A Critical Upheaval

Starting in Great Britain and the United States in the late 1970s and early 1980s, a political and ideological upheaval has vigorously reaffirmed ideas, once widely held but long since forgotten, about the state's “excessive,” “inappropriate” expansions and the need to reduce it to a more “suitable” size and ambit. Let me recapitulate briefly the tenor of these issues and the ways in which they were again propelled into the foreground. In this chapter, I outline the developments involved only insofar as they throw light on the rationale for downsizing the state by reducing public ownership and shrinking the compass of its welfare programs.

The arrival in power of Margaret Thatcher and Ronald Reagan, at the end of the 1970s and the beginning of the 1980s respectively, portended crucial changes in the last quarter of the twentieth century. In Great Britain, Margaret Thatcher brought to an end the era of the “postwar settlement” that had emerged there out of the wartime suppression of party politics and that embodied acceptance by both socialist and conservative parties of the goals of full employment and the maintenance of the welfare state. This agreement had set not only the framework but also the agenda for postwar economic policies, “for neither full employment nor the Welfare State could be maintained without an expanding economy” – as a British analyst rightly put it.