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Thatcher Anniversary Thursday, 29 April, 1999, 15:02 GMT 16:02 UK
Thatcher's Frankenstein's monster
As GLC leader, Livingstone frequently clashed with Thatcher
Ken Livingstone MP, the former leader of the Greater London Council, assesses Margaret Thatcher's premiership for BBC News Online's special report on the 20th anniversary of her first election victory.

Edward Heath was quite right when he said in 1995 that Margaret Thatcher "stripped this country of its future prospects, its manufacturing base. People have every right to turn against us."

Margaret Thatcher's legacy - political, social and cultural - is vast. But underpinning it all is an appalling economic legacy which the country has never recovered from. It produced, in 1979-81 and 1990-92, the two deepest recessions in British post-war history. Manufacturing industry was delivered a blow from which it has still not recovered.

The Iron Lady's effect is "still not fully understood"
Under the cover of 'freedom', every effort was made to weaken democratic institutions. Under the pretext of an attack on 'dependency culture', a concerted attempt was made to dismantle the welfare state.

But the full scale of what took place is still not fully appreciated - what occurred under the Conservative governments was the greatest shift of wealth from earned to unearned income in British history.

Literally billions of pounds were transferred from wages to companies - to be used not for investment but for a consumption boom, fed by dividend payments, of the richest members of society.

It was all done as part of a vile experiment conducted on the British economy, involving privatisation, deregulation, trade union legislation and tight monetary policy. It was Margaret Thatcher's Frankenstein's Monster. To put it bluntly, their tools were anti-trade union legislation and mass unemployment.

Fifteen years after the Conservatives came to power, wages and salaries had declined as a proportion of the British economy from 66% to 62%. That was equivalent to £17.50 a week out of the pockets of every wage earner. At the same time, profits of companies were increasing.

This vast shift of income from ordinary wage earners to companies at least provided us with a laboratory test of the Thatcherite argument that private companies - given the right incentives - will solve the economy's problems.

The Tories' official theory was once spelt out to me by John Major in an exchange in the House of Commons while he was still prime minister: "We have at the moment perhaps the best environment for investment that we have had for every many years.... Since 1980 UK investment has grown quite substantially. In the present economic climate I would expect it to continue to do so."

Twenty years on, Thatcher's experiment has been "refuted by facts"
This nonsense boils down to the theory that the incentive of receiving dividend payments on shares ensures that companies invest for the future: high shareholder dividends lead to a dynamic economy, and we should therefore do everything to make it easy for them to maximise their profits.

But despite giving companies every opportunity to do just that, including by introducing the toughest trade union laws in western Europe, the opposite happened. Dividend payments to shareholders quadrupled under Thatcher and Major, but investment fell by 3.9 per cent of the British economy - almost identical to the increase in shareholders' dividends during the same period.

Mrs Thatcher's theory, 20 years on, has been refuted by the facts. In real terms wages and investment went down, company profits went up, and our manufacturing base was smashed.

We are all paying the price for letting her conduct her wild experiment on our economy.

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