By the summer of 1978 Prime Minister James Callaghan appeared to have weathered the worst. The trauma of 1976, when Britain had been forced to go cap in hand to the International Monetary Fund, was fading from memory. Callaghan and his team had managed to make moderate cuts in spending and hold inflation at manageable levels. The economy was picking up, and if Callaghan could sustain the positive trend, he had a good chance of winning the next election.
But there was a catch: these achievements were contingent on good relations with the unions. A former union official himself, Callaghan had plenty of credibility with the labor movement’s leaders, and he had put this capital to use by pressing them to moderate their pay demands. This was in keeping with Keynesian orthodoxy, which dictated that the best way of fighting inflation was the control of wages and prices, an approach known as “incomes policy.” In July 1978 it was time to negotiate a new deal. Union leaders felt that their previous forbearance entitled them to a reward. The government recommended a raise of 5 percent. The Trades Unions Confederation rejected it.
Desperate to keep inflation at bay, Callaghan tried to bring the unions to heel by denying government contracts to companies whose workers refused to go along. But the unions had had enough. The first unraveling came in September, when 57,000 workers at Ford Motor Company’s British subsidiary voted to go on strike. In late November, company management finally capitulated, granting its workers a pay increase well above the limit that Number Ten Downing Street had recommended. Callaghan and his government protested, but that was about all they could do. Other unions decided that it was time to join in.
The floodgates opened. The public-sector unions announced that they, too, wanted higher pay. Next the nurses joined the strike, followed by hospital support staff. Emergency rooms closed their doors to all but the most dire cases. Callaghan was forced to dispatch substitute workers from the armed forces to keep basic services going. Garbage men went on strike, and uncollected trash began to pile up around British cities. Bread rationing was declared when bakers stopped work. A work stoppage by truck drivers triggered shortages of food and gasoline. On January 22 the unions announced a nationwide “Day of Action” that was observed by 1.5 million workers; a whole range of institutions, from schools to airports, shut their doors. The United Kingdom had not seen the likes of it since the General Strike of 1926. The misery was magnified by a bitterly cold winter that buried many parts of the country in wet snow. In Liverpool even the grave diggers stopped work. The city council actually considered, for a while, burying the dead at sea.1
It was a prodigious mess, but if anyone could deal with it, surely it was Callaghan. No one else could boast a comparable range of experience. Before taking up residence in Number Ten Downing Street, Callaghan had served as chancellor of the Exchequer, foreign secretary, and home secretary, which made him the only British politician to have held all four of the great offices of state. He had a smooth, jovial manner and an easy pragmatism that endeared him to both ruling-class and ordinary voters. His personal popularity was immense.
But while the prime minister well understood that Britain could not continue on its current path, he had no clear alternative to offer. He was, after all, the Labour leader. The unions dominated his party. What’s more, the characteristics that had served him so well on his rise now boomeranged against him. His cheery sense of absolute self-belief had earned him the label “Sunny Jim,” and his unflappability was a key ingredient of his personal popularity. On January 10, 1979, this trait was on full display as he returned to London from a summit meeting of the leading industrial powers held on the island of Guadeloupe. It was bad enough for his image that Callaghan had been basking in the Caribbean sunshine at a time when his countrymen were slogging their way through mountains of garbage. Greeting journalists at the airport, Callaghan brushed off their questions about the dark national mood: “I promise if you look at it from the outside . . . I don’t think other people in the world would share the view that there is mounting chaos.” It was a remark that made him appear fatally disconnected. The next day’s edition of the tabloid the Sun ran a damning headline: “Crisis? What Crisis?”
