CHAPTER 3
BY THE LATE 1970s, the challenge of breaking promises could no longer be deferred in both East and West. As Paul Volcker began his monetary crusade against inflation in the United States, global markets pushed governments in the two economic laggards of Europe—Great Britain and Poland—to undertake their own fraught campaigns to remake the economic and social foundations of their countries. Within their respective blocs, Britain and Poland had taken on ignominious titles in the 1970s that reflected their hapless circumstance. In the West, “the British disease” had become shorthand for the profound problems of economic management afflicting democratic capitalism—low growth, high inflation, industrial strife, and high unemployment. In the East, “the Polish disease” had become a moniker for all that was wrong with state socialism—high sovereign debt, low export growth, and government subsidy of all manner of economic activity. The worst part about both diseases was that they appeared to be terminal. After the British and Polish populations rejected attempted reforms through popular protest in 1970, 1974, and 1976, most observers concluded that the national diseases were simply incurable on account of popular resistance to the necessary cures.
The fundamental challenge for British and Polish politicians, therefore, was not identifying the policy outlines of a cure,—though that was fraught enough—but rather gaining the domestic political support to implement it. Under the leadership of Margaret Thatcher in Britain and Wojciech Jaruzelski in Poland, the question of popular support was definitively but divergently decided in the early 1980s. Thatcher received and maintained the support, or at least the acquiescence, of the British population as she implemented economic discipline, while Jaruzelski never received the same from the Polish population. This chapter seeks to explain these divergent outcomes, primarily through the story of John Hoskyns and Mieczysław Rakowski. Hoskyns and Rakowski, respectively, were two of Thatcher’s and Jaruzelski’s most important advisers, particularly on the issue of building popular support for economic reform. So through their stories, we can gain a broader understanding of the divergent histories of their countries during this period.1
As we have seen, many people in the West in the 1970s assumed that state socialism had a distinct advantage in imposing economic discipline precisely because popular support appeared to be an irrelevant factor in socialist authoritarian governance. If an iron fist was good for anything, it was thought, surely it was good for imposing unpopular solutions on a resistant domestic populace. Electoral democracies were assumed to be fatally flawed for precisely the opposite reason. How could democratically elected leaders ever hope to carry out unpopular economic policies in political systems where their power depended on gaining and maintaining the approbation of their people? As the Cold War transitioned from a race to make promises to a race to break promises in the 1970s, state socialism appeared, in this regard, to have the upper hand.
Thatcherism and the Polish Crisis turned this prevailing wisdom on its head. These two crises command our attention not merely as the most vibrant case studies of broader dynamics occurring throughout the East and West but also as events that changed the Cold War in a fundamental way. The course of events in Warsaw and London, in Gdańsk and Orgreave, demonstrated for policy makers around the world the merits and demerits of implementing the politics of breaking promises in democratic and anti-democratic political systems. They demonstrated the ways in which the potent combination of electoral democracy and neoliberal ideology could produce a stronger state than socialist authoritarianism in the era of breaking promises.
Margaret Thatcher was able to achieve what her Polish counterparts could not because of the manifold benefits multiparty democratic elections and neoliberal ideology bestowed upon her government. Elections allowed her to credibly claim no responsibility for past government policy and instilled in most British people a confidence that their government was legitimate. Neoliberalism’s embrace of individual freedom as the highest moral good and critique of government intervention in the economy provided an ideological framework that painted the politics of breaking promises in a virtuous light. To be sure, there were many people within Britain who despised Thatcher and all she stood for, but after 1979 they failed to win the hearts and minds of a national majority.
These points come into sharper relief when juxtaposed to the situation in Poland. Because Wojciech Jaruzelski sat atop an antidemocratic state and a Communist Party that monopolized power, he could not credibly distance himself from past policy, rely on popular belief in his legitimacy, or gain society’s trust. Because he led a Communist Party that proudly proclaimed its control over society and the economy, he struggled to frame the politics of breaking promises in propitious ideological terms. The fundamental roadblock standing in the way of reform was also the reason Solidarity garnered widespread national support: most people believed they lived in an unjust society under the rule of an illegitimate government and therefore did not trust the Communist Party to carry out economic reform. Despite Jaruzelski’s numerous efforts to overturn these beliefs, it became clear in the crucible of crisis that he could not do so without liquidating the communist state itself. So he chose martial law instead. As Britain returned to growth under Thatcherism and Poland faltered under martial law during the rest of the 1980s, the lessons for the world were clear enough: the politics of breaking promises worked best when citizens viewed their government as legitimate and when governments found an ideological basis for defining austerity as virtuous. These lessons would redound in their effects all the way to the revolutions of 1989.
As the economic fate of both Poland and Britain faltered in the 1970s, the fraught prospects of reform became the subject of a broad and diverse national debate. Countless economists, policy makers, and public intellectuals proposed ways of reversing national decline, but it was John Hoskyns in Britain and Mieczysław Rakowski in Poland who rose above the general din of the debate to fundamentally influence the course of their nations. Both men had spent their lives in a profession other than politics—Hoskyns had built a successful career in business as the CEO of a computer company, and Rakowski was the longtime editor of the reformist weekly Polish newspaper Polityka. But because their ideas offered persuasive ways of overcoming the nations’ crises, they became influential advisors to Thatcher and Jaruzelski as their governments tried to implement economic discipline.2
By his own admission a man of mixed political allegiance (he had voted Labour through the 1970 election), Hoskyns’s engagement with British politics grew in equal measure with his dismay over the political system’s failure to fix the British economy. After watching Edward Heath’s government fall in the 1974 election, caused by the powerful National Union of Mineworkers (NUM) strike, he became convinced the key to solving all of Britain’s economic problems lay in breaking the power of the country’s trade unions to resist economic discipline. With this conviction, he went in search of a political party.
