Margaret Thatcher is about to have another of her triumphs

By the time the sun is up on Friday 10 June we shall all be a lot wiser – and sadder too, quite likely. Either we shall have found out that the Iron Lady is impregnable or she herself will have been found out. Margaret Thatcher is the favourite politician of those who like an exciting life. Her maxim in politics – she has claimed it as Thatche’s Law – is that the unexpected always happens. Certainly something always happens when she is around, and it is often something nasty. Yet she seldom takes the blame when things turn out badly. It is not just that she has been lucky in escaping the natural consequences of her own misjudgments: her impregnability rests upon a sort of ideological second-strike capacity which has enabled her to find vindication in discomfiture.

Here is the scenario. First she points to the terrible mess we are in and promises to get us out of it. At this stage it appears that her reputation depends on actually achieving the promise. When her measures prove unavailing, however, it turns out that she is unabashed. She now blandly maintains that it shows what a really terrible mess it was in the first place. Now this pattern of behaviour is not particularly unusual. In this sense, Thatcher is one of those people – we meet them every day – who never imagine that they might be to blame. If the responsibility for failure can be transferred from oneself to a malignant world, there is no cause for personal reproach or loss of self-esteem. But while the psychological functions of compulsive exculpation are commonplace, the ability to convince others is a good deal more impressive.

Thatcher’s capacity to project her own fantasy as received wisdom is the crux of this election. The change that four years have wrought in the relation of promise to performance is breathtaking. It takes an effort to recall that in 1979 the Tories were running as the sunshine party. Theirs was an appeal to optimism, as against those who declared Britain’s economic plight to be intractable. Naturally, Thatcher stressed that we were in a bad way, but that was because we had gone a bad way, and her message was accordingly about a better way. The Thatcher Experiment was explicitly based upon the proposition that a government which controlled the money supply could thereby squeeze inflation out of the economy without impairing its vitality. Indeed such policies were presented as the means to prosperity, creating jobs by cutting prices. The fact that the unemployment figure stood at over one million was held up as a graphic indictment of existing government policy. ‘Labour Isn’t Working,’ Saatchi and Saatchi assured the country.

The notion that the unemployment level could be taken to measure the success or otherwise of economic management was not dreamt up subsequently by jaundiced critics of Thatcherism: it was endorsed by the Tories in their prospectus. For their claim to be able to reduce inflation was concomitant with their claim to be able to reduce unemployment. It was their opponents who suggested otherwise. The case against monetarism held that insofar as it was capable of throttling inflation it would do so by throttling the economy as a whole. No one was in any doubt that, under these conditions, inflation would decline along with the economic activity that generated it. This was not, back in 1979, a Thatcherite insight overlooked by two generations of Keynesians. Indeed, monetarists regarded any suggestion that their panacea for inflation worked in this way as a slur upon their good name.

And a good name it was in those days, as Sir Geoffrey Howe’s explicitly monetarist claims for his policy sufficiently indicate. The Thatcher Experiment was put in his hands, like a sort of lab technician, under the direction of the Prime Minister. They were egged on by Sir Keith Joseph, who was doubtless comforted by the knowledge that Thatcher’s university training had avoided those soft options in the social sciences which might have warped her objectivity. The Experiment was conducted boldly and openly, in full knowledge of what was at stake. At first the results were merely comical (especially for the unemployed, of course, who took a good-humoured interest throughout). The more loudly Howe threatened to beat down the money supply, the more wildly the figures for M3 kept popping up. Given the time-lags claimed by the monetarists, this should have stored up bad inflationary news for subsequent years, like 1983.

After a while, however, these technical difficulties were overcome, partly by inducing everyone to forget about the figures for money supply in face of cruder indications that the policy was beginning to bite. Whom it bit became fairly obvious when unemployment topped three million (still smiling through), but it was less clear exactly what the policy had become. Hitherto the question had been: can monetarism work? The answer seemed to be: maybe it can, but only if a lot of the rest of us can’t. But monetarism was by now a misnomer or an alias for a policy which had abandoned specific targets in the money supply in favour of old-fashioned deflation, intensifying an old-fashioned slump. And in this slump, lo and behold the rate of inflation began to fall. Intellectually, it has been as much a slump in monetarism as anything else. Who now reads Friedman? Yet, given the very curious way in which the doctrine was tested, there is room for a different conclusion. The conduct of the Thatcher Experiment proves that it must be harder to get a chemistry degree now than it was 36 years ago.

