What Is Thatcherism?

Thatcherism refers to the political and economic policies and ideas of the British Conservative Prime Minister, Margaret Thatcher (1979-1990). Thatcher believed in the primacy of economic competition, a small state (through deregulation and privatization), control of the supply of money to tackle inflation, and strong curbs on the power of trade unions. Internationally, Thatcherism aligned with the ‘neoliberal’ turn in global economic policy spearheaded by US President Ronald Reagan and Paul Volker, Chairman of the US Federal Reserve, in the 1980s.

British politician Margaret Thatcher (ne. Roberts) was born in 1925 in Grantham, a small town in the East of England. She left home at age 18 to study chemistry at the University of Oxford and swiftly became President of the Oxford University Conservative Association. In 1951, Margaret married Denis Thatcher, a wealthy industrialist, who supported her ambitions for a political career. After a brief stint first as a research chemist, and then as a Barrister, Thatcher was elected to parliament on her second attempt in 1959. She quickly rose through the ranks of the party and in 1974 became party leader.

In 1979 Thatcher became the first ever female Prime Minister in Europe. Thatcher was a divisive figure known for her unwavering confidence and tenacious iron will. However she is seen – national icon or the most hated Prime Minister in living memory – Margaret Thatcher transformed Britain, for better or for worse. 

The Ideologies of Margaret Thatcher

Thatcher’s ideology did indeed mirror Hayek’s belief that free markets, low taxes, and a small state equaled the royal road to individuality and self-determination. She also imbibed Hayek’s argument that socialism was not to be compromised with in any form – for even mild social democracy tended towards totalitarian outcomes. 

Thus, the package of Victorian values traditionally associated with the British Conservative Party were dosed with Cold War-era anti-communism and radical “free market” ideas. Backed by her close colleague and fellow ideologue, Keith Joseph of the Centre for Policy Studies, Thatcher set out to implement key aspects of Heyek’s philosophy. 

After Thatcher came to power she doubled down on her commitment to free enterprise, by launching one of the biggest privatization drives in living memory. Across three terms in government, national industries such as British Steel and British Petroleum (BP), and major utilities including water, electricity, and gas were all sold off. 

In 1983 the Thatcher government also initiated the so-called “big bang” – a sudden and comprehensive deregulation of financial markets, hugely strengthening the City of London as a centre of global finance. Speaking to the Sunday Times in 1981, Thatcher defined her ultimate aim: “Economics are the method; the object is to change the soul.” Her flagship policy The Housing Act (1980) came closest to achieving her aspiration. 

The Housing Act gave five million council residents the “Right to Buy” their house from the local authority, at a hugely discounted price. It was a major step towards the conservative dream of a property-owning, shareholding, individualist democracy. 

Thatcherism in Global Context

Thatcherism was not, of course, a unique and isolated economic experiment. But rather, part of a new political and economic configuration that emerged in the late-1970s. This turning point away from the post-war Keynesian economics of nationalized industries, welfare states, full employment, and public investment is sometimes referred to as “globalization.” 

More accurately, the liberalization of China under Deng Xiaoping (1978), the arrival of Paul Volker as Chairman of the US Federal Reserve (1979) and Ronald Reagan in the White House (1980) – and Thatcher in Britain – represented the emergence of a new ‘neoliberal’ economic model. 

If neoliberalism can be described as a gradual shift in the nations of the global economy towards economic and social policies that give increasing centrality to capitalist markets and the interests of corporate business and finance, then Thatcherism can be said to be the UK variant. 

The legacy of Thatcherism is a steep decline in manufacturing and industry and a boom in the service sector. A significant reduction in the size of the state, through the sale of state assets – and at the same time, an expanded welfare bill expanded due to a loss of industrial jobs. Despite the low tax mantra Thatcherism, taxes – as a proportion of GDP – actually went up, thanks to the discounted sale of public assets and loss of North Sea oil revenue. 

Nonetheless, despite her record, Margaret Thatcher has endured as an icon to many in the business of politics. Her legacy is that Thatcherism continues to shape the political strategy of her party and the other major parties in Great Britain. Asked at a dinner party in 2002 what she considered to be her greatest achievement, she replied without hesitation: “Tony Blair and New Labour. We forced our opponents to change their minds.”