The choice was not as clear at the time as it appears in retrospect. Both the Labour and Conservative Parties had followed the same broad Keynesian consensus throughout the postwar period, and their trade union policy varied between the confined limits of outright support and quiet accommodation. Neither party stood against trade union interests because neither believed the trade unions could be defeated. Indeed, it was assumed across the political spectrum that Britain could only be governed with the permission of organized labor. The fall of the Heath government appeared to be proof that any policy that transgressed the interests of the working class would not only fail but would also bring down the government that proposed it. As Thatcher herself recounted in her memoirs, for most of the 1970s, “the conventional wisdom was that Britain could only be governed with the consent of the trade unions. No government could really resist, still less defeat, a major strike.”3
Thatcher, of course, shared the broad outlines of Hoskyns’s view, and thus it was in her ascendant radical wing of the Conservative Party that Hoskyns found a home. In the wake of the 1974 Heath defeat, Thatcher and her closest political ally, Keith Joseph, set up a think tank, the Centre for Policy Studies (CPS), to transform the Tories’ postwar policy of Keynesian economic management and trade union accommodation. The following year, she was elected party leader and became leader of the opposition in Parliament. Through Joseph, Hoskyns met Thatcher in the summer of 1976 and joined the ranks of the CPS to study how the nation’s economic decline could be reversed. As the country descended into the fraught politics and strict economics of the International Monetary Fund (IMF) crisis that fall, the time for fresh thinking about cures for the British disease was indeed propitious.
It did not take long to identify the root of the problem: policies that would solve the country’s economic problems were politically impossible, and policies that were politically possible would not solve the country’s economic problems. Thus, expanding the horizons of political possibility lay at the heart of any attempt at reform. In a June 1977 letter to Joseph, Hoskyns wrote that turning around the British economy would require “a complete change in the unions’ role; a further fall in living standards; yet more unemployment (unless wages can fall further still).” This whole package was “obviously a political non-starter,” and “the dilemma of government (of either party)” was therefore “absolute.” A government could “either face up to the real measures which might just turn the economy around, but which are politically impossible: or it can select measures which, however sensible, cannot save the UK economy, but are at least politically permissible.” The key question confronting the Tories, therefore, was political rather than economic. “What political innovation is needed to remove the political constraints on government’s freedom to pursue such policies?” Hoskyns’s letter asked.4 It was the question that would define the Conservatives’ time in opposition. In response to the letter, Joseph latched onto the theme of “political innovation” and discussed Hoskyns’s views with Thatcher. Liking what she heard, Thatcher tasked Hoskyns and his collaborator, Norman Strauss, with developing their thoughts into “a coherent plan” to campaign and govern.5
The result was the Stepping Stones report of November 1977. Widely regarded as the blueprint for Thatcherism, the report had two objectives. First, it aimed to develop a communications strategy that would “begin the long process of convincing the public that radical change would have to come, that it would be pretty uncomfortable, and that the alternative would be something much worse.”6 The Tories needed to focus on “the selling of new policies” because “creating the necessary understanding of the need for reform” would ensure “that the reform itself did not provoke what many feared might be physical revolution.”7 Second, Stepping Stones aimed to unite the party itself around the set of policies that would need to be implemented to transform the economy. The array of policy changes was vast. The inflation rate, the exchange rate, interest rates, tax rates, nationalized industry policy, and public sector spending would have to be altered. But all of them revolved around the central and politically radioactive issue of trade union reform. Numerically, if not ideologically, the Tories were still dominated by politicians who believed the trade union issue should be left alone (in time, they would become known as the “wets”). Those, led by Thatcher, who favored tackling the issue head-on (later called the “dries”) were a powerful minority, but a minority nonetheless. Firmly uniting the party around a policy platform that included union reform was therefore essential.8
The Stepping Stones report fostered no illusions about the challenge that lay ahead. The task of the next government would be “of a different order” than that facing any other postwar government. Economic recovery would require “a sea change in Britain’s political economy.” To achieve this sea change, a “landside” victory in the next election would not be enough if it only reflected “the electorate’s material dissatisfaction.” Instead, the electoral victory would have to represent “an explicit rejection of socialism” and “the demand for something morally and economically better.” It had to produce a mandate to deal with the country’s “one major obstacle—the negative role of trade unions.” Gaining such a mandate would not be easy, but if the union question was “skillfully handled,” the “rising tide of public feeling” could transform the issue from a political liability into a strength.9
How could the party effect such a dramatic change in public opinion? The report drew on theories of advertising to lay out nothing short of a grand theory of social change. First, it posited that “in politics, the party and its policies are all aspects of the ‘Product,’ which the voter, or the ‘User,’ buys with his vote.” Each voter had a “Mental Set”—“a more or less stable set of opinions, values, interests and purposes”—they used to choose a Product, and as long as voters’ Mental Sets remained unchanged, their behavior would “tend to be predicable and to follow a fixed pattern.” Only “New Data”—new information about the Product’s (or party’s) function, effects, or psychological impact—could disrupt Users’ Mental Sets and put them in a state of “Cognitive Dissonance,” which Users would find stressful and attempt to resolve by changing their behavior. If enough voters reached a state of cognitive dissonance, the electorate would recognize that the country had reached “Discontinuity”: “a point at which solutions to our problems simply could not be found without breaking constraints (either political or economic) which had previously been accepted as unalterable ‘facts of life.’”10
