Book review: ‘Thatcher’s Trial, Six Months That Defined A Leader’, by Kwasi Kwarteng, 2015
The article below was originally published here on The Rising Tide blog.
An emergency budget is due on September 23. The new government led by Liz Truss has started as it means to go on. It will borrow £150bn to give to the already engorged energy companies. Meanwhile, the people will pick up the tab.
Under the premiership of Johnson and now Truss, their critics have given far too much weight to issues of competence and style. The issue is not competence or even intelligence but policy.
The class war content of the policies enacted and proposed has been grotesquely downplayed. Or even worse, in the case of Johnson often misrepresented as defying traditional Tory policies of low public spending rather than the reality of unprecedented levels of public expenditure being used to enrich big business and the wealthiest in our society.
The new Chancellor, Kwasi Kwarteng, will be centre stage when he delivers his first budget. His 2015 book, ‘Thatcher’s Trial, Six Months That Defined A Leader’, provides many clues to understanding his politics, and how they will shape his economic policies. The book focuses on the six months from March 1981 budget to Thatcher’s September 14 cabinet reshuffle.
The events Kwarteng selects in the book find an echo today. The new prime minister making her mark; a controversial budget dominated by inflation and a crisis in Ireland. On the other hand, others like the Thatcher purge of the so-called wets in the Tory party has already been done by Johnson, or in the case of the 1981 right-wing SDP split in the Labour Party, has taken the form of a defeat of the left within the party. The other events Kwarteng looks at, like the social rebellions, are probably just around the corner.
The book is more narrative than analysis. But it has a distinct theme: Thatcher as a leader defying the odds and conventional wisdom in a crusade of national renewal. In short, the book is a celebration of right-wing voluntarism.
Kwarteng provides no evidence for national economic success under Thatcher because none exists. But as with Johnson and Truss, the talk of national renewal and unprecedented economic growth is just fodder for the newspapers, the BBC and election-time propaganda.
This week, the Chancellor will echo the PM when he speaks about the importance of growth. Kwarteng and Truss will put forward policies for the few, not the many. They will justify their redistribution of wealth to the rich by claiming that everyone benefits from the bigger national economic cake they say will follow, rather than focus in their view on redistributing more fairly, an increasingly small one.
With no sense of irony, they will decry the economic failure of previous governments, including the Tory ones. They may even imitate Thatcher, who criticised previous Tory leaders like Macmillan and Heath as quasi-socialists for their ‘acceptance’ of the post-war social contract and the welfare state.
They will offer the well past its sell-by-date reheated fare of monetarism as a way to increase economic growth. Unlike Thatcher, who had the Nobel Prize-winning Milton Friedman to add some intellectual gloss to the economics of warfare against the working-class and oppressed, Truss and Kwarteng will be relying on the downmarket versions in the form of the Adam Smith Institute and the TaxPayers’ Alliance who now occupy senior advisory posts to the government.
Chancellor Kwarteng’s mantra will be the same as Thatcher’s. As he puts it, ‘For her, ‘the way to achieve recovery was to ensure that a smaller proportion of the nation’s income went to the government, freeing resources for the private sector where the majority of people worked’.
But this mantra, as the Socialist Economic Bulletin SEB explained, “is a misreading, as the far higher growth rate in the US and to a lesser extent the UK was in the pre-war and war period itself. The exceptionally strong growth was caused by the state taking control of investment and directing very large increases, in order to wage war. The subsequent ‘Golden Age’ was the gradual deceleration of this war boom.”
Chart 1 SEB
The collapse of the post-war boom in the early seventies brought a combination of a political, economic and social crisis. The question was, as it remains today, in the interests of which class was a solution to be devised.
Edward Heath, [Conservative PM 1970-74], tried and failed to implement his ‘Selsdon Man’ policies of free market competition and attacks on the rights of trade unions. Instead, a united labour movement led by the NUM defeated him.
Heath did try to make the working class pay to resolve the economic crisis with his version of an irreversible shift in power and wealth from labour to capital. But as Heath explained, this was not enough to increase investment and, with it, growth.
In 1973 he complained to the Institute of Directors, ‘The curse of British industry is that it has never anticipated demand. When we came in we were told there weren’t sufficient inducements to invest. So we provided the inducements. Then we were told people were scared of balance of payments difficulties leading to stop-go. So we floated the pound. Then we were told of fears of inflation and now we’re dealing with that. And still you aren’t investing enough’.
