Today marks the 13th anniversary of the death of Britain’s conservative politician Margaret Thatcher.

Thatcher’s contributions to the United Kingdom are evident to all. It was she who rescued Britain from the “cancer” of decades-long economic stagnation, restoring vitality to British society.

When Thatcher took office in 1987, Britain was a country sliding toward second-tier status in Europe. Excessive government regulation, a bloated state sector, and powerful trade unions had made it the “sick man of Europe.” Yet when she left office, she handed over one of the healthiest economies in Europe.

However, she did not cling endlessly to the position of prime minister or tightly hold on to power. Instead, she defeated ideas with ideas, tamed her opponents, and influenced the entire world.

Britain’s legendary prime minister, the “Iron Lady,” Margaret Thatcher

Margaret Thatcher was born in 1925. She grew up during the height of Keynesianism, but experienced its negative effects firsthand in her own life. In a public interview after becoming prime minister, she said: “Perhaps I had already begun to dislike Keynes before I even came to know Hayek.”

While studying chemistry at the University of Oxford, Hayek’s The Road to Serfdom had already become her “pocket book.” It is said that during her tenure as prime minister, she kept the book in her handbag. She once threw Hayek’s The Constitution of Liberty in front of her colleagues and said: “This is what we should believe in.”

During her tenure as Prime Minister, she led the liberalization of the British economy with bold and decisive measures. She closely aligned with the then U.S. President Reagan, echoing each other from afar, and together they spearheaded the global trend of economic liberalization, influencing the future world and becoming a focal point of ongoing debate.

Commenting on global economic liberalization in the 1980s is a vast topic. What concerns us here is under what circumstances and by what means Margaret Thatcher promoted economic liberalization in the UK, and what impact these policies had on the British economy at the time and today.

The once-great British Empire suffered from the “British disease”

After entering the 20th century, the British economy stagnated, faltering and sluggish, a condition referred to in academia as the “British disease.”

The share of Britain’s industrial production in the capitalist world fell from 50% in 1820 to 18% in 1900, 12.5% in 1937, and 8.8% in 1962. After World War II, the pound sterling lost its status as a world currency and continued to depreciate. The balance of payments deteriorated, productivity declined, competitiveness weakened, and growth rates fell below the global average.

From the end of World War II to the late 1970s, the Labour Party was largely in power. Adhering to European democratic socialism, it sought to rescue the British economy beginning with nationalization. From 1951 to 1954 alone, the Attlee government passed eight nationalization acts, bringing major industries such as the Bank of England, coal mines, aviation, and steel under state ownership. At the same time, based on the 1942 Beveridge Report, it implemented the welfare state. Subsequent Labour governments continued these policies, and even when the Conservative Party occasionally came to power, they did not fundamentally change them.

However, these policies did not improve the British economy; the “British disease” worsened instead. By the late 1970s, the global oil crisis further deteriorated Britain’s economic situation, with prolonged slow or stagnant growth, severe inflation, large fiscal deficits, and intensified social conflicts.

It was under these circumstances that Margaret Thatcher came to power in 1979. She resolved to rescue Britain through economic liberalization, with major policies including controlling the money supply, stabilizing prices, privatization, reforming welfare policies, and limiting the power of trade unions.

Thatcher used liberalization to rescue Britain

In terms of stabilizing prices, Thatcher fully implemented Milton Friedman’s views.

Friedman believed that price stability is a prerequisite for a functioning market economy, and that inflation fundamentally results from excessive money supply; therefore, stabilizing prices requires controlling money supply.

In the second quarter of 1979, when Thatcher took office, inflation in Britain was as high as 10.8%, rising to 22% by mid-1980. Her economic liberalization began with tackling inflation: tightening monetary policy and reducing national debt. By 1983, inflation had dropped to 4.5%, and GDP growth reached 3.7%, creating conditions for further liberalization policies.

Private ownership is the foundation of a market economy. Thatcher clearly understood that the root of Britain’s economic problems lay in postwar nationalization, which had pushed the economy toward a planned model.

State-owned enterprises in Britain had their boards and senior executives appointed by the government, which also determined their development strategies and incorporated their revenues into the fiscal budget—essentially no different from state enterprises in planned economies. As a result, they suffered from similar problems.

Executives became government officials, and company profits or losses were not directly tied to personal interests. Internal management became bureaucratic, inefficient, lacking innovation and competitiveness, leading to heavy losses. For example, the British Steel Corporation alone lost £300 million in the 1978–1979 fiscal year. Its per capita output in 1979 was only 141 tons, compared to 180 tons in France and 237 tons in Germany, with near-zero returns on capital.

Across all state-owned enterprises, from 1978 to 1981, they accounted for 16.8% of total investment but only 10.9% of output. These enterprises became an increasing burden on the government. From 1973 to 1980, the government invested as much as £20.5 billion into them through loans, grants, and debt write-offs, with minimal returns, worsening fiscal deficits and inflation.

During parliamentary debates, Thatcher bluntly stated: “The industries supported by Labour are parasites that only consume without producing.” At the time, state-owned enterprises dominated the British economy, and their inefficiency was a major cause of economic decline.

