By her metric, Thatcherism was a failure

Margaret Thatcher won famous victories but showed no generosity to the defeated, in word or deed, writes Robert Skidelsky.

Margaret Thatcher was Britain's greatest 20th century peacetime prime minister. In the 1980s, the near-simultaneous crisis of communism in the East and social democracy in the West gave her the opportunity to do great deeds. But it required a great leader to take advantage of it.

Her relationship with Soviet leader Mikhail Gorbachev opened up the way to ending the Cold War; her privatisation policies showed the world how to dismantle state socialism. The neo-liberal revival of the 1980s will always be known as the Reagan-Thatcher revolution.

She was also the most divisive British prime minister of modern times, admired and reviled in equal measure, owing as much to the self-righteous way she pursued her policies as to the policies themselves. She rightly described herself as a "conviction politician". A conviction is a settled belief that brooks no argument. And she did not deign to conciliate, instead dividing the political world into "us" and "them".

"Where there is error, may we bring truth," she announced on her entry to No.10 Downing Street, quoting St Francis of Assisi.

"In victory, magnanimity," Winston Churchill advised. Thatcher was brave and resolute, but she was not magnanimous. She won famous victories, but showed no generosity to the defeated, in word or deed. As a result, she failed to create harmony out of discord.

Her mission was projected from a narrow ideological base. In instinct and language, she was a follower of Friedrich Hayek. For Thatcher, as for Hayek, the great intellectual error of the 20th century was the belief that the state could improve on the spontaneous efforts of individuals. What others saw as the state's role in elevating the condition of the people, she saw as the insidious road to serfdom. It is easy to see why this message resonated in Eastern Europe.

Translated into British terms, it meant releasing the impulse to wealth creation from the dead hand of socialism, bureaucracy, and trade unions, which in her reading of history had brought about Britain's decline. The Good Samaritan, she said, was to be admired because he helped himself before helping the poor.

This insular program of national revival increasingly estranged her from continental Europe's more dirigiste approach. In her famous Bruges speech in 1988, she thundered: "We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level, with a European super-state exercising a new dominance from Brussels."

She left Britain's relations with the European Union in a mess from which they have never recovered.

Of course, like any shrewd politician, Thatcher knew which battles were unwinnable, or had to be postponed; but she always preferred winning a fight to reaching a compromise.

She won the sobriquet "Iron Lady" for her decisive leadership in the Falklands War; yet most of her battles were fought against sections of her own people - the "enemy within", like the miners whom she crushed in the strike of 1984-1985, or Ken Livingstone's Greater London Council, which she abolished in 1986.

She made much of her humble origins as the daughter of a Grantham grocer, and had no time for the Establishment, which she blamed for Britain's moral and economic decline. She understood the lower middle class, shared its material aspirations and moral prejudices, and argued for government spending cuts in the language of the housewife managing the weekly accounts. She rewarded "aspirational" members of the working class by selling off council houses at discounted prices. Support for the deserving poor was to her like charity wrung from the household budget. And, while she was Britain's most successful female politician ever, she regarded feminism as "poison", and did little to encourage women to follow her.

Thatcher's answers to the growing industrial disorder of the 1970s were "monetarism" to liquidate inflation, legal curbs on trade-union power, and privatisation of bloated state-owned industries - "selling off the family silver" as former Conservative prime minister Harold Macmillan called it. The aim of all three measures was to restore both state authority and economic dynamism.

With the help of North Sea oil, Thatcher reversed Britain's relative economic decline. But her victories came at a huge social cost, with unemployment rising to 12 per cent (3 million people) in 1984, the highest since the 1930s. For those growing up in the industrial north, Thatcherism foreclosed the future. The new economy based on finance and shopping skipped a generation.

Much as they may have admired her, most Britons were never convinced that the Thatcher way was the only way. Although she won three consecutive elections, the Conservatives never polled more than 43 per cent of the popular vote, well below the levels achieved by Conservative leaders - Churchill, Anthony Eden, and Macmillan - in the 1950s. Her approval rating exceeded 50 per cent in only five of her 137 months in office.

In economic and social affairs, the electorate grew steadily less Thatcherite and her missionary zeal fell on deaf ears. She owed her power to a divided opposition and a first-past-the-post electoral system.

Thatcher offered her own summary of her political project: "Economics are the method. The object is to change the soul." If that is the metric, then, despite her achievements, Thatcherism was a failure.

The shift toward finance that Thatcher promoted heightened inequality and made the economy more volatile. Her "right to buy" policy triggered an upward spiral in house prices, which encouraged households to take on more and more debt. The "Big Bang" of 1986, which deregulated financial services, made risky behaviour in the City of London the norm. These reforms sowed the seeds of the financial crisis of 2008.

The "Victorian values" that Thatcher sought to foster fell afoul of the unrestrained celebration of material wealth that her rule brought about. The moral society, based on decent self-interest, that Thatcher hoped to establish became the greedy society, based on coarse self-regard. If she experienced any retrospective doubt, she gave no sign of it.