This was all a rather elaborate way of saying the Tories had to get people to change their minds on the issue of organized labor. But when taken out of the realm of jargon and made concrete, the scale of the challenge before them began to emerge. “There must be a national realization that the unions must modify their behavior so as to be less combative, more flexible and genuinely helpful,” the report concluded. “We must ensure that [voters] feel an aversion to current union values. . . . They must be made to dislike them so intensely that their fear turns to anger.”11
Although Stepping Stones serves as a convincing interpretation of how Thatcherism actually won popular support, it garnered only lukewarm support among the Tory leadership in late 1977 and 1978. Thatcher called it “the best thing we’ve had for many years” and ordered the formation of working groups to study how it could be implemented. But as those groups began their work in the spring of 1978, the career Tory politicians who had survived by not provoking conflict with the trade unions slowly buried the Stepping Stones agenda under deafening silence. Rather than strategically raising the issue in public forums in ways that would “invite” voters to reorganize their “Mental Sets,” most of the party leadership relied on the tried-and-true method for dealing with uncomfortable topics: simply not talking about it.12
But if it was not a slick, strategic communications strategy that engineered a broad public recognition of “Discontinuity,” what did? A more banal but also more effective cause was lurking in the wings—unforeseen events. In the summer of 1978, the Labour prime minister, James Callaghan, decided to delay the next election from the fall of 1978 to the spring of 1979. In the intervening months, Callaghan’s IMF-sponsored “incomes policy,” which mandated nationwide levels for annual pay increases as a means of fighting inflation, broke down under popular pressure, and trade unions of all stripes went on strike for higher wages. In what came to be known as the Winter of Discontent, British society virtually ceased to function in the months surrounding the turn from 1978 to 1979. Bernard Donoughue, a senior advisor to Callaghan, recalled:
By the second week of January [1979] . . . there was a serious shortage of food and medical supplies—ministers considered sending tanks into the ICI medical headquarters to retrieve drugs and essential equipment. . . . The nightly television pictures of violence and the brutal face of trade unionism were doing terrible damage to the government and to the trade union movement itself. . . . a million and a half public service workers went on strike, closing hospitals, schools and local authority services across the country. The railways came to a halt. . . .
NUPE [The National Union of Public Employees] publicly and without apology or sign of compassion announced that they would not allow the sick into hospital; and an official stood before the television cameras and stated that “if people died, so be it.”13
The Winter of Discontent was, in the vibrant and depressing color of lived experience, precisely the “New Data” that Stepping Stones had called for. Britain arrived at a moment of “Discontinuity,” and people immediately began to search for a way out of what had only recently seemed to be the unalterable facts of life. On January 18, 1979, Hoskyns recorded in his diary that “the party [is] in grip of mild euphoria, I think, because country beset by strikes. . . . Union issue is now top of the list.”14 At the end of March, Callaghan lost a vote of confidence in the House of Commons, which led to the first general election forced by the House of Commons since 1924. Just over a month later, on May 3, 1979, the Conservatives returned to government with a forty-three-seat majority, and Thatcher became prime minister with a mandate to fight inflation, limit public spending, and curb trade union power.
While Hoskyns was developing Stepping Stones in Britain, Mieczysław Rakowski was hard at work on reform plans for Poland. From his editorial perch at Polityka, Rakowski watched the 1970s unfold in a political and economic system both radically different and strikingly similar to the one in the United Kingdom. Where Edward Heath had fallen in 1974 after trying to impose discipline on British unions, Władysław Gomułka had fallen in 1970 after trying to impose discipline on Polish workers through consumer price increases. Like the Labour men who replaced Heath in Britain, the man who replaced Gomułka, Edward Gierek, legitimized his leadership after 1970 by championing rather than disciplining the interests of the Polish working class. Even the mid-decade crisis point in Poland arrived the same year as the IMF crisis in Britain.
This left the fundamental problem of Polish and British society in the late 1970s essentially the same: the political impossibility of economic reform. As in Britain, pressure to appease the working class had pushed wage increases in Poland during the first half of the 1970s far beyond increases in workers’ productivity. This had left the Polish population with lots of money to spend and too little to spend it on. In Britain, where prices freely moved in response to market pressures, this monetary overhang manifested itself in crippling inflation. In Poland, where prices were administratively fixed, this overhang took the form of equally crippling shortages of consumer goods. Where Hoskyns and the Tories sought to solve this problem in Britain through monetarism, subsidy cuts to nationalized industries, and trade union discipline, policy makers in Poland sought similar solutions in price increases, enterprise independence, and campaigns to increase work discipline. In both countries, the results of these reforms would be significant declines in national living standards, bankruptcies of prized nationalized companies, and greater job insecurity for the working class. In both countries, then, the results would threaten political stability.
The question in Poland, as John Hoskyns might have posed it, was what political innovation would allow the government to pursue policies that were seen as economically necessary but politically unpopular. It was here that Rakowski emerged as an important voice on the Polish scene. Rakowski was not an economist, but he was an astute observer of the nation’s politics. By the late 1970s, it had become clear to him that the government’s future economic reform efforts would forever be crippled by two glaring weaknesses: its lack of legitimacy in the eyes of the Polish people and the population’s consequent lack of trust in the government. Drawing attention to these weaknesses drove him in 1978 and 1979 to compose a book-length critique of communist leadership in the 1970s, The Republic on the Threshold of the Eighties (Rzeczpospolita na progu lat osiemdziesiątych).
