by Martin Odoni

Predictably irritating, but necessary.

As I write this the ITV Leaders’ Debate has recently concluded, and it was annoyingly crammed with one-hundred-and-eighty-degree reversals of the facts, especially from David Cameron, and with economic fallacies by everyone. Nick Clegg in particular was spectacular in his economic illiteracy, using two of the worst clichés of the subject; “leaving debts for future generations to pay”, and comparing the National Debt to a “maxed-out credit card”. Ed Miliband, still hampered by a speaking voice that lacks power, came through with some credit, but not enough, you feel, to swing many voters. Natalie Bennett started very well for the Greens, indeed she arguably won the first half of the debate with her best TV performance to date, but she did seem to tire somewhat and fade into the background in the second half. Leanne Wood perhaps came across as a bit too Wales-centric, probably inadvertently, but she deserves great credit for the best-delivered closing statement of the night. Nicola Sturgeon clearly did the Scottish National Party’s hopes a bit of good with a very strong performance, although she was being very hypocritical on the subject of education, given her party’s long-running butchery of college places north of the border. As for Nigel Farage, TV pictures did him no favours with him looking sweaty and flustered throughout, but as ever, he came across as smug and callous, with his ill-judged remarks about HIV-sufferers bound to alienate more people than they will attract. (On that subject, his argument was not only scaremongering, it was also back-to-front. Surely it is a good thing that people suffering HIV/AIDS are brought into a country where effective treatments are available? It is one of the best methods of containing, controlling, and studying the epidemic, which will therefore be of benefit to everybody, including the British. He just never thinks things through, numpty-Nige, does he?)

But David Cameron’s overall performance… well, dear oh dear, he was just awful. Veering between mechanically-rehearsed soundbites and jumpy protestation, you could tell from the opening seconds that he wanted to be elsewhere. His down-the-nose tone when discussing opponents was off-putting, his denials of plain reality made him seem unsettlingly deluded, and some of his logic sounded like the dog following the tail. His use of the term, “we’ve brought the country back from the brink” was self-aggrandising, without ever establishing what it was that we were “back from the brink” of. (No. Not bankruptcy, that was never going to happen and it never will.)

Especially ridiculous – and to be fair Clegg was just as guilty of this – was Cameron’s idea that we need to build up a strong economy before we can have a strong health service. This is like saying we have to have sturdy branches before we can have a healthy tree-trunk; a strong economy depends before all else on a healthy workforce that can thus perform its work to the best of its potential. Waiting for the economy to be strong before investing in the NHS is akin to telling a hungry builder to get the houses built first, and he will only be fed afterwards. He just will not be able to do a good job of constructing a house when he is dizzy with gnawing hunger. Equally, a workforce full of sick people will not be able to build a strong economy until their illnesses are treated.

But for me, Cameron’s really major failure in the debate was one that went almost unnoticed, when he let slip some exceptionally bad arithmetic that draws attention to the dirtiest trick of which his Government has been guilty. He claimed, with complete dishonesty, that the Government has created ‘two million new jobs’ in the last Parliament, before adding that he planned to create ‘two million more new jobs’ over the next five years.

Another two million jobs? Really? That’s strange.

Post-Credit Crunch unemployment peaked at around two-point-seven million in 2011, and is now officially down to zero-point-eight million (though only by the underhanded decision to count just the people receiving Jobseekers’ Allowance instead of all people who are out of work and looking for a job).

Two million new jobs for zero-point-eight million people? Are most of these new jobs going to be part-time work so new workers can ‘double up’ or something? That sounds too impractical to believe.

The funny thing is, if we look at the current real unemployment figures i.e. the ones that are arrived at by the pre-Coalition calculation (which admittedly had inherited misleading spin of their own from the 1980’s), we find the number of people out of work and looking for a job is a little under… oh! Two million!

The unemployment figures from the Office Of National Statistics

This graph shows the real-terms unemployment figures since 1991. The blue line offering the JSA recipient figures only is the one being falsely spun by the Government as the total unemployed.

Coincidence that the number of new jobs hoped for will happen to be roughly the same as the real number of people who are currently unemployed? Coincidence, my foot. It was a very careless lapse by a Prime Minister who, over the last two months, seems to have been suffering from growing deceit-fatigue. Never mind the drawback that Cameron has still offered no clear explanation for how he plans to create two million jobs anyway. Coming from a party that traditionally rejects the idea of Government creating jobs in the first place, it is an explanation that he should have offered this evening.

His failure to do so will leave a lot of people thinking, “Another pie-in-the-sky promise”. The number of them we have had down the years is unhealthy for democracy, but then democracy is not something that Cameron has ever had much time for. If he had, he would never have tried to wriggle out of the debate to begin with.

