatcher herself emerged in retirement as a kind of economic heroine of Asian capitalism, invited regularly to Asian countries and frequently consulted by their governments. Her death was treated there as a significant event as analyst Martin J. Sieff pointed out in his column for the Asia-Pacific Defence Forum:


Thatcher’s passing … was widely and sympathetically reported throughout the official media in China. Most major newspapers carried long features praising her achievements on their front page. The English-language China Daily turned over the entirety of its back page to her – an unprecedented honour for any foreign leader in modern times.


The reason is that her reform program was seen as an important test by Asian economic reformers. Deng Xiaoping had embarked on his free market "Four Modernisations” program in the same year that Mrs Thatcher got elected. She was not a main inspiration for them in the first instance. His models were probably Lee Kuan Yew in Singapore and the Taiwanese (though Deng could hardly admit that). But these models were flawed insofar as they were experiments, however successful, in a city-state and a small economy respectively. What Thatcher demonstrated was that free market reforms could transform a large advanced economy that was sclerotic and a polity that was allegedly ungovernable even under democratic constraints. That encouraged Deng’s reformers to persist with their policies. And as the Thatcherite reform program expanded further in the 1980s, they took note of such deregulatory changes as the financial "Big Bang” in their design of Shanghai as a financial centre. With successful results as Sieff again demonstrates:


Chinese economists and bankers watched closely as the deregulated City of London and its banks utterly outstripped Paris and Frankfurt, despite Germany’s far larger economy at the time and France’s central power role in the European Community to become the dominant financial centre of Europe and once again one of the three largest, wealthiest and most important in the world.

Thatcher’s free market example therefore helped explain why the unregulated "anything goes” Chinese economy and financial system continued to roar in a continuing bull market boom through the last decade of the 20th century and the first decade of the 21st century while Japan’s far more cautious, integrated and consensual banking and financial system went into a tailspin in the early 1990s followed by a generation-long stagnation from which it has yet to fully recover.


China’s success, which continues, compelled other Asian governments (notably India) to go down similar reform paths. These economic transformations brought literally billions of Asian workers out of subsistence economies (and worse) into the global labour market. They have created new middle classes across Asia. And, not irrelevantly, they have reduced the cost of living for poor people in Western countries even as they lifted the standard of living for poor people in Europe and North America. As Mrs Thatcher would be the first to point out, these results are the latest success for the traditional British (or Whig) economic policy: sound money, property rights, and free trade and capital movement. And they occurred in part because Mrs Thatcher both implemented them and argued for them.


If the world can see that Margaret Thatcher was a great world historical figure, why was her reputation at home more controversial? The short answer is that Mrs Thatcher, like Franklin Roosevelt, was a great reforming politician whose reforms had to overcome bitter opponents and vested interests from the striking miners to the "Wets” in her own party to the liberal intelligentsia that controlled most of Britain’s cultural institutions – including Oxford that refused its most famous graduate an honorary degree and the BBC that treated the street parties celebrating her death as serious indicators of public opinion. Such struggles leave deep wounds especially on the losing side. The continuing hostility of her various opponents was a reflection of the completeness of her victory over them. And at the time of her death they still nursed grievances and revenge fantasies.


The extreme Left’s bitterness fuelled the more repulsive responses to her death: the street parties and the chanting of the "Ding Dong, the Witch is Dead”. These usually turned out to be led or inspired by middle-class public sector people in non-jobs. They are a symptom of the cultural decline of Britain which she did not manage to stem (thinking it necessary to defeat the labour unions and the Soviets first). She herself would have seen the street parties as comforting evidence that she had deeply wounded the Caliban Left. Ten years after losing office, she had responded to a mob chanting "Thatcher, Thatcher, Thatcher, Fascist, Fascist, Fascist, Out, Out, Out” by turning to her speechwriter, Robin Harris, and saying "Oh, Robin, doesn’t it make you feel nostalgic?” But as the respectful and affectionate reaction of the crowds to her funeral showed, these extreme hostilities are ludicrously out of step with public opinion.


