The seventies were great: don't believe the myth of Thatcherism
With living standards rapidly rising, late-Seventies Britain was a great place to live. Thatcher ruined it
Monday, May 4 marks the 30th anniversary of arguably the most significant event in post-war British politics: the coming to power of Margaret Thatcher.
The dominant narrative - accepted even by many who consider themselves to be on the left - is that Britain's economy in the 1970s was in such dire straits that our country urgently needed a change of direction.
Britain, in this account, was the 'Sick Man of Europe'. The unions and inflation were out of control. Our inefficient nationalised industries were an expensive disaster. The Labour governments of 1974-79 were complete flops. The post-war mixed economy model had failed. But this narrative is a myth.
It's true that inflation hit 27 per cent in 1975, but this was largely a consequence of the Yom Kippur War oil price shock, which saw oil prices quadruple, and not a sign that the mixed economy model had collapsed.
By 1978, the British economy was rapidly improving. Inflation was down to single figures and unemployment was falling too. Productivity was rising, including in the nationalised industries. North sea oil revenues were starting to transform the balance of payments, which showed a surplus of £109m in 1977. And in December 1978 Britain recorded a massive trade surplus of £246m.
Britain was a contented society that had a healthy work-life balance
During 1978, Britain's standard of living rose by 6.4 per cent to reach its highest ever level: so much for the 'Sick Man of Europe'.
"The outlook for Britain is better than at any time in the postwar years," was the verdict, not of a Labour party propagandist, but of Chase Manhattan bank's chief European economist, Geoffrey Maynard.
Bernard Nossiter, a Washington Post journalist, argued in his 1978 book Britain- the Future that Works, that Britain, unlike the US, had created a contented society that had managed to get the balance right between work, leisure and remuneration. Far from having had enough of Labour and the post-war consensus, opinion polls show that the party would have won a General Election, had Prime Minister James Callaghan called one, as expected, for October 1978.
The so-called 'Winter of Discontent' of 1979 - which ushered in Thatcherism - is also shrouded in myth. James Callaghan never said 'Crisis, what crisis' - that was an invention of The Sun. The strikes themselves only lasted for a comparatively short period and were largely over by February 1979.
One might ask why all this matters. It does, because if we are going to break with neoliberalism, we need to shatter the myths put forward by Thatcherite ideologues. We need to understand the truth which was that the British economy performed far better 30 years ago than is commonly believed. The mixed economy model didn't fail. We were no more in need of Mrs Thatcher's 'painful medicine', than someone suffering from a common cold needs a course of chemotherapy.
Acknowledging the truth about the 1970s is important, because it means that we can then return to an economic model that served the great majority of Britons extraordinarily well for over 30 years after World War Two. It was a model under which large sections of the economy - including transport, energy and most major industries - were in public ownership; capitalism was strictly regulated and made to work for the common good and manufacturing was regarded as more important than finance.
In no other period in British history was there such a rapid rise in living standards. The gap between rich and poor was significantly reduced. As the One Nation Tory Harold Macmillan, one of the architects of the post-war consensus, famously declared, we never had it so good.
Since 1979 we have followed a very different economic path: one of deregulation, privatisation and allowing 'market forces' to rule the roost. And we all know where that has led us.