The passing of Margaret Thatcher comes at a time when the great theme that shaped her years as Britain’s prime minister – the frontier between government and the private sector – is again the focus of serious public debate. Her historic achievement was to widen the frontiers of the “market” and, as she said, to have “rolled back the frontiers of the state.”
There is, however, a pendulum in this relationship between government and private sector. The role of government in the economy has expanded greatly since the 2008 financial collapse, along with government debt. So we will likely again see a struggle to rebalance the respective realms of state and market. And it will again be a battle.
The former prime minister’s memorial service Wednesday provides timely reason to ask: What was the Thatcher Revolution about? I tackled that question 15 years ago – for my book The Commanding Heights: The Battle for the World Economy – and I decided the best way to answer was by asking Thatcher herself. So I turned up at the Thatcher Foundation, a town house in London’s Belgravia, which was the operating base for then-Baroness Thatcher.
“For me, it was so simple,” Thatcher told me that day. “The state ought not to tell people what to do. My experience reinforced my beliefs. It was becoming obvious to people that the socialist way meant accepting decline.” At that point she shook her head. “Can you imagine – people accepting decline.”
She had become prime minister in 1979, when Britain’s economic decline was accelerating – many were predicting it would slide to the level of East Germany. Britain was broke, and its economy was broken. Inflation was at 20 percent. Public debt was so out of control that Britain had been forced to borrow money from the International Monetary Fund.