The Thatcher Revolution; J. T. Murray

John T. Murray TheThatcher Revolution ON May 4,1979, the British Conser vative Party brought forth a new leader, selected democratically, and dedicated to the proposition that an ounce of personal effort is worth a ton of public charity. Mrs. Margaret Thatcher, in her sex, her origins and her convictions symbolizes a trans formation in the Conservative Party, which had become associated in the public mind with stick-in-the-mud attitudes. The truth is that the Brit ish people as a whole had developed an alarming resistance to change. Enormous damage had been done by a succession of governments, mostly socialist, which, despite much revo lutionary rhetoric, had acted on the assumption that the good old days could be resurrected by persisting in our bad old habits. Mr. Murray is a long-time observer of the British eco nomic and industrial scene. Mrs. Thatcher ushered in a real revolution by challenging the two sacred cows of contemporary eco nomic. thought, the Keynesian no tion that endless prosperity could be assured by giving state handouts to those who were out of work, and the Marxist view that this Utopia should be financed by expropriating the earnings and savings of those in work. The situation which led the Conservative Party to choose such a leader, and the progress she has al ready made in correcting that situ ation, is in many respects peculiar to Britain, but it has a wider rele vance.

The British political scene differs from the American in one important feature. In Britain we have a Social ist Party, dedicated in its written constitution to the public ownership of the means of production, distri451 452 THE FREEMAN August bution and exchange. It is the polit ical arm of the trade union move ment and is largely financed by a special political levy on union mem bers and a similar levy made on pur chases in the associated national network. of cooperative shops. The politically active unions, exercising monopoly control of labor in most industries, and enjoying remarkable immunity from normal legal pro cess, are well placed to blackmail the rest of the community and to inflict great damage on the national econ omy. To recognize the dangers inherent in this situation it is only necessary to recall Lenin's instruction to his comrades operating in foreign coun tries: "We must be able to agree to any sacrifice and even-if need be to resort to all sorts of stratagems, artifices, illegal methods, to eva sions and subterfuges, only so as to get into the trade unions, to remain in them, and to carry out Commu nist work within them at all costs."

Working-class movements tend to attract middle-class supporters whose compassion for the underdog is greater than their passion for Marx ism. Many of such recruits, notably the late Hugh Gaitskell, have tried to wean the British Labour Party away from the pure milk of the so cialist gospel to a watered-down ver sion, in which belief in equality rather than public ownership was to be the acknowledged criterion of ortho doxy. The attempt failed, but be cause of it Britain has suffered from a succession of Labour governments which have adopted policies not only of nationalization and central eco nomic planning but also of statutory leveling, principally though not ex clusively, through penal taxation. Equality vs. Liberty Imposed equality and statutory expropriation strike at the heart of free societies. For enterprise, inven tion, daring and unstinting effort are the children of freedom-freedom to stretch for personal reward and to keep it. They are brought forth in an individual when the objectives to which they are harnessed are com patible with his own interest as he sees it. Tocqueville held that liberty and equality are incompatible aims, for men who are free will not long remain equal, and if you would have men equal you must first deprive them of their liberty.

Alongside these philosophical truths one may place some practical observations of human behavior. Men look after their own possessions much more carefully than they do those of other people. Even the idealists of the early Israeli Kibbutz had to abandon communal ownership of tools. Where no one owns, no one cares. The abuses prevalent in the British National Health Service are a public scandal. That which is free is seldom valued. Certainly people 1983 THE THATCHER REVOLUTION 453 Mrs. Margaret Thatcher (Photograph courtesy of British Information Services) spend other people's money more ir responsibly than they spend their own. Economic disciplines are most poignant when they are most per sonal. None of this is to disparage ideal ism. The ideal is the polestar of hu man progress. But ideals are realiz able only by the self-reliant; parasites build nothing. John F. Kennedy touched the mainspring of national greatness when he said: "Ask not what your country can do for you.