Callaghan never actually said those words. But the accusation stuck—precisely because his optimism appeared at such odds with the images that dominated the evening news. For nonunionized Britons, the “Winter of Discontent,” as the months of strikes were soon dubbed, was more than just another episode in a long history of industrial unrest. It was not just that sidewalks were vanishing under piles of garbage or that coffins were going unburied. Strikers and the police clashed in pitched battles that evoked nightmarish visions of anarchy. The promise of the late-nineteenth-century labor movement—the brotherhood of man and the rights of the oppressed—had devolved into a kind of storm-trooper anomie. Twice before in the course of the decade, the unions—with the all-powerful miners in the vanguard—had toppled governments. Now that recent history appeared to be repeating itself, with a vengeance. It all reinforced the widespread notion that Britain had entered a period of crippling decline.
There was one small consolation for Callaghan: he had little to fear from the leader of the opposition. Her name was Margaret Thatcher. She had ascended to the leadership of the Conservative Party four years earlier after launching a surprise challenge to Edward Heath, the former prime minister in whose cabinet she had served for four years until his defeat in 1974. She had been in charge of the Ministry of Education, where one of her modest reforms—canceling free milk in school lunches—earned her the nickname “Margaret Thatcher, Milk Snatcher.” (Never mind that she had actually increased the budget for her department during her stint.) In professional terms, this scarcely compared with Callaghan’s experience as a holder of all four of the great offices of state.
She represented, as far as Callaghan and his advisers could see, a sort of ideological dead end. She talked, almost like an American, about “free markets” and the virtues of capitalism. She preached the need to tighten the money supply and choke off inflation—all fine and good, but the unions would never allow it, as they were now demonstrating. She even talked quite aggressively about the need to discipline the labor movement: “The unions have unique power and unique power requires unique responsibility,” she declared in one of her duels with Callaghan in the House of Commons. “That responsibility has not been forthcoming. That is the reason for the position in which the country finds itself today—about which there can be no dispute.”2 This was tough talk, but few professional politicians took it seriously—even within her own shadow cabinet. What could she possibly do about the unions that hadn’t been tried before?
And then there was the fact of her gender. Callaghan was a practiced debater in the Commons, and a certain condescension came through whenever the two of them sparred. Where he was genial, she was earnest. Where he was smooth, she was grating, sometimes even a bit shrill. What could you expect, really, from a woman? At one point, when Thatcher chastised him for his “avuncular condescension,” Callaghan replied that he found it hard to imagine her as his niece.3
The Winter of Discontent took its toll. As the early months of 1979 gave way to spring, it no longer looked as if Callaghan could count on an economic upturn to counter the prevailing gloom. But his advisers took some consolation from the polls. They showed that Thatcher’s personal approval ratings still lagged behind Callaghan’s. By the time the election came, they reasoned, Sunny Jim could rely on the power of his charm to best the joyless Milk Snatcher.
Callaghan’s personal popularity was not the only obstacle that Thatcher faced in 1979. She was also confronting the inertia of a well-entrenched political and economic consensus that had reigned since the end of World War II—a consensus that included wide swaths of her own party. In the 1940s, tired of their country’s class conflicts and minimal social protections, Britons had begun to dream of a radical break with the past. It was a dream that first assumed concrete form in a book published under the stewardship of an economist and civil servant named William Beveridge in 1942. The Beveridge Report, as it came to be known, was an instant best-seller. People lined up all night to purchase a copy. It was translated into twenty-two languages, and British airmen dropped copies of it on occupied Europe.4 At the end of the war, two copies of the text, translated into German, were found in Hitler’s underground bunker in Berlin.5
The report was an extremely unlikely candidate for popular success. It was an official publication that bore the notably drab title of Report of the Inter-Departmental Committee on Social Insurance and Allied Services. But no matter. The Beveridge Report fired the public imagination because it provided the blueprint for a reorganization of the British state that would eliminate poverty, hunger, and sickness.
“Now, when the war is abolishing landmarks of every kind, is the opportunity for using experience in a clear field,” the report declared. “A revolutionary moment in the world’s history is a time for revolutions, not for patching.” What the report proposed, however, was a distinctly British kind of revolution: a bureaucratic transformation of the state. It declared that full employment should be the goal of economic policy. It proposed the creation of comprehensive public pensions and unemployment insurance. It laid out the basis for a national health insurance system. And it argued for a broad expansion of public education at all levels.
