Inside Thatcher’s Monetarism Experiment: The Promise, the Failure, the Legacy by Tim Lankester (Policy Press, 2024)
In the summer of 1981, Margaret Thatcher’s Cabinet nearly mutinied. Unemployment was climbing past two million, inflation hadn’t shifted, industry was in freefall and still she refused to change course. Eighteen out of twenty-two Cabinet members spoke out against the economic strategy. But Geoffrey Howe held the line and Willie Whitelaw soothed the room. They stuck with the plan. Tim Lankester, Thatcher’s private secretary for economic affairs, was in the room when it happened.
His new book, Inside Thatcher’s Monetarism Experiment, is a mixture of confession and post-mortem. It’s a lucid account of how the British state embraced a hardline economic theory, and what happened when it tried to turn theory into policy. Monetarism, as imported from Milton Friedman1, promised to curb inflation by reducing the growth of the money supply. Thatcher’s government raised interest rates, slashed public spending, and let unemployment rise, convinced that a leaner, harsher economy would stabilise prices.
It didn’t. The money supply turned out to be poorly defined, impossible to control, and largely irrelevant. Inflation eventually fell, but not for the reasons Friedman predicted. What fell faster was output and employment. Manufacturing collapsed. Whole industries disappeared. Unemployment soared past three million. There were riots in Brixton, Toxteth, Moss Side. “Deindustrialisation” is the term economists use. It sounds tidy. It wasn’t.
Lankester recounts it all in sober, careful prose. He is not a tub-thumper. He doesn’t rage. He just writes it down, and in the gaps, between charts, between Treasury memos, you start to hear the sound of someone losing faith. “I did feel compromised,” he writes, “through having worked perhaps too diligently in support of a strategy in which I didn’t really believe.” The tone is modest, occasionally self-flagellating, but never evasive. That’s what makes the book unusual. Lankester isn’t a critic of the system, he was the system. And yet his verdict, gently delivered, is damning.
I was still at school when the cuts came. I remember the mood: grey, frayed, unstable. Some kids stopped bringing packed lunches. Others had dads who started mowing the lawn during the day, or drinking at lunchtime. One week the school started handing out free milk again, just for a few months. No one explained why. I didn’t know the word “monetarism,” but I could see what it did.
Lankester saw more. He watched it from the inside. The early 1980s Treasury, as he describes it, was a place of ideological capture. Keynesianism, discredited by stagflation, had collapsed. The new orthodoxy came from Chicago, dressed in technocratic language but politically useful: shrink the state, discipline the workforce, break the unions. Monetarism’s appeal was not just economic, but moral. It demanded sacrifice, and Thatcher decided who would do the sacrificing. There was something almost Calvinist in its logic: suffering as proof of virtue, discipline as salvation, prosperity as the reward of the righteous. It aligned neatly with Thatcher’s own Methodist upbringing, with its emphasis on thrift, personal responsibility, and moral fortitude. This was policy as punishment—cold, deliberate, and sanctified by the language of duty.
Lankester tries to square the circle, his loyalty to Thatcher, his doubts about her policies. He doesn’t quite manage it. He helped write the budgets. He saw the projections. He knew what was coming. But he stayed. And now, decades later, he says the policy failed. That the price was too high. That the people who paid it weren’t the ones making the decisions. He tells a story about a dinner party in north London where someone accused him of being Thatcher’s Albert Speer. He doesn’t dismiss it out of hand. That hesitation lingers.
There are many books on this period—Thatcher’s Downing Street Years, Heseltine’s Life in the Jungle, John Hoskyns’ strange little dispatch from the bunker—but this is the first I’ve read where someone changes their mind. Not loudly, not dramatically. But he changes it. He admits that the experiment failed. That he helped carry it out. That admission gives the book a kind of moral weight you don’t often find in civil service memoirs, which tend toward process, deflection, or the bureaucratic sublime.
Hoskyns, by contrast, never recanted. His was the voice of Thatcherite conviction, clear, ruthless, and openly disdainful of both the civil service and the working class. Just in Time reads less like a memoir than a war diary: the enemy, in his telling, was not just inflation but the “bloated” public sector, union power, and what he saw as a culture of dependency. Where Lankester expresses regret, Hoskyns remains unrepentant, seeing the social destruction of the early 1980s as necessary purgation. If Lankester’s book is a quiet confession, Hoskyns’ was a manifesto for class war from above. It’s striking that Lankester barely mentions him. Perhaps he doesn’t need to. The contrast speaks for itself.
More than an economic doctrine, monetarism was a weapon in a longer class offensive. Its purpose wasn’t just to curb inflation, but to break the post-war settlement: to smash the trade unions, discipline labour, and shift the balance of power decisively toward capital. The pain it inflicted was not accidental but instrumental. The recession of the early 1980s did what no bill or negotiation could: it disorganised the working class. Stuart Hall, writing at the time, identified what he termed “authoritarian populism”—an ideological project that linked economic liberalism with social conservatism. Thatcherism, in Hall’s view, wasn’t just about markets. It was about restoring order, moral hierarchy, and national authority in a moment of political crisis.
Lankester gestures toward this without fully engaging it. His account of policy failure is sincere, but it risks reducing a class offensive to a misfiring economic experiment. What goes unacknowledged is how effectively that “failure” achieved other, unspoken goals: the hollowing out of the trade unions, the privatisation of public services, the transformation of the welfare state into a disciplinary apparatus. This wasn’t just the death of Keynes. It was the birth of cruelty as policy.
The terrain reshaped in those years is the one New Labour inherited, and never seriously challenged. Blair and Brown replaced dogmatic monetarism with inflation targeting and independent central banking, but the fundamentals remained: fiscal caution, market primacy, suspicion of state capacity. Reeves and Starmer are not a break with this tradition but its most careful stewards. Lankester’s reflections make clear that the economic experiment failed on its own terms. What’s missing is a reckoning with what it succeeded in doing, and what remains of it still.
The final chapters trace the legacy: the move from money supply targets to inflation targeting, the ERM debacle, the eventual independence of the Bank of England. The ideological edge softened; the institutions grew more flexible. But the instincts of early Thatcherism endured, fiscal caution, labour market “flexibility”, hostility to the state. From austerity to Trussonomics, the ghost of monetarism still haunts Whitehall. Today, it is not only Conservative politicians who speak the language of restraint. Rachel Reeves, who recently pledged to “balance the books” by cutting welfare, offers a fiscal stance indistinguishable from her Tory predecessors—disciplined, deflationary, and indifferent to consequence. Starmer’s Labour has made peace with a political economy forged in the 1980s: cautious in spending, allergic to redistribution, and terrified of the unions. The experiment failed. The cruelty stayed.
More than economic policy, Lankester writes, this was about a new political order: harder, colder, and brutal in its disregard for those it harmed.
He helped build it. Now, at least, he names it.
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Footnotes
- Milton Friedman, the high priest of market fundamentalism, made a career out of dressing ideology in the language of science. His promise that inflation could be tamed by managing the money supply collapsed on contact with reality, but not before it gave political cover for a generation of wage suppression, public sector cuts, and state retreat. Few economists have caused more damage while insisting they were merely doing the maths. ↩︎
