Margaret Thatcher’s economic policies, we are often told, were cruel, harsh, immoral. In fact she was a deeply moral thinker, and the moral superiority of the free market was central to her thinking. She made the case for it like no other major political leader.
Before Thatcher, the Conservative party had more or less acquiesced to the Labour view of the economy — as a fixed lump of wealth to be parceled out to whatever interest groups spoke up most loudly. But Thatcher freed up markets to vastly increase national wealth. There were, she declared, “only two political philosophies, noly two ways of governing a country. One is the Socialist-Marxist way in which what matters is not the people but the State. In which decisions affecting people’s lives are taken from them, instead of being taken by them. In which property and savings are taken from the people instead of being more widely held among them. In which directives replace incentives. In which the State is the master of the individual, instead of the servant.” The other, she said, was, “A free economic system” which “not only guarantees the freedom of each individual citizen, it is the surest way to increase the prosperity of the nation as a whole.”
The no-nonsense small-town grocer’s daughter learned, by careful study of the work of F.A. Hayek and Milton Friedman, both of whose lectures she attended, that her instincts about hard work, market competition, thrift and a sound currency were exactly the blast of oxygen Britain needed to save it from slow asphyxiation by the trade unions.
In 1981, during a round of fiscal tightening, she said of her opponents, “I tell you what they really mean, they mean, ‘We don’t like the expenditure we have agreed, we are unwilling to raise the tax to pay for it. Let us print the money instead.’ The most immoral path of all. Because what that is saying is let us quietly steal a certain amount from every pound in circulation, let us steal a certain amount from every pound saved in building societies, in national savings, from every person who has been thrifty.” Accusing Thatcher of being “heartless” is an infantile response, the protest of a child who howls at the prick of the needle that staves off disease.
The unions’ many supporters in the media and popular culture failed to recognize that big labor’s demands were unsustainable in the long run — Britain could no longer maintain coal, steel and shipbuilding without massive subsidies that simply transferred wealth from productive industries to moribund ones. Moreover, a country’s ability to keep increasing the standard of living depends on more growth, more efficiency, more output per hour worked. The nationalized union-run industries were a drag on everyone’s advancement.
“I am not declaring war on the unions or their leaders,” Thatcher said in 1980. “But I am challenging their illusion that Government can be a universal provider. The fact is that if the public sector unions take more it will mean less for those who work in the private sector….When expansion comes, it will be just as important to match pay to productivity as it is now during the recession. The new leadership being shown by management, the new realism being shown by workforces, must continue. If our own industries do not become more efficient and produce the products that people want, other nations’ industries will. They will get our business and our jobs.” She was as good as her word; as she held real government growth to 13 percent during her premiership, private industry blossomed. Real GDP rose by 23 percent.
That Thatcher enjoyed robust support of “the nation of shopkeepers,” as Napoleon accurately referred to the ultimate source of British power, confounded the hard left and their allies in important media outlets. But Thatcher simply put into practice the common-sense idea that government’s job was to create the conditions for the greatest advancement for the greatest possible number. Decreasing the influence of self-interested power brokers “cocooned in a world of their own” was critical to that mission; government is not your friend.
Quoting the 19th century French economist Frédéric Bastiat, she wondered in a 1978 speech, “Since the natural inclinations of mankind are so evil that its liberty must be taken away, how is it that the inclinations of the socialists are good? Are not the legislators and their agents part of the human race? Do they believe themselves moulded from another clay than the rest of mankind?”
No, Thatcher said: “You can’t make people good, kind, generous, thoughtful or dutiful by compulsion. True harmony comes from the willing cooperation of free men. It is not served by an over-regulated society. Socialists, on the other hand, believe in increasing the power of government, in reducing the choices left to the people, and hence in diminishing their liberties. Their methods are high taxation, regimentation, compulsion, closed shops and blacklists.”
Other leaders or would-be leaders of Western societies have made the case for capitalism as a necessary evil. Not so Thatcher: to her it was and is a necessary good. In her ringing 1977 “New Renaissance” speech, she said, The economic success of the Western world is a product of its moral philosophy and practice. The economic results are better because the moral philosophy is superior. It is superior because it starts with the individual, with his uniqueness, his responsibility, and his capacity to choose….Choice is the essence of ethics: if there were no choice, there would be no ethics, no good, no evil; good and evil have meaning only insofar as man is free to choose.”