Margaret Thatcher’s unacknowledged grandchild

15.04.2013

The death of Baroness Thatcher is dominating today's news. Despite the euologic praises heaped now posthumously on the ‘iron lady’ one cannot overlook one common thread: ambiguity. Yes, she modernized Britain, but for whom? She was a war leader, but what was really gained in the Falklands? She battled constantly with her European friends, but to what avail? Yes, she was the first British female head of state, fairly unprecedented in many countries at the time – but did she leave a legacy to her sisterhood? “Well, yes, technically she was a woman...” was one of the funnier comments on Thatcher’s gender role I once heard.

It is fair to say then that among her legacy is certainly one topic which is close to the interest of this blog. And we hasten to add, a legacy no less ambiguous than all her other ones. She certainly symbolizes and has pioneered many of the political changes which have given rise to Corporate Social Responsibility (CSR) as a new business practice during the last three decades. This conclusion is fairly obvious looking at some of the more historical work on the spread of CSR in Europe by authors such as Jeremy Moon, Daniel Kinderman and others.

Among her heritage we can certainly count the comprehensive privatization of many then state-owned companies in the UK – a policy then also very popular in the US during the administration of her close friend Ronald Reagan. It was her conviction that telecommunication, public transport, water or electricity can be better delivered by private companies and governed by ‘free’ markets’. The attribute ‘free’, by the way, makes me cringe when it gets relentlessly rehearsed today (just listing to BBC World while writing this). Whoever has lived in the UK and has used, for instance, the railways knows that these markets are anything but ‘free’. In many cases her privatization project made a few people very rich and created a monopoly for private companies which resulted in lower quality of services and higher costs to the citizen-turned-consumer.

A second important heritage was deregulation. Many of her reforms here, for instance, created the burgeoning financial industry in the City of London; but it also cut down workers rights, the power of trade unions and a host of welfare state institutions.

The crucial side effect of this retreat of the state of course was that suddenly a huge vacuum occurred. The initial reason why many public services were ‘public’ was that receiving a letter, drinking clean water or having access to affordable transportation was seen as a civic entitlement. And the expectations, once administered by the state, now turned to private companies. The same with abandoned public services: safe high streets, reliable schools,or care for the elderly and poor in many cases morphed into ‘responsibilities’ for private companies. The retailer Marks&Spencer, in explaining their CSR approach, used the slogan ‘healthy high streets need healthy back streets’. It still symbolizes this turn. Thatcher pioneered in the UK what we have seen over the years happening in most other European countries and beyond with some time-lag; and it is for this reason, that the UK became and still is the leader in CSR in Europe.

The legacy of privatization and deregulation again is at best ambiguous, and CSR as it were is the knock-on effect of that. Even the more recent events at the financial markets after 2008 can be seen as the aftermath of the Thatcherite legacy. And lets not forget - the British banking system and indeed the UK economy has been hit quite severely to this day. Deregulation left more discretion to actors in those markets – which encouraged a behavior which has contributed to the financial crisis. Which in turn led to calls for more responsible and accountable corporate action even louder and more demanding today than ever before (think Occupy).

CSR then can be seen as some sort of unacknowledged grandchild of Mrs Thatcher: a knock-on effect of her policies, but certainly not one she would have approved. Her policies were very much inspired by the other big critic of CSR, Nobel Laureate and Chicago economist Milton Friedman. It was a big illusion of the 1980s to think that government can discharge themselves from a host of public services and responsibilities and to expect that the market will happily take care of all those issues. While Thatcher’s idea was to free markets from stifling regulation and to liberate companies to pursue their economic self interest – companies end up having to look after healthcare, education, infrastructure and many more social goods. It is fair to argue, that in the UK – but also in Scandinavia, Germany and France – privatized utility companies are at the forefront of CSR currently.

It is deeply ironic that the person who emphatically claimed that ‘there is no such thing as society’ instigated a renewed sense of social embeddedness and social responsibility exactly in the very place which she went out to free from all such considerations. While her famous statement ‘the lady is not for turning’ remains unforgotten, the turns of history are sometimes stronger than the most resolute renegade – even if they come in the shape of an ‘iron lady’.