The issue was not just whether monetarism could tame inflation, but how much unemployment it would produce. For Macrae, employment was not so much a moral good or even an economic, demand-sustaining necessity, as the literal cost of doing business in post-war democracies. Such a justification was contingent: when Thatcher won again in 1983, despite unemployment rates unseen since the Depression, the calculus changed. A year later, with growth at 3 per cent, ‘something in the British economy is defying Keynesian convention, and it is time for Keynesians to accept that’.96 The shift in economic policy was not simply about convincing arguments, however. As in the 1930s, it came with a shove from concatenated national and international crises.
Thatcher and Reagan
Britain had felt the effects of the oil price spike and sputtering global growth with special force in the 1970s. Balance of payment and currency crises battered the country again in 1976, now with annualized inflation at around 24 per cent, leading the Wilson-Callaghan government to seek an IMF bailout. While spending cuts attached to the IMF loan (then the largest ever made) helped bring down the rate of inflation, this was also due to the acceptance by workers of pay caps – an incomes policy that collapsed two years later, when public sector unions struck against another round of real-term wage cuts. Inflation shot up, unemployment climbed above a million, and growth fell to a post-war low. The ‘winter of discontent’ ended in a narrow election win for the Conservatives under Margaret Thatcher – who campaigned on the promise that monetarist medicine could cure the economy of inflation by restricting the money supply. Ronald Reagan captured the White House in 1980, with similar plans to restore ‘morning in America’, as the swing to the right picked up speed across the OECD. Here the Economist hesitated, with the newsroom divided about the best – the most liberal – solution to the crisis.
While Thatcher’s program of lower direct taxes, smaller government and weaker trade unions was precisely what the paper wanted, that was not ‘reason by itself to vote for her’ in 1979. ‘Visceral’, ‘unreflective’, ‘frightening’, her rhetoric seemed to promise a repeat in office of Edward Heath: provoke the trade unions, lose, then hand the reins to ‘a perfectly awful Labour government by 1984 – one far worse than the respectable alternative available today, a house-trained party gone rabid again in the kennels of opposition’. The good dog in this metaphor? The current occupant of Number 10, James Callaghan, who had already moved Labour away from Keynesianism by 1976, soliciting the IMF loan in exchange for budget cuts of 20 per cent, while informing his party that governments could no longer ‘spend their way’ to full employment.97 The Economist worried that his defeat risked moving Labour in the wrong direction, towards the ‘loony’ far left represented by MPs like Tony Benn or Michael Foot. Truly to ‘switch emphasis back to private wealth creation and private choice’ in Britain, the Conservatives must win not one but two or three elections in a row against Labour, turning it into a well-behaved opposition of the centre-left; but for that, a Tory leader had to show ‘continuity, dare we say a sense of national consensus’. In effect, the paper wanted what would become the hegemonic project of Thatcherism, without being sure that Thatcher was the right leader to offer it. ‘There is a chance that office will temper her convictions’, but ‘all this is to be proved. None of it yet can be proved. We are not confident that it will be proved, but we would like to see it tried.’ For those confused by what this meant, it added, ‘The Economist votes for Mrs. Thatcher being given her chance.’98
Reagan formed a partial contrast. In 1980 the paper gave him more decided backing, focusing on the issue that mattered most to it: foreign policy. On that score, Jimmy Carter was so ‘dangerously second rate’ that ‘an ally trembles at the prospect of his return’.99 Reagan would be the better president when it came to showing ‘firmness with Russia’, unleashing ‘American arms-making resources in full’ and exposing Soviet economic and political frailties. Yet on other scores the Economist had some doubts. Reagan had a crude view of government in which all regulations and taxes formed a hindrance to innovation, as if its duties were simply ‘to balance the budget – otherwise inflation results – and to hold back the excessive demands of abortionists, drug addicts, homosexuals and women’. But it took ‘an act of Lafferesque faith in buoyant tax revenues to believe that the American economy could simultaneously withstand a 30 per cent tax cut, a large increase in defence spending and a balanced budget’; while the old-fashioned conservatism of Reagan’s Supreme Court choices risked ‘making America a less liberal society’.100
