Full text: Wirtschaft und Gesellschaft - 1996 Heft 3 (3)

Wirtschaft und Gesellschaft 22. Jahrgang (1996), Heft 3 
But by then the govemment had (secretly) given up on monetarism. Its 
anti-inflationary policy was now "largely rudderless" (20). "Unthinking 
monetarism" (2 1) was followed by a less dogmatic, discretionary 
approach to the management of the economy via a variable mix of 
monetary and fiscal policies, the very pre-Thatcher strategy about which 
the thatcherites had been so dismissive. It brought a brief period of mo­
dest growth and low inflation. 
When Lawson retumed to the Treasury after the 1983 election, dogma 
was "in" again. In his Mais lecture of June 1984,  he proclaimed a eross­
over from what he called the conventional post-war wisdom, in which 
macro-economic policy was assigned to promote growth and micro (in­
cluding incomes) policy to suppress inflation: now the Suppression of in­
flation was to be the task of macro (mainly monetary) policy while micro 
(supply-side) policy, mainly tax and labour market reform, would pro­
vide the conditions favourable to improved performance in terms of 
growth and employment, which were now considered outside the proper 
direct responsibility of govemment. There was an implied allusion to the 
claim that a succession of pre-Thatcher govemments had allowed the 
country to become "ungovernable" (22), presumably because decades of 
full employment had shifted the balance of power too far from managers 
to workers and had brought "excessive" job security and wage rises. 
But by the mid-1980s inflation had risen again sharply and the go­
vemment escaped by making the Deutsche Mark (instead of the money 
supply) the target variable for the conduct of British monetary policy 
and so handed over its disinflationary policy to the Bundesbank. This 
was reinforced when the pound entered the Exchange Rate Mechanism 
(ERM) of the European Monetary system (EMS) in October 1990 .  When 
that strategy collapsed also, in September 1992 ,  a new phase of more 
pragmatic - quite unthatcherlike - way of steering the economy ensued, 
though again only briefly (See Section 10) .  
3. The economic record: an overview 
Table 1 sets out some selected key data to show how the economy has 
in fact performed: clearly the overall objective of decisively improving 
on the past was in no way achieved: economic growth did recover 
marginally from the - intemationally - dismal second half of the 1970s, 
but it remained much inferior to the pre-Thatcher 1960s. Rates of un­
employment and of inflation were also very much higher under Thatcher 
than they had been before. 
In intemational terms the growth rate remained below, unemployment 
above, inflation marginally above, that of the EU between 1979  and 
1996 :  the government's claim that the deregulated British economy "has 
been out-performing" all the more regulated Countries of Europe (23) 
does not square with the facts. What is true, however, is that the negati­
ve differential has shrunk as performances have deteriorated in traditio-

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