The other party of Thatcher: The Democrats and New Labour

In this file photo,  President Bill Clinton stands outside the North Portico of the White House with the Girls Nation group in 1996 in Washington, D.C.
In this file photo, President Bill Clinton stands outside the North Portico of the White House with the Girls Nation group in 1996 in Washington, D.C.
David Hume Kennerly/Getty Images

When Margaret Thatcher was asked what her greatest achievement as Prime Minister had been, she gave a surprising answer. “Tony Blair and New Labour,” she said. “We forced our opponents to change their minds.”

That may sound like a bold claim, but in fact the Iron Lady was being modest. She did not simply change minds in the Labour Party; she also helped to transform America’s Democratic Party. While it is the Republicans who have self-consciously assumed the mantle of Thatcherism, the Democrats have also been irrevocably marked by her legacy.

Margaret Thatcher’s immediate predecessor as Prime Minister was the Labour Party’s James Callaghan, and during Thatcher’s eleven years in office Labour was the main opposition party. At the time, Labour was still at least nominally a socialist party, though some socialists believe that Callaghan and other Labour leaders “were far more interested in accommodating themselves to capitalism than promoting socialism.”

Still, the party platform’s Clause IV advocated “common ownership of the means of production, distribution and exchange,” and the party’s logo—a red flag—reflected its commitment to socialism. The old Labour Party was a social democratic party in the original sense of the term: Whereas modern European social democrats support a mixed economy, their predecessors supported reform to the capitalist system only as a means to the end of capitalism.

That was already beginning to change prior to Thatcher’s rise, but the party’s “wilderness years” out of government helped to fuel its ideological transformation. During Thatcher’s eleven years in office she systematically undid the social welfare policies and national monopolies over industry which formed the bedrock of social democratic rule. She also launched a full-on assault on the trade unions which made up a significant portion of Labour’s power base, and aggressively red-baited Labour, saying at one point that their tax policy was a step “not only towards Socialism, but towards Communism.”

Members of the Labour Party saw no place to move but right. In 1983, incoming party leader Neil Kinnock made clear that Labour was on its way to becoming more of a center-left party. But internal power struggles continued to plague the party, and Thatcher’s reign continued unabated. Even after she was forced out of government in 1990, another Tory, John Major, seized the reigns.

Meanwhile, America was going through a similar period of conservative dominance. After two terms under President Ronald Reagan—an ideological cousin to Margaret Thatcher—the Oval Office went to his Vice President, George H.W. Bush. Reagan had also pursued a policy of market liberalization, privatization and union-busting, the latter most prominently during the 1981 public sector PATCO strike. While the Democrats had never been avowedly socialist, they too went through a period of adjustment, casting aside the social welfare policies and close labor alliances of the New Deal. In their place came the centrist presidential candidate Bill Clinton and the New Democrats.

“[W]e need to put government on the playing field, not to manage or direct markets but mainly to help create markets,” said Clinton during the 1992 election. That business-friendly avowal was a far cry from Franklin Roosevelt’s 1936 claim that the forces of “organized money…are unanimous in their hate for me—and I welcome their hatred.”

Sure enough, as president, Clinton actually helped to further aspects of the Reagan-Thatcher political project. His 1996 welfare reforms significantly reduced the size of the social safety net and made work a condition of receiving welfare. His Treasury Secretary, Robert Rubin, helped deregulate the financial industry, which in turn contributed to the 2008 financial collapse.

But Clinton also shepherded his party back into the White House, where he presided over an era of economic prosperity. Tony Blair, the young, up-and-coming leader of the Labour party, was watching. In fact, Clinton wound up being the “spiritual godfather” to Blair’s New Labour, according to the Guardian’s Jonathan Freedland.

By the time Labour emerged from the wilderness and Blair became Prime Minister in 1997, the party had made an even more dramatic rightward shift than the New Democrats and cast aside the last vestiges of its socialist past. In 1995, as party leader, Blair has successfully spearheaded a campaign to rewrite Clause IV, eliminating language about the “means of production” and replacing it with an endorsement of the ”enterprise of the market and the rigour of competition.” In order to return to power, Labour had become a capitalist party. It had been a long time coming, but now it was official.

“With the passing of Baroness Margaret Thatcher, the world has lost one of the great champions of freedom and liberty, and America has lost a true friend,” said President Obama in a statement issued shortly after Thatcher’s death. He added, “Michelle and I send our thoughts to the Thatcher family and all the British people as we carry on the work to which she dedicated her life—free peoples standing together, determined to write our own destiny.”

The president might be even more right than he realizes. As an inheritor of Clinton’s Democratic Party—and, by extension, an inheritor of the New Labour tradition—he too owns a piece of Margaret Thatcher’s legacy.

The other party of Thatcher: The Democrats and New Labour