Postwar Conservatism, A Transnational Investigation by Clarisse Berthezène & Jean-Christian Vinel

Author:Clarisse Berthezène & Jean-Christian Vinel
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Conclusion

Whatever her ambition, Thatcher did not roll back the state. In 1978, the final full year of the Labour government, total tax revenue as a percentage of GDP was 32.7 per cent before rising to a peak of 38.5 per cent in 1982. By the time Thatcher left office in 1990, total taxation had fallen to 35.5 per cent of GDP, still above the level when she came to power. 91 Unlike in the United States, taxes were not being reduced in order to starve the state—indeed, there was a windfall of additional revenue from North Sea oil and the financial service sector. What her government did achieve was a shift in the structure of taxation that was intended to reconstitute British society. There was a move away from long-term, prudential, institutional investment to a stress on personal control over assets, on choice and individualism, and the use of the market to allocate resources more efficiently. There was an attempt to increase profitability and to encourage enterprise, moving away from the low-effort bargain by means of reform of the labor market as well as the tax system.

The shift in public finances cannot simply be explained as a triumph of neo-liberalism, for it reflected a number of other strands of thinking. Economists and officials moved away from utilitarian notions of the diminishing marginal utility of income that had held sway since the end of the nineteenth century with the emergence of optimal tax theory and a greater concern for incentives. These views were not necessarily neo-liberal but reflected a wider sense of set of concerns. And Thatcher’s policies also reflected her own religious formation—a shift from paternalistic, state-centered policies to self-reliance in families and communities in order to achieve moral rejuvenation that different from simple individualism. 92 The changes did mean that incentives at the top were given priority over incentives at the bottom. In opposition in the 1960s, the Conservatives developed the notion of an opportunity state that would integrate members of society by cutting taxes at the top and offering benefits to the poor in compensation for indirect taxes, leading to a more dynamic society that would also be fair. In office in 1970–1974, this vision was already fading. Increasingly, the focus was on an enterprise society in which income and wealth inequality became more extreme and policies more divisive. It was a far cry from the social-democratic vision of Meade as the good fortune of the fortunate was reinforced rather than mitigated.

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