Truss's Fag-end Thatcherism Should Learn from the 1980s Soviet Union

Geoffrey Hosking


Sergei Wing

| 6 mins read

‘Freedom begins with Tax Cuts’, said the Daily Mail on 21 Sept, implying that true freedom is only possible if one makes a minimum contribution to society’s collective facilities, to schools, health centres, care homes, kindergartens and so on. Liz Truss, for whom the Daily Mail is a spokesman, is keen to return ‘back to Thatcher’, to the pure, unadulterated doctrine of the free market. Thatcher was a more pragmatic politician than she is usually given credited for, but it is true she believed that lower taxes would generate higher investment rates and therefore a more productive economy whose benefits would ‘trickle down’ to most of the population. That theory has been amply refuted by subsequent experience. Investment rates did not climb, and by now have reached an unusually low level in the UK compared with most other European countries. Productivity did not improve, but declined compared with the thirty years before the 1980s. Wealth did not ‘trickle down’, but rather trickled up: the already wealthy captured ever larger proportions of the economy, while the incomes of the poorer – and the social benefits available to them - were squeezed further.

If Truss sticks to her declared policy, the result will probably be an economic upheaval such as we did not experience in Britain even during the financial crisis of 2007-8. It might include the collapse of many businesses, soaring inflation, a run on the pound and/or a general strike. We can see signs of such developments in embryo right now. Rishi Sunak warned of some of them during the endless inner-Tory debates of the summer. What will Liz Truss do then?

Lessons from the Soviet Union

There is an unexpected precedent: the Soviet Union from 1982-91, under two of its last three General Secretaries of the Communist Party, Iurii Andropov and Mikhail Gorbachev (one can ignore the brief tenure of Konstantin Chernenko). With Truss’s accession the Conservatives have been in power for twelve years. When Andropov became General Secretary, the Communists had been in power for 65, so the parallel is not exact. But in both cases the initial diagnosis of the incoming leaders was implicitly pretty damning for their predecessors. Andropov and Gorbachev, were convinced that the Soviet Union had become grossly under-productive, that its economy was failing to provide the wherewithal to sustain the great power status both its leaders and its population had come to expect. In other words, without saying so, they were alleging that their predecessors had failed.

Their solution: back to Lenin, to the pure unadulterated source of Soviet socialism! Reinforce discipline throughout society. Evoke the memory of Alexei Stakhanov, 1930s breaker of production records: ‘acceleration’ was Gorbachev’s watchword during his first year in power. Uproot corruption. Ensure that people were at work when they were supposed to be, and not acting out the tacit social contract: ‘They pretend to pay us and we pretend to work’. Cut out drunkenness by severely limiting the sale of alcohol. (Gorbachev at one stage was known as ‘Mineral Secretary’ after the substitute he enforced for vodka at state receptions.)

A year into Gorbachev’s tenure, it became clear that enhanced discipline was not working. Industrial and agricultural production showed no signs of increasing. Work discipline remained as slack as ever. Pollution continued to poison air and water in too many places. The vodka ban had simply encouraged the illegal distillation of potentially lethal ‘moonshine’. And then came Chernobyl, the nuclear explosion that devastated parts of Belorussia and Ukraine.

Gorbachev perceived, rightly, that he was being obstructed by higher and medium-level party-state officials who had become accustomed to a well-paid cushy life and were not minded to have it disrupted. He decided that they could only be overcome by glasnost’ (openness) and perestroika (political reform). The media began to publish franker news and livelier discussions, including about the Stalinist past. New enterprises (some of them previously operating illegally) cornered areas of the economy and imposed higher prices on consumers. New social movements arose and some of them eventually became alternative political parties. Non-Russian national sentiment became a powerful political player. Ultimately, of course, the result was the disintegration of the Soviet Union.

Fag-end Thatcherism

This is what may happen when an ideology passes its use-by date. Radical free market theory is an ideology as much as Marxism-Leninism: it is woven from out-of-context fragments of Adam Smith. I am not predicting the same disaster for the United Kingdom – though that is certainly one possible scenario. What I am saying is that much of Britain’s future depends on what Truss and her government decide to do when it turns out that her fag-end Thatcherism is leading to disaster.

Truss is convinced that a shift to deregulation and free markets will solve all of the UK’s desperately serious economic woes. She recognises that the UK is a low-wage, low productivity economy but fails to realise that we are in this position after twelve years of deregulatory Tory rule and forty years of free market doctrine. Free markets have not served Britain well. Truss has so far provided no arguments or evidence that even free-er markets will address the low-wage, low productivity problems Britain faces. Tax cuts and massive borrowing in an inflationary crisis are a high-risk leap in the dark. Lord knows how it will all end but Gorbachev’s experience offers a cautionary comparison.

Volume 95, Issue 1

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Volume 95, Issue 1

Includes a collection on the Future of Public Service Broadcasting, edited by Suzanne Franks and Jean Seaton. This features articles such as 'The Governance of the BBC' by Diane Coyle; 'A Public Service Internet - Reclaiming the Public Service Mission' by Helen Jay; and 'BBC Funding: Much Ado about the Cost of a Coffee a Week' by Patrick Barwise. There are a wide range of other articles including 'Back to the Stone Age: Europe's Mainstream Right and Climate Change’ by Mitya Pearson and 'Labour, the Unions and Proportional Representation' by Cameron Rhys Herbert. Finally, there is a selection of book reviews such as Lyndsey Jenkins's review of Fighting For Life: The Twelve Battles that Made Our NHS and the Struggle for Its Future by Isabel Hardman, and Victoria Brittain's review of Three Worlds, Memoirs of an Arab-Jew by Avi Shlaim.

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