Only when we have democracy in the boardroom will we have broken Thatcher's kind of capitalism
Margaret Thatcher was good at destruction. Some say she revolutionised British politics – certainly never again could people say nobody would vote for a woman – but it served a reactionary end. The seismic shift from industry to financial-based capitalism that Thatcherism ushered in rattled the establishment. But, as the prince in Lampedusa's The Leopard says: "For things to remain the same, everything must change."
Thatcher's unwavering belief in the invisible hand of the market meant that she did not believe it was part of her job description to put anything in its place. A big decline in traditional industries took place across Europe and the US in the 80s and 90s. What was different in Britain was that she assumed no responsibility to minimise social disruption or to create new jobs and industries.
Instead state assets and a huge income stream from North sea oil were used to fund a populist programme of tax cuts, privatisation and council house sales. The family silver was squandered on bribing voters rather than modernising the economy.
There is a paradox. Thatcher's social instincts were always nostalgic conservative. The great contradiction in her politics was that someone who yearned for the certainties of small-town shopkeeper economics helped create the amoral yuppiedom of 80s excess and an explosion of cultural resistance that is still an ironic positive legacy of her time in power. Adam Smith's invisible hand ended up raising two fingers to her moral project.
And for all the tributes being paid by ministers this week, the issues at the top of the government's agenda are all to do with clearing up the mess she created. Above all has been the hollowing out of the labour market.
The 70s was Britain's most equal decade. The jobs that went during the 80s tended to be good, skilled jobs, delivering decent incomes and some security. She failed to replace those jobs with well-paid equivalents. Demonising unions and stripping the great mass of private-sector workers of a voice and power in the workplace is still the root of the great living standards crisis that saw the share of wealth going to wages slide long before Lehman Brothers failed.
Even the nasty politics of "welfare reform" is driven by the high cost of subsidising low pay through in-work benefits, and indifference to the plight of jobless communities who have never recovered from de-industrialisation.
The financial crash of 2008 was a direct result of the policies Thatcher championed. The dominance of finance in the economy and the failure of bank regulation flowed from her belief that markets should always be left to themselves. The credit boom – both here and in the USA – may have gone against her Grantham roots but was an equally inevitable result of deregulation and the temptation of easy loans for people hungry to improve living standards.
There is now, however, an opportunity to commit to a new politics that learns lessons from her ambition yet undoes the damage and focuses on reconstruction. A massive programme of social housing would be a good place to start, stimulating the economy. Arguably, it was not the sale of council houses that was the problem, but the failure to replace the stock and maintain a sufficient supply of affordable homes. A great windfall in the short-term for asset-owners – one form of inflation she encouraged – but disastrous for future generations.
Thatcher's opposition to a positive role for the state in industrial policy caused her grief even during her time in office, but a cross-party consensus newly shaped by Michael Heseltine's report has given him the last word. At its heart must be an active programme to create good jobs and raise living standards. We must reduce the inequality that has seen a super-rich elite, openly contemptuous of the flag and family values Thatcher proclaimed, float free from the rest of us.
Thatcher was suspicious of democracy. She preferred markets, and a strong but minimal central state that backed their rule. She abolished city-wide local government, capped spending and expected the poll tax to further undermine alternative voices.
This is the area where we need to make progress – not just in restoring strong local government, but in understanding that democracy means more than a Westminster vote. I will know that we have finally broken from the kind of capitalism that she championed and which died in 2008 when we see workers elected on to company boards.