On one level, the paper’s conflict of emotions may seem surprising. After all, the Economist had in many ways prepared the ground for Reagan and Thatcher. In both the US and Britain, it had worked hard to undermine détente, offering a platform for Kissinger to preach ‘unilateral rearmament’ during the Carter years. In Chile, Robert Moss had discovered how American power could do more than score propaganda points against Moscow; it could eradicate a left with no links to it, whose socialism had previously constituted a legitimate political opposition. Indeed, Moss honed this point over many years on the Economist, repeatedly invoking the danger that democracy posed to the economy, the rule of law and individual liberty, in a formula intentionally open-ended – so as to apply to Britain. ‘What has happened in Chile under Sr. Allende’s government suggests that, in the long term, political democracy is inconceivable without economic pluralism’, he wrote in 1972.101 A year later he added, ‘the Allende government’s programme of nationalisation cannot be regarded as “reform” in an economic sense, since it did not result in better management, higher productivity, the introduction of new technology, or imaginative new investment.’102 By 1975, in The Collapse of Democracy, Moss was explicit about the lessons Chile held for Britain (‘a singularly depressing example of the abuse of democratic institutions by the enemies of a free society’), whose decay could only be halted by ‘reasserting the rule of law in industrial relations’, stiffening the backbones of government and business, where ‘every major economic decision was being taken in fear of the trade unions’, and shrinking the state, except ‘in the realm of defence’. This was published by the National Association for Freedom (NAFF), which Moss helped to found, and then talked up in the Economist.103 Given the creeping ‘Sovietization of Britain’ – Moss had a good word for authoritarianism: ‘in the event a democratic society breaks down irretrievably’, it was preferable to ‘totalitarian rule’.104 Three years later, Thatcher brought this Chilean baggage with her to 10 Downing Street: not just Moss and Crozier, but Hayek and Friedman, the economists invited to clean up Allende’s ‘Marxist experiment’. Once in office, one historian has remarked, Thatcher quickly sidelined Moss and her other ‘eccentric’ advisers on ‘counter-subversion’.105 But this mischaracterizes their impact. What they had done in the Economist and elsewhere was to heighten ideological tensions through constant intimations of disaster and campaigns of misinformation, creating a climate in which authoritarian solutions to disarm the left became respectable. Liberals, they hammered home, had to accept the need for a political reckoning with the trade unions and the Soviets, in a combined assault at home and abroad. Less significant than their missed chance to exercise power was their powerful justification of the neoliberal turn up to 1979.
Divided Counsels: Newsroom Shakeouts
While Brian Beedham exercised near-complete control at the foreign desk, beyond it Economist journalists were divided about the right response to the crises of the 1970s. In this, the newsroom reflected a larger breakdown of consensus, helping to explain the strange hesitance of tone in the political endorsements of Thatcher and Reagan on their first outings: neither the foreign editor nor Andrew Knight could exercise full control on these questions, and other voices made themselves heard. Editors like Edmund Fawcett, Johnny Grimond and Barbara Smith all clashed with Knight, who in turn recalled a series of brave stands against them. ‘I can remember horrid weeks of isolation over Angola, as an early disbelie
ver in Carter; in the first Reagan election; over the Falklands and Grenada … on all of which I can now feel quite smugly comfortable that I was right not to give into the first wave of lemmings declaring the world should jump over the precipice in an orgy of despairing condemnation.’106 Though ‘far more suspicious of Thatcher than Reagan’, Knight regretted the ambivalent notes he was forced to insert in his praise of the latter. ‘I was lobbied so hard by Grimond and Fawcett, I had to hedge’. Barbara Smith, leading the Washington bureau, also pushed back, and Edmund Fawcett, the correspondent there, remembered, ‘I called Knight up and argued with him – Why was the Economist endorsing a candidate in a foreign election? – but I lost.’ Their efforts explain the question mark appended to what was meant to be a bold cover declaration: ‘Anyone but Carter?’
