Thatcher's legacy of competition

The death of Margaret Thatcher and a superb article on the event written by (surprisingly) Russell Brand, have got me thinking about competition. It's good, but it's also really shit.

Thatcher, like her colleague Reagan across the pond, brought in a range of economic measures aimed at increasing competitive pressures in the British economy. Famous among these policies are privatisation, union breaking and the winding back of Britain’s social welfare net. There is a general theme of selfishness.

Her policies were inspired by the work of Milton Freidman and other ‘free market fundamentalists’ in the Chicago School of Economics. But there is a great deal of debate on whether Reaganomics and Thatcher-nomics were actually in line with academic theory or whether they were just Victorian-era capitalism marketed with new rhetoric. In any case, the policies of Thatcher’s governments did see an improvement in growth rates and the end of stagflation. There are arguments about correlation and causation, and even bigger arguments about how much of that growth was captured by a very small section of the population (modern capitalists). But that’s not something we need to get into here.

Perhaps the best section of Brand’s is the third-from-final paragraph, which brings up the themes I want to discuss. I will quote it:

‘If you behave like there's no such thing as society, in the end there isn't... What is more troubling is my inability to ascertain where my own selfishness ends and her neo-liberal inculcation begins. All of us that grew up under Thatcher were taught that it is good to be selfish, that other people's pain is not your problem; that pain is in fact a weakness and suffering is deserved and shameful. Perhaps there is resentment because the clemency and respect that are being mawkishly displayed now by some and haughtily demanded of the rest of us at the impending, solemn ceremonial funeral, are values that her government and policies sought to annihilate.’

I am particularly piqued by the comments referring to the fact that now Thatcher is dead everyone is expected to engage in community sympathy when community was precisely something her government annihilated. Competition is not very good for cohesion.

Competition creates efficiency because it forces people to perform at the ‘best’ or miss out on ‘winning’. What constitutes ‘best’ and ‘winning’ depends on the context. In an economic context, best is best practice, and winning is getting the consumer’s dollar. For example, if a manufacturing firm employs expensive local labour for menial tasks instead of outsourcing that labour to a cheaper neighbouring country its costs will go up. These will need to be passed on to the consumer. If a competitor who does employ cheap labour can sell those goods cheaper they will entice consumers and take market share away from the original company. They will ‘win’ because they use ‘best’ i.e. most efficient (in terms of cost), practice.

One could argue that society loses because those labourers are now out of work. But the argument goes that in advanced country with high wages those labourers should be able to find work requiring more skill. Educational infrastructure should be available to help them do it.

Outside of the marketplace things are different. Few things are more socially atomising than competition. Think back to your childhood and recall the feelings of insecurity, range, hatred and revenge losing a game even to your best friend inspired in you. I have watched children get angry and upset about the outcome of games that are entirely dictated by chance. As we grow older we can rationalise away some of these feelings, which inevitably come down to insecurity, but it is nonetheless not a good feeling to lose.

It is also not a good feeling to have to constantly be on a treadmill to maintain what you currently have. The nature of modern globalised capitalism is that innovation is constant and necessary to maintain global competitiveness. This means constant change that is increasingly unavoidable. We always need to work and we always need to get better. A caricature of this is arguments from many social commentators (including very good commentators like Niall Ferguson) that in order to compete we must work harder. What is the point in being richer than China if we still have to work as hard as they do?  

Another thing driving this constant change is the aforementioned importance of constantly rationalising business practices to ensure a minimum of waste and maximum efficiency. This ceaseless onslaught can sometimes have catastrophic effects on people's established patterns of life. For example, Heinz closed a fish canning operation in Eden in 1999 despite the fact it was still making close to $10million dollars p.a. The company needed to quickly liquidate assets to plug into other, even more profitable ventures. Unfortunately, the cannery was one of the main sources of employment in the town at the time. Upheaval ensued.

Soulless economic types, including myself, would argue that this is simply life, and people need to deal with it. In many similar cases nowadays provision is made by companies to move employees into other arms of the business in other parts of the country, or to help them retrain. Not much more can be done. As a friend of mine noted on community radio a few months ago, life is competitive, and humans are unequal. That’s reality.

But we can also appreciate that sometimes habits are nice, sometimes change is very unwelcome. We can also acknowledge that competition is usually bad, and something we should work against. We don’t celebrate the schoolyard bully’s natural playground dominance—we cheer when he gets his comeuppence. And we cheer even more when he joins forces with the protagonist in a daring raid against whomever the real evil overlord happens to be. We think teamwork and social cohesion is best of all.

Even those among us who hate a great many social types and think the most important human right is to be left alone think that society and community is a beautiful thing of immense value worth protecting. Competition and selfishness are threats to this ideal. Ironically for a ‘conservative’, Thatcher did immense damage to this ‘civil society’ that many conservatives see as the basis for effective public policy (contra. government intervention).

I am not advocating policies that are not thoroughly informed by market economics. I am advocating, as usual, for a more robust, nuanced and informed public discourse about these matters. We like money. We like growth. At the very least we like high quality health care and that requires money which requires growth. But we also like low crime rates, fair days pay for fair days work, and social cohesion. Navigating these two often disparate goals requires a discourse that never indulges in ideology or falls back on simplifications. That discourse does not currently exist.