For the dignity of the evening, it might have been better had he done so.

by Martin Odoni

One of the things about Godwin’s Law is that it is only supposed to apply to discussions that take place over the Internet. It asserts that the longer a discussion lasts, the higher the chances of someone mentioning Nazi Germany, usually as an insulting comparison to a debating opponent. (In truth, this is something of a redundant point when looked at broadly. Think about it – the longer a discussion lasts, the higher the chances are of anything being mentioned.)

But invocation of the Nazis does very much happen in spoken-word discussions too, and not always as an insult. Sometimes it happens as a result of history-paranoia. This can be seen particularly among the lunatic fringe of the Far Right in the USA; the likes of Glenn Beck and Louie Gohmert play the ‘Nazi card’ almost as a matter of reflex. If you are in the mood for a good laugh, by the way, see what Lewis Black made of Beck five years ago.

Trying to compare the behaviour of modern people to the behaviour of the Nazis is therefore something of a lazy hot-button. But the phenomenon sometimes takes a subtler, but no less insidious, appearance. It is the ‘warning from history’, not about behaving like the Nazis, but about behaving in a way that opens the door to the Nazis. One of the most frequent forms this takes is the ‘Beware-The-Mistakes-Of-The-1920’s’ argument.

This refers to the aftermath of World War I, in which the German Empire was given exclusive blame for the War starting*, and the brief history of the Weimar Republic that followed. The warning focuses on how the phenomenon of ‘Hyperinflation’ supposedly killed it off. (This common understanding of it was given voice in the revived TV series Yes, Prime Minister two years ago, when Jim Hacker declared that the Germans are “terrified of runaway inflation because that’s what destroyed the Weimar Republic and brought them Hitler”.)

This is a commonly-held view, and is often held up as one of the great lessons of the early Twentieth Century – that ‘Hyperinflation’, as it is sometimes called, must be avoided, even at the expense of all other aims.

It is not entirely without foundation. There was indeed a bewildering period of out-of-control inflation in the Weimar Republic in the early-1920’s, and it led to terrible hardship for its people. The notorious ‘Reparations’ that the British and French Governments had imposed on Germany in the Treaty Of Versailles required regular payments of vast quantities of money and raw materials, more than the fledgling Republic, itself still struggling to recover from the War, could afford.

When Germany fell behind in its payments in 1923, French and Belgian forces invaded and occupied the region of the Ruhr, Germany’s industrial heartland. With the Germans unable to muster remotely enough troops to defend their borders, they were swiftly strong-armed into resuming payments, even though the Weimar Government did not have enough capital in its reserves to do so. It therefore resorted to the only option it had available; it simply printed vast quantities of new Deutschmarks and shipped them straight to the French and British Governments. The Ruhr’s industries were largely idle due to the ongoing occupation – the Government had even ordered the workers in the region to go on a general strike in protest against the invasion – and were thus not producing many saleable goods. Therefore, the range and the amount of goods that could be purchased with the German currency were both getting very small, making it a less useful form of money, and thus less valuable. And with so many extra marks now in free circulation, having been freshly printed by the Government, the ease with which they could be obtained encouraged markets to put prices up, knowing that at least some potential customers would have enough marks to meet the cost. Prices going up, by definition, meant that the value of the money was going down even further, as purchasing the same item one day required more money than it had the previous day.

The value of the German currency was receding so rapidly in fact that people soon found that prices were climbing many times per day. This caused public panic, and motivated tides of ‘rush-buying’; many Germans were desperate to buy as many goods as they could as quickly as possible, fearing that if they waited more than a couple of hours, the prices would go up again and the money they had in their pockets would no longer be enough.

But of course, when everybody is buying goods in a panic, that means general demand is going up. At a time when the country’s manufacturing industry was limping, there was no chance that supply could ever meet such a surge in demand. Goods on German markets rapidly became scarcer and scarcer, which in turn made them more valuable, and this again caused prices that could be charged for them to go up even faster. Soon, no purchase was possible for any goods worth less than thousands of marks. So in response – if nothing else it might have reduced the amount of paper being used – the German Government issued fresh notes with extra zeroes added to the ends of the sums e.g. a 100 mark note could be replaced with a 100,000 mark note. But this just made it easier for people to possess and carry tens of thousands, or even hundreds of thousands of marks in their pockets, and to spend them quickly, and therefore made it likely that prices would go up still faster.

The international outlook for the mark was no better. Foreign goods cost more and more to import, as there were so few German goods even being manufactured, let alone being made available for export, that foreign traders saw very little use in possessing marks in any quantity – thus an importer had to offer gigantic sums just to bring in a few basic items.

