644 Chapter 32
for this huge loss of government revenue by instituting
another regressive tax called the Poll Tax, antitax
demonstrations drove her from office.
This conservative revolution necessitated severe
reductions in government spending, especially in the
budgets that Thatcher knew well—education and wel-
fare services. Thatcher asserted that the cradle-to-grave
welfare state that had evolved out of the Beveridge Plan
and the Attlee reforms of the 1940s cost more than the
nation could pay. The demographic portrait of the na-
tion—greater longevity, lower employment, and lower
birthrates—meant that the costs of the welfare state,
which stood at 25 percent of the budget in 1979 and
rose to 31 percent by 1988 (chiefly because of retire-
ment pensions and the high cost of benefits in a period
of high unemployment), would continue to rise. The
Thatcher government cut some benefits directly,
chiefly housing benefits, and curtailed others by taxing
them or not raising them to match inflation. Her mone-
tarism and budget cuts lowered inflation (5 percent),
increased unemployment (12.7 percent), reduced pub-
lic services, and caused vehement public debate.
Simultaneously, Thatcher aimed to increase the pri-
vate sector of the British economy by selling off some
previously nationalized enterprises. (Ten percent of the
British national economy was state-run in 1979.) This
policy of privatization eliminated state monopolies in
some areas and sold state-run enterprises in others. This
extended a cycle in British history; the Labour Party
had begun nationalizations in 1945. Two of the most
controversial nationalizations were privatized by Con-
servatives in 1951 (iron and steel) and a Labour govern-
ment of 1967 made a few gestures toward the party’s
historic commitment. (Ironically, Thatcher’s privatiza-
tions happened at the same time that François Mit-
terand’s socialist government in France was undertaking
new nationalizations in 1981–82.) Thatcher now sold
nationalized coal, gas, oil, and steel interests such as the
leading gasoline company, BP.
The Thatcher government also adopted a tough
policy toward labor unions and public employees. Em-
ployment Acts in 1980, 1982, and 1988, plus a Trade
Union Act of 1984, changed labor relations in Britain
and weakened trade unions. These laws continued a
century-long battle over union powers, redefining the
right to strike (by requiring a membership ballot before
a strike), restricting the right to picket, making unions
liable for strike damages, and curtailing union monopo-
lies known as closed shops. These restrictions were
backed by the courts and grew stronger when unions
became reluctant to strike.
Margaret Thatcher imposed her policies on a
sometimes nervous conservative government with a
forceful, intransigent style of leadership that belied
generalizations about women leaders. Her tough poli-
cies and tougher style (especially in her dealings with
the Soviet Union) earned her the nickname of “the Iron
Lady.” Thatcher also demonstrated her hard-line style
during her chief foreign policy crisis. In the spring of
1982 Argentina invaded the Falkland Islands, a small
British colony in the south Atlantic, claiming that they
formed a historic part of the Argentine state. Against
the strong opposition of the Labour Party and many
members of her own party, Thatcher insisted upon tak-
ing back the Falklands by war. One month after the Ar-
gentine occupation, British troops stormed the islands
and reclaimed them after a three-week land battle and
several bloody encounters at sea. A year later, the Iron
Lady was reelected with an overwhelming majority.Discontent in Eastern Europe
and the Rise of Solidarity
The peoples of eastern Europe demonstrated their hos-
tility to Communist dictatorship on many occasions af-
ter 1945. Antigovernment demonstrations in East Berlin
in 1953, an anti-Soviet rebellion in Hungary in 1956,
and the Prague Spring reform movement in Czechoslo-
vakia in 1968 were the most dramatic outbursts against
the Soviet system. The frustration in Eastern Europe
grew from the desire for both western freedoms and
western material conditions. The standard of living in
the east was far below conditions in the west, so daily
frustrations compounded the discontent.
The Soviet Union had used force to suppress East
Europe protest movements, asserting a right to inter-
vene in neighboring states. This Soviet policy was
known as the Brezhnev Doctrine in analogy to the
Monroe Doctrine by which the United States inter-
vened in neighboring states of Latin America. The
Helsinki Agreement of 1975, however, contained So-
viet guarantees of human rights. This inspired dissi-
dents in several of the Soviet satellites. Czech
intellectuals, led by the playwright Vaclav Havel, cre-
ated a civil rights movement known as Charter 77.
Their manifesto charged that the Czech government
violated the human rights promised at Helsinki. The
campaign was short-lived. Havel, whose satirical plays
had been banned since 1968, and five other civil rights
activists were jailed in 1979 for the crime of subversion.