by Angela Eagle
Over the following decades, the battle continued to rage but it was not until thirty years later that Hayek’s and capital’s most ideologically convinced proponent appeared, in the form of Margaret Thatcher. She had read Hayek at Oxford University, aged eighteen. It would have a profound effect on her beliefs – although, she claimed, not immediately. She was not particularly political at Oxford, despite being a member of the University’s Conservative Association. In fact, at university, Mrs Thatcher, an occasional Methodist lay preacher, was more religious than political. By the time Margaret Hilda Roberts had met and married her husband, Denis Thatcher, however, going on to become the MP for Finchley, and then – in February 1975 – Conservative Party leader, no one would doubt the importance of Hayek and his brand of anti-socialism to her politics. Thatcher was much taken by Hayek’s arguments that conservatives cannot compromise with any brand or variant of socialism because the core logic of all socialisms inexorably lead to totalitarian outcomes. She scorned her colleagues who had some sympathy with social democratic politics or outcomes, labelling such compromisers ‘wets’ who needed to be belittled and defeated.
A moment that perhaps sums up Thatcher’s relationship to Hayek’s philosophies came on a visit to the Conservative Research Department in the summer of 1975. Listening to an official explain why the Tories should take the ‘middle path’ in their policy platform, so as to avoid the extremes of left and right, Thatcher snapped and thwacked one of Hayek’s books onto the table. ‘This is what we believe,’ she imperiously announced. She would go on to repeatedly reference Hayek in public, and even corresponded with him while in government. One of her most important economic advisers, Keith Joseph, was as taken by Hayek as was Mrs Thatcher, and corresponded with him frequently. Joseph may well have been preferred to Mrs Thatcher as the right-wing standard-bearer in the Conservative leadership contest had he not been forced to resign in disgrace a few months earlier after suggesting poor people should stop having children, to keep their DNA out of the British gene pool and thus restore ‘the balance of the human stock’. Thus was Mrs Thatcher catapulted into pole position as the next best leadership choice for the right-wing of the Conservative Party.
Mrs Thatcher’s own contribution to making real Hayek’s philosophy came when she reframed the argument against paying for better services through higher taxes by making it all about balancing the budget, using the idiom of household budgets.
In 1976, three years before she became Prime Minister, she argued:
I think you’re tackling public expenditure from the wrong end, if I might say so. Why don’t you look at it as any housewife has to look at it? She has to look at her expenditure every week or every month, according to what she can afford to spend, and if she overspends one week or month, she’s got to economise the next.
Now governments really ought to look at it from the viewpoint of ‘What can we afford to spend?’ They’ve already put up taxes, and yet the taxes they collect are not enough for the tremendous amount they’re spending. They’re having to borrow to a greater extent than ever before, and future generations will have to repay.
Now, this was, objectively speaking, ingenious political rhetoric, and it worked.
Misleading? Absolutely. It is preposterous to compare household finances to a country’s economy. Not least because by borrowing money to invest wisely in skills and capacity in the economy the state can put rocket-boosters on growth, covering the cost of borrowing and then some.
Cynical? Again, absolutely. Mrs Thatcher knew that her words were misleading. She understood the above argument. But she also understood how well the false analogy to balancing a household budget communicated an idea to voters.
Effective? Unfortunately, for the great mass of citizens who suffered under Thatcher’s rule, absolutely. So effective, indeed, that a reinterpreted version was used to great effect by David Cameron and George Osborne in 2010. Cameron and Osborne knew they couldn’t use her precise example because neither of them were housewives and because no one believed that either of them had to worry too much about balancing their own household budgets. Instead, they repeatedly told Britain that we couldn’t keep spending on public services on the nation’s credit card, an argument that had painful emotional resonance for those who recognised the pleasure of splurging on something expensive, and the corollary pain of having to tighten one’s belt over following months.
Hayek was still an active participant in academia and politics as Thatcher came to power, and he did not refrain from excitedly writing to her key advisers and sending letters to newspapers, urging her to bring his ideas to fruition. Every philosopher needs political advocates to turn their ideas into policy and statute. And when Mrs Thatcher faced opposition to her philosophy, to her uncompromising opposition to socialism and in particular to the trade unions movement within her own party, Hayek supported her enthusiastically. In 1978, Hayek wrote in a letter to The Times:
The majority of the prospective Tory candidates are naturally and understandably primarily concerned about winning a seat in the coming election and feel that their chances may be reduced by what I have seen described as Mrs. Thatcher’s ‘extremism’ … A statesman and patriot should prefer being defeated in the election to being charged with a task in which he has not the support of the public … I still hope that the British people will honour Mrs. Thatcher for putting the long run interests of the nation above the short run prospects of her party.
The country will not be saved by the Tories being elected, but it may be saved by what they can do, but not a party dependent on the trade union leaders who owe their power to the very privileges which the law has granted them but which must be revoked.