Thatcher relies, notwithstanding, upon sheer effrontery to escape the consequences. Her demeanour suggests that she is waiting for plaudits, not reproaches. She claims responsibility for the current level of inflation – but not, of course, for the current level of unemployment. The one is allegedly the result of her good housekeeping, while the other is the fault of world forces, or the poor position from which she started, or simply of the workers themselves. Those who doubt these assertions are treated like children who simply do not understand the intractable nature of the problem. To point out that lower inflation has been achieved at a terrible cost is to invite the retort that it was obvious that some price had to be paid. The charge that none of this was promised in 1979, and indeed was specifically scouted, is regarded as a rather tiresome piece of pedantry.

Obviously the world recession provides some extenuation of Thatcher’s record at home, and it likewise sets limits to the scope for domestic recovery. International measures are no doubt needed to break the beggar-my-neighbour spiral of general deflation. But that, of course, is not Thatcher’s case. She has readily descended to the platitudes of economic chauvinism when co-operation with foreign governments has been on the agenda. She has simultaneously held up the restrictive policies of these same governments as some kind of model of rationality in urging the soundness of her own strategy. This is the economics of the dog in the manger. It relies for its domestic appeal upon people accepting a bellyful of ideological grievances in place of more solid sustenance. Though Thatcher denounces ‘the policies that failed before’, at least they provided more obvious material satisfaction all round. Incomes policies, for example, have failed in the sense that when they broke down, things were arguably as bad as ever. But whereas they failed after they ceased to work, the present policies are unique in that they fail while they work.

The gibe against the SDP is that it promises a better yesterday. It would be odd if there were no nostalgia at present for the era of consensus when European prosperity flourished. This is to some extent the mood of Richard Mayne’s evocative study Postwar,* which offers a vivid subjective account of the rebuilding of Europe, culminating in the Treaty of Rome. One of the author’s themes is the way the Second World War had undermined the minimalist conception of the state’s role. If war produced variants on Kriegssozialismus, rising expectations subsequently made greater demands, so that ‘even the least socialist of postwar governments were to embark on what might be called Nachkriegskeynesianismus.’ Certainly in the 1960s the fruit of this experiment seemed to be good, and in Britain’s case the main cause for reproach was over self-imposed exclusion from the establishment of the EEC. Peripheral as she was, even Britain felt the second-hand benefits of European prosperity. If the SDP is accused of wishing to bring back the 1960s, this is at any rate not so deeply atavistic as the other parties. Under Michael Foot, Labour would clearly like to bring back the 1940s, and the author of that meretricious tract Guilty Men is for ever trying to speak for England and to tell the Prime Minister that she must, in the name of God, go. The Tories, meanwhile, have openly declared in favour of the 19th century, with their selective invocation of Victorian values. In this competition, the SDP’s better yesterday seems rather forward-looking.

The idea that Britain should pull out of the EEC, which is the Labour Party’s current panacea, is a more insidious example of historical escapism. It is economically damaging whether or not it is actually accomplished. The Tories’ alternative is apparently to stay in with a bad grace – to send Thatcher from summit to summit as a sort of fishwife Britannia demanding her money back. One does not have to be a Euro-fanatic to suppose that there might be a better way of working together within the Community for objectives which are increasingly held in common by all its members. The only way of registering this commitment at present, failing another referendum, is to vote for the Alliance.

For many of us in the SDP, this general election will be the first time we have not voted Labour. Our reasons for defecting from the Labour Party have been exhaustively rehearsed by now. Its drift to the left was part of the story, of course, but it would be a profound mistake to justify the SDP’s role in this election by seeing how many reds can be discovered under how many beds. The crux of the social democratic case against Labour surely rested upon trade-union control of the party under conditions where the sectional interests of trade-unionism provided an increasingly inadequate guide to public policy. The fact that trade-union control – notably of the purse-strings – has recently been exerted to put the Left in check does not vitiate the case. Stalemate is the only ending for that game. Labou’s sociological base is too narrow to sustain a viable government, and any such government would be condemned by its inner tensions to a fatal immobilism. The point of supporting the Alliance is to indicate that an alternative to Thatcherism exists now and can be made to work in the future. The Prime Minister is in her own person the dominant factor in our current politics and it is her claim to a vote of confidence which the Alliance must first refute. The Thatcher Experiment has proved conclusive, but it remains to draw the proper conclusion from it.