We have no record of how the young Margaret Thatcher regarded the report. But it is entirely possible that, like so many of her young Conservative contemporaries, she accepted its conclusions. The privations of the Great Depression and the war compelled even many staunch Tories to recognize that the country needed a more extensive welfare state. Even Churchill welcomed the report—within limits. As a young Liberal politician, he had been something of a social reformer, and had even cooperated with Beveridge on some proposals in the years before World War I.6 Now, in a 1943 speech titled “After the War,” he promised that the government would do its best to implement many of the key provisions of the report—including a “broadening field for State ownership and enterprise” and “national compulsory insurance for all classes for all purposes from the cradle to the grave.” But he also warned against saddling the government with too many ambitious obligations that might break the budget and said that any plans for implementing the Beveridge proposals would have to wait until the first postwar elections.7
The result of the general election of 1945 was not what Churchill had expected. Churchill’s Conservatives were buried by a Labour Party landslide. It was the party of Clement Attlee that had campaigned most aggressively on a Beveridge platform, and his newly formed government announced to the British public that it would use the mandate given it by the electorate to move the country forward to the “New Jerusalem” of a comprehensive welfare state. Attlee himself had worked in the slums of East London as a young man, and the experience had left him with a profound sense of the need for wide-ranging social protections.
It took the Labour government just a few short years to implement a raft of social welfare policies that transformed British society. The Labourites established child subsidies, expanded a range of social insurance programs, built vast new tracts of public housing, imposed far-reaching rent controls, and launched a comprehensive program of state-run, single-payer health care (the National Health Service). It all proved enormously popular.
Labour’s economic policies were even more far-reaching. “It is doubtful whether we have ever, except in war, used the whole of our productive capacity,” the Labour election manifesto proclaimed. “This must be corrected.” Attlee and his cabinet set out to do this through a series of measures that transformed British capitalism. They nationalized the “commanding heights” of the economy: coal, oil and gas, communications, railroads, iron, and steel.8 They instituted management boards to oversee the new publicly owned industries. And they put into place a wide-ranging system of price controls and regulations. By 1951 about 20 percent of the British economy was under public ownership.
This was revolutionary, even if it didn’t quite add up to a revolution. Many aspects of capitalism continued to coexist with these reforms. The Labourites borrowed some of their most consequential policies from the thinking of an economist who had transformed economic theory between the wars precisely as part of his effort to save capitalism from its own weaknesses. This was John Maynard Keynes. A lifelong member of the Liberal Party, Keynes was far from being a socialist. But he had posited that classical economics tended to understate the possibility of market failure. Real markets did not always balance out perfectly, he argued. In some cases, supply and demand could achieve equilibrium without creating full employment. Governments could pick up the slack by stimulating demand through increased spending during economic slowdowns.9
Keynesian prescriptions had picked up many adherents throughout the Anglo-Saxon world since the great deflationary crisis of the Great Depression. The policies he proposed seemed to offer a tool for overcoming the problem of the destructive boom-and-bust cycles that seemed to plague capitalist economies. The Labour government of 1945, which touted its belief in “rational” economic decision making, was ready to follow suit. The centerpiece of Attlee’s New Jerusalem was “freedom from want,” which meant, in practical terms, full employment. Keynes had argued that the best way to sustain full employment was through government spending—even if it led to temporary budget deficits.
Churchill had contributed to his Conservative Party’s defeat in the 1945 election by expressing skepticism about the degree of state control that a Beveridge-style reform program would entail. In so doing, he alienated not only many members of the electorate but also quite a few Tories as well—especially younger ones. By the time the Conservatives returned to power in 1951, many members of the party had to concede that the reforms of the Labour era were deeply entrenched in the public mind. The Conservatives offered a few modest corrections but left most of the Attlee-era edifice in place. The generation of Conservative leaders, embodied by the centrist R. A. Butler, acknowledged the virtues of the mixed economy. Conservatives argued that their greater business expertise would enable them to manage it better. But they did not challenge the fundamental assumptions of the Labour model. A consensus of sorts, often called “the postwar settlement,” had been achieved.