After beginning the book with the requisite praise for the achievements of socialism in Poland, Rakowski quickly arrived at the problem that had motivated his work. By 1979, the economy had already been performing poorly for three years, and it was likely to show no significant improvement for at least two more. Half a decade would therefore be defined “by serious economic difficulties.” Five years of troubles meant the country’s economic problems “were no longer a trivial matter” and ensured that the country was “not only dealing with an economic problem but also with a political one.”15
The country’s economic problems had produced two worrying social phenomena. First, the Polish people increasingly viewed their society as an unjust one. “Many people are increasingly aware of the growing gap between their life situation” and the life situation of those who were “considered privileged in society,” Rakowski wrote. Social policy had begun to depart from “the basic principles of social egalitarianism and the simplest principles of social justice.” Second, a widespread distrust of the current government and the nation’s Communist Party, the Polish United Workers’ Party (known by its Polish acronym, PZPR), had taken hold in the population. As shortages of consumer goods and long queues at stores had become depressingly familiar in the late 1970s, the “accumulating difficulties of everyday life” had caused large sections of society to “lose confidence” in the party’s constant declarations of socialism’s benign advance.16
Because of these two trends, Rakowski feared that a “majority of society” did not believe in “the idea of jointly leading Poland out of the difficulties it had fallen into.” As the party tried to “carry out large and not at all easy economic and social tasks” in the coming years, it would be forced to do so amid a deepening “crisis of public trust in our policy.” If such an environment persisted, he wrote ominously and presciently, “the time may come when society, or some of its factions, will fiercely question our ability to take a leading role in framing the country’s development directions.” The consequences of such a development would be “tragic.”17
In search of a way to prevent this looming tragedy, Rakowski then posed a very Hoskynsian question. “What then should be done to open the way out of the current, highly unfavorable situation?” he asked. He offered many answers, but they all centered around a common theme—indeed, around a political innovation: it was time for the PZPR to enter into a “partnership” with society to solve the nation’s problems. Rakowski defined this partnership as an agreement between the PZPR and other societal forces that would establish the partners’ “co-responsibility” for reform policies and “for the country’s fate.” The Catholic Church and the country’s trade unions headlined the list of possible partners. The church was “one of the guarantors of peace in Poland,” and the trade unions could “fulfill the role of an authentic intermediary between the working class and the centers of power.” If both could be brought on as partners, Rakowski believed the party would benefit from a “real distribution of shared responsibility for the development of the country.” But they had to act fast. Rakowski warned that inaction would bring even greater problems to the fore. If the party did not “meet the growing striving of society for real participation in government,” Rakowski concluded, then “life will force us to do so anyway.”18
However perceptive Rakowski’s judgments appear in retrospect, they received no quarter in the Polish halls of power in 1979. Because of his book’s extended criticism of the Communist Party, Rakowski could not find a publisher to print it, though he was allowed to circulate it among his friends and associates.19 The economy contracted at a rate of 2 percent in 1979, and instead of confronting the mounting problems proactively, Gierek’s party apparatus assumed a pose of political paralysis. Like the fate of Stepping Stones in Great Britain, it would take a moment of national crisis before Rakowski’s views would receive full consideration. Only after a moment of “Discontinuity” would people (in this case, in the Communist Party) search for a way out of what had only recently seemed to be the unalterable “facts of life.”
The moment of crisis was not long in coming. Shut out of global capital markets by the stinging combination of Volcker’s interest rates, the Iranian hostage crisis, and the Soviet invasion of Afghanistan, Gierek’s government attempted to raise food prices for the third time in a decade on July 1, 1980. Within three weeks, strikes consumed the nation’s industrial centers. In mid-August, unrest returned to the Lenin Shipyard in Gdańsk, where activists made both economic and political demands, including the reinstatement of two workers who had been fired for union organizing. One of these workers, Lech Wałęsa, went on to lead the local strike committee and worked to unite the strikes under a single umbrella organization, the Inter-Factory Strike Committee. The speed and size of the protests overwhelmed the state systems of repression, and soon the newly united workers published a list of twenty-one demands to end the strikes. Sensing the weakness of its own position, Gierek’s Politburo decided to negotiate with the strikers, and on August 31, the government and the fledgling opposition signed the Gdańsk Accords, which acknowledged the workers’ rights to form independent trade unions, strike without reprisals, and express themselves freely in the public sphere. Similar agreements were signed in other parts of the country in the days that followed, and in mid-September, the workers joined their groups together into one national organization, the Independent Self-Governing Trade Union “Solidarność.” Poland had arrived at its moment of discontinuity, and the national search for ways out of previously unalterable facts of life promptly commenced.
