Philips, Deborah, and Garry Whannel. "Neoliberalism and New Labour: From Thatcher to Blair." The Trojan Horse: The Growth of Commercial Sponsorship. New York: Bloomsbury Academic, 2013. 67–96. Bloomsbury Collections. Web. 28 Sep. 2021. <http:// dx.doi.org/10.5040/9781472545145.ch-004>. Downloaded from Bloomsbury Collections, www.bloomsburycollections.com, 28 September 2021, 02:25 UTC. Copyright © 2013 Deborah Philips and Garry Whannel 2013. You may share this work for non- commercial purposes only, provided you give attribution to the copyright holder and the publisher, and provide a link to the Creative Commons licence. 4 Neoliberalism and New Labour: From Thatcher to Blair The dominant political leaders of the last 50 years, Margaret Thatcher and Tony Blair, may seem like polar opposites but their similarities are striking. Strong leaders, with transformational aspirations, they each introduced policies which significantly increased the involvement of the private sector in public provision. In particular, Thatcher’s Compulsory Competitive Tendering (CCT) and Blair’s promoting of the Private Finance Initiative (PFI) established bases for this expansion of private sector provision into public services. The growth of commercial sponsorship served to associate private firms with benevolence rather than with the rapacious search for profit and to render the presence of private firms in the context of the public sector safe and familiar. The election of the 1979 Conservative Government led by Margaret Thatcher is now widely held to be a watershed in British politics, marking the demise of Butskellism and the emergent hegemony of neoliberalism. While the Labour victory of 1997 was widely celebrated by supporters marking the end of 18 years of Tory rule, it is now very clear that, despite many worthwhile social reforms and innovations, the overarching trajectory of policy and philosophy did not depart radically from the directions established under Thatcher. Under Blair, even more so than under Thatcher, new initiatives such as PFI encouraged the growth of private involvement in public provision. Three key elements contributed to the emergence of Thatcherism. The first was the failure of both Labour under Wilson and the Conservatives under Heath to make the Butskellite scenario (a healthy mixed economy, an expanded state and a comprehensive welfare system) work. The second element was that the level of contestation and struggle in society became more vigorous and more visible (see Hall et al. 1978). The third was that neoliberalism shaped by the writing of Friedman and Hayek, and advocating a substantial reduction in the scope of the state, was winning adherents and was being translated into a 68 The Trojan Horse: The Growth of Commercial Sponsorship practical politics and a potent ideological force in Britain and the United States. The Selsdon Group, brought together by Edward Heath in 1970, marked the first emergence of a significant free market pressure group, and by the mid-1970s, neo-liberal philosophy and monetarist economics found its organizational form as Thatcher rose to become leader of the Conservative Party. Towards the end of the 1960s, the long-term structural weaknesses of the British economy began to become apparent as the unstable cycle of boom and recession was to prove ultimately unmanageable either by Wilson’s Labour or Heath’s Conservative governments. During the 1970s, Heath’s policies proved unable to make an impact on the United Kingdom’s structural economic problems. Struggling with the onset of both stagnation and inflation, dubbed ‘stagflation’, and damaged further by the OPEC (Oil Petroleum Exporting Countries)-inspired oil price rises of 1973, the Heath government of 1970–74 failed in the end to win decisive public support for a showdown with the trade unions. Within 2 years of taking office in 1974, growing economic problems forced the Labour government to go to the International Monetary Fund (IMF), who imposed a rigid monetarist economic framework that presaged the fuller implementation of this strategy after the election to power of the Conservatives under Margaret Thatcher in 1979.1 While the 1979 election of the Conservative government led by Margaret Thatcher serves as a convenient watershed, the transition from Butskellism to Thatcherism has to be regarded as a process that began in the 1960s, unravelling the contradictions inherent in Labour’s managerialist vision of the expanded state. The Labour Party in opposition had been, for almost the entire twentieth century, the primary focus of the aspirations of ordinary working people and of organized labour. The Labour Party in power, unwilling or unable to introduce any profound economic restructuring, finds itself in the position of