The Hyperinflation was a dizzying, disastrous cycle that rendered the Deutschmark worthless in less than two years. To illustrate; for most of 1922, an ordinary loaf of bread would have cost about 160 marks. By September the following year, it cost 1,500,000 marks. And just two months after that, it cost an unimaginable two hundred billion marks.

Most of the stories you have probably heard about the Weimar Hyperinflation are true. Widescale starvation, people unable to afford fuel or clothing, money often being carted around in wheelbarrows just to buy small quantities of food, paper actually becoming far, far less valuable when turned into banknotes than it had been when it was blank, basketsful of money being left in the street and only the baskets being stolen by passers-by, the money just being tipped all over the pavement.

In this light, it becomes understandable that people in Germany ended up rejecting democracy and adopted authoritarianism in the years ahead. The Republic had, after all, been the country’s first real experience of liberal democracy, and after just five years Germany was in the grip of destitution, starvation, poverty – a total catastrophe. Thus an uprising of extremism is entirely predictable, yes?

There is just one problem with this interpretation of the time. It is completely untrue.

It involves directly and immediately linking two events that in reality were over half-a-decade apart, and ignoring everything that happened in between times. And a lot of very significant events did happen in between times. There was no inevitability whatever during Hyperinflation that an extremist right-wing Government would take over, and for some years after 1923, the possibility became very much more, not less, remote.

Adolf Hitler and the National Socialist German Workers’ (‘Nazi’) Party did attempt an uprising in Bavaria late in 1923, but the so-called ‘Beer-Hall Putsch’ was an abject failure, not least because it had very little support. Hitler spent nine months in prison for it, and the odds at that stage were that that would be the last history would know of him.

In September, Gustav Streseman became the new Chancellor of the Republic, and he introduced a new raft of policies that pulled the country out of its rut with impressive speed. He ended the strike and ordered a fullscale return to work in the Ruhr. He also formally abandoned the old mark as a currency, and introduced a brand new version called the Rentenmark, which was immediately given a very high, stable starting value through the backing of US gold. This quickly brought the Hyperinflation screeching to a halt. But at least as important, the following year, employing fine political skills Streseman managed to negotiate a new, more realistic arrangement with Britain, France and the USA for the payment of Reparations. Taking proposals from the American diplomat Charles Dawes, a framework was drawn up that reduced the total that had to be paid from the wildly-punitive two billion pounds demanded at Versailles to a much more reasonable fifty million pounds. Streseman also managed to secure a loan of two hundred million dollars from the USA, to inject into the ailing German industries.

(This had the bizarre upshot that the USA was sending money to Germany, so that Germany could produce enough industry to make payments to Britain and France, so that Britain and France could pay back war-loans owed to… the USA. Yes, I know, I think it sounds as potty as you doubtless think too. But it did work for a while.)

With German manufacturing back on its feet, the loans from the USA providing much-needed support, and a strong, restored national currency, the Weimar Republic in fact spent most of the rest of the 1920’s doing very nicely indeed. New factories were built rapidly, high employment rates were re-established, and a cultural revival, especially in Berlin, made Germany seem one of the most elegant and refined nations in Europe once more.

So you see, the years 1924-1929, far from being a period of ‘Nazification’, were a period of real prosperity in Germany. The period was even referred to as the ‘Golden Age Of Weimar’. If you had told a German trader in, say, 1928, that the now-flourishing Republic would cease to exist within five years and be replaced by a military dictatorship, he would probably have given you a sad look and told you how much he pitied you your pessimistic outlook. The very notion of Hitler and his extreme ideas being the way forward would have seemed absurd, and he and his Nazi followers were viewed as rather silly and embarrassing cranks. (In fact, the Nazi Party had very nearly gone bankrupt that very year.)

What could possibly go so wrong from this position as to bring Hitler to power?

Well, there was one drawback to the Dawes Plan; the fate of the big economies of Western/Central Europe were now heavily-locked into the fate of the US economy, because Britain, France and Germany all owed large amounts of money to the US banks. While the American economy remained in the rudest of health, this would not be a problem, as it meant the banks could be as patient about receiving the repayments from Europe as conditions required.

The problem was that, of course, the US economy was not to remain in the rudest of health. Instead, in 1929, it was to enter the most unhealthy condition in its history. When the London Stock Exchange crashed in September, in response to the notorious Clarence Hatry scandal – a fraud involving millions of pounds-worth of fake share certificates – the news filtered through to Wall Street, causing panic, especially among bankers who were still owed money by the British Government. Related holdings suddenly looked very unpromising, and stocks started being sold off at ‘cut-the-losses’ prices. All foreign investments now looking distinctly unsafe, and average stock-prices started to go down.