Knight need not have worried. Reagan invited him to dinner promptly after the election. ‘Reagan wanted to thank me. He thought the endorsement of this respectable English publication, which came at a difficult moment in the campaign, had been a big deal in getting him elected.’ All the guests at this memorable repast, including the conservative columnist George Will and Carter’s outgoing trade representative, Robert Strauss, were invited to ask a question. Knight held his until dessert.107 ‘Whereas I know we have to take on the Soviets, and show them that Vietnam hasn’t diminished us, and what to do on the economy, reducing government’, Knight remembered Reagan saying in reply to his question on Israel-Palestine, ‘I don’t know what to do on the Middle East because I think they’re both right.’ Knight commented, ‘This impressed me tremendously.’ Edmund Fawcett and his Economist colleague Tony Thomas – unable to insert more than a few caveats in the endorsement of Reagan, and unconvinced by his declarations of impartiality on Israel-Palestine – published The American Condition in 1980, expanding on their doubtful impressions of ‘middle-aged America’ outside the paper.108
Back in London, the newsroom saw similar shakeouts. Dick Leonard, assistant editor, was a link to the liberal, free-trade socialists of the 1930s, when the likes of Douglas Jay wrote for the paper; indeed, as a Labour MP from 1970–74 and personal private secretary to Anthony Crosland (author of The Future of Socialism, the revisionist classic), Leonard was a lineal descendent of this tradition on the right of Labour. Knight offered Leonard the Britain section of the paper in 1974 after a boundary redrawing cost him his parliamentary seat – a bridge to the Wilson government formed that year. Leonard was unsure if he could take a job at a publication that had been so close to Edward Heath and the Tories under Burnet. ‘Nonsense! I’m going to bring it back to the centre’, Knight told him. ‘But after two or three years’, Leonard recalled, ‘the paper drifted insidiously to the right. Knight got closer and closer to Thatcher, and I found myself writing fewer and fewer political leaders’. One was a signed tribute to Anthony Crosland, who died suddenly in 1977, ‘the first time people found out I worked there’.109 Pro-European, Leonard was then eased into the Brussels bureau; a section downsized two years after he left it in 1985, with no full-time correspondent for seven years, Beedham insisting on priority for America. Leonard’s eventual replacement as editor of the Britain section captures the rightward shift of the Economist in these years.
Andrew Neil, a Burnet hire in 1973, played several roles at the Economist at the start – reporting on the Troubles in Northern Ireland, the House of Commons, and on the trade unions. He also appeared on TV, where his truculence and distinctive haircut earned him the nickname ‘Brillo’ from the satirical weekly Private Eye. In 1979 Knight sent him to the US, a three-year sojourn that changed him profoundly. ‘I revelled in its dynamic, can-do culture, the ease with which new technology was introduced and exploited and the free and fast social mobility between the classes.’110 He grew close to Irwin Stelzer, a free-market economist and consultant, who argued deregulation was the wave of the future – first in airlines, then being divvied up under Carter. No fan of Thatcher when he left – ‘I had not voted for her: she had yet to discover her radical-right market economics (as had I)’ and seemed ‘an unsavoury amalgam of bourgeois prejudices and simplistic monetarism from the reactionary right’ – all had changed on his return. As Britain editor, ‘I was now seeing our ills through a strong free-market prism’, urging ‘privatization and deregulation and exposés of expensive and debilitating state intervention’. Rupert Murdoch was impressed and lured him away to edit the Sunday Times in 1983.111 A pushy, ambitious man, Neil was a significant voice, whose departure says a lot about the paper when he left. He titled his final report on the TUC conference in Blackpool, ‘The Unions Don’t Know Where They Go Now – Except Down’. Predicting that unionized employment in Britain, still at roughly 50 per cent, would follow the lead of the US – where it had fallen from 34 per cent in 1965 to less than 20 – he quipped that nobody had phoned in a bomb threat at this year’s conference: ‘now that’s a real sign of lost status’.112 Knight solemnly announced his departure to a packed meeting. ‘We are losing Neil.’ ‘Everyone applauded’, recalled one Economist editor of the relief that swept the room. ‘Neil thought we were congratulating him!’