Thatcher rose to power in the Tory party on the back of Heath’s two electoral defeats in 1974. Like Heath, she was also committed to growth.
Her strategy – embraced by Truss and Kwarteng – is highlighted by the new Chancellor in a reference he makes to an anonymous journalist writing in the Economist: ‘the government was elected in 1979 above all else to roll back the frontiers of the public sector, to leave resources free for private-sector expansion. The key to this strategy lay in reducing public spending and borrowing, to bring down taxes and interest rates.’ Critical to this was defeating the organised labour movement by set-piece confrontations backed by anti-trade union laws designed to make strikes as ineffectual as possible.
In his book ’From Labourism to Thatcherism’, Colin Leys also highlighted another strategy proposed inside the Conservative Party by Enoch Powell. A strategy implemented by Boris Johnson, to be continued by Truss and Kwarteng. “The later sixties saw ‘a more fundamental right-wing movement than Heath’s ‘competition policy’ gaining ground inside the Conservative Party. Enoch Powell, shadow minister for health, shared his enthusiasm for the market for cutting back the state, but went much farther in calling for denationalisation, an end to state intervention in industrial disputes and strict control of the money supply to control inflation. He also combined this with a nationalist campaign against entry into the EEC and a racist campaign against immigrants.”
Powell’s strategy was carried out by Johnson. Truss will take Powell’s strategy many steps further. That will not be about her character or competence but her design and purpose. It will be about the times and the demands of the capitalist class she is the political leader for the moment. Already, there is talk in the papers that the government is reviewing regulations on the 48-hour week and holiday pay. That is just the beginning. On her watch, the vicious racism will accelerate. The Tory press is already crowing that Truss will stop all attempts by those fleeing war to cross the English Channel.
In short, each attempt by the Tories since 1970 to reverse Britain’s economic decline has become more extreme.
Twelve years of Tory austerity, an unprecedented wage fall, and a surge in the wealth of the 1% have failed to foster growth. The critical element to growth, investment, has not been revived. On the contrary, Britain faces an investment strike by capital as workers have not been squeezed enough to restore the level of profits it demands before investing.
The economics espoused by Truss and Kwarteng is like the bloodletters approach that hastened Charles II’s demise – a decline in the patient’s condition has not led to alternative remedies being pursued. The answer – then and now – is that the bloodletting did not go far enough.
Brexit and Covid
Brexit was both an application of and a facilitator for the new Powellism of Johnson and Truss. Covid has set the template for transferring vast amounts of public money to private corporations. As a result, the NHS continues to be deliberately undermined, and the take-up of private health treatment is surging, often with reluctant patients. Conservative think tanks openly talk about using inflation to reduce the real level of public spending and wipe out some areas of state provision altogether.
Slash and burn
Truss may not have much time as PM, but we should not assume she won’t use it to great effect. Her policy will be one of slash and burn. She will try to Americanise as much as she can of not only the British economy but also British politics. The latter will see a ramping up of racism, bigotry and attacks on women’s rights. She will hope that an incoming Labour government will be reluctant to undo her ‘achievements’, particularly on privatisation and attacks on trade union rights. She will also hope that Keir Starmer will be what Tony Blair was to Thatcher, her ‘greatest achievement’.
The labour movement
Truss and Kwarteng have signalled their desire to achieve 2.5% GDP growth in the British economy in advance of the budget. Anything approaching that growth rate can only be achieved in one of two ways – by a massive increase in public investment as proposed by Jeremy Corbyn and John McDonnell i.e. Corbynomics, or by unleashing an even more vicious attack on the working class share of the economy. The latter would cause much more devastation than the austerity assault suffered since 2010.
It would be of great benefit for our side in the class struggle to emulate Kwarteng, the political historian, in one way – learn from the 1970s. A united labour movement brought down a Tory government in 1974 and replaced it with a Labour one. It can do so again. But a Labour Party that repeats the failures of the Wilson and Callaghan governments will lead to an even bigger disaster for the working class and the oppressed than in 1979.
‘Thatcher’s Trial, Six Months That Defined A Leader” by Kwasi Kwarteng, 2015