repeated that there was “no alternative” and stated in no ambiguous
terms that “the lady’s not for turning.”^34 In reality, the Conservative
government gradually abandoned its attempt to exercise a strict
control over the money supply, which in effect was impossible, in
favor of more pragmatic macro-economic orientations. Monetary and
fiscal policy nevertheless remained tight, and inflation was eventually
reduced, at the expense of a lasting increase in unemployment.^35
In the United States, the monetarist turn actually preceded the
election of Ronald Reagan. In the fall of 1979, in a last-minute
attempt to demonstrate his determination to reduce a worryingly high
rate of inflation, Jimmy Carter appointed Paul Volcker as chairman of
the Federal Reserve Board. Volcker almost immediately adopted a
strong monetarist stance, and contributed to an economic downturn
that may have cost Carter the presidency. In 1980–81, with a new
president who was more supportive of this stern orientation, interest
rates climbed up to 15.9 percent and the United States experienced
its worst recession since the 1930s.^36
The case of Ronald Reagan was distinctive. In a country that had
not lived through Britain’s difficulties – in 1976, the Labour govern-
ment of James Callaghan had to change its economic policies to
obtain a much-needed loan from the International Monetary Fund –
voters were not predisposed to support radical change.^37 To be elected,
Reagan promised that inflation could be reduced without increasing
unemployment, that taxes could be cut without incurring a deficit, and
that spending could be lowered without injuring anyone. Traditional
Republican “castor-oil economics,” lamented economist Herbert Stein,
was transformed into “the economics of joy,” with the help of dubi-
ous notions associated with “supply-side economics.”^38 In power,
(^34) Margaret Thatcher, “Speech to the Conservative Party Conference (‘The lady’s
not for turning’),” Brighton, October 10, 1980 (www.margaretthatcher.org/
35 speeches/displaydocument.asp?docid¼^104431 ).
Smith,The Rise and Fall of Monetarism, p. 106; Hall,Governing the Economy,
36 p. 118.
Alberto Alesina and Geoffrey Carliner, “Introduction,” in Alberto Alesina and
Geoffrey Carliner (eds.),Politics and Economics in the Eighties, University of
Chicago Press, 1991, p. 4; Douglass A. Hibbs, Jr.,The Political Economy of
Industrial Democracies, Cambridge, MA, Harvard University Press, 1987,
pp. 163–90; Smithin,Macroeconomics after Thatcher and Reagan, p. 57.
(^37) Hibbs,The Political Economy of Industrial Democracies, pp. 176–82.
(^38) Stein,Presidential Economics, pp. 236–37.
146 Left and Right in Global Politics