In 2002/3 John Jopling and I wrote
Redefining Globalisation and People-Power
This site introduces its key ideas and some associated topics
Leading the Gaian Revolution: Commonsense for Desperate Times
Gaian Democracies: Redefining Globalisation & People-Power by Roy Madron & John Jopling
A Web site for students and educators in business studies, economics, accounting, leisure, sport & recreation and travel & tourism. http://www.bized.co.uk/current/mind/2003_4/170504.htm
Margaret Thatcher became Prime Ministerof the UK in 1979,'Thatcherite economics' was based on :
* A belief in freeing up markets
* De-regulation to encourage enterprise and efficiency
* Reducing the influence of government
* Reducing the strength of the trade unions
* Cutting personal taxation and shifting the burden to indirect taxation
* Increasing incentives to enterprise and improvement
* Increasing public involvement in business - shareholding for example
* Increasing public property ownership - through the sales of council housing
* A focus on monetary policy to control inflation and economic growth
It is hard for those who have not lived through this period to understand the impact these policies had. The years after the end of the Second World War had seen government take an increasing hand in the economy - Keynesian demand management was the order of the day. If unemployment - the main focus of such policies, were too high, the government would engineer economic growth through operating a budget deficit - spending more than it received in tax revenue. The multiplier effect would lead to economic growth and unemployment would fall. Booms in the economy could be dealt with through a reverse of this policy.
State owned utilities such as gas, electricity, telecommunications and water along with other nationalised industries like steel and coal, were all seen as being inefficient and victims of state control. Mrs Thatcher intended to bring competition to these industries, to make people appreciate the necessity of operating in real world markets, as a vital plank of her policy as well as bringing people into contact with share ownership and thus having greater understanding of how businesses work.
During the next 13 years, most state owned enterprises were privatised, share ownership amongst ordinary people increased dramatically, most of these enterprises became efficient profit making organisations although the cost was seen as being massive. Thousands of jobs were shed in the drive to profitability prior to privatisation; the industrial landscape of Britain changed beyond recognition, communities were laid waste - especially in the coalfields and steel-producing areas of the UK and services became the dominant business type.
Mrs Thatcher oversaw cuts in income tax - the bands were reduced and the top rate cut from 83% to 40% whilst the lower band was also cut. To replace this, VAT was increased from 8% to 15% and then again to 17.5%. Targets were set for the growth in the money supply as attempts to cut inflation were strengthened.
In addition, Mrs Thatcher passed numerous bits of legislation cutting the power of the unions. There were high profile strikes by the miners in 1984 and the print workers in Wapping in 1986, following the sacking of 6000 of them after their refusal to accept new working regimes by Rupert Murdoch's News International Group. Both of these strikes were long and violent but Mrs Thatcher stood firm. The unions would not blackmail the country and the failure of both strikes led to a new approach by the unions and a new attitude to industrial relations.
Mrs Thatcher based many of her economic policies on the ideas of this man, the 'godfather' of monetarism. Friedman had developed the 'expectations augmented Phillips Curve' to explain why the curves properties did not seem to be holding in the stagflation era - rising inflation and unemployment at the same time was not the trade off predicted by the curve. Friedman asserted that individuals would adjust their behaviour in line with what they expected to happen in the economy. So if inflation was growing and was currently at 5%, workers might reasonably expect that it would continue to rise. They might therefore put in wage claims to cater for an expected rise in inflation (plus a real increase) of 8%. In so doing and assuming firms paid the increase, costs would rise and to protect their margins firms would increase prices causing inflation to rise as anticipated.
Attempts were also made to adjust welfare policy to encourage those out of work to try to find employment rather than rely on the state. This included amendments to the tax and benefits system that made the hoops people had to go through to claim benefit harder as well as making the financial incentive of getting work more significant. Such a policy is fraught with problems but the effects continue to be felt as the current Labour government use similar tactics with its 'welfare to work' programme and 'working families tax credits' systems.
Arguably the most enduring image of the Thatcher era is the accusation that she encouraged self-centredness and greed. The 'have's' benefited at the expense of the 'have-nots' with the gap between rich and poor getting wider. Such images were clarified in the numerous inner city riots of the early eighties in Brixton, Toxteth in Liverpool and Tottenham in North London and the 'yuppie' culture perhaps emphasised by Harry Enfield's 'loadsa money' character.
This image of greed and the emphasis on the enterprise culture was also reflected in the approach to industrial relations. The miner's strike and the News International dispute were both seen by the government as necessary victories in the fight against union militants who were deemed to have too much power and who were stifling change and innovation and making the labour market inflexible.
The legislation passed at various times throughout the eighties forced the trade union movement to look at its role and how it represented its dwindling membership. For some, the new union movement that emerged was more responsible, forward looking and pragmatic. For others, the costs in terms of the damage to communities and the heavy handedness of the state, exemplified by the way the police acted, were costs that were too high to pay for the supposed benefits.
• GAIAN SYSTEMS • LIBERATING LEADERSHIP • PARTICIPATORY SYSTEMS CHANGE • PAULO FREIRE'S LEARNING PRINCIPLES • SHARED PURPOSES AND PRINCIPLES • SOFT SYSTEMS •
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NOTE: THE UPDATE OF THIS SITE WILL TAKE UNTIL AUGUST 2008 TO COMPLETE
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Roy Madron 2008