Mrs Thatcher’s all-out war on the trade union movement and workers would delight Hayek, and over the years of her premiership the closeness and intensity of their relationship and their mutual admiration and affection deepened. In 1984, he sent her a gift of a leather-bound edition of The Road to Serfdom. She wrote back, in a personal note in her own handwriting: ‘It means so much to me. I remember well the days when I first read it.’
By the time she left Downing Street in tears, felled by a revolt in her own party, she had fundamentally recast the relationship between capital and labour, giving the whip hand to capital. So, Hayek’s legacy was confirmed. The philosopher had found the politician that could translate his beliefs into economic and social reality. It is not unfair or hyperbolic to identify Hayek as the intellectual father of much of the suffering that the poor and working people have endured since under successive Conservative administrations.
We have tried to present Hayek’s ideas fairly but we do not agree with them. We believe Hayekian conservatism is short-sighted, selfish and just plain wrong. The Road to Serfdom was a classic straw man argument, in which Hayek built up and then smashed down a caricature of socialism. He then claimed democratic socialism – a different type of political philosophy to revolutionary socialism or communism – was identical for the purposes of his argument. In pursuit of an extreme and distorted version of ‘freedom’ Hayek sacrifices any form of co-operation or collectivism. The effect of his philosophy on our politics and on our society has been devastating. His ideas have led Britain into a cul-de-sac of inequality, poverty and a lack of opportunity that resemble the very serfdom that Hayek claimed socialism would bring about. Indeed, the weakening of the bargaining power of trade unions and the ‘freedoms’ granted to capitalists to take advantage of workers were given dubious moral force by Hayek’s notion that socialism was not just wrong but evil. This corrosive idea has led directly to the low-paid exploitive segments of the labour market we examine below.
We hold these opinions so forcefully because we are politicians, not philosophers. Politics is the realm of praxis – that is, practical action. Our first instinct is to look not at ideology but at material reality; the sphere in which we seek to exert influence. That is why we state with confidence that the practical effects of Hayekism have b
een a disaster for many. Indeed, we are not the only ones to say so. In recent months, even Conservatives, from Theresa May’s first speech as Prime Minister opining about the ‘just about managing’, to Ruth Davidson in the wake of the disastrous 2017 general election, to journalists such as Matthew D’Ancona and Matthew Parris, have criticised how opportunity and outcomes have been devastated by decades of unbridled market fundamentalism. The plain truth of this is obvious to those who look.
Hayek was not just an economist but sought political ends. He delighted in being the philosopher king behind Mrs Thatcher’s throne. He and his great opponent, Marx, are examples of philosophers whose aims and legacies involved huge political change. Ideas always affect politics, since they can fundamentally change how we perceive and interpret reality. For example, if we believed regulation was stifling economic productivity, we would seek to avoid it. Conversely, if we see regulation as an economic good because it ensures workers remain healthy, happy, effective and productive, and that products have minimum standards of safety so that consumers can have confidence when purchasing, we would welcome it. Ideas become the lens through which we interpret the world around us and seek to act. Hayek’s philosophies, advocated by the Conservatives over decades, helped to shape Britain’s understanding of socialism, of trade unions, of taxation and of freedom. This contributed fundamentally to Margaret Thatcher’s ability to win, for the first time in over a century and a half, three consecutive Conservative terms in office. Her brand of conservatism wasn’t somehow innately popular to British citizens; it required decades of ideological argument and conditioning for her policies to be interpreted as a good thing by people for whom, quite often, they would be highly detrimental.
Fundamentally, Hayekian conservatism is populist at its heart. Its most compelling promise is that anyone can become very rich and then retain that wealth without state interference or the obligation to support others. Wealth is deeply attractive. The wealthy can clad themselves in fine clothes, live in luxurious surroundings, spend more leisure time and own goods that others envy. Today, gossip magazines, Instagram and the right-hand bar on the Daily Mail’s website feature photographs of an endless array of ingénues wearing designer clothing, driving in sports cars from enormous gilt-clad mansions to private clubs populated solely by other expensively dressed people. The message is simple: all you have to do to have the same things is to win the lottery of life and join the wealthy elite. Through a multiplicity of deceits, such propaganda tells people that all it takes is hard work and playing by the rules. This, we know, is profoundly untrue. The rules were always there to protect capital, not to grant the dispossessed access to its privileged environs. But this shimmering dream is even more untrue now in the Britain shaped by Hayek’s market fundamentalism and delivered by Mrs Thatcher’s ideological devotion. The possibilities of becoming rich have narrowed, not widened.
In Part 2, as we look at the state of our nation, we will identify the changes Hayek’s ideas have wrought upon Britain. We will identify the victims of Hayekian/Thatcherite politics – the socially isolated and marginalised, those starved of opportunities, that feel ‘left behind’ by the other Britain that is wealthier, healthier and more secure. We will argue that it is this philosophy that has caused the growing inequality and insecurity of so many. And we will show that only an empowering state implementing democratic socialist policies can rebalance the woefully lopsided relations between labour and capital and restore a healthier and happier society.