Ask what you can do for your coun try." Only a man who has met the challenge to look after himself will have in him the strength and ability to help others. Only a government which calls for the maximum effort from the vast majority of its citizens who are fit and able-bodied can com mand the abundance with which to care for the poor and unfortunate. Charity therefore begins at work, for the fruitfulness of our labors deter mines the scope of our generosity. The child is father to the man. For half a century we have been teach ing our children that capitalism is exploitation of the poor by the rich, that the wicked white man cor rupted and enslaved the "noble sav age," and that our nineteenth-cen tury forebears devoted themselves to creating slums, overworking infants and waging war, with a relish which only the darkest insights of Dr. Freud can explain. Little mention has been made of the fact that capitalism alone created the modern world, with its unique abundance and greatly ex tended life span, by developing and harnessing science; and that our an cestors showed the world the way to civilized living by abolishing slav ery, introducing public health regu lations and establishing education for all.

The Myth of Utopia The myth of primitive Utopia, propagated by such naive or phony anthropological studies as Margaret Meade's recently debunked-Coming 454 THE FREEMAN August of Age in Samoa, has masked the fact that the "noble savage" was more corrupt, more enslaved and more diseased before he received the white man's visitation. The benisons the white man brought have been for gotten; a whole industry has been built on reminding the world of his shortcomings. We will not build a more peaceful world by cherishing these hateful distortions of history. The greatest danger to Western civ ilization comes not from the enemies without, but from the treason of in tellectuals within, who have made our children ashamed of their heri tage. The typical British leftwing in tellectual is visionary, sentimental and revolutionary in an amateurish way. He demands a fuller life for all as a natural right, and prefers mys tic insight and apocalyptic utter ance to mundane concern with pro ductivity, industrial costs and market signals. He studiously avoids real problems and current events, pre ferring to concentrate instead on nostalgic adulation of the "pioneers"

and impassioned, though somewhat imprecise, intimations of the mil lennium. Such types usually come from, or enjoy, a bourgeois life sty Ie and practice professions or occupations in which their capacity to manipulate intellectual abstractions is almost never brought to the acid test of practical execution. They constantly underestimate the precariousness of the hard-won civilization which they are bent on changing, and project the assumptions of their own comforta ble and sheltered lives into all their thinking, whether it be some Uto pian idealization of working-class aspirations, or some purblind reli ance on Soviet sincerity. They com mand the support of the dreamers, the failures and the misguided; all those in fact for whom the burden of reality has become too great and who yearn to cast it' upon some miracle working system or omniscient su perman, so that they may explain away failure and frustration as someone else's fault.

All such potential Fascists are doomed, when they achieve office, to increasing invasions of the demo cratic process and destruction of in dividual freedoms as they struggle to make intractable humanity con form to their smooth premises. In the modern world the accession of such revolutionary simpletons to power is doubly dangerous, for as they reck 1esslydestroy traditional controls and institutions, democratic capitalist society becomes increasingly un workable and that anarchical situa, tion develops in which the disciples of Lenin flourish. No intelligent industrialist would underestimate the importance of in dustrial communications, or deny the historical role of the trade unions in improving them. Certainly in any 1983 THE THATCHER REVOLUTION 455 society which calls itself civilized each citizen should have an impor tant say in the terms and conditions under which he works. But entitling workers to a seat on the Board of Directors is another matter. In a world of universal educational op portunity anyone in our society can achieve Board status .. Look around any company and you will find plenty of directors who came through the ranks.

EmpoweringWorkersto Manage The future of our industrial soci ety depends on people earning power and responsibility, not being given it as a political or trade union perk. There is little sense in imposing di rectors on industrial boards in a free enterprise society where promotion is already open to talent and ac quired expertise. Abraham Lincoln once pointed out that a sheep does not have five legs if you call the tail a leg, for you do not make a tail into a leg merely by calling it one. Like wise you do not make a worker into a director merely by calling him one. There is a popular notion that we should buy industrial peace by giv ing workers shares in industry. But capitalism involves the clear recog nition that the rewards of capital for denial of immediate satisfactions, for risk bearing, for acceptance of losses as well as profits, and for patient en terprise, are quite distinct and sep arate from the immediate and effectually contractual rewards of labor.