There were good reasons the postwar settlement proved so durable. First, it accurately reflected the spirit of the times. Soviet planning—its apparent success in speedy industrialization with zero unemployment in the 1930s as well as its astonishing performance in marshaling resources against the Nazis during the war—had many admirers in Great Britain; the immense human costs of this achievement had received far less notice. America’s New Deal experiments with government intervention and an expanded social welfare state also found considerable resonance in Britain, whose leaders had responded to the Great Depression mostly by muddling through. And finally, the UK’s own experience with government planning of the economy during the war had been remarkably positive. It demonstrated that shrewd government management could “squeeze much more production out of the industrial machine than its capitalist owners had done before the war.”10
Second, the postwar consensus worked—at least for a while. Indicators of health and social welfare climbed sharply during the immediate postwar period. Wartime rationing took longer to eliminate, but in the 1950s and early 1960s, the British economy grew steadily. Broad swaths of society that had been left out of earlier upswings now tasted the benefits of prosperity. The same Britons who had suffered through the turmoil of the 1920s and 1930s now enjoyed a notably far higher standard of living, cushioned by the state against the threats of disability, job loss, or sudden illness. Jobs were plentiful. The Keynesian magic seemed to work. When the economy began to slow, you could stimulate demand through fiscal “fine-tuning,” adjusting government spending and taxation to promote full employment. And if these policies led to inflation, it was to be controlled by regulating wages and prices (known as “incomes policy”).11
In the 1960s and 1970s, however, a darker side of the postwar consensus began to show through. Inflation proved naggingly persistent. Government attempts to tame it through incomes policy found increasingly little traction; indeed, it began to look as though each round of wage hikes was actually exacerbating the problem. Financing the welfare state was becoming an increasingly onerous burden. Income tax rates had reached levels that were driving entrepreneurs out of the country. By the third decade after the war, faith in the near omnipotence of economic policy makers was beginning to wane.
In 1970, with the Conservatives in opposition again, party leader Edward Heath convened his shadow cabinet in a hotel in the London suburb of Selsdon. The program that emerged from the meeting betrayed a strong free-market bent, arguing strongly for curtailing government intervention in the economy, putting the fight against inflation at the center of monetary policy, and cutting back on the power of organized labor. Prime Minister Harold Wilson dubbed the Conservative mentality behind the document “Selsdon Man.” (The allusion to “Piltdown Man” was intended to evoke the allegedly antediluvian quality of the Conservative program.) To everyone’s surprise, however, the Conservatives won the election; the electorate did not appear to find the ideas from Selsdon quite as frightening as Wilson did.
But the Heath government soon discovered the limits of its mandate. The powerful trade unions, now enshrined at the very heart of British economic policy, soon grew restive. As unemployment ticked upward, Heath abandoned the Selsdon principles. He launched a new round of monetary expansion, restored controls over incomes and prices, widened industrial subsidies, and put plans for union reform on the back burner. He even nationalized Rolls-Royce. Finding an alternative to the postwar consensus was proving a challenge.
Though few dared to criticize it publicly, Heath’s “U-turn,” as it became known, profoundly disillusioned some of the members of his cabinet. One of them was his young secretary of state for education and science, Margaret Thatcher. She was, perhaps, the most unusual member of Heath’s team. She fulfilled very few of the typical attributes of a leading Tory at the time. She was of solidly middle-class origins. She attended a girls’ grammar school outside her hometown rather than one of the posh private boarding schools for boys that still turned out England’s highborn leaders. She had not served in the army. She attended Oxford, though on a scholarship, and was unable to join the Oxford Union, that training school of future politicians, since it was closed to female students. Nor was she a member of any of the famous London clubs that were frequented by an upper-class clientele that included many leading Conservatives. These establishments, too, were off-limits to her gender.
