Liberation Economics

Hunched in the shadow of his esteemed predecessor last month, British Prime Minister David Cameron boldly asserted that “we are all Thatcherites now”. Far from a political battle cry as some commentators had speculated, the somewhat disregarded importance of the statement actually lay in its ontological development. Though the phrase had previously been developed by former Labour party secretary of state Lord Mandelson, its modern development actually found its roots in one of Thatcher's own ideological parents; the Nobel Prize winning economist, Milton Friedman.

In 1965, Time Magazine had attributed Friedman to the quote, “We are all Keynesians now”. Playing on Harcourt's dictum in 1887 that the Labourer's allotment bill had introduced to first brand of universal socialism, Friedman reacted against President Nixon's decision to withdraw from the Gold Standard. Nixon's move broke the Bretton Woods system established in 1944, suspending the US Dollar's convertibility into gold. Yet rather than a run on the currency, both Nixon and and then Treasury secretary John Conally justified the change through a peculiar language of liberation. Addressing the public, Nixon claimed that the reform would free Americans from the turmoil of consecutive financial crises. By America taking the lead in monetary exchange, it would provide the foundations for a stable, easily controllable system of financial relations across the world.

Yet far from ushering a new model of liberty, Friedman saw this form of government intervention as a form of entrapment. Instead, he preached the gospel of the Chicago School of Economics- which posited a rational, 'value-free' model of economics as a pure science. Channelled through Fleet Street and the BBC,  Friedman's construction of liberty precipitated on an abstract, linear understanding of 'choice' ; Though it was certainly true that economies could be 'controlled', its mechanics would derive from collective consumer actions, in the form of Market Forces. Government had no place in becoming ideological alchemists.

More interesting, was that this philosophy had been moulded in the century of ideology. The shaping of 'positivist economics', with its supposedly value-free, subjectivist assertions, physically manifested into anything but. The emergence of individualistic ideas into the public sphere, such as those of Fredrich Hayek and John Nash allowed for the development of a new type of policy making- one which Mrs. Thatcher adopted and eventually built her legacy on. Upon winning the 1979 general election, Thatcher echoed Friedman in perpetuating the importance of Economic liberty. While previous Labour and Conservative governments had perceived the economy as a means of distributing resources and organising society, she would set the animal spirits free; market forces would determine the the outcomes of social problems, ultimately freeing individuals of government interference.

This paradigm shift has had its consequences; since Thatcher, the gap between the rich and the poor has widened dramatically, and for those in the 'middle', living conditions and future prospects are bleaker than ever before. Such people would be hard pressed to identify themselves as 'Thatcherites'. At the same time, our politics has been paralysed in this Friedman inspired rhetoric, with even the Labour party making a redundant case for state interventions. Indeed, despite its social consequences, the positivist economic model has become embedded into the ideological fabric of modern liberal discourse, with the continued argument that market forces are the most 'efficient'  method for distributing social justice.

For the most part, we are not 'Thatcherites'. But what is seemingly clear, is that we are all trapped by a form of Thatcherism which won't be dying any time soon.