As in Britain, the first step in Poland was to throw out the leader who had steered the country into crisis. In early September, Gierek was swiftly deposed by his own Politburo in a desperate attempt by the party to distance itself from the policies of the 1970s. However, his replacement, Stanisław Kania, was almost equally implicated in the mistakes of the past, and few Poles looked upon his appointment as a fresh start. The latter months of 1980 produced further bouts of tension between the PZPR and its newfound opposition. In October, Solidarity organized a one-hour general strike to protest delays in the wage increases that had been promised at Gdańsk, which forced Kania to pledge adherence to the Accords the next day. In November, as the party dragged its feet on officially recognizing Solidarity’s existence, the union leadership threatened another, longer general strike unless its registration went through. Again, the party caved. In December, workers in the city of Piotrków Trybunalski went on strike to protest a drop in their meat rations. The government said the economic crisis necessitated the meager rations, but as Rakowski had feared, the workers had lost all confidence in the credibility of government statements. Indeed, a widespread belief had taken hold that the party was purposefully manufacturing the economic crisis (including, it was believed, withholding food from the population) to discredit Solidarity in the eyes of society. Only when local officials agreed to allow Solidarity to supervise the food distribution system in the area did the workers return to their jobs.20
Upon such vacuous foundations of social trust, a program of economic reform and discipline could not be built. Rakowski, who had long believed this, viewed the strife of late 1980 as a chance to finally build support for his position. In November, he took to the pages of Polityka to advocate for a change in the party’s course. Under the title “Credibility,” he told the Polish people, “We are witnesses of the end of a certain era—the epoch of the PZPR autonomy. In place of autonomy, partnership enters as a prospect.” The party’s rule could no longer be based “on suspicion towards partners” because those potential partners now enjoyed “the support of major factions of society.” The “decisive factor” in the creation of Solidarity had been “the tiredness of the working class and the whole society with [the party’s] way of exercising power.” If the PZPR wanted to continue to govern Poland, it first had to regain society’s trust.21
Amid the crisis, these views at last caught the eye of a very important person, Wojciech Jaruzelski. As Kania’s standing faltered in late 1980, Jaruzelski began to take on an expanded role in the party leadership. Already the head of the army and the defense minister in the fall of 1980, he became prime minister in February 1981. After reading Rakowski’s articles throughout the fall of 1980, he asked Rakowski to send him his unpublished book manuscript. In his memoirs, the general recalls sharing Rakowski’s conviction that Solidarity had to be viewed “as a valued partner” and believing that their views generally “corresponded.”22 As a result, he offered Rakowski the post of deputy prime minister for trade unions in his new government and charged him with implementing his vision of partnership between the PZPR and society. As in Britain, a moment of social crisis had brought about a change in government and in government thinking. What remained to be seen was whether the new governments and the new thinking could produce the unpopular change that had eluded all predecessors.
The first year of the Thatcher revolution was, in fact, not much of a revolution at all. To resolve the labor disputes at the heart of the Winter of Discontent, the outgoing Labour government had granted a generous set of wage increases across the economy, and Thatcher chose not to spend her first moments in office refighting the labor battles that had won her Downing Street in the first place. In combination with the pressures produced by the second oil crisis, these wage increases only deepened the inflationary problem hanging over Britain. In addition, while Thatcher’s first budget was certainly not a Keynesian spending spree, it nevertheless stimulated more than disciplined the economy through income tax cuts. The result was that by the fall of 1979 inflation was running at 17.4 percent, and the British welfare state and trade union system remained virtually untouched.23
It was left to those who controlled the printing presses to impose the discipline that Thatcher’s cabinet avoided. Under Geoffrey Howe, the new chancellor of the Exchequer, the government adopted a monetarist policy aimed at breaking inflationary expectations among the population. Like Volcker in the United States, the government would now set a target for monetary growth every year and then adjust interest rates to meet that target. Theoretically, this meant the government put no cap on the interest rate levels it would set in pursuit of its monetary goals, but in practice it simply meant interest rates would go much higher than they ever had in the past. And go up they did. Howe raised rates from 12 to 14 percent in June 1979 and again from 14 to 17 percent in November. The toll on the economy quickly showed. The British pound sharply appreciated to an average value of $2.40 in the second half of 1980 (up from $1.57 in the depths of the IMF crisis), and the resulting competitive disadvantage for British industry on world markets led to massive layoffs in the private sector. Unemployment, which had numbered 1.4 million people when Thatcher entered office, began a steady and excruciating climb to 3 million by January 1982.24
Hoskyns and his allies expected a popular backlash. With memories of the Heath government in 1974 and the Winter of Discontent in 1979 fresh in their minds, they started to plan for what they believed would be the inevitable response of the working class: strikes. In the summer of 1979, Hoskyns began what he called the “Quick” and “Long” campaigns to change working-class thinking. The basis of both campaigns was what he and his Policy Unit colleague Norman Strauss termed “event-led communications.” This theory was motivated by the conviction that “public attitudes were not much affected by speeches and articles because most people are not in the habit of visualizing differing future situations.” Instead, “what changed their minds . . . was the direct observation—or better still, first-hand experience—of actual events and actions.” In practical policy terms, this meant the Thatcher government should use “principled argument” to state its economic positions publicly and “then be ready to let the strikes happen.” Once strikes were “causing wide-spread hardship” and “stress in the minds of the public,” the “moral and intellectual bankruptcy” of union leaders would be exposed. Only then would public attitudes toward unions, including among rank-and-file union members, begin to change.25
There are two important points to make about this line of reasoning. First, as with the Stepping Stones report in opposition, most of Thatcher’s ministers found this policy of purposeful provocation to be politically reckless and chose instead to keep quiet. Most ministers simply did not share Hoskyns’s faith in the mutability of public opinion. After a few stern speeches by Thatcher and Howe in the fall of 1979, the “Quick” campaign petered out, and by the spring of 1980, Hoskyns himself had abandoned the “Long” campaign on account of internal opposition.