These peculiar circumstances explain a great deal about Margaret Thatcher, but they do not explain everything. We should be wary of biographies that rely excessively on social determinism. People are not only the products of their surroundings. Other Chinese men of Deng Xiaoping’s generation emerged from environments comparable to his, but that didn’t necessarily turn them into leaders of the Chinese Communist Party. Unlike Khomeini, most Shiite clerics did not end up challenging the shah and engineering revolution.
What circumstances can do, though, is give peculiar shape to the predilections we were born with, and it is easy to imagine how Thatcher’s upbringing contributed to the politician she was to become. She was born Margaret Roberts in the Midlands town of Grantham in 1925. Her father, Alfred—by her own testimony the central influence in her life—raised his two daughters in an atmosphere of strong discipline and clearly articulated values. He was a greengrocer and shop owner—the owner of two shops, to be precise—and an active participant in city government. (For all his traditionalism, however, he was not a Conservative; he was a Liberal who seems to have believed firmly in the postwar principles of the mixed economy.)
He was also a devout Methodist who insisted that his family attend church up to four times on a single Sunday and regarded public dances as deplorable frivolities. By the 1930s English Methodism had lost some of the socially activist spirit that had made it such an influential force in nineteenth-century Britain, especially as far as the creation of the Labour Party was concerned.12 But the ethics of activism that alderman Alfred Roberts transmitted to his daughter Margaret certainly retained a strong whiff of John Wesley’s original brand of antiestablishment revivalism. Wesley developed Methodism as a way of bringing God back into the lives of those who experienced the poverty and social turmoil of the Industrial Revolution and whose spiritual needs, as he saw it, were neglected by the entrenched Church of England. Like modern evangelical movements, Methodism emphasized a direct and individual relationship to Christ; the path to salvation did not lie through official institutions or trust in elites. Though Wesley preached strongly against greed, his teachings also contained a strain of individual self-improvement that has to have impressed itself on the ambitious young Margaret Roberts—as this excerpt from a Wesley sermon might suggest:
These cautions and restrictions being observed, it is the bounden duty of all who are engaged in worldly business to observe that first and great rule of Christian wisdom with respect to money, “Gain all you can.” Gain all you can by honest industry. Use all possible diligence in your calling. Lose no time. If you understand yourself and your relation to God and man, you know you have none to spare. . . . If you understand your particular calling as you ought, you will have no time that hangs upon your hands. Every business will afford some employment sufficient for every day and every hour. That wherein you are placed, if you follow it in earnest, will leave you no leisure for silly, unprofitable diversions.13
Church of England stalwarts derided what they saw as the unseemly fanaticism of the Methodists: there was something distastefully effervescent about all those public displays of godly fervor, all that preaching in open fields and the insistence on charity as an everyday reality. Wesley was fond of quoting Galatians 4:18: “It is always good to be zealously affected in a good thing.”14 One can easily imagine Alfred Roberts making the same arguments to his daughter. “Never do things because other people do them,” he told her. “Make up your own mind what you are going to do and persuade people to do things your way.”15
The message of gritty self-sufficiency undoubtedly resonated amid the deprivations of a small English town during the Depression. But Thatcher’s value system was affected most dramatically, as was the case with most of her generation, by the experience of the Second World War. She had done well enough in school that she managed to earn a scholarship to Oxford, and she arrived at Somerville College when the war was already well under way. The sense of patriotism and political ferment that reigned there at the time dovetailed with her natural inclinations. Many of the students were off in the war, and those who remained spent a good deal of their time debating the postwar political order. Marxism was a dominant intellectual current at wartime Oxford, but Roberts certainly did not find it amenable. She was already defining herself as a Tory, though the party was in the midst of an agonized redefinition triggered by the disaster of the Depression and the rising popularity of Beveridge-style plans for the future. Since the Oxford Union was closed to women, Roberts cut her political teeth in the Oxford University Conservative Association. (She became its head in 1946.) True to her no-nonsense mind, she eschewed the liberal arts in favor of hard science, choosing chemistry as her major. (When she was later asked about her status as Britain’s first female prime minister, she would say that she preferred to be remembered as the first scientist who won the office.)