After weeks of nervous instability, it was at the end of October that the US economy finally choked in a crazed spree of panicked any-cost selling. On 29th October 1929, over sixteen million shares were sold off at rock-bottom prices in a desperate bid by investors to separate themselves from what they now believed were worthless stocks, and just to get anything they could in exchange for them.

The Wall Street Crash had shifted the very geography of world economics. All of a sudden, the stockmarket was flooded with goods that were of no apparent value. Banks that had lent to the investors who had purchased the stocks now found that repayments halted. Many investors who had taken advantage of easy credit that had previously been made available now could not pay it back. Other people who held shares that were now worthless could no longer afford to buy general, even day-to-day goods, and so all across the US economy, business spiralled downwards. Goods could not even be sold at the price of manufacture, and many retailers either folded, or turned to banks in a desperate bid for emergency loans. The banks did not have enough capital available to support the number of loans being requested. All they could do, therefore, was to call in debts already owed to them. Including foreign debts.

Britain, already reeling from the smaller crash on the London Stock Exchange, now found the creditors who had sent loans during the War were demanding their money back. France faced similar demands, and so both countries, in need of money quickly, now decided to call a halt to the Dawes Plan and to make a demand of their own – that Germany resume paying full Reparations.

The German position was not helped by the fact that Streseman had died shortly before the Wall Street Crash. He had warned not long before of the danger to the German economy if the American loans were recalled: “If the short-term credits are called in, a large section of our economy could collapse.” Now, just as they had lost his leadership, the German Government received a demand for renewed Reparation payments, and a ninety-day notice for the first repayment of the 1924 loan from the USA.

Crippling taxes now had to be raised to start the repayments, at a time when frightened American investors were withdrawing their capital from the country. Many German businesses folded under the strain of consequent lost revenues and an increased tax burden, and with that, unemployment began to rise. With every worker who lost his job, money was lost to those businesses he had previously purchased goods from, and so those businesses faced the strain of paying increased amounts while selling fewer and fewer goods. The only solution for many of them was to lay off staff to reduce the wage-bill, repeating the cycle.

A new economic downward spiral had set in, and by September 1930, unemployment had leapt from about one-point-two million a year earlier to over three million. Over the next couple of years, the jobless total would race past six million. With huge numbers of increasingly-desperate people out-of-work, and resentful of what they saw as foreigners taking their misfortune out on Germany once again, extremism was on the up – the Nazis took over one hundred-and-forty seats in the 1930 Reichstag Election – and the rise of Adolf Hitler and The Third Reich was finally under way.

The interesting aspect of this part of the story though is that there was no particular Hyperinflation of the rentenmark. Inevitably, with the value of US gold declining, there had been significant inflation of the mark, but nothing remotely resembling what was seen in 1923. Now it is probably fair to suggest that the terrifying memory of Hyperinflation might have played a psychological role in the growing radicalisation of the German working class in the early-1930’s, but that was about as much a part as the phenomenon had to play in Hitler’s accession. In reality, the Hyperinflation problem had been solved by 1925, and since then the country had gone through a boom period. What really caused the collapse of the Weimar Republic was a financial over-dependence on one country that was suddenly having trouble just supporting itself. The ‘trigger’ was not Hyperinflation at all, but the Wall Street Crash. (And the Crash was, in a manner of speaking, the reverse phenomenon; a collapse in stockmarket prices is a form of rapid deflation, as the same amount of money is able to buy more goods as time passes – if only anybody had wanted them.)

The worry of the “Hyperinflation-gave-the-world-Hitler!!!!” scare-story is that it still plays a substantial role in economic thought even today. Now, I am certainly not trying to make light of Hyperinflation as a phenomenon, it is horrendously damaging when it happens and causes unthinkable misery and hardship. But that is a problem in itself. There should be no need to add a horn-headed demon at the foot of the path, with warnings of “Hyperinflation will lead to Nazism” or some other such Godwin’s Law mimickry. It quite emphatically did not lead to any such thing in Germany – the Beer Hall Putsch failed completely. But the myth causes many a mind at the Exchequer to think that any amount of inflation is undesirable, and to imagine that it is the one danger, above all others, that must be guarded against at any cost. Hence George Osborne’s smug pride in recent very low inflation figures, even though inflation this low is, as Alex Little has recently explained, no less a problem than high inflation. And let us keep in mind that the Wall Street Crash had a deflation element to it.

