The rise and fall of Britain's neoliberals; the Social Democratic Party is kinder than Thatcher, smarter than Labour - so why is it falling apart?

• Author: Toynbee, Polly
• Position: Margaret Thatcher

The Rise and Fall of Britain's Neoliberals

Six years ago, when four members of the British Parliament walked out of the Labour party and formed the left-center Social Democratic party, all signs indicated a desperate need, and indeed a popular demand, for a third party. When it was founded, polls showed that well over 50 percent of the voters would vote for the SDP--if they thought it had a chance of winning. But that has turned out to be a gigantic "if.' Now, following the general election in June, when it failed to break through the near impenetrable barrier of a first-past-the-post electoral system, the SDP has split apart and lies in tattered disarray. It has fallen prey to the fatal tendency of small parties out of power to turn upon themselves looking for scapegoats.

After Labour lost the 1979 general election to Margaret Thatcher, it did what it has always done: it ceded power to its most left-wing elements, which succeeded in changing the way the party leadership was selected. That resulted in the election of Michael Foot, elderly guru and a keeper of the socialist conscience. The party turned unilateralist, calling for the abolition of Britain's independent nuclear deterrent and opposing the installation of U.S. cruise missiles on British soil. It produced a platform calling for more nationalization, including the nationalization of banks, and other unpopular socialist policies that flew in the face of changes taking place in the wake of Margaret Thatcher's victory.

Meanwhile, Mrs. Thatcher launched her own revolution, breaking the postwar consensus in British politics. She declared war on the welfare state and the attitudes that went with it. She began to outline her program for the privatization of large parts of nationalized industry. The policy that won her the most support on her road to victory was the sale of public housing to its tenants at knock-down prices. She was not personally pupular--indeed her personal rating fell to the lowest of any prime minister ever--but she was ruthlessly determined and admired for her strength.

The great majority of voters appeared to have no taste for the politics of either extreme, and were uneasy, sometimes indignant at the Manichean choice laid out before them. Moreover, the SDP leaders--the Gang of Four--who formed the new party consisted of Roy Jenkins, then president of the Commission of the European Economic Community, who had been a Labour chancellor of the exchequer and home secretary; Shirley Williams, who had, among other posts, been a Labour education secretary; William Rodgers, a transport minister; and David Owen, a health minister and a remarkably young foreign secretary. All had been part of a faction of the right within the Labour party as it moved rapidly leftwards.

A kick-start for business

What kind of party did the Gang of Four set out to create? The Labour and Conservative parties denounced it as unprincipled, rootless, destined to bend with the prevailing wind, stealing a little from either side, appealing to that essentially antipolitical urge found in all democracies where some people yearn hopelessly for less conflict and more agreement. The very same accusations are made in the United States against the neoliberals.

Certain broad policies were laid down in the original SDP constitution--a commitment to the Common Market and to NATO and to the creation of a more open and classless society. But it took time for the real character of the party to emerge. Gradually, the SDP made a wholehearted commitment to the market economy and to free enterprise--words never used in the Labour party.

It was not until after the SDP's first general election in 1983, when David Owen took over the leadership, that the SDP started to appreciate the scale and the permanence of the Thatcher revolution in British politics. Whether Thatcher was the cause or the result, the pursuit of profit and private enterprise was now at the top of the national political agenda. As nationalized industries were sold off by the government, public anxiety turned to strong approval. The government offered shares in these industries at bargain prices, creating a vast new pool of shareholders from people who had never owned a share in their lives.

Under Owen, the SDP moved away from an automatic opposition to these sell-offs. It urged competition in industry and opposed the establishment of monopolies in the newly privatized telephone and gas companies. Competition became the cornerstone of the SDP's industrial and enterprise policies, setting it apart from the far left and the far right. (The Labour party, following the traditional trade union and socialist lines, opposed all privatization; the Conservative party favored privatization but tolerated monopolies.) SDP advocated tax-free bonds for high-risk investments and regional development agencies--all to give industry a kick-start.

The importance of this was not so much the policies themselves--the electorate was never much interested in the specifics--but the waving of a bright flag to signal the SDP's belief in the value of enterprise for its own sake. While the Labour party had truculently accepted the need for a private sector to generate wealth so they could tax it back and spend it themselves, the SDP regarded private wealth as good and high taxation as economically undesirable. They never ducked the fact that taxes would be slightly higher under the SDP, but they refused to return to the astronomical rates that the Conservatives had brought down steadily.

What made the SDP...