At Oxford, Thatcher did not make a name for herself as a radical enthusiast of the values that would later be associated with her name. The Toryism of the time was very much under the sway of the period’s progressive mainstream. Just before the 1945 election, Oxford’s student conservatives published a paper declaring that “Liberal Capitalism is as dead as Aristocratic Feudalism,” and welcoming “a state without privilege where each shall enrich himself through the enrichment of all.”16 No one can recall Margaret Roberts taking up a stand that radically differed from this stance. She later claimed to have read Friedrich von Hayek’s Road to Serfdom during her last year at Oxford. If so, it had little visible effect on her public positions.
But she was eager to make her mark. Upon her graduation she got a job as a chemist with a food company, where she worked on the development of cake frostings and pie fillings. This position, however, was merely a placeholder for someone of her ambitions. The Conservative Party, to which she remained loyal, was eager to field more female candidates, and she soon got her chance to campaign for a seat in Parliament. She lost on her first try for Parliament in 1950 (as the youngest Conservative woman candidate), and the next year as well. But she was certainly noticed.
She met Denis Thatcher in 1949, at her induction as a Tory candidate for Parliament. They married two years later. For her it meant a step up the social ladder. Her new husband, who had served with distinction during the war, ran a chemical company that had been founded by his grandfather. With his support she set out to study law, and in 1953 she qualified for the bar. It was also the year that she gave birth to twins, which actually made it harder for her to get a candidacy. Several local party associations rejected her on the rationale, more or less openly expressed, that a young mother would find it harder to campaign. Finally, in 1958, circumstance conspired to give her the chance to campaign for the seat from Finchley, a northern suburb of London that usually voted for Tories with comfortable majorities. In 1959 she won with a comfortable majority, a seat that she would retain for the next thirty-three years. In 1961 Prime Minister Harold Macmillan gave the young striver a job in the Ministry of Pensions. In 1965 she and her parliamentary colleague Keith Joseph had suggested encouraging private alternatives to the National Health Service and state pensions as a way of reducing taxes—a modest position, by today’s terms, but one that stamped them at the time as staunch conservatives.
In the 1960s some Conservatives were already articulating a program of opposition to the reigning wisdom. One of them was Enoch Powell, a Tory stalwart who railed against socialism in terms that came close to the apocalyptic. Some of his ideas would become mainstream in the 1980s, but in the 1960s, as one commentator notes, his philosophy was regarded as “extreme.”17 Powell believed that the solution to all economic problems, great and small, could be found in the market. Competition within the private sector, rather than the close collaboration of business and state, was the source of lasting growth. In 1964 he even came out in favor of “denationalizing” the postal system and the state telecommunications monopoly—an idea far ahead of its time. Powell regarded inflation as an unmitigated evil, the scourge of productivity rather than the somewhat regrettable side effect of a worthy effort to manage demand. Luckily, there was a simple remedy: slow down the government printing presses. Powell believed that the most effective way to combat the state’s pernicious intervention in the workings of the market was to exercise tight control of the money supply.
Unfortunately, Powell also happened to profess radical views on the even more delicate subject of immigration and race. In 1968, he gave a soon-to-be notorious speech—dubbed “Rivers of Blood” for its near-apocalyptic rhetoric—in which he declared that the influx of immigrants from the former colonies would, if unchecked, lead to the collapse of British society. It effectively ended his political career.
Yet his airing of free-market ideas, summarily dismissed by most of the political elite, resonated within the party. Thatcher—a member of the new shadow cabinet under the Conservative leader of the opposition, Ted Heath—was one of them. By now she was avidly consuming the publications of the Institute of Economic Affairs and steeping herself in the works of Hayek (whom she later claimed to have begun reading during her Oxford days). Her positions in the cabinet—first as the future minister responsible for the energy industries, then for transportation—confronted her directly with the issue of state ownership of strategic segments of the economy. Under Heath’s leadership, the Tories pledged to stop any further nationalizations—but that was as far as it went. In the late 1960s, the notion of actually returning state-owned industries to the private sector was regarded as wildly outlandish.