In the interest of preventing inflation, lock-stock-and-barrel, neoliberal ideology argues that there should always be a substantial standing army of the unemployed, as the more that the working classes are competing with each other, the less able they will be to band together to bargain for better wages (the questionable assumption being that improved wages are what causes inflation). This school-of-thought fails to consider that it was in fact precisely when unemployment – not inflation – was spiralling out-of-control in the Weimar Republic that large numbers of dispossessed workers started turning to extremist political parties and rejecting classic liberal democracy. Surely therefore, neoliberalism has learned exactly the wrong lesson from history, and encourages the very folly that fuelled the extremism it supposedly wants to avoid i.e. over-dependence of the British economy on the USA, and high unemployment?

Surely if we wish to take the real lessons from inter-war-period Germany, we have to accept that large-scale unemployment (and probably starvation-wage employment as well) is the true danger that we need to avoid at all costs. With the Government’s constant figure-fiddling to get around that issue, they could well be sleepwalking into precisely the terrible danger that the Friedmanite handbook tells them it will prevent.

Indeed, that may well be a key factor in the rise of Far Right groups in Britain such as the UK Independence Party. Far be it from me to trigger Godwin’s Law, but by consciously telling ourselves not to, we are in fact behaving in the way that once opened the door to the Nazis.


* I am of the view that, while it is grossly wrong and unfair that Germany took all of the blame for the First World War, the reckless policies adopted by Kaiser Wilhelm II probably were the chief, most immediate cause of the conflict. Written evidence shows that the Habsburg Emperor of Austria-Hungary, Francis-Joseph I, did not move to avenge the assassination of the Arch-Duke Franz Ferdinand until the Kaiser’s Government pushed him into declaring war on Serbia. Furthermore, when Germany and Austria were faced with a consequent invasion by the Russian Empire, Wilhelm ordered a pre-emptive invasion of France, who, in spite of their alliances, still might have stayed out of the War if left alone. The Kaiser also endorsed the scheme to make the invasion via Belgium, which was a clear violation of a Belgian neutrality agreement that the German provinces had signed up to in the previous century, and which made British intervention pretty much unavoidable. At every trigger-point of conflict, the German Empire was one of the key players driving events, and in ways that violated treaties and International Law.

by Martin Odoni

So, the house from Kansas has finally departed the cyclone and crash-landed, and the victim whose feet protrude from under its foundations is the Wicked Witch of Grantham. Margaret Thatcher is no more.

As I type this, it is in fact nine days since her final demise, and they were nine days of almost stupefying predictability. Every day, we’d hear a sentimental Tory politician of past or present offering words of mourning and nostalgia that would completely misrepresent the realities of the 1980’s, words that as soon as I heard them would provoke me to sneer, “Oh, I just knew he would say something like that.” And every day, a thousand other people would respond with equally predictable expressions of joy and celebration, including street parties in many of the nation’s favourite cities; predictable not least because most of them had been loudly promising for years that a party was precisely what they would throw once the Iron Lady had kicked it.

Now I have said more than once before that I have little time for people who go so far as to organise celebrations for the passing of a political or military opponent – see – and indeed the more prolonged and triumphant the revelries become, the more ill I start to feel. This is true even for the worst of tyrants, and the reality is that, heartless, anti-democratic, and dictatorial though Thatcher was, she wasn’t quite the free market answer to Pol Pot (her prized ally against Vietnam) that she is sometimes painted as.

I concede I allowed myself the privilege of a smug grin for most of the day when her death was announced, and even a satisfied drink or two when I got home from work, but I was never going to organise a parade through the streets. As much as a matter of seemliness, it would be quite pointless and empty to start partying, as her death has come much too late for it to have any beneficial effect for anyone whose lives she made so miserable while she was Prime Minister. She fell from power only a few months after her favourite false-bogeyman-of-Africa, Nelson Mandela, was freed from prison, and since then, the real world Margaret Thatcher has been increasingly a figure of quaintness. Either clinging with increasing exasperation to obsolete, 1940’s Neo-Toryist ideas of patriotism, obsessing over the phantom ‘menace’ of Trade Unions that were already more or less crushed by about 1987, or just retreating into rather poignant and enfeebled dementia. By the end of her days, she was no longer a figure to be hated so much as a doddering, mad old granny to be treated with reluctant pity.

In her time, she was like the 2005 revival of Dr Who; you hated her, everyone you knew hated her, you were convinced everyone in the country hated her, and you could never find anybody who would admit to not hating her. And yet somehow, every election, she kept getting back into power anyway. Just like the new Dr Who is largely made up of over-loud, sentimentalist rubbish, but when it comes down to it, nobody dares to suggest it should be taken off the air.

Why did Thatcher keep getting back in though?