having to discipline and limit those aspirations (see Hall 1983, Hall et al. 1978). Such an unstable equilibrium is always precarious, and it is striking that, before Blair, Labour had never been able to string together two full terms in office. It was during the 1970s that the discursive political elements that were to shape the Thatcher government began to coalesce and gain credence. For Thatcher, monetarist economics were to be given full rein – the medicine would hurt, but it would be ‘good for us’. Unemployment would be allowed to rise, ‘squeezing inflation from the system’. For individuals, the safety net of the state would be diminished, and for industry, ‘lame ducks’ would no longer be ‘propped up’. Enterprise would be rewarded and an enterprise culture fostered. There was, Milton Friedman asserted, no such thing as a free lunch; indeed, Neoliberalism and New Labour: From Thatcher to Blair 69 in the later words of the anti-hero of the film Wall Street (1987), lunch was for wimps. In such a climate, it was easy to see how requests from the arts world for greater state funding might fall on deaf ears, while the growth of commercial sponsorship would be seen as a solution to arts funding. Disillusion with Labour during the 1970s fostered a more radical challenge from a stronger and more confident left. A campaign for Labour Party Democracy began a fight to establish the right of members to de-select candidates and MPs and to remove the power of the Parliamentary Labour Party (PLP) to select the leader.2 Outside the Labour Party, various modes of struggle were highly visible – union struggles, women’s movement campaigns and the anti-Nazi league. There was a growth of support for revolutionary socialist groups, and of public interest in left alternatives, in part generated by the debate within the British Communist Party over the British Road to Socialism.3 This ‘moment’ peaked during the so-called ‘winter of discontent’, when a combination of Labour Party ineptitude, trade union anger, popular press venom and tactical acumen by the Conservative Party laid the ground for the victory of Margaret Thatcher in 1979. Thatcher was able to portray Britain as being in a bad state, beset with strikes, with the piles of rat-infested garbage in Leicester Square providing a potent symbol. On entering Number 10 Downing Street she proclaimed ‘where there is discord, may we bring harmony’. Seldom has a public pronouncement proved quite so inaccurate. During this erosion of the Butskellite hegemony, a new political configuration was gathering strength, fuelled by the economic theories of Friedman and Hayek and translated to the British context partly through the Selsdon Group, and through the austere and monkish brain of Keith Joseph. Arguably, the declining power of concepts of public service and community has its beginnings here. In the last 30 years, neoliberalism has become a dominant ideological and economic force. It has won support within elements of the political classes in America, Europe and Asia. Through the power of the United States and institutions such as the World Bank, the IMF and GATT, the neo-liberal agenda has been forced on countries around the world which have needed financial support (see Klein 2007).4 The election of the Thatcher Government in 1979 and the election of Ronald Reagan as president of the United States in 1980 marked a great leap forward in the struggle of neoliberalism for hegemony. Thirty years on from this moment, neoliberal economics and its associated political strategies have indeed become hegemonic and, through the power of the IMF, GATT and the World Bank, have been imposed around the world: on any country that falls into debt and requires support, on developing countries who need aid and on the Eastern European countries who were part of the Soviet bloc 70 The Trojan Horse: The Growth of Commercial Sponsorship until 1992. The current Euro crisis constitutes a current example – Greece, Cyprus and Spain are subject to stringent regulations and conditions in order to qualify for support. It is pertinent to examine the economic analyses of two key figures, Friedman and Hayek, who were influences on Thatcher and ‘Reaganomics’ and whose thinking has shaped contemporary academic economics. Milton Friedman (1912–2006) was born in Brooklyn to Jewish immigrants from Austria-Hungary. He spent the bulk of his professional life at the University of Chicago (1946–77), where he played a formative role in the development of neo-liberalism and in shaping the intellectual community which became known as the Chicago School of Economics. Philosophically, neoliberalism depends on a denial of the shared communal and interdependent interests of humanity. In Capitalism and Freedom (1962), Friedman asserts