Unlike Powell, whose radical economic ideas were way ahead of his time, Thatcher always remained a practical politician, acutely conscious of the gap between idealism and political reality. Her career climb was going smoothly, and she was not prepared to jeopardize it at this early stage. Heath, the party boss, was a firm believer in the reigning mixed-economy consensus, and as a future minister, she took care not to depart too far from his line. Heath was a brilliant politician, a man who had risen from circumstances even more humble than Thatcher’s (his father was a carpenter, his mother a maid) to gain admission to Oxford’s Balliol College in 1935. His travels around Europe as a student in the 1930s, including an alarming visit to Nazi Germany, made him a foe of appeasement—at the time a choice decidedly at odds with majority views in the Conservative Party. After 1945, however, he wholeheartedly embraced the “postwar settlement.” He believed firmly in the principle of state intervention in the economy, though perhaps not as actively as some Labourites. In Heath’s vision, it was “partnership” between an active, entrepreneurial private sector and the government that reigned supreme.18 This was, at the time, a solidly establishment view. In 1968, when Heath scolded a few lonely Conservatives who had dared to express sympathy with some of Powell’s economic ideas, he was praised by the Times for exercising “plain common sense.”19
Thatcher knew that the Conservatives had a good chance of winning the next election, so she was not about to declare herself a rebel. Yet Powell’s iconoclasm clearly resonated with her, and that same year—in 1968—she made a small but discernible step toward defining a distinct political identity. Addressing the meeting of a Conservative policy group in the seaside resort of Blackpool, she set out markers that clearly identified her as a member of the party’s incipient free-market camp. She expressed doubts about the virtues of state intervention and declared herself firmly in favor of rigorous control of the money supply. But none of this deviated too drastically from conservative rhetoric. She said little, for example, about privatizing those parts of the economy that were already under state control.
In retrospect, though, it was not her policy prescriptions that made the speech striking. It was, instead, a first distinct flash of the missionary zeal that one day became such a clear mark of the authentic Thatcher. It is important to remember that Thatcher’s arguments in favor of free enterprise were never only about economic efficiency. She believed, with Hayek, that state intervention in the economy limited the scope for individual freedom. As she explained to her Blackpool audience, giving markets the room to operate was a moral imperative, and not just a matter of sound administration: “It is good to recall how our freedom has been gained in this country—not by great abstract campaigns but through the objections of ordinary men and women to having their money taken from them by the State. In the early days people banded together and said to the Government, ‘You shall not take our money before you have redressed our grievances.’ It was their money . . . which was the source of their independence against the government.”20 There was nothing wrong with people wanting to earn more money, she continued. But they should also be expected to contribute to society as a whole. She strongly rejected an uncritical embrace of materialism, declaring at one point, “Money is not an end unto itself.”
