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Stopping the Thatcher-Reagan consensus

AlfieJ

left labour poster on here
Ultimately you could drag our postwar consensus under moderate Tory or Labour leaders but the momentum towards monetarism had already started both under Heath and Callaghan in particular. The shift was already clearly underway and a victory for say Labour in 78 could well have just led to a Labour monatarism now too dissimilar to what was seen in New Zealand (Healeynomics maybe?). Ideological blinkers going I know but the best way you could get the neoliberal consensus to not happen in Britain, at least for a long time, is if the Alternative Economic Stratgey happens
 

Japhy

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If Reagan developed early-onset dementia and Thatcher never got the momentum to win in 1975, how long would the "soft left" post-war consensus last?
Not much longer, the late 1970s economic crunch was on some level inevitable as West Germany and Japan started reaching their previous positions in the world Economy and emerging economies found their footing.

If there's no Reagan, Gerald Ford and Jimmy Carter are in prime positions to pull the plug in the US, as are countless others. I'm less well read on the British Conservative Party of the times but I am under the impression that Margaret wasn't the only Anti-Heath figure, just the one who rose up at the right time.
 
If there's no Reagan, Gerald Ford and Jimmy Carter are in prime positions to pull the plug in the US, as are countless others. I'm less well read on the British Conservative Party of the times but I am under the impression that Margaret wasn't the only Anti-Heath figure, just the one who rose up at the right time.
Keith Joseph was on maneuvers, but thankfully he shot himself in the foot.
 

AlfieJ

left labour poster on here
Keith Joseph was on maneuvers, but thankfully he shot himself in the foot.
Keith Joseph was meant to be the candidate, being far more ideologically rigorous than Thatcher.

He also supported constitutional and electoral reform as he did t actually believe Tories could win again under FPTP (1974 showed them actually third among first time voters).

So even if someone who wasn’t Thatcher managed to get in seeing some form of electoral reform happen would be interesting and certainly shift economic policy to a more centrist position in the 80s
 

aurinoko

This is how I win
I wonder what effect full implementation of AES in Britain and common program/ 110 propositions in France during late 70s to 80s would have brought about, especially with the last hurrah of the New Deal Democrats in the early 1980s in the United States. Would the United States under let's say, Mondale administration w/ aforementioned divergence decisively change the post-war economic consensus towards the left?
 

Earling

Well-known member
At the danger of showing my ideological blinkers, I don't see how you get there beyond a magic wand that makes everything better. I.e. lower inflation, greater productivity, happier management-worker-government relations.

Giving a detailed breakdown on what AES is likely to do is difficult - but in brief.
1. The pound will fall considerably. Its very hard to see how this doesn't happen.
2. To some degree this will decrease imports and improve exports.
3. This will be further impacted by protectionist tariff barriers, which will further decrease imports. Reactions from other countries towards Britain (and a potential cascade result globally if other countries emulate the same policies) will see trade decline - and any uptick in exports extinguished.
4. This loss of trade - especially if mirrored across the globe - is likely to in an uptick in unemployment. The government can spend money to try and bring about full employment but,
5. This is likely to put the government budget under pressure, as revenues are falling and expenditure is increasing. As the government will find it increasingly difficult to borrow money (see: IMF crisis), this will mean raising taxes or cutting expenditure. Cutting expenditure means giving up on the plan. Raising taxes will result in a further reduction in economic activity and higher unemployment.
6. Trade Union activity/worker democracy is likely to increase the spiralling inflation experienced throughout the 1970s as pay deals chase a worsening economy. If you pay people more but there is no commensurate increase in goods or services the existing goods and services will just increase in price. As in the 1970s middle class & pensioner savings are eroded while workers are not seeing a material increase in living standards.
7. The government will have to face the music. Its almost impossible they win the next election - and almost anyone will move to undo what has been done. Financial necessity - which is now even more acute - will result in Thatcherite policies.
 

Roger II

Well-known member
I think to a very limited extent the protectionism you describe might not have been such a bad thing in the US as a temporary measure; it wouldn't have been very good long-term but it might have slowed the collapse of the Rust Belt long enough that it could switch to the service/tertiary sector or more specialized manufacturing more easily instead of having a whole gap where everything's just collapsed. Ideally you'd have more Pittsburghs and Chicagos and fewer Detroits and Garys. But that assumes very modest protectionist measures, and I'm not sure the AES would have been so modest.
 

Earling

Well-known member
The problem is I can't think of many instances where protectionist measures have encouraged innovation - or even rationalisation.
I think its because usually - in the moment - all businesses appear in crisis. Typically all resources are earmarked for something, so its only later
that you realise you could have done something in a better way - or that resources were not as tight as they would later become.

In the 1970s and 80s most economic thinkers were of the mind that a services/tertiary model for a major economy was essentially impossible. You could have an economy based around producing steel and cars - you couldn't have one around banking and cutting people's hair. As such few were going to make the transition unless forced.
 

Heat

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The shift was already clearly underway and a victory for say Labour in 78 could well have just led to a Labour monatarism now too dissimilar to what was seen in New Zealand (Healeynomics maybe?).
I'm sure @Uhura's Mazda can explain this better, but I really don't think there was anyone prominent in the 1970s Labour Party who would have been willing and able to go down the same path as New Zealand. What's more likely is an Australian scenario, where you still see a shift towards monetarism and deregulation while still trying to save the furniture of the welfare state instead of engaging in the sort of ideologically driven slash-and-burn Roger Douglas did.
 

Roger II

Well-known member
Yea, I'm not saying to speed it up or intentionally transition so much as "to provide a bit of breathing room as the transition happens". Sort of like with automation today, where it's still going to be a messy transition, but people see it coming down the pike as an issue and there's an active conversation about how to best deal with it. As opposed to what it seems like happened in the 70s/80s with the shift away from manufacturing being sudden and unexpected. Is that at all logical?
 

Earling

Well-known member
Yea, I'm not saying to speed it up or intentionally transition so much as "to provide a bit of breathing room as the transition happens". Sort of like with automation today, where it's still going to be a messy transition, but people see it coming down the pike as an issue and there's an active conversation about how to best deal with it. As opposed to what it seems like happened in the 70s/80s with the shift away from manufacturing being sudden and unexpected. Is that at all logical?
Well - I think that's a reasonable example (even though I think fears of automation are dramatically exaggerated).
Its one thing to prophesise the end of industry but its quite another to say what the millions of unemployed people will do instead. Its far easier to lean on government to implement tariffs so your sector can carry on - even if its at the expense of everyone else.
 

Roger II

Well-known member
Right, yes-I think this is why people are talking up UBI(the sense of "WE NEED TO DO SOMETHING" coupled with a lack of appetite for tariffs for obvious reasons). I do think that per Heat(and you'll probably disagree) some kind of transitional measure and taking a more limited approach to Post-Keynsian reforms(ie. making structural adjustments while "saving the furniture" and not burning everything down ideologically).
 
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