The "Wets” in the Tory establishment whom she outmanoeuvred have mainly conceded that she got the big things right. They still nurse a wounded vanity because in winning the battle with the labour unions, she also demonstrated that their entire political strategy was rooted in a defeatism that proved mistaken. Managing an inevitable decline looks very foolish when the decline is reversed. Their modern equivalents – the Cameron "modernisers” – began by distancing themselves from her on a similar calculation. They have now reversed themselves and argue that Mrs Thatcher was "a moderniser” herself. This argument is essentially a semantic game: modernisation is an empty concept that needs filling with content before it can be assessed. Thatcher’s modernisation consisted of sound money, ending exchange rate control, cutting taxes, building up defence, privatisation, etc. Cameron’s modernisation consists of same-sex marriage, "ring- fencing” foreign aid, sharply cutting defence, allowing the UK financial sector to be regulated by Brussels, etc., etc. They are not quite the same thing. Still, the semantic game is nonetheless an admission by the Tory establishment that her body is now well worth snatching.


The critics of her opposition to Britain’s joining the Exchange Rate Mechanism and the Euro itself have, for understandable reasons, have fallen silent. She now looks as prescient on Euro-federalism as she had previously been on market economics and the Cold War.


Her liberal opponents in the intelligentsia – moderate Labour, the cultural establishment, the BBC, the universities, etc. etc. – have retreated from their earlier criticisms which were too embarrassingly snobbish ("suburban”, "odiously vulgar”, etc). They now suggest in a world-weary way that she was not that important really, a conventional Tory politician until 1975, when she saw an opportunity to rise and adopted an economic liberalism then in the air. She was more a symptom of global changes than their inspirer. She did not really make much of a difference. Etc., etc.


Well, maybe it is more comforting to be defeated by a trend than by a person. But this is an argument that could be employed to demonstrate that no statesman is ever more than an innocent bystander since, almost by definition, a successful statesman has historical trends on his side. None of these critics argued at the time that Mrs Thatcher was the beneficiary of favourable historical trends; indeed, they very often argued the precise opposite – that she was defying such trends. This dismissive claim is also false biographically. As Charles Moore’s new biography makes clear, she gradually developed a political position that was subtly different from the Tory establishment’s policies in both government and opposition. In the early 1960s she told a meeting of despairing Tory MPs brought together by the Institute of Economic Affairs that they should go into a different business if they could not persuade the voters that Marks and Spencer gave them a better deal than the Post Office. In 1968, when she was the leading woman frontbencher in the Tory opposition, she gave a major lecture to the annual party conference in which almost all the ideas that later became known as Thatcherism were clearly laid out. (I attended the lecture and well recall the excitement of the younger Conservatives afterwards. Someone high in the party was finally speaking their language.)


Above all, her convictions (and the global achievements to which they led) were rooted originally in the values of provincial England in the 1930s–patriotism, hard work, diligence, prudence, the Methodist faith and a moral earnestness that metropolitan liberals liked to mock. These were what Shirley Robin Letwin called the "vigorous virtues” in her study, The Anatomy of Thatcherism, and which she saw as the essence of Thatcherism. They are the virtues that enable people to be self- reliant and to live in a free society. And they are the essential foundation of the softer virtues such as compassion since only self-reliant people are in a position to help others. Mrs Thatcher did not merely approve of these virtues in a theoretical way. She lived them. She was a grocer’s daughter who saw in simple practical terms how the free market brought goods from all over the world to a small town in Lincolnshire. She was a hard-working scholarship girl who knew that knowledge is both hard-won and precious and who never stopped learning. And she was a well- brought-up Methodist girl whose favourite religious quotation was John Wesley’s "Earn all you can; save all you can; give all you can”. Her revolution was provincial before it conquered the world, a moral revolution before it was an economic one. Margaret Thatcher was a Goddess of the Copybook Headings.

 

In a way that was why she was hated and despised. She reminded people of obligations they had forgotten and of shortcomings they wished to forget. She was a walking reproach to a certain kind of cynical worldview.


In the face of death, however, these passions dissolve, or should do so, and in most cases they did. As the funeral approached a general sentiment seemed to coalesce in all but the hardest critics that she was one of the great figures of British history. As with Ronald Reagan’s funeral, the event itself seemed to settle the question.


Yet the funeral, which she herself had largely planned, was by no means a celebration of her worldly achievements. It was the traditional Christian farewell to a humble soul seeking the mercy of God. She took the need for such mercy as seriously as she took more strenuous Christian truths. On the last pages of her memoirs, she tells of attending a Catholic mass in a Warsaw church where the congregation had welcomed her warmly as someone whose messages to them during the Cold War had shown an understanding sympathy for their lives under communism. She then reflected that "… the full accounting of how my political work affected the lives of others is something we will only know on Judgement Day. It is an awesome and unsettling thought. But it comforts me to think that when I stand up to hear the verdict, I will at least have the people of the Church of the Holy Cross in court as character witnesses”.

 

Rest in Peace.




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