One argument I’ve been hearing a lot over the last few days is that she was prepared to face realities that her predecessors – both Labour and Conservative – were too blind to accept. The 1970’s, according to these people, were the darkest, gloomiest and shabbiest decade in living memory (er, never heard of the Blitz, anyone?) with the structure of British society wearing thin under the grinding strain of planned economics, nationalisation of industry, and subsidisation of failure – be it failed industries or indolent people. Thatcher was respected, they argue, simply because she formalised reality; she merely did what would have had to be done sooner or later,  they say, irrespective of who was in power.

The standard hagiographic clichés to sum this view up have been as follows; –

“She deserves our love and respect, because she put the ‘Great’ back into Great Britain!”

“Even if you didn’t agree with her, you have to admire her convictions!”

“The country was about to go bankrupt. Thatcher knew we couldn’t keep paying for things we couldn’t afford!”

“She really believed in what she stood for!”

But is any of this really true? The trouble is that most of the people who say it are part of the large minority who inevitably benefited from the changes she made, which were designed to concentrate wealth. Many of these people were part of the obnoxious ‘Yuppiedom’ culture of the mid-1980’s. But did Britain really become ‘Great’ again, given that it finally lost, once and for all, its production and resource bases, and so became completely dependent on foreign imports and investment to get by? Britain has mines across its length and breadth, and yet the country hardly extracts any coal, tin or iron from its own soil. Almost all such resources that the British use are now imported, creating trade deficits, and presenting the countries the resources are bought from with considerable potential to ‘strong-arm’ the British Government.

As for the secondary sector, contrary to popular myth, manufacturing is still alive in Britain. However, the great bulk of it is run from other countries these days, which again makes it very easy for multi-national firms to twist the arm of British policymakers, with the threat of closing factories and laying off workers any time the “economic climate in the UK ceases to be as appealing” i.e. any time that running a business in the UK becomes a bit more expensive or becomes subject to rules that already exist in other countries – workers’ rights that are actually worth something, for instance.

I am not disputing that the British primary and secondary sectors were in a poor way at the turn of the 1980’s, but what they needed was reform. That does not mean that they needed butchering, and the price the UK has paid in the decades since Thatcher just dismantled them and sold off the assets has been a very high one, in the sense that, far from being ‘Great’, the country has almost ceased to be able to sustain itself without foreign investment. (Some might well argue, given how much Britain was dependent on lifting unpaid resources from its Empire in past centuries, that this ‘greatness’ was always an illusion.)

And did Thatcher really know we couldn’t keep paying for things we couldn’t afford? And more to the point, did she put a stop to it? On close analysis, the answer appears to suggest a split-personality at best. Roughly speaking, she wanted to cut public spending, but she didn’t know how to do it. At all. Yes, she cut spending on education, health, and support for the unemployed, but in real terms, public spending almost always went up during the period from 1979 to 1990. In only two years while she was in office did public spending decline. In all the others, spending continued to go up, even though she was reducing monies paid to its previous beneficiaries.

The reason for this is as true of her as it has been of almost every prominent Tory in the years since; she just never ‘got’ (perhaps wasn’t willing to ‘get’) the circulatory nature of how an economy operates. She understood enough that low taxation could plausibly increase private spending, and so increase profits for companies, which in turn would lead to greater tax yields. Unfortunately, she couldn’t spot everything else that could and would happen all around it when spending is reduced in a frantic rush to allow taxes to be cut in the first place. She seemed convinced that everything could be solved with a mixture of ruthless impatience and aggression.

The difficulty was that she denationalised or closed down much British public industry. Some people will sniff, “Good, less time and money spent on failing industries” at that, but this is not only a generalisation, it is also short-sighted. For consider, what other knock-on effects would happen when you close down firms, be they private or public, and thus make their staff unemployed? The answer is, of course, those who have lost their jobs will stop spending, because they have no money to spend. And so the shops and businesses who had previously profited from their custom suddenly lose trade. And as the businesses lose trade, revenue would go down, offsetting the benefit of the tax-cuts. The top and bottom of the matter in the early-1980’s was that the tax-cuts were not sufficient to increase tax yields, because they would not result in increased sales all around, nor in companies taking on more staff. Sometimes they would even have to lay off staff to cope with the loss of sales, repeating the cycle. This is a contributory reason why unemployment surged so wildly for much of the decade.*

It was therefore necessary to compensate for the loss of spending power by allowing people to stay on benefits – albeit reduced – even though Thatcher never really believed in them and tried to make them harder to obtain. (This goes to show that, contrary to right wing dogma, benefits are not only good for the disadvantaged, they in fact provide good stimulus for an economy, at least in the short term, as they make sure that those who are out of work can at least carry on spending money.) So public spending was merely diverted, not reduced, from paying for people to work – which at least provided an end-product – to paying for people merely to avoid starvation. Given Thatcher was always so obsessed with her father’s notion that, ‘Anyone can do well so long as they work hard,’ and therefore wanted to end state-support for those out of work, this does rather put a different complexion on matters for those who say that she “believed in what she stood for”. Her own hyper-aggressive approach cornered her into doing the opposite. Whether or not you see that as a good thing (which I do – benefits are not only sound morally, but they are, as I explained above, of far more practical value than they are often given credit for), it is clearly a paradox in her position.