It is social democracy that created the sustainable, effective, civilised British institutions of the NHS and welfare state which have saved and enhanced millions of British lives. It is social democratic policies on education – from free pre-infant intellectual enrichment classes like SureStart, to the comprehensive education system, to the expansion of university education – that have in the past empowered so many.
We recognise that democratic socialism, too, is in crisis and has been since the fall of the Berlin Wall. In Europe, it is losing ground to populist parties of the right and left. The extent to which the Hayekian/Thatcherite programme of anti-socialism has permeated our laws, our policies and our political discourse means that a party that sought to right this balance would need to have the same confidence in re-writing the fundamental rules governing the relationship between labour and capital as Mrs Thatcher had when she followed Hayek’s blueprint.
Our goal is to reinterpret social democratic values for the twenty-first century because we believe our values are crucial to re-establishing a healthy and sustainable society. The world is changing and this change brings dangers as well as opportunities. Digitisation, automation and our growing understanding of the building blocks of life and the universe mean that the world of tomorrow will be quite different to that of today. We still, profoundly, believe that it is only through a combination of democracy and democratic socialism – the rational, intelligently combined efforts of all people – that we can deal with the challenges of tomorrow to create a stable, prosperous and happy society.
CHAPTER TWO
DEMOCRATIC SOCIALISM
Labour is a democratic socialist party. Labour’s core values are an enduring signpost to the better society we strive to create together. While the methods by which we achieve this must evolve as the context we find ourselves in continues to transform, the values we seek to live by never change. Here, we set them out.
EQUALITY
We believe that everyone is created equal in dignity and worth, regardless of talent and ability.
As democratic socialists, we wish to see social chances and economic opportunities more fairly distributed. Our aim is to organise our society so that crucial needs are met and individuals have fair access to resources to help them reach their potential and live happy and fulfilling lives in dignity and respect.
In doing so, we should seek to end the dominance in our society of inherited privilege, income and wealth. And we should strive to end all forms of discrimination and bigotry, because it stunts individual human potential and unfairly narrows opportunity.
While individual progress is important, we recognise that we are social beings that exist and prosper best in a nurturing and respectful society. There is a collective as well as an individual wellbeing.
As democratic socialists, we have a vision of how a society could be more equal and liberated through collective action. Thus, we have collective duties to each other and our communities as well as the capacity to express ourselves as individuals and pursue our own individual goals. This balance between the individual and the collective is crucial to our understanding of the world. Our communities are important building blocks in a fairer society. Human flourishing requires us to be aware of our social bonds and the duties of empathy, social solidarity and selflessness. We have responsibilities and duties to others as well as enjoying for ourselves the human rights our democracy confers on us. Therefore success is by definition not based solely on the acquisition of individual income and wealth.
LIBERTY
We believe in a positive vision of a pluralistic, diverse society, where universal rights are upheld and respect for others is paramount.
To flourish, liberty demands respect for the truth and for facts. The Labour Party has always been about providing freedom from insecurity and fear, liberating working people and their communities from servitude, exploitation and poverty.
To emphasise this point, the original Labour Party badge displayed the symbol of liberty, the flaming torch of knowledge, alongside a crossed quill pen and a shovel, representing the workers by hand and by brain. Labour always regarded liberty as an essential precondition to social and economic progress. It is what our pioneers dreamed about: freedom from the arbitrary control of exploitation at work; freedom to make your own choices, both social and economic; freedom from as well as freedom to.
Liberty and equality are not at odds. The defence of individual human rights and the recognition of universal human values go han
d in hand with campaigning for greater social and economic equality in a society which is fairer for all.
DEMOCRACY
We believe in government by the people, for the people. The UK Labour Party has always been committed to making progress by democratic means. Democracy is key to the spirit of social equality, which is central to the creation of a fairer society and what it is to be a citizen. It is also what confers legitimacy upon collective decision-making about the direction we wish to see our society as a whole take.
Labour developed out of a desire for the majority of working people to control their own destiny through direct parliamentary representation, rather than indirect lobbying of other political parties. The battle to win the modern democratic franchise predates the Labour Party, but it was at the centre of the struggle. From the Levellers and the Chartists to the early trade unions and our first leader, Keir Hardie, our pioneers enthusiastically joined the battle for women’s suffrage and a universal franchise. This inclusive and progressive democracy is part of Labour’s proud heritage.
We believe that this democratic approach should extend far beyond the right to vote in national and local elections, important though that is as a prerequisite for further progress. Labour has always been focused on the workplace and the importance of a productive economy, where working people enjoy the fruits of their labour and are allowed to develop to their full potential. Economic democracy, industrial democracy – a voice at work – are crucial, as is the right to collective representation. Living in a democratic political system but being subject to autocracy at work shows that the ideal of participation and having an input needs to be developed and deepened in all walks of life throughout the UK and be present and accessible throughout life. Participatory democracy is thus a principle that deepens the democratic spirit animating all healthy societies.