It's tempting to say Margaret Thatcher will have no truly long-term legacy in the UK – all the unemployed will one day be gone; governments spend more now as a percentage of GDP than before her; governments have switched from privatising industries to nationalising them on a vast scale; keeping inflation low has little more than lip-service and no-one believes today’s policymakers would accept unemployment rising to get inflation down; confidence in the general merits of capitalism is at its lowest ebb since the 1930s. Perhaps her most lasting economic legacy is not in the UK but abroad – in those nations that copied her privatising programme or even (ironically) in that most economically Thatcherite of institutions, the European Commission?
Tempting, but incomplete. To see why, we should first understand that a country’s model of economic organisation is fundamentally a political, not commercial, arrangement. Money is a form of power – a way to get things done. An economic model is therefore a way that power is allocated and channelled.
There have always been three main models of how money and property, and hence power, was to be allocated: brute force (“might is right” – money and property needs to be allocated such that order is maintained); justice (property should sit with its rightful owners, not its mere current possessors); collective prosperity (the allocation needs to promote the interests of the country as a whole, not simply of individuals).
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