Thatcher firmly advocated privatization of state-owned enterprises. Smaller firms were sold to private owners, while larger ones were corporatized and privatized through the sale of government-held shares.

During her eleven years in power, industries ranging from oil, telecommunications, gas, steel, and water—once monopolized by state enterprises—to services like park maintenance, waste collection, and school catering, were opened to private ownership and operation.

Despite opposition from trade unions and Parliament, and even an open letter from 364 economists opposing her policies, she persisted.

Privatization increased government revenue—reaching £28 billion from 1979 to 1990—and more importantly transformed corporate governance, improving efficiency, reducing costs, and revitalizing businesses. Economic growth in Britain remained around 5%.

Alongside privatization, Thatcher strengthened industrial restructuring that had begun in the 1960s.

Take Manchester, a manufacturing hub, as an example: it shifted from traditional manufacturing to emerging industries such as electronics, information technology, computing, biotechnology, and optoelectronics. The share of traditional manufacturing in GDP fell from 60% to 17%.

At the same time, Thatcher relaxed government regulations on finance and business, revitalizing enterprises and the broader economy. Britain emerged from its difficulties, transforming from the “sick man of Europe” into a strong economic power, restoring its national vitality.

Another major policy of Thatcher’s economic liberalization was reforming the welfare state.

After World War II, Britain significantly expanded social welfare spending. By 1948, the Attlee government declared that Britain had established a “welfare state,” providing cradle-to-grave benefits.

Welfare spending remained high: £10.3 billion in 1949–1950 (4.7% of GDP), rising to £44.9 billion in 1979–1980 (9% of GDP). Government finances became unsustainable, relying on borrowing. By 1982, national debt had reached £100 billion, with annual interest payments of £6 billion.

Britain was mocked as a “comfortable nation living on debt.” The welfare system also fostered a class of “lazy people,” reducing social efficiency and vitality.

Yet no ruling party dared to undertake major reforms of the welfare system. Thatcher used a firm hand to reform it, emphasizing individual responsibility and shifting from universal benefits to targeted support—providing welfare only to those most in need and improving resource allocation efficiency through market mechanisms. This not only helped the poor but also encouraged greater work motivation.

She introduced market competition into healthcare, replacing the fully free system with one where patients bore part of the cost, and transforming the Department of Health from a provider into a purchaser of medical services, increasing autonomy for healthcare institutions.

In housing, she implemented privatization of public housing, selling large amounts of government-owned homes and encouraging private ownership through favorable terms. Even the poorest tenants were required to pay 20% of the rent.

Reforming trade unions

Trade unions in Britain were extremely powerful. Former Prime Minister Harold Macmillan once remarked: “There are three institutions we cannot touch: the Guards, the Roman Catholic Church, and the National Union of Mineworkers.” While unions are necessary as a counterbalance to business, excessive power can harm the broader economy and workers’ long-term interests.

When unions began to hinder Britain’s economy, Thatcher resolved to challenge them. In 1981, when coal miners went on strike, she had been in office only two years and her position was not yet secure, so she conceded to union demands. However, she prepared for future confrontation.

Over the next three years, she stockpiled large reserves of coal, converted some coal-fired power plants to oil, organized road transport fleets to replace rail if needed, amended union laws, and even had intelligence agents infiltrate the miners’ union.

In 1984, miners struck again. This time, Thatcher was prepared, and unions could not replicate earlier disruptions such as power outages. The strike lasted 362 days, but she refused to yield, and the unions ultimately failed.

Not content with this victory, she further constrained unions through legislation—for example, requiring secret ballots within unions to prevent control by small factions, and prohibiting unions from punishing workers who did not join strikes, thereby dividing union ranks. These measures not only limited union power but also allowed unions to function more appropriately.

Many years have passed since Thatcher’s time in office, yet her legacy remains controversial. This involves both ideological positions and vested interests. Those who support planned economies and state intervention, particularly left-wing advocates, will never affirm her. Those whose interests were harmed by liberalization policies—such as union leaders in traditional industries and low-income groups—also will not forgive her, just as Argentinians have long resented her over the Falklands War.

However, from this perspective, I believe Thatcher’s achievements far outweigh her mistakes; she was a hero who defended the order of civilization.

From a global historical perspective, the contributions of Hayek and Friedman to economic liberalization were largely theoretical; translating theory into practice may be even more important.

In the 1980s, Thatcher and Reagan turned economic liberalism from theory into practice in their respective countries, achieving success. This led global economic liberalization, the marketization of Eastern Europe and the Soviet bloc, and China’s economic reforms. In a certain sense, all of these were outcomes of economic liberalization, which forms the foundation of humanity’s path toward civilization.

Margaret Thatcher was not beyond reproach—no one is ever always right in politics—but she got the big things right. Her extraordinary life, in which she pursued her dreams and never compromised, is admirable. This biography records the legendary life of the Iron Lady who once dominated the political stage; this may be the best biography of Margaret Thatcher.