Lecture 6 - Thatcherism and its impact on the British Society

Question 1

Explain the UK’s economic conditions before Thatcher

Answer 1

The UK went through economic struggles in the 1970s such as stagflation, high unemployment and inefficiencies in state-owned industries

Question 2

How did Thatcher improve the UK economy?

Answer 2

Thatcher imposed an ideological shift from Keynesian demand management to a supply-side, free-market approach

Question 3

What were the key economic policies associated with Margaret Thatcher?

Answer 3

Key economic policies associated with Margaret Thatcher: Monetarism, Deregulation, privatization, reduction of state welfare and government spending, emphasis on individualism and self-reliance and Trade union reform

Question 4

Define Monetarism and explain it as an economic policy

Answer 4

• Monetarism is the control of the money supply to manage inflation, influenced by Milton Friedman’s theories
• The outcome of this is that output is determined by a ‘natural’ rate, reducing the government’s role in demand management
• As a result, the reduction of inflation is prioritized leading to significant interest rate hikes
• The role of money supply and controlling inflation is the main economic goal of monetarism

Question 5

Define deregulation and explain it as an economic policy

Answer 5

• Deregulation is defined as removing state control to promote private business freedom
• The main goal of this is to improve market efficiency by reducing bureaucratic constraints, encouraging entrepreneurship and fostering competition
• An example of this is deregulation in financial markets (eg. Big Bang of 1986) and transportation
• The key part of deregulation is the shift from government oversight to market-driven decisions

Question 6

What are the benefits of deregulation

Answer 6

Deregulation can lead to increased competition, innovation but it can also have negative consequences

Question 7

Define privatization and explain it as an economic policy

Answer 7

• Privatization is defined as selling state-owned enterprises to the private sector to boost efficiency
• This was inspired by Hayek’s arguments on the efficient use of information in markets
• Some examples of key sectors that have been privatized are British Airways, British Telecom, steel, gas and electricity
• The main aims of privatization is to increase productivity, reduce public sector deficits and introduce competition

Question 8

What were the positive impacts of Thatcherism on the British Economy?

Answer 8

• Increased efficiency
• Improved consumer choice
• Lower inflation
• Higher economic growth

Question 9

What are the criticisms of Thatcherism on the British Economy?

Answer 9

• Greater inequality
• Loss of jobs in traditional industries and increased social division

Question 10

What was the conclusive impact of Thatcherism on the British economy?

Answer 10

Thatcherism caused a shift in British economic policy towards free markets, influencing subsequent governments