I don’t feel like dancin’

This post was written by Professor Lynne Segal, Anniversary Professor of Psychology & Gender Studies in Birkbeck’s Department of Psychosocial Studies.

‘Margaret Thatcher is Dead: This lady is not returning!’ is one way of the calmer statements celebrating Thatcher’s demise on my Facebook page. I can’t join the clamour singing ‘Ding dong the witch is dead’, trailing as it does its horrific historical sexism. More sadly, I can’t see anything to celebrate. Whilst this once formidable Tory trailblazer is dead, her ideas are more resurgent than ever. Neither Cameron nor Osborne will ever be damned as a warlocks or necromancers – this rarely happens to men – yet it is thanks to them that Margaret Thatcher dies triumphant. Thatcher’s success, like that of her pal, Ronald Reagan, was that through a combination of shrewdness and luck she could ride the high tide of corporate capital’s determination to increase profits by rolling back all the popular gains of the postwar settlement. She was neoliberalism’s willing tool, rather than something unique, evil or otherwise.

What is truly extraordinary about these times is that while Thatcher’s economic legacy has imploded, her ideological stance – which as she said was always her main agenda – is more viciously enforced than ever. “Markets know better than governments”, was her pivotal mantra, the rest flowed from this. Oh no they do not! You would think we must all have learned this from the catastrophic economic collapse in 2008, when so many banks had to be bailed out by governments, only to be returned as quickly as possible: old bonuses intact; new regulations nonexistent. All too quickly forgotten is the revelation of the cruel absurdity of the economic collapse set in motion by the buccaneers of the finance sector that Thatcher had ‘liberated’ in October 1986, with all the reckless gambling and belief that ‘toxic debt’ was itself a tradable commodity. Or at least, any such knowledge is drowned out by the continued combination of Coalition rhetoric baiting Gordon Brown and the Labour Party, together with relentless media attacks on the ‘undeserving’ poor, or any other scapegoats conjured up to misdirect people’s sense of resentment, fear and insecurity: ‘Crisis: Blame the baby boomers, not the bankers’, was a typically absurd headline in The Times when Irish Banks banks were on the point of collapse at the start of 2010, summarizing the argument by their chief economic analyst, Anatole Kaletsky.

In these topsy-turvy times, any thoughtful, reforming responses to the crisis, no matter how carefully argued and widely supported by fellow economists – such as those put forward by the highly respected American economist, Paul Klugman – are tossed aside in the UK. No reference to Keynesianism or any policies for decreasing the obscene inequality that helped generate the crisis are considered. Instead, after so much mayhem, Thatcher’s worship of market values rules supreme, motivating vicious cuts in welfare and the surreptitious turning over of what remains of the public sector to the private, even as the crisis in market forces and the finance sector continues to deepen, especially in Europe.

Of course there have been impressive flurries of resistance, and for a while in the wake of the Occupy movement, grass-roots dissent was back on the political agenda. Networks of resistance are active around the country, especially in defence of the NHS. Yet those eager to dance on Thatcher’s grave have much thinking to do, when there remains such a lack of connection between protesters and mainstream politics. Indeed, as Paul Mason admits in his book celebrating all the new protest movements around the globe, Why It’s Kicking Off Everywhere, most of the people he interviewed ‘were hostile to the very idea of a unifying theory’. Yet it is surely some sort of compelling counter-ideology and alternative strategy to the ubiquitous rule of market forces that we are desperately in need of if we are ever to safely bury Thatcher. Although the rich few get richer and the rest of us poorer, the left has yet to strike any real chord with the broader public. We know that it was Tony Blair, or ‘Blairism’, which – as Thatcher knew – did so much to entrench her legacy: with his seamless endorsement of market values and public veneration for wealth and celebrity, even as it furthered cynicism about politicians and politics generally. We have headed so far down that stream, it is hard now to turn things around.

