Inside Thatcher’s Monetarism Experiment

In 1979, Margaret Thatcher’s new government was faced with rampant double-digit inflation, rising unemployment and flatlining economic growth. In response, Thatcher pursued an economic policy which rejected the old orthodoxies and was promoted by only a minority of economists: a policy based on the doctrine of monetarism.

Tim Lankester was the private secretary for economic affairs to Thatcher during the early years of her government. His insider’s account explains her attitudes and decisions and those of the other main players in this deeply damaging experiment in economic policy making, which promised much but completely failed to deliver.

Offering fascinating insights into one of the most unsuccessful episodes of British economic history, he also examines the legacy of monetarism for the economy today.

'Aasmah Mir and Stig Abell with Times Radio Breakfast' for the Times Radio Podcast 
'The Economy is Recovering - but beware any politician who says they have 'a plan'' for The Times
'The myth that money supply controls inflation is being revived. Here’s how it failed its most ardent believer—Margaret Thatcher' in Fortune
'The rise and fall of 20th Century monetarism, according to one of Margaret Thatcher’s advisors' in City A.M
'Sir Tim Lankester on the promise, failure and legacy of Margaret Thatcher's monetarist revolution' on the Keen On podcast
'Inside a Macroeconomic Policy Blunder' on the Mainly Macro blog
Leaders Need To Know Economies Can Be Difficult To Turn Around in Forbes
Extreme Economics – What monetarism meant for Britain, with ex-Thatcher’s advisor Tim Lankester for the Bunker podcast
Inside Thatcher’s Monetarism Experiment — terminal velocity for the Financial Times
Framing Starmer in The New European
Brian Griffiths: Was Margaret Thatcher’s Monetarism Necessary? in The Centre for Enterprise, Markets & Ethics
Trouble in the Treasury in Literary Review
What I’ve been reading by Tyler Cowen

“A self-lacerating account of the British monetarist experiment by a man of stern principle, Lankester paints a surprisingly sympathetic picture of the lady herself and vividly illustrates how top civil servants approached their jobs, in difficult times – for good or ill.” Rachel Lomax, former Deputy Governor of the Bank of England

“Lankester is uniquely well-placed to tell the inside story of Thatcher's monetarist policies. And what a fascinating and well-told story!” Charles Goodhart, Emeritus Professor, London School of Economics and Political Science

“A unique contribution from an impartial Treasury official who witnessed some of the most politically charged debates of the Thatcher era from within Number 10.” Duncan Needham, Director of the Centre for Financial History, University of Cambridge

“An intriguing read. It explains from inside Number 10 how a simplistic economic theory that chimed with her ideology – monetarism – captured Thatcher’s imagination and how pursuing it inflicted long-lasting damage on the fabric of the British economy.” Wendy Carlin, University College London

“Steers the reader through a fascinating insider’s account of Thatcher’s approach to monetary policy and why she got some things wrong." Montek Singh Ahluwalia, Distinguished Fellow of the Centre for Social and Economic Progress and former Deputy Chairman of the Planning Commission of India

"Achieves what very few political books do, which is give the ideas of economics a relevance to time and place....explains them clearly and relate(s) them to historical persons set in a lively narrative." . Sir Simon Jenkins, journalist and author

"Fascinating" William Keegan, The Observer

"Lankester’s “inside track” experience makes his eye-witness account especially enthralling." Ian Harwood, The Society of Professional Economists

"A brilliant account." Financial Times

1. Introduction

2. A view from Number 10

3. Keynes and Friedman

4. The monetarists’ challenge

5. Labour and soft monetarism

6. Mrs Thatcher and hard monetarism

7. Monetarism’s high noon

8. Ending the experiment

9. Counting the cost

10. Mrs Thatcher and the trade unions

11. The quest for an alternative anchor

12. The monetarists and the critics look back

13. The legacy

14. The return to stagflation?

15. Epilogue