In an article entitled, Thatcher’s golden legacy of privatisation, the far-right think tank, CapX wrote:

“Economic policy has taken an anti-market turn in recent years, with many nations increasing regulation, running large deficits, and embracing repeated stimulus actions by central banks. There is, however, one good-news story in economic policy that is often overlooked: the ongoing privatisation revolution that has swept the world since the 1980s.

Governments in more than 100 countries have moved thousands of state-owned businesses to the private sector. Airlines, railroads, postal services, electric utilities, and many other types of businesses, valued at more than $3.3 trillion, have been privatised over the past three decades.

The revolution was launched by Margaret Thatcher. She came to power determined to revive the stagnant British economy with market-based reforms. Her government deregulated, cut marginal tax rates, repealed exchange controls, and tamed militant labour unions.

This story of the Iron Lady single-handedly rescuing the sick man of Europe (the UK) and by that example leading the world into a new, more dynamic and hugely successful economic system is so familiar that many of us have believed it.

And it is partly true. There was a post-war consensus about economic management which endured throughout the Golden Age of Capitalism until two major oil-price shocks rocked the world economy and created an appetite for change. And it is also true that Margaret Thatcher (with Ronald Reagan) was hugely influential in ushering in a new approach: Market Capitalism. Thatcher did drive enormous change.

But not everybody enjoyed the change – certainly not those members of labour unions referred to above, not those who became unemployed, not students whose grants were first reduced and then removed, and not those who now find themselves unable to secure safe, stable, affordable accommodation since the decline in social housing.

So it is worth asking the question: Economically, who benefitted from Thatcherism?

A small proportion of the world’s wealthiest did benefit – everyone else did not:

  • No country benefitted;
  • Most people did not benefit;
  • The wealthiest grew far richer.

No country benefitted

The chart below, based on the Maddison Project dataset, shows for the major European countries, the US and Japan how strongly their economies grew during the Golden Age of Capitalism and during the more recent era of Market Capitalism. The measure of growth here is real (i.e. inflation-adjusted) growth in per capita GDP, which you can think of as measuring the ‘size of the pie’ which might be available for each individual to consume.

The absence of countries in the green region – those that did better under Market Capitalism than they had done during the Golden Age – is striking. Even the US and the UK, the principal architects of the change, performed worse under Market Capitalism, and countries like Japan, Germany, Greece and Italy who ‘lost the war but won the peace’ performed far worse.

But this is a measure of the ‘size of the pie’ – perhaps individuals benefited in a way that their nations did not?

Most people did not benefit

Unfortunately not – at least not most people. The chart below focuses on the US and the UK.

You can see that when it came to issues which directly affect normal people – like median income and the unemployment rate – the Golden Age was a far better period to live through.

In fact the only measure by which the era of Market Capitalism scores better is inflation – and even that is essentially meaningless because the growth figures above are inflation-adjusted, so people were getting rich much faster during the Golden Age.

Given all this evidence of the failure of market capitalism, you may be wondering: why does it have such a good press?

The wealthiest grew far richer

There is one group that has benefited substantially from market capitalism: the very wealthy.

The chart shows the extraordinary growth in the share of total wealth in the US which is in the hands of the top 0.1% of the population. The answer to the question of why Market Capitalism has such a good press may be largely that the media are owned by members of this group.


We do have a golden legacy, but it is the Golden Age itself, not Market Capitalism.

The existence of the Golden Age demonstrates two simple but critically important points that we have largely forgotten:

  1. there is a proven alternative to the system of Market Capitalism which we have adopted for the last 40 years — and the alternative works far better; and
  2. it is possible to adopt that system even at a time when many countries are reeling from a devastating shock and have high levels of public debt.

There is essentially nothing stopping us from creating a second Golden Age, other than the fact that 99% of the population are not clearly demanding it.

If this matters to you, please do sign-up  and join the 99% Organisation.