Without former British chancellor of the exchequer Nigel Lawson, who died this week, former British prime minister Margaret Thatcher’s political revolution would not have happened. Not only was he crucial in shaping its most compelling ideas, he also plotted its most telling victories.
Thatcher recognized his importance and saw him as an indispensable ally and partner — yet, 10 years into her administration, she let him quit over his squabble with her part-time economic adviser.
In short order, the revolution unraveled. In 1990, one year after his exit, the Tories dumped their leader and entered an extended period of drift, incompetence and, in due course, nostalgia for what should properly be called the Thatcher-Lawson years.
The two conceived modern conservatism in much the same way. They emphasized individualism over corporatism, as well as privatization and property ownership, and the connection between the freedoms of the market system and individual responsibility. Moreover, it was all inside a populist wrapper of British exceptionalism.
What made it so potent — something that is often overlooked by the mostly negative histories of this momentous shift in British politics — is that when Thatcher came to power in 1979, the UK seemed to be in an irreversible political and economic decline. Voters understood this, and gave her government a mandate for radical change.
In no small part thanks to Lawson, that is what they got. At the outset, he was a junior minister in Her Majesty’s Treasury, but did not see the job that way.
As a (truly) junior economist in the department at the time, I can attest to his impact, which was not confined to startled civil servants. The British government lifted strict restrictions on mortgage lending, abolished foreign-exchange controls, and announced a wholly new approach to monetary and fiscal policy.
From 1983, as chancellor, Lawson pressed ahead with privatization of state-owned enterprises, financial deregulation and comprehensive tax reform, cutting rates and broadening the tax base while curbing public borrowing.
In between his Treasury jobs, he occupied what might have been his most pivotal role. As secretary of state for energy, he carefully prepared for a long-threatened miners’ strike by building vast stocks of coal at British power plants. Together with labor reforms that outlawed so-called secondary picketing, making it illegal for striking miners to stop power plant staff getting to work, this would keep the electricity flowing for months.
In 1984, unyielding hard-left National Union of Mineworkers president Arthur Scargill called a strike anyway (without troubling to ballot his members) aiming to tank the economy and with luck bring down the government, as it had before.
Lawson was delighted. Scargill had even started the strike in March, as winter ended. After a year of uninterrupted power supplies, with public opinion hardening against the miners’ leaders, the strike collapsed. In due course, so did the union.
The Thatcher-Lawson revolution waged explicit war on union power. Prevailing center-left sentiment in the UK (as in the US) now holds that this power needs to be restored. There is a discussion to be had about the right balance, but there is no mistaking the costs of excessive union power.
In Britain in the early 1980s, the alternative to the Thatcher-Lawson project was constant labor stoppages and surrender to unaccountable, uncompromising, anti-democratic force. In the decade before Thatcher’s first election win, this possible future was thoroughly rehearsed by militant unions and cowering governments, Tory and Labour alike. That was what gave Thatcher’s all-purpose maxim that “there is no alternative” such resonance.
After their victory over the unions, the prime minister and her chancellor began to quarrel about — guess what — Europe.
Oddly enough, by today’s lights they were closely aligned on this subject too. Both were committed euroskeptics, favoring cooperation with European partners, but opposed to the bloc’s organizing principle of ever closer political union.
In due course, Lawson backed Brexit.
However, in the late 1980s, he said that the UK should join Europe’s Exchange Rate Mechanism — a system of semi-fixed exchange rates and a precursor of the single currency. Thatcher, on the advice of then-World Bank economic adviser Alan Walters, disagreed.
Lawson and Walters began feuding. When the prime minister refused to sideline her part-time adviser and make plain that her chancellor was in charge of economic policy, Lawson quit — to her astonishment and everybody else’s. Then Walters quit too, leaving Thatcher all the more embarrassed and bewildered. Such an absurd falling-out, with vanity and miscalculation on all sides.
The Tories were already losing patience with her approach to the EU. Lawson’s stunning exit proved to be the beginning of the end.
Lawson was forceful and capable, but also arrogant and unyielding — all traits he shared with Thatcher. He was wrong about a lot of things, but rarely doubted he was right. In his retirement, he continued to stir controversy with an aggressively skeptical approach to the conventional wisdom on climate change. A journalist in his younger days, he never lost his taste for provocation.
Unbounded self-belief might very well be a requirement for success in politics. There is no question that, as Thatcher’s indispensable partner, Lawson did succeed. He achieved most of what he hoped to, setting the UK on a radically different course.
Britain’s struggle to come to terms with its future in Europe remains unresolved, and its current labor unrest is a little too redolent of that earlier trajectory, but it is worth noting that, starting with former British prime minister Tony Blair, successive Labour governments have accepted and consolidated the main elements of the Thatcher-Lawson settlement: Low taxes are better than high taxes; public spending and borrowing need to be kept under control; markets are best at setting prices and wages; and, most importantly, the UK is governed by elected politicians, not leaders of organized labor.
All of that might seem obvious today, but in Britain before Thatcher and Lawson, none of it was.
Clive Crook is a Bloomberg Opinion columnist and member of the editorial board covering economics. Previously, he was deputy editor of The Economist and chief Washington commentator for the Financial Times.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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