But even more so, when people say Thatcher “believed in what she stood for”, it rather invites a question; what exactly did she believe in? This is where we arrive at the central lie of her entire worldview. She believed in, and embarked on, a campaign of Milton Friedman’s monetarist ideas. The monetarist philosophy argues that the state should not be allowed to interfere in the market at all. The less regulation there is, according to Friedman, the freer the market becomes to take the actions that are needed to keep an economy ticking over and vibrant. The more a state intervenes, he believed, the more reluctant companies would become to make decisions, or to employ staff.

But further, he also theorised about one of the sporadic blights that haunted many a successful economy. That was inflation, the phenomenon of a currency declining in value. Inflation can be caused, not just by economic hardship, but even by economic success. The better an economy is doing, the more people there will be in work, the more money there is moving around, and the more people there will be with money to spend. And in all probability they will spend it. When spending is not merely high but manic, demand will be high. And when demand is high, the tertiary sector will know it can afford to charge the maximum price for its goods and still make its sales more often than not. The higher a price people have to pay for goods means, by definition, that the currency they are using is worth less than it used to be, for they are unable to buy as much for the same amount of money as they could previously. Friedman’s idea to address that was to keep wages for the majority low. If people couldn’t afford to buy much more than the occasional luxury, he opined, then demand could be kept from turning manic.

The best way of keeping wages low, Friedman argued rather insidiously, was to keep demand for labour low. One of the main circumstances that cause wages to rise is when there are fewer workers available than the number that are needed by industry. At such times, those people who receive an offer of work have a powerful bargaining chip with which to negotiate a better wage, for the simple reason that the employer may not have an alternative candidate to turn to. (In England, the aftermath of the Black Death of the Fourteenth and Fifteenth Centuries was a prime example of that. The population had halved in size, and suddenly there was a severe shortage of workers available to farm the land, and so the surviving serfs began to demand much better terms from landowners. Any landowners who refused to do a deal would soon see the serf walking away to offer their services to someone who had a better grip on reality.)

The answer as Friedman saw it was to make sure that demand for work was higher than the demand for labour. This is to say, the number of people looking for work needs to be substantially higher, at least in monetarist eyes, than the number of jobs available. That way, any time a candidate is angling for a job, they won’t be in much of a position to haggle; if the candidate refuses the offer put on the table in front of them, the employer can be sure of finding somebody else who will tolerate low-payment terms soon enough, because the number of unemployed people to choose from is substantial, and most of them will be desperate for an income.

By the cynical logic of Friedmanite thinking, unemployment – usually between five and ten per cent of the working-age population – is a good thing, as it keeps inflation contained. This is to say, monetarism wants there to be unemployment.

And here is the lie in Thatcher’s philosophy, indeed in conservative philosophy as a whole, not just in the UK but around the world. Thatcher hated unemployment, and she despised those people who were unemployed for long periods of time. Conservatives the world over despise the unemployed. They speak of them as ‘scroungers’, or ‘parasites’, or ‘moochers’, and are forever grailing against the ‘burden’ that benefits claimants heap on ‘hard-working’ (by which they really mean upper-Middle Class) society. Thatcher always maintained unflinchingly that anyone who needs help should get up and help themselves, and that if anyone wants to get on in life, they will always be able to do so, as though it is a simple matter of trying a bit harder.

And yet, while loudly and contemptuously berating what she (quite wrongly) called ‘parasitism’, and the largely mythical culture of dependency, she was very actively, very willingly, even proudly, creating more unemployment, and making it more or less impossible for unemployment ever to be really eradicated. It is quite true that, under James Callaghan, the era of full employment had already ended – unemployment had increased to one and a half million by the time he fell from power in 1979 – but Thatcher made no attempt to stop the slide. On the contrary, she butchered public industry, and that soon doubled the sum, probably worse than doubled it. (We may never know the exact real number of Britons out of work around 1983, thanks to the rather obvious figure-fiddling that was going on at the time, but there is a growing suspicion among historians that the number might even have exceeded four million. In a population of under sixty million, as it was at the time, that is truly horrendous.)