Notwithstanding a degree of personal loathing for Neil, the Economist as a whole was moving in his direction. By 1982, the paper was swept up in patriotic euphoria over the Falklands War, in which ‘Britain has said something to itself’, the ‘free world’ and ‘the old men of the Kremlin’. Long in need of ‘its own sort of cultural revolution’, Britain had dispelled the ‘malaise’ of the post–Second World War and post-Vietnam generations that saw ‘military values and men as out-of-date jokes’. ‘A younger generation’ had witnessed ‘an affair of principle’ and soldiers ‘a bit more handsome and heroic than Mr. David Bowie’.113 Such sentiments helped to turn a possible election defeat into a second, larger victory for Thatcher in 1983, which had been uncertain before the war with Argentina, in the wake of a severe recession provoked by her government’s ratcheting up of interest rates to a historic high. After four years, inflation fell back to roughly 4 per cent, but at a terrible cost, eviscerating manufacturing in the north of England and Scotland, and raising unemployment above 3 million.114 ‘This newspaper, which had difficulty in coming down narrowly against Mr. Callaghan’s government four years ago, has no hesitation in condemning Labour today’, it wrote. ‘As to who should win this election, we have no doubt: we favour the return of Mrs. Thatcher to Downing Street.’ Her manner was not always genial, but her policies were realistic and if there was a strain of ‘economic masochism’ in her, ‘she is buying the chance of future tolerance in British society by forcing it to endure her economic intolerance today.’115
If some doubters remained, they had less and less influence over editorial policy. Emma Duncan, later deputy editor, recalled that Neil almost got her fired when she started at the paper in the early 1980s – ‘furious’ that she had failed to produce a piece that ‘said that every truck and every car in the British rail network ought to be sold off in one go’. Remarkably, Seumas Milne – much later to serve as chief of staff for Jeremy Corbyn – was on staff at the same time. He recalled editorial meetings between 1981 and 1984 in which Beedham expressed ‘suspicion of monetarism, neo-liberalism and the like’ because he ‘wanted the working class to stay strong and contented, if only to fight the Cold War’.
But the most vocal critic of Thatcher at editorial meetings was Simon Jenkins, hired by Knight as the Economist’s political editor in 1979 after the Evening Standard fired him. Reliably Conservative up to then, Jenkins was one of several editors to back the alliance between a new Social Democratic Party – breakaway challenger to Labour on the centre left – and the Liberals, as the choice most consistent with Economist tradition. For this reason, the Economist ran a small article on ‘anti-Tory tactical voting’, designed to benefit the alliance.116 Jenkins also criticized Thatcher’s decision to fight Argentina over a ‘few rocks’ in the South Atlantic, which Britain had been preparing to return, as a foolish act of imperialism. Knight ke
pt both criticisms from this ‘brilliant, eccentric journalist’ out of lead articles, however, while allowing him to fire shots elsewhere. For the 1982 Christmas issue, Jenkins wrote a mock Shakespearean history play in which Thatcher storms against her ministers and allies – telling her to ‘forget, forgive, conclude and be agreed’ – as spineless.117 When Jenkins’s book with Max Hastings, The Battle for the Falklands, appeared the next year, Knight reviewed it himself in the Economist. ‘The Falkland Islands are not about “colonial Britain” – despite what Mr Jenkins, Mr Hastings and others keep saying. There are no Red, Mayan, Aztec or sub-continental Indian masses being subjugated, no African tribes, no imported slave races, no debauched Polynesians or Aborigines.’ Rather, in a moral tone borrowed from Thatcher, it was ‘a dispute over international principle in which right vanquished wrong’.118
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