Restraining the Iron Lady: TheLimits of Welfare State Retrenchment in the UK.

Over the 11 years that Margaret Thatcher occupied the office of prime minister in the United Kingdom, the economy was transformed away from its quasi-corporatist roots toward a more market-centered, laissez-faire system like that of the United States. The power of the unions was diminished, monetarist programs were introduced, substantial privatization occurred, and the legacy of Keynesian politics faded away. At the same time, the welfare state was restructured to put more focus on market forces and flexibility. Of particular interest is the relative tameness of the welfare state changes as compared to those in the economic sector. What caused Thatcher to hold back on serious welfare state retrenchment? The argument presented in this paper is that the extent of liberalization that occurred in the United Kingdom can best be understood by recognizing the particular economic and electoral pressures that faced Thatcher’s Conservatives. While Thatcher’s government was capable of passing legislation in keeping with its neo-liberal agenda for the country, the cultural preference for some government provision of social services (such as the National Health Service) became a constraint on policy-making. Furthermore, the effect of popular pressure was felt not only in the electoral realm, but also within the Conservative Party itself. Thatcher would have preferred to cut deeper and retrench more, but the preferences of her caucus and party members, and the power that they yielded over her position as party leader, forced her to check her own instincts and institute a milder version of neo-liberal welfare state reform. In the end, the Thatcher governments of the 1980s produced a liberal economy-welfare state combination that had a market focus but also a (seemingly contradictory) measure of social democracy in its social policies. [ABSTRACT FROM AUTHOR]