And Thatcher revelled in it. She wasn’t sorry for it, she wasn’t hesitant to do it. She wanted to put large numbers out of work, because it was what the monetarist doctrine told her to do; to get Government out of the economy by denationalising, and to reduce demand for workers. And the most vile aspect was that she offloaded the blame for the consequences onto her victims; she condemned people for being unemployed, while condemning them to unemployment. She castigated those who were out-of-work, while taking away their option to be anything else.

So either Thatcher did not believe in what she stood for after all, or she believed in two mutually exclusive premises, and tried to speak up for both of them. Either way, she was lying. Lying to the country, or lying to herself, well who knows? But what she said and what she did were not compatible, and almost every ‘Neoliberal’ conservative since her time – not just in the UK, but in the USA, Australia, Italy, Germany and many other countries beyond – who have invoked those same philosophies, have been telling the exact same lie.

The lie is to say that being unemployed is shameful, while making sure that there will always be large numbers out of work. It is a lie used as a substitute for justifying monetarist policy. The policy is convenient, so conservatives adhere to it, but it has terrible repercussions for innocent people, and will always cause opposition. The most effective way of evading criticism for unfairness is to blame its victims for their own misfortune. To condemn them for their ‘idleness’ or their ‘profligacy’. So when conservatives throw ordinary people on the scrapheap for the sake of monetarist convenience, the easy way to avoid a shaming argument is just to condemn those who have been scrapped. Call them ‘dependent’. Call them ‘parasites’. Call them ‘useless’ or a ‘burden’. Call them ‘lazy’. And try not to let attention be drawn to the fact that they are on the scrapheap because conservatives put them there – usually without even consulting them.

This is why I find Tory appeals for ‘respect’ over the last few days, in response to the anti-Thatcherite rhetoric,  to be empty, pompous and two-faced. Conservatives have spent their lives insulting the poor, often in Thatcher’s own name. If the poor wish to condemn Thatcher in return, when finally she is gone for good and can hurt them no more, who can blame them?

So now, in the aftermath of Thatcher’s funeral – insultingly paid for by public funds of all things – and a week of listening to the usual history-rewriting, dewy-eyed Tory mush about Thatcher being the ‘saviour of Britain’, I look back on those vulgar days of revived class snobbery in the 1980’s, and compare them with now, and realise that they are right in a sense. She did save Britain, but not in the way her acolytes would have us believe. What she saved was Old Britain. Not the Britain of state-run industries or trade unions, but a much older idea. The Britain of elitism; sure the elite may have changed names, or even where some of them came from, but they were still an elite as much as the old aristocratic ruling class of previous centuries. The Britain of jingoism; a country where the definition of doing the right thing is being pro-British, thus allowing Thatcher to be dear chums with PW Botha, General Augusto Pinochet and General Suharto while condemning the African National Congress as terrorists. And a Britain that convinced itself it was ‘Great’ simply because it was British. As I said earlier, there was something unsettlingly Neo-Toryist about Thatcher’s worldview, like a 1940’s Conservative desperately trying to convince himself that Britain was not in decline after the colossal strain of fighting two World Wars in thirty years. Some people might acclaim Thatcher to be a radical, or even, really perversely, a ‘working class heroine’, simply because some of her Yuppie supporters emerged from the lower classes. But for most on society’s bottom rung, life got far worse thanks to her, and that was because she believed it should. Despite her claims, it was not possible for absolutely anybody to make it in her Britain by working hard. Hers was a Britain designed not to have enough to go around. Since the war, the nation had moved away from that old idea of itself, and the idea was starting to die out, only for it to be revived with a vengeance in 1979. That was the Britain that Thatcher saved – by reversing the steps taken away from it.

And if the public funding Thatcher failed to cut must now be used for her funeral, purely because conservatives like it, then it simply proves what many of us have known all along; ‘austerity’ does not mean cutting needless expenditure to repair the British economy. It means that, from now on, the Government will only spend money on the things that rich people like.

Should we even be surprised? That was what always happened in Old Britain. It is a sick but fitting tribute to Margaret Thatcher that, having restored Old Britain, she should be given the only kind of send-off that Old Britain could possibly like.


* Today, we have a similar problem with George Osborne’s one-eyed obsession with getting rid of public sector workers. Every single worker he gets rid of will end up with little or no income. How are they supposed to contribute to the nation’s already-dwindling cash-circulation when they have no money to spend? If he really believes that the cutback approach is correct – which it probably isn’t – he needs to do it in stages, offloading staff at a trickle, and allowing time for the private sector to take up the lost public sector workforce without it being hit by a private spending down-surge. Instead he is trying to remove many thousands of people from the state payroll en masse. By any perceived wisdom, of either the left or the right, that is self-destructive folly.