But second, and more important, even if the Tory cabinet did not place much hope in “event-led communications,” leaders across the Iron Curtain in the Polish Politburo did. Throughout their own long battle with a union, Polish leaders consistently hoped that the public’s “first-hand experience” with the “material hardships” produced by Solidarity’s actions would expose what they believed to be “the moral and intellectual bankruptcy” of the union leadership and sway public opinion in their favor. In this hope, of course, they faced a rather significant problem: in their antidemocratic and unjust socialist authoritarian system, it was difficult to convince any Pole that it was Solidarity, rather than the party, that was morally and intellectually bankrupt. Although there is some evidence to suggest that the Polish population grew tired of the material hardship and uncertainty of daily life by late 1981, these feelings never translated into a widespread turn of public opinion against Solidarity. The PZPR never did take the steps that would have given it the moral and intellectual high ground required to change public opinion because it could not do so without liquidating the communist system itself. For that reason, events always “communicated” a different message to the Polish population than they did to the British.26
Despite Hoskyns’s ambition, by the start of 1980, the Thatcher government still had not done anything to change the structure of British government and society. A number of policy innovations in the spring and summer of that year converged to begin to produce such changes. In March, the Treasury announced a new policy of long-term monetary planning called the Medium Term Financial Strategy (MTFS). A further elaboration of the government’s monetarist vision, the MTFS announced annual goals for growth in the money supply and committed the government to lowering the budget deficit in order to meet those goals. Many exceedingly smart civil servants and politicians in the Bank of England, the Treasury, and 10 Downing Street thought this was an exceedingly stupid idea.27 The growth of the money supply, they reasoned, was extremely hard to measure, let alone predict, and any time it looked as though a target would be missed, the government would be boxed in. As Nigel Lawson, Howe’s deputy at Treasury who first proposed the idea, put it, “That of course was the point of the whole exercise.” The MTFS, he wrote, “was intended to be a self-imposed constraint on economic policy-making, just as the Gold Standard and the Bretton Woods system . . . had been in the past.”28 In the end, both sides in the debate proved to be right. The targets were often missed (sometimes wildly), and yet their very existence pushed the government to adopt politically difficult policies that otherwise would have been avoided.
Evidence of this began to show almost immediately. With the announcement of the MTFS, the government faced pressure of its own making to cut public expenditure. Throughout the summer and fall of 1980, this pressure manifested in various technical debates over public sector pay settlements, the deindexing of public spending from inflation, and the determination of “cash limits” for each government ministry and nationalized industry. Collectively these debates show a government searching for a way to make politically possible what it now deemed economically necessary.
As the government’s chief strategist, Hoskyns’s counsel in these debates proved decisive. With inflation running at double digits in 1980, any government decision to deindex pay increases from the price level was sure to deliver workers a significant decline in real wages. Everyone knew this might cause trouble and even lead to a strike in the Civil Service, but Hoskyns confidently advised Thatcher to make the change.29 If it led to a strike, so be it. Hoskyns, of course, believed that changes in public opinion were really “events led,” so perhaps a strike would be just what the Thatcher government needed. “There is a strong case for doing it early,” he wrote, “in order to allow maximum ‘protest time’ so that the ensuing debate can expose the moral and intellectual bankruptcy of the union position.” As he had been writing since first crafting his grand theory of social change in Stepping Stones, he repeated, “You won’t get new behavior unless you have new attitudes. And you won’t get new attitudes without new information and enough elapsed time for it to be put across, explained by the media and understood by the public.”30
Decoupling social security payments from inflation presented a similar disciplinary challenge. Hoskyns’s memo on the issue immediately noted “the political difficulties” inherent in the decision, but it encouraged Thatcher to press ahead anyway. To make society’s bitter pill go down easier, Hoskyns suggested the deindexing be folded into “a bigger package” that would include a signal of the “fair distribution of sacrifice.” He surmised that something like “a symbolic surcharge” on the highest tax brackets would do the trick. “People will accept almost anything,” he concluded, “provided they are persuaded that it is (a) necessary; (b) fair.”31 By this point in her premiership, Thatcher was known the world over for her mantra, “There is no alternative.” For Hoskyns, the phrase only encapsulated half the challenge: people not only had to be convinced that there were no alternatives to the government’s discipline, but they also had to be convinced that the burden of the discipline would be distributed fairly throughout society.
These questions of necessity and fairness came to a head at the end of 1980. Despite months of work on preparing policies of economic discipline, Thatcher and her government still had not introduced enough reform to change the country’s outlook. Indeed, by November 1980, most observers both inside and outside the government had concluded that the government had struck the wrong balance between fiscal and monetary policy in its first two years. The combination of high interest rates and loose fiscal policy had produced the worst of all worlds—high interest rates that had led to an overvalued pound; an overvalued pound that had decimated British industry; a decimated industrial sector that had subsequently laid off hundreds of thousands of workers; a rise in the number of unemployed workers, which had driven up government social insurance spending; and an increase in government spending that had increased the budget deficit and pushed already high interest rates even higher. It was a vicious spiral from which there appeared to be no politically easy exit. All the apparent options that would solve the crisis—cutting public spending further, repealing the tax cuts that had defined Thatcher’s governing agenda, or allowing nationalized industries to go bankrupt—looked like political suicide of one form or another.
