The business firm carries the burden of delivering many aspects of "the satisfactory life" in the developed world of the late twentieth century. It is a fundamental unit of social organization. Analogous in many ways to the family, it takes many forms, can be defined in several different ways, and performs a multiplicity of direct and indirect functions. While most evidently economic in character, firm interactions with, and impact on, social life are considerable and are an important feature of the politics of capitalist societies. In its modern forms, the firm created by political actions in the past century and a half (in Britain and especially by the Joint Stock Companies Act of 1856) is enshrined in a complex set of laws and practices.(1) In the wake of the "great capitalist restoration," it is interesting to consider the politics of the capitalist firm in the political economy of late twentieth century Britain.
The Firm as a Business Venture: Removing Obstacles to Enterprise
A central aspect of the "Thatcher Revolution" was the claim to set firms free from the web of regulations that bound them. If, as Leonard Tivey [1978, chap. 2] asserts, firms are at the same time business ventures and commercial and industrial organizations, then it was as the former that they were most valued by Thatcherites. The unencumbered firm was necessary for the restoration of British competitiveness. In the Thatcherite view, securing profit by identifying and meeting the wants of customers should drive the firm, and the driven firm should be the motor of prosperity and general welfare. Consumers ought to have sovereignty, and competitive markets should be promoted to ensure responsibility and responsiveness. The simplicity and directness of the model have obvious attractions for many - and when presented as a counterfactual, it was particularly persuasive.
The long hegemony of Keynesian social democratic attitudes, it was claimed, had had perverse effects. A web of legal impediments and a set of insidious values had been established on beth sides of industry. The postwar concern to defend and promote the firm as a commercial and industrial social organization - a supplier, an employer, a significant national player, or whatever - had eroded the significance of the firm as business enterprise. In a favorite analogy of the time, "the nanny" would be replaced by a world of responsible, free adults who faced the consequences of their own actions. "Exit" (and entry) should be stressed, rather than "Voice and Loyalty," and "cozy" relationships distrusted. "Lame ducks" should go to the wall, and encouragement and status should go not to the cautious, white-shirted bureaucrats of "respectable" old companies that dominated the Confederation of British Industries (CBI), but to a new breed of sharp-suited, thrusting young entrepreneurs. "Red tape" must be minimized to encourage new and growing young companies.
This bundle of attitudes and understandings(2) - rather than a highly elaborated program - shaped the policies we outline below as Britain's "Great Capitalist Restoration." It was promoted by a minority within the Conservative administrations of 1979-1992 [Gamble 1994, esp. 21]. But it is widely acknowledged that "The Thatcher Revolution" had great symbolic impact and real effects on values, legitimations, laws, and practices both within and beyond the United Kingdom. Margaret Thatcher herself makes a strong claim in her account of her fall from political office in 1990:
The beliefs and policies which I had pioneered in Britain were helping to remould world affairs [Thatcher 1993, 829].
Of underlying significance to many of the policies with which she sought to remould Britain was the belief in the unencumbered firm.
Britain's "Great Capitalist Restoration": The Nature and Extent of the "Thatcher Revolution"
The 1970s brought to a head an economic and political predicament that had been developing over many years. The long-term competitive decline of British manufacturing industry left a Labour Government, in the world recession following the OPEC oil price rises, with a weak economic base on which to maintain its Keynesian, social democratic project. In the face of "stagflation," Labour, after an aborted attempt at trade union legislation, tried to control inflation by drawing on the remains of union goodwill to establish the "Social Contract" - a voluntary incomes policy - within a reoriented, IMF-assisted, macroeconomic framework...