It was this fundamentally moral impulse that drove her, in the climax of the speech, to an explicit rejection of the hallowed principle of consensus. Consensus, she declared, should not be viewed as an end unto itself; consensus could also be viewed as “an attempt to satisfy people holding no particular views about anything.” Much more essential was to have “a philosophy and policy which because they are good appeal to sufficient people to secure a majority. . . . No great party can survive except on the basis of firm beliefs about what it wants to do. It is not enough to have reluctant support. We want people’s enthusiasm as well.”21
As Thatcher biographer John Campbell observes, “More than anything else it was this crusading spirit which was Mrs. Thatcher’s unique contribution to the anti-collectivist counter-revolution which ultimately bore her name.” It was other thinkers—eccentric fellow politicians such as Powell and her friend Keith Joseph and the scholars at the conservative Institute for Economic Affairs—who elaborated the policy ideas that animated her reign in office. What Thatcher brought to the mix was the ferocious zeal with which she pursued the realization of these political aims. British politics in the three decades before her arrival on the scene was dominated by consensus. Thatcher, by contrast, believed in the value of polarization; she had a penchant for defining herself as a rebel and a revolutionary. The conventional political wisdom, in her view, needed to be demolished, and if this required a certain degree of aggression, so be it. It was characteristic of her mind-set that her ire sometimes focused on the doubters within her own party as well as her opponents in the others.22
Thatcher and Joseph took comfort from the result of the surprise Conservative victory in the 1970 election. Some pollsters suggested that Powell’s diversions from orthodoxy—and in particular his controversial remarks about the need to limit immigration—had actually drawn many working-class voters to the Conservatives (a feat that Thatcher would later strive to repeat, on her own terms, in 1979). The 1970 Conservative Party meeting in Selsdon that resulted in the markedly free-enterprise policy document so derided by Harold Wilson may have also played a role.
Thatcher joined the new government as the secretary of state for education and science. Although she did manage during her term to boost the budget for schooling, she failed to make much headway on her declared objective of curbing the growth of comprehensive schools (which are supposed to take in all pupils regardless of their previous academic achievements). In keeping with her strong beliefs in competition and personal responsibility, she preferred the more traditional grammar schools, regarding comprehensives as a classic example of left-wing egalitarianism that held back talented pupils. The problem was that comprehensives were just too popular with the public. (And Thatcher, ever the realist, ended up inaugurating a record number of them on her watch.) This was not the last time she would have to square her views with tricky political facts.
If the economic liberals in the party had hoped that their ideas would guide Heath’s actions as prime minister, they were soon disabused by the notorious “U-turn.” Though Thatcher publicly supported her leader, she clearly felt little personal investment in his policies. She later complained that her role in the government was primarily to act as the “statutory woman” who was consulted in the event of any issue likely to matter to the female electorate. In any event, she had little opportunity to push for implementation of the 1970 Conservative manifesto in the cabinet, and few paid attention when she did. Her disillusionment reflected a broader dissatisfaction with Heath that soon made itself felt among many other Tories.
In the event, Heath’s government did not survive the general election of 1974. The defeat triggered considerable soul-searching among Conservatives. Heath himself saw little reason for second thoughts and made it clear that he intended to continue leading the party in opposition. But not all of his colleagues agreed. Keith Joseph, who had served as Heath’s secretary of state for social services, had undergone a conversion to the free-market gospel and launched a series of speeches in which he proposed a radically different direction for the party that presaged much of what would later come to be known as “Thatcherism.” He soon become a lodestar for Heath’s right-wing critics. But Joseph—a nervous character with a marked self-questioning strain to his personality—followed in Powell’s self-destructive path by holding a speech in which he warned against rising teen pregnancies in terms that evoked early-twentieth-century theories of eugenics. His bid for the leadership of the party was over before it really began.
Thatcher decided to pick up the gauntlet. She was an unlikely candidate for the leadership, even with Heath in a relatively vulnerable state after his election defeat. A parliamentary veteran named Airey Neave managed her campaign for the leadership (after having asked three other prominent party right-wingers, including Joseph, to go after Heath). Shrewdly assessing that Heath’s camp did not take her challenge seriously, Neave aggressively wooed party backbenchers disgruntled by Heath’s imperious style of government, driving home that Thatcher was the candidate of genuine change. It proved exactly the right approach for a deeply demoralized party. To his astonishment, Heath lost the first ballot to Thatcher. He resigned immediately. But he never got over his resentment toward the woman who, he felt, had behaved disloyally.
Thatcher, however, had a memory of her own. In April 1979, when that year’s general election was drawing to its close, an anxious aide pressed her to let Heath join her at a press conference to appeal to wavering voters. Thatcher categorically refused. The old paragon of “consensus” remained on the back benches, an impotent symbol of the old order, throughout Thatcher’s eleven years as prime minister.23