It was precisely the moment of political impossibility Hoskyns had long seen on the horizon. Beginning in late November 1980 and extending through the next budget’s publication in March 1981, he undertook a sustained campaign to get Thatcher to disregard all political constraints and do what he deemed economically necessary. “We must now be approaching the point . . . when we have to choose between one of two routes,” he wrote her in November. “On the one side, we can start to move increasingly towards what is ‘politically possible’ but simply inadequate for solving the problem. On the other, we will have to find ways of doing things which appear to be ‘politically impossible’ but which are essential.”32 By the end of the year, he had extended the scope of his message to the entire postwar period. Britain’s postwar decline had been caused by “politicians who have never understood what is economically necessary, only what appears to be ‘possible.’” In late 1980, very few things seemed politically possible because of a long list of constraints—an inability to cut social security spending, an inability to reform trade unions, an inability to handle strikes, and an inability to liquidate state-owned enterprises. But Hoskyns pleaded for persistence: “Acceptance of these constraints is tantamount to saying: ‘On reflection we’ve decided we can’t succeed.’” He implored Thatcher to convince her cabinet that each of these constraints “has to be broken” and then to focus on “the right political communications to gain public acceptance.”33
Ever the politician, Thatcher had long been focused on plucking the rhetorical strings that would make the British public’s heart sing. Throughout her speeches, she appealed to liberal themes of individualism, independence, and self-reliance to ennoble her crusade against government intervention in the economy. In her telling, she was not imposing economic discipline on a resistant population but rather liberating a captive population from the growing tyranny of the state. “It is not the State that creates a healthy society,” she told the nation in October 1980. “The State drains society, not only of wealth, but of initiative, of energy. . . . A healthy society is not created by its institutions.” Instead, “a great nation” was “the voluntary creation of its people,” and prosperity was the product of “countless acts of personal self-confidence and self-reliance.”34 This was no mere cover story whipped up for public consumption; Thatcher was an effective promoter of her vision because she truly believed in it.
This sincerity of conviction proved decisive when—as in fall 1980—everything about Thatcher’s deteriorating circumstances suggested she should abandon her beliefs. Indeed, most observers believed it was only a matter of time before she would change course, and talk of a Thatcher “U-turn” became widespread. The Iron Lady relished defying their expectations. “To those waiting with bated breath for . . . the ‘U’ turn,” she said in her October speech, “I have only one thing to say. ‘You turn if you want to. The lady’s not for turning.’”35 Neither this confidence in the righteousness of economic discipline nor liberalism’s lexicon of individualism and self-reliance was available to Jaruzelski and Rakowski in Poland.
Righteous confidence still needed to be attached to particular policies, so in early 1981, a small group of leading officials gathered at Chequers for a weekend retreat to discuss their next steps. It was at this retreat that the 1981 budget—the defining landmark in the fiscal history of Thatcherism—was born. When the group assembled on January 17, Geoffrey Howe brought with him some very bad news: the budget deficit was growing with no end in sight.36 Unless the growth in government borrowing was reversed, interest rates and the pound would continue to rise, industry would continue to shed workers, and public spending would continue to grow. To prevent this slide, it was now clear the government would have to propose a draconian deflationary budget in the midst of an already severe recession. The ministers returned to London late in the day, where a battle for the future of the Thatcher experiment awaited.
In her memoirs, Thatcher wrote, “I shall never forget the weeks leading up to the 1981 budget. Hardly a day seemed to go by without the financial scene deteriorating in some way.”37 Indeed, every time Howe produced new forecasts, the projected size of the budget deficit only grew larger and further over the government’s stated goal in the MTFS. The debate within the government, therefore, aimed to balance the interests of the two groups most important in the politics of breaking promises: capital holders on global markets who bought British debt and the citizens of the country the government served. Through much of February, the debate over how to balance the competing interests of these two groups raged within the government. After one such meeting, Hoskyns and the Policy Unit warned, “This budget is the turning point.” Economic constraints had forced a confrontation with brutal political reality, they concluded, and Thatcher’s political future now rested on her choice. “IN SHORT, WE BELIEVE THAT THE BUDGET PRESENTED ON 10 MARCH WILL LARGELY DETERMINE WHETHER WE WIN OR LOSE THE NEXT ELECTION.”38
In the end, Thatcher chose economic discipline over political felicity and introduced a deflationary budget of tax increases and spending cuts. She publicly tried to explain that in prioritizing the reduction of the deficit, the budget aimed to lower interest rates, improve the exchange rate, and thereby eventually return Britain to economic growth. But it was a tough sell. Across much of the political spectrum and the academic world, the budget was condemned for holding to a blind faith in the power of monetarism over the obvious suffering of the British people. Most famously, a group of 364 economists from across Britain published a letter in the Times declaring, “There is no basis in economic theory or supporting evidence for the government’s belief that by deflating demand they will bring inflation permanently under control.” The 1981 budget, they declared, “will only deepen the depression.”39
There is a significant academic debate about the ultimate effects of the 1981 budget, but two things are clear and important for our purposes.40 First, whether caused by the budget or merely correlated to it, the recession of the early 1980s reached its trough in the first quarter of 1981, and economic growth returned thereafter. As Nigel Lawson wrote of the 364 economists’ letter with evident satisfaction, “The economy embarked on a prolonged phase of vigorous growth almost from the moment the letter was published. So far from launching the economy on a self-perpetuating downward spiral, the Budget [sic] was a prelude to eight years of uninterrupted growth.”41
Second, whatever the scale of the budget’s economic effect, the limited scale of its political and social effect was even more important. In the spring and summer of 1981, socially troubling and politically difficult riots broke out in the Brixton district of London and the Toxteth district of Liverpool. Hundreds of police and protesters violently clashed, more than one hundred buildings and police cars were burned, and hundreds of arrests were made.42 But Britain did not descend into revolution. Such a statement may seem outlandish in the contingency it grants to the course of British history. But one only needed to look across the Iron Curtain to see the potential scale of popular revolt that waited in austerity’s wings. As Jaruzelski and Rakowski were about to find out in Poland, implementing economic discipline in a political system with no popular legitimacy was a recipe for national revolution.