This is a very fundamental distinc tion, a line which we blur at our peril. You do not, to use a socialist phrase, "bring ownership to the people" without issuing a license to expro priate the property of others, which is the essence of Communism. Capitalism is about people earn ing their own money, saving some of it to acquire property, and subse quently being permitted to enjoy the frui ts of that property, if any. The process has long been freely avail able to anyone in Britain who cared to participate. Significantly, only 3.8 per cent of the working population have sought to avail themselves of this opportunity to participate in in dustrial ventures. Clearly workers do not want the responsibilities and downside risks of shareholding but, understandably, they would not be averse to being given free entitle ment to its rewards. It would be difficult to conceive of a single measure better calculated to weaken the mainspring of capi talist free enterprise. Yet many de cent people clutch at this purported panacea which, they think, would provide a viable halfway house be tween capitalism and communism.

Such people, including an eminent religious leader who has recently taken to anathematizing both sys tems as if there were nothing to choose between them, should take note of Bertrand Russell's observa456 THE FREEMAN August tion that on the frontiers which run between capitalist and communist countries, the refugees are all mov ing in one direction. Opening the Books Another idea now favored by the British trade unions and their So cialist friends is that companies should be compelled to open their books to continuous inspection by union officials, in order that they may monitor management performance and, if they think fit, ask the gov ernment to intervene in the compa ny's affairs. The proposal reveals a complete failure to comprehend the nature of management in a free market economy. Apart from the vi tal importance of commercial and technical security, which is recog nized in Company Law by the limi tations placed on information given to shareholders, they have not grasped the primary role of manage ment which is to make decisions, and, which is more, to make decisions continuously and quickly, often on the basis of inadequate information.

The mercurial shift in the pace and pattern of commercial events sel dom leaves top management time for deliberation and research. Under such conditions no manager can be infallible. The best one can hope is that he will be more often right than wrong. If, however, you place him in a situation where every decision he makes is the subject of continuous scrutiny and criticism and endless inquests-if you place him perma nently in a kind of public pillory then you will achieve only one re sult, he will cease to make any de cisions at all. That is the end of all enterprise, the beginning of bureau cratic procrastination and indus trial stagnation. Coping with Uncertainty One of the great delusions of the present century is that human re wards can be determined by what are usually referred to as prices and incomes policies. Adam Smith taught us long ago, and Hayek has bril liantly updated the lesson, that in dividual freedom is the prerequisite of economic efficiency. Only the fluid coupling of a free market system can keep the motor of demand and the wheels of production in continuous and fruitful harmony. What free in dividuals will collectively want can not be foreseen because you cannot forecast fancy and you cannot antic ipate innovation.

There is now incontrovertible ev idence that centrally directed econ omies cannot supply the abundance and variety produced by free market economies. The fundamental princi ple of free market economics is that prices and incomes cannot be fixed but must flex to market require ments. Ignoring this principle has cost us dear, for labor is a commod ity and in a market embarrassed with 1983 THE THATCHER REVOLUTION 457 surplus labor the price of labor must fall to clear the market and stimu late new demand. Wages have not fallen as they should have done in recent years because politicians infected with half-baked Keynesian notions have introduced all kinds of artificial dampers to price responses to mar ket signals, preferring to keep work ers in subsidized idleness rather than encouraging them to adapt to ruling economic conditions. Having thus inhibited the market coordinating and clearing functions, we are now faced with massive unemployment of workers who have priced them selves out of ajob.

The bureaucratic mandarins who conspire with the politicians to de sign national plans for instant Uto pia, will not understand that even if the feat were possible without doing violence to our liberty, it still would not please us. Human beings are perverse. They prefer self-govern ment even to good government. They want freedom not only to do what they like but to do what the plan ners think they should not like. So cialists will have none of this, for at the heart of every socialist there is a censor, and Utopia must be drawn in their colors. Remaking the Individual If man as he is will not conform to their wonderful plans then addi tional plans must be drawn up to improve him so that he will con form. Thus the walls of the prison house are fashioned with kindly hands and all around us, in our so cial planning, our economic plan ning and our town planning, the monuments of misguided benevo lence cast their shadows wherein no spirit dwells.

Paradoxically, in the planned economy the only equality which matters, equality before the law, what A. V. Dicey called equality of consideration, soon joins liberty in the collectivist dust bin. Justice re sides in equal application of rules which reflect the moral sense of the community, and not in the selective application of regulations aimed at establishing an arbitrary interpre tation of Utopia. When a Socialist talks about justice he usually means punishing those who do not conform to his plan. You cannot expect much justice from those who share Proudhon's premise that private property is theft. The right to own private property and to have the state ensure the pro tection of that right is one of the oldest and most fundamental conditions of a civilized society. Yet collectivist administrations throughout the world have been for so long insidiously nibbling away at that right that we scarcely recognize the scale and importance of our loss.

