Keith Joseph helped to overturn a generation of post-war so-called Keynesian consensus by inspiring Margaret Thatcher to privatise major nationalised industries and coined the phrase ‘the socialist ratchet’ to illustrate his then-radical beliefs¹.

Joseph and others suggested that Labour were a party of change, so did things like creating the welfare state, whereas Conservatives were by nature pragmatic and left things pretty much alone. The upshot of this over time, was that the direction of the Government was inevitably leftward.

By railing against this situation, Joseph therefore helped usher in a Conservatism that was radically reforming towards a free-market right-wing, so not really pragmatic at all. This is quite a feat because, until Thatcher, conservatism and pragmatism were virtually synonymous. In helping to sever that connection, he helped kill off the previous so-called post-war consensus that began with Labour’s shock general election win in 1945.

What I ponder a lot is the duration of these political epochs, and if there’s a pattern there. If the post-war consensus lasted from about 1945 to roughly the mid-80s (e.g. we could take the nationalisation of British Gas, the first really major privatisation in 1986, as the final nail in the coffin), Thatcher ended about 40 years of ‘Keynesian’ orthodoxy.

And then, since the mid-80s with New Labour maintaining the core economic model during their governments, we’ve now had 30-something years of Thatcherite orthodoxy. I’m writing this in 2017, so about 32 years of Thatcherite ratchet that seems unable to turn left, to adapt the phrase from Keith Joseph. 

The time periods here could be meaningless, of course, but it’s worth a suggesting a hypothesis – each major economic consensus lasts for a generation of roughly 40 years, and over the next few years we’re due for another major turn.

Even if you disagree with this hypothesis, it’s worth remembering that all apparently unassailable consensuses are not actually immortal truths. Tides change, even after decades of repetition. For example, when the Conservatives lost in 1945 they thought they had to accept the welfare state and some nationalisation – and did so, until Thatcher’s rise. In 1997, Labour thought it had to accept the free-market and some privatisations.

What orthodoxy will flip next, and when?

(By the way, I’m not consciously cheerleading for any particular political ideology in this piece, it’s just a perspective I enjoy thinking about!)

Below are a couple of quotes that give a bit more context – and the latter, written before the rise of Jeremy Corbyn, is fairly amusing.

“I argued that the pendulum in politics had been replaced by the ratchet, in the sense that the Socialists, when in office, move the balance towards collectivism: we Conservatives, when in our time comes, at best leave things as they are ready for Labour’s next turn of the screw.”

Keith Joseph, 1975

“She reversed what her mentor, Keith Joseph, liked to call “the ratchet effect”, whereby the state was rewarded for its failures with yet more power. With the brief exception of the emergency measures taken in the wake of the financial crisis of 2007-08, there have been no moves to renationalise industries or to resume a policy of picking winners. Thanks to her, the centre of gravity of British politics moved dramatically to the right. The New Labourites of the 1990s concluded that they could rescue the Labour Party from ruin only by adopting the central tenets of Thatcherism. ‘The presumption should be that economic activity is best left to the private sector,’ declared Mr Blair. Neither he nor his successors [sic] would dream of reverting to the days of nationalisation and unfettered union power.”

Margaret Thatcher obituary, The Economist, 2013

References