Policy Press

Inside Thatcher’s Monetarism Experiment

The Promise, the Failure, the Legacy

By Tim Lankester

Published

May 21, 2024

Page count

192 pages

ISBN

978-1447371359

Dimensions

216 x 240 mm

Imprint

Policy Press

Published

May 21, 2024

Page count

192 pages

ISBN

978-1447371373

Dimensions

216 x 240 mm

Imprint

Policy Press

Published

May 21, 2024

Page count

192 pages

ISBN

978-1447371373

Dimensions

216 x 240 mm

Imprint

Policy Press
Inside Thatcher’s Monetarism Experiment

In 1979, Margaret Thatcher’s new government was faced with rampant double-digit inflation, rising unemployment and flatlining economic growth. In response, Thatcher pursued an economic policy which rejected the old orthodoxies and was promoted by only a minority of economists: a policy based on the doctrine of monetarism.

Tim Lankester was the private secretary for economic affairs to Thatcher during the early years of her government. His insider’s account explains her attitudes and decisions and those of the other main players in this deeply damaging experiment in economic policy making, which promised much but completely failed to deliver.

Offering fascinating insights into one of the most unsuccessful episodes of British economic history, he also examines the legacy of monetarism for the economy today.

“A self-lacerating account of the British monetarist experiment by a man of stern principle, Lankester paints a surprisingly sympathetic picture of the lady herself and vividly illustrates how top civil servants approached their jobs, in difficult times – for good or ill.” Rachel Lomax, former Deputy Governor of the Bank of England

“Lankester is uniquely well-placed to tell the inside story of Thatcher's monetarist policies. And what a fascinating and well-told story!” Charles Goodhart, London School of Economics

“A unique contribution from an impartial Treasury official who witnessed some of the most politically charged debates of the Thatcher era from within Number 10.” Duncan Needham, University of Cambridge

“An intriguing read. It explains from inside Number 10 how a simplistic economic theory that chimed with her ideology – monetarism – captured Thatcher’s imagination and how pursuing it inflicted long-lasting damage on the fabric of the British economy.” Wendy Carlin, University College London

“Steers the reader through a fascinating insider’s account of Thatcher’s approach to monetary policy and why she got some things wrong." Montek Singh Ahluwalia, Distinguished Fellow of the Centre for Social and Economic Progress and former Deputy Chairman of the Planning Commission of India

Sir Tim Lankester, KCB, was Margaret Thatcher's first private secretary for economic affairs. He was subsequently Britain's representative on the boards of the IMF and the World Bank; Permanent Secretary at the former Overseas Development Administration; Director of the School of Oriental and African Studies, University of London; and President of Corpus Christi College, Oxford. He is the author of The Politics and Economics of Britain's Foreign Aid: The Pergau Dam Affair (Routledge, 2013).

1. Introduction

2. A view from Number 10

3. Keynes and Friedman

4. The monetarists’ challenge

5. Labour and soft monetarism

6. Mrs Thatcher and hard monetarism

7. Monetarism’s high noon

8. Ending the experiment

9. Counting the cost

10. Mrs Thatcher and the trade unions

11. The quest for an alternative anchor

12. The monetarists and the critics look back

13. The legacy

14. The return to stagflation?

15. Epilogue