This is the root of the crime wave surging through our societies.

458 THE FREEMAN August Moral decay and economic non sense flourish in our society under the camouflage of such high-sound ing euphemisms as "redistribution of wealth," "the planned economy" and "the just society." The penal levels of taxation, effectively forced labor at the behest of the state, are excused as charity, or even as some sort of deserved penance for the wickedness of having become rich. Yet stealing in the name of charity is still stealing and discouraging the weal th makers is no. service to the homeless and the hungry. There is no system at once so self adjusting and so productive as that which enables men of talent, thrift and effort to acquire capital which they can then plough back into the system, backing their own judgment with their own money. The cumula tive investment decisions of such in dividuals, men of proven shrewd ness, are obviously going to be more careful and more correct than the huge central investment decisions of bureaucrats investing other people's money.

The annals of British industry are filled with endless illustrations ofthis truth, from the successes of our mer chant venturers and the rags-to riches sagas of engineering geniuses like Lord Nuffield (Morris Motors) and Henry Royce (Rolls-Royce),to the chronic loss-making record of al most all our state-owned enter prises. Marx said that the only true wealth comes from work but his modern disciples in Britain deliber ately discourage work, telling their supporters that by working they are only lining the capitalist's pocket. CapitalismTriumphsby OfferingConsumerSatisfaction Fortunately capitalism has tri umphed over this nonsense by showing the worker the jam, an in credible abundance of consumer sat isfactions, ranged tier upon tier in our capitalist supermarkets, chang ing in assortment and specification continuously in precise response to the signals of consumer demand. That does not happen in Omsk. And despite all the egalitarian claptrap to which he has been subjected, the average man recognizes that his liv ing standard and that of his children depends on more able men than himself and he is prepared to hire that ability.

The wonders of the modern wo.rld which surround him, the space ships and the nuclear power, the comput ers and the new world of genetic en gineering, no less than the press button magic which increasingly transforms modern living and which creates in the lay mind an awe and admiration for the technician and the scientist formerly reserved for the witch doctor and the high priest, are tangible rewards for which John Citizen will pay. Everyone pays the messenger bearing gifts. Capitalism 1983 THE THATCHER REVOLUTION 459 is a cornucopia, a veritable horn of plenty. Our experience, our traditions and our wisest philosophers are now de livering one clear message. The cen trally planned state, with its egali tarian measures and its assumptions of economic omniscience is a recipe for economic failure, social sterility and political tyranny. The Thatcher revolution is therefore founded on three simple themes. Restore the authority of free markets. Encour age effort and discourage idleness.

Reduce the role of the state and pro mote the sense of personal responsi bility. Pursuing these policies' she has, in four years of office, trans formed the British situation. The rate of inflation which as reW. M. Curtiss cently as 1975 was twenty-six per cent has been reduced to only five per cent. She has shaken up man agement and shaken out chronic overmanning, causing a dramatic rise in individual productivity and considerably reducing the time lost in industrial disputes. The complex process of denationalizing the basic industries has begun and the prun ing knife has been systematically applied to the public services. De spite the inevitable transitional in crease in unemployment caused by these new disciplines· her personal popularity with the electorate re mains high. Not since Churchill in war has Britain had a Prime Minis ter who so completely measured up to the challenge of the times. i IDEAS ON LIBERTY THE removal of tariffs restores justice to consumers-to millions and millions of consumers. The fact that it may seem to result in a tempo rary inconvenience for a few producers is merely the correction of an injustice previously established.

Free trade is such a simple solution for so many of the world's ills. It doesn't require endless hours of debate in the United Nations or the International Labor Organization or the Food and Agriculture Organi zation, or any other worldwide debating society. It requires only that one nation see the light and remove its restrictions. The results will be immediate and widespread. It isn't necessary for all nations to agree jointly and simultaneously to remove restrictions. I{only one nation does it, some good is accom plished-both for itself and for its customers. A great nation, such as the United States, could do it and thus set an example for others to follow. It would not be meddling in the affairs of other nations; it would merely be looking after the best interests of its own citizens. And in stead of being resentful, other nations would be grateful.