Margaret Thatcher Was a Privatization Pioneer, and This Is the Story of How Her Agenda Did Nothing But Make Life Worse for Millions of People
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In the process of privatizing the large public enterprises, Mrs. Thatcher seized labor’s pension funds, wiping out company liability for the pensions saved up by their employees. It took several years for the European Community to rule her act illegal. The money belonged to the workers, not to the buyers of these companies.
But just who were these buyers? Where did workers fit into the picture, via their personal shareholdings and those of their pension funds?
“Popular” or “Peoples’ Capitalism”
Mrs. Thatcher recognized that an anti-union policy by itself would not suffice; she had to give workers something in return. What was needed was to cast monetarism’s anti-labor philosophy in a more positive rhetoric. Her solution was “popular capitalism,” an elaboration of what Anthony Eden and other earlier Conservatives had called a property-owning democracy.
The idea of getting workers to think of themselves as property owners had long been voiced by Conservative politicians. It began with the idea of them owning their own homes, bought on mortgage. Mrs. Thatcher started the process with Council house sales. No less than £24 billion were sold off, larger than any single other public industry. But the privatization that really inaugurated “popular capitalism” was the sale of British Telephone in November 1984. The idea was nothing less than to win workers over to the cause of capitalism as an ideal, by turning them into stockholders in the economy’s commanding heights. This, she hoped, would shift their faith away from socialism in the future to capitalism in the present. “Privatization not only widens share ownership (desirable in itself),” claimed Lawson, “but increases employee share ownership, which previous privatizations show leads to further improved performance.” More politically to the point, giving property to citizens would create “a society with an inbuilt resistance to revolutionary change.”
Lawson hoped that workers would value their shareholdings more than they would resent their falling real wages. In any event, he added, “I give away few political secrets when I say that Governments are likely to be more concerned about the prospect of alienating a mass of individual shareholders” than they would be about offending a few dozen Conservative investment managers. Future Labour governments thus would have to hesitate before taking steps that would threaten the value of shares held by large numbers of workers.
Every attempt therefore was made to spread share ownership as widely as possible, for “the more widely the shares were spread, the more people had a personal stake in privatization, and were thus unlikely to support a Labour Party committed to renationalization. And if this forced Labour to abandon its commitment to renationalization, so much the better. For our objective was, so far as practically possible, to make the transfer of these businesses irreversible.” However, another Conservative politician has assured me that the small private investor “was never more than icing on the political cake.” In the end, it was the large campaign contributors who mattered after all, for their funding enabled the party to buy TV time and media space to attack Labour in the usual ways, which had little to do with the economic self-interest of workers as such.
Mrs. Thatcher’s ideal was for every employee and customer of British Gas, British Telephone and other major utilities to buy into them and thereby to acquire a stake in their efficient management. Workers who were not deemed redundant would find their wages supplemented by dividends (and capital gains) from the stocks they were able to buy with their savings. In good capitalist form they would become owners of the means of production, at least as minority shareholders. This prospect was supposed to gain popular support for breaking the trade unions, dismantling government protection of labor and withdrawing subsidies from public services. Politics became an exercize in the degree to which the perspective of labor’s economic self-interest could be foreshortened and sidetracked.