It took the extraordinary conditions of the Second World War to create the Labour Party’s comprehensive commitment to welfare, albeit of a conservative and authoritarian kind. The reforms and nationalizations inaugurating the British welfare state, post 1945, were based on the deliberate spread of a consensus that it was economic insecurities and domestic unhappiness that created unhappy societies: ‘many of the maladjustments and neuroses of modern society’, as Bevan explained when Minister of Health, arose directly from poverty and insecurity. When will our politicians say these words again? Any direct action, movement politics or coalitions of resistance we build today has to find ways to influence national government to reaffirm that mind-set, hopefully with more creative agendas than hitherto, before we can bury Thatcher. And since I began with a feminist note, let me also end there. Some women have argued that it was Thatcher who provided the best role model for helping women release their true potential. No she did not. She was the perfect role model for the ever deepening gulf between women, as the privileged few have been able to rise to the very heights of political or corporate power, even as the majority of women, affected at every turn by the rolling back of welfare and the politics of individual success she promoted, are ever more firmly left at the bottom of the heap.

Lynne Segal’s new book Out of Time: The Pleasures and Perils of Ageing will be published by Verso in the Autumn.

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Austerity under Thatcher and the Coalition: the second time as tragedy

By Professor Deborah Mabbett, who will be delivering her inaugural lecture this evening, 8 November 2012.

In 1979, a new government came to power in Britain determined to rein in public spending and set the economy on a new path led by private innovation and enterprise. Sound familiar? There are certainly some parallels between the Thatcher government and the current Coalition, but there are also some puzzling differences. Take social security. Both tried, or are trying, to cut back this unloved area of government spending, but their cuts are quite different. Thatcher cut back the state pension, but more or less maintained the safety net of means-tested benefits. The Coalition has targeted many parts of the means-tested system for cuts, while the state pension is to be protected with a ‘triple lock’: indexed to the best of wages, prices or 2.5%. Thatcher’s policy was based on the philosophy that the state should provide a minimal, residual safety net, and the private sector would do the rest. But what philosophy guides the Coalition’s pattern of cuts?

The answer shows something important about the relationship between the government and the financial services sector. Under Thatcher, this sector was not only the great hope for the deindustrialised British economy; it also had a key role to play in privatising welfare. Council tenants exercising their right to buy would get their mortgages from the newly-liberalised building societies, while workers would entrust their pension contributions to investment funds which held out the promise of good returns, albeit reduced by large fees.  Twenty-five years on, the government was forced into a dramatic bailout of the financial system. Less noticed, it is also locked into supporting privatised welfare in expensive ways.

Problems with privatised pensions have been apparent: mis-selling, fraud and high fees have afflicted the sector. The government’s response has been to tighten the regulatory framework, while continuing to encourage contributions with generous tax incentives. Regulation was the price of making finance the agent of the government’s plans: private pensions had to be made to work, and if they didn’t, the government would step in to ‘correct’ the market.  Regulation was seen as a burden by the financial sector, but it could also be costly for the government, as the Equitable Life case showed. Equitable Life made commitments to its policyholders that it was unable to honour: the government ended up having to compensate policy-holders for ‘a decade of regulatory failure’. The failings of private sector agents could come back to bite the government.

Indexing the state pension only to prices meant that it failed to keep up with rising living standards. This was intentional: the idea was that private pension provision would expand to fill the gap. For those who lacked a private pension top-up, means-tested benefits were available. However, the rise of means-testing conflicted with the aim of expanding private provision, because workers can contribute to a pension scheme and then find that state benefits are reduced. While successive governments tried to mitigate the effects with various allowances and tapers, it remained the case that pension contributions could bring a very small return in increased retirement income.

The decision to adopt ‘automatic enrolment’ made it a necessity to do something to restrain means-testing. This policy aims to boost private pensions by relying on workers to accept ‘defaults’ in market transactions rather than actively evaluating their options. The problem with this type of ‘nudge’ is that the nudger must be quite sure that the default is in the interests of the worker. In short, the government must make private pensions pay. The triple lock on the state pension is one step towards this, as it should slow down the growth of means-testing.

Is there any alternative? A much larger compulsory state scheme would avoid many of the problems with private pensions, but apparently that is politically untenable. What makes it so is the continued power of the financial services sector. Privatisation does not stand for individual autonomy and choice – the contributing worker is a passive figure in pensions policy. Instead, privatisation stands for making policies for the financial services sector, protecting its role in provision. The result is inefficiency and expense, complex regulation and a high risk that the government picks up the tab in the end.

The Thatcher government sowed the seeds of a private welfare sector, and the Coalition has reaped an unwelcome harvest. Privatising welfare has locked government and finance into a tight embrace which neither desired but neither can bear to leave.

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