The two Polish leaders began their quest at almost exactly the same moment Thatcher announced her 1981 budget. In his first speech to the Polish Sejm after assuming the position of prime minister in February 1981, Jaruzelski called for a three-month moratorium on strikes so the government could “take the first steps toward the introduction of a program for economic stability” and “prepare wide ranging economic reforms.” In exchange for its compliance, Solidarity was offered participation in a “Permanent Committee” on government-union relations, to be led by Rakowski.43 Two days later, Wałęsa met Rakowski for the first time and welcomed the call for social peace and consultations. On February 15, Rakowski gave his first speech in the Sejm, telling the gathered officials, “We have begun the difficult and arduous path of regaining credibility with voters.” It was, he said, “not possible to imagine the construction of a partnership agreement in Poland without ‘Solidarity.’”44
Wałęsa met Rakowski and Jaruzelski again for meetings in early March. Rakowski told the union leader of the government’s “fatal” assessment of the economic situation and expressed concern over local Solidarity groups’ recent anti-Soviet and antigovernment statements in various parts of the country. Wałęsa agreed to quiet those elements of his coalition, but Rakowski and Jaruzelski could not be sure he would be able or willing to follow through.45
The first test of the Solidarity leader’s intentions came in the city of Radom, where the local union had gone on strike in early March with a mix of political and economic demands. Wałęsa traveled to the city and urged the striking workers to call off the strike and give the new government more time. “We should take a different style of struggle,” he said, “we cannot destroy ourselves. . . . Our Prime Minister wants to do something [good] . . . we must remember that we must have a wise and strong government, which must have time” to undertake reforms. Upon reading the speech back in his office in Warsaw, Rakowski concluded, “If Wałęsa can impose this way of thinking on his people, maybe we can build something good.”46
The optimism did not last long. In March 1981, in what came to be known as the Bydgoszcz crisis, tensions between the party and Solidarity reached a boiling point that nearly ended all hope of partnership and almost triggered a Soviet invasion of Poland. The crisis began when police in the city of Bydgoszcz forcibly removed a group of Solidarity activists from a government building. Three activists were injured, and within days, Solidarity members across the country were pressing for a union-wide response to the government’s provocation. As tensions increased, Wałęsa called for a general strike, and Soviet planners hinted at invasion. For nearly two weeks, the country hurtled toward a final confrontation until, at the end of the month, Wałęsa and Rakowski worked out a compromise that left neither side happy but both sides intact.47
Even as Rakowski’s idea of partnership survived the Bydgoszcz crisis, the country’s political and economic constraints continued to tighten a noose around the idea with each passing day. First and foremost, the country was now out of money. Since Polish bankers had first struggled to raise money on global capital markets in the spring of 1980, they had been fighting an increasingly improbable battle to keep the nation solvent. The Gdańsk Accords and all of Solidarity’s activism since then had not helped, as they only increased the government’s promises at a time when promises needed to be broken. The Soviet Union had provided at least a billion dollars in hard currency support in 1980 to help the country stay afloat, but it was not enough to meet the country’s mounting debt payments.48 So, in February 1981, Warsaw announced to the West its desire to reschedule its debts. In April, fifteen Western governments signed a rescheduling agreement with Poland that deferred most of its 1981 debt payments for five years, and in June, Western banks followed with similar terms. The agreements deferred Poland’s obligations to its creditors temporarily but did nothing to reopen the country’s general access to global capital markets. Western banks’ confidence in the Polish system was now lost, and until significant and painful domestic reforms were implemented, it would not return. Even with its debts rescheduled, the state still had precious little hard currency to buy the food and basic goods it needed to fill the country’s shops and assuage the population’s concerns.
The result was rationing. In April, the government was forced to introduce ration cards for meat, butter, and grain products, which only furthered the population’s suspicion that it was being starved for political purposes. Soon cigarettes and alcohol were added to the list of controlled goods.49 If economic reality was bad, economic reform would only make it worse. Everyone agreed that any package of reforms in Poland would involve significant and extended hardship for the population. One Western economist writing in the Socialist Register in 1981 estimated that food prices would have to go up 100 percent, rationing would have to continue, work hours would have to be lengthened, and 1.2 million Poles would have to lose their jobs for economic growth to return.50 Solidarity’s own economists reluctantly agreed. They eventually arrived at similar projections for price increases and layoffs that would produce an average drop in Polish living standards of 25 percent.51
Unlike Hoskyns’s Britain, however, the government had no credibility with society that it could use to gain acceptance of austerity. For that, it needed Solidarity. This left the union in a powerful position that it was slow to recognize and embrace. Through most of 1980, the Solidarity leadership had said that economic reform was the government’s responsibility. Solidarity was only a trade union, its leaders maintained, and therefore could take no position on an issue that was clearly the purview of politicians. As the economy continued to deteriorate, however, this position became increasingly untenable. With rumors swirling that the party was starving society for political purposes, it became clear that only Solidarity could be an arbiter of any potential reform. So, by spring 1981, the union changed its tune. It would use its credibility to gain popular acceptance of economic discipline, but only if it was granted the power to oversee the reform’s implementation alongside the government. In theory, this accorded with Rakowski’s concept of partnership. After all, he had defined it as an agreement between the PZPR and societal forces for “co-responsibility” of the country’s fate. But could it work in practice?
The second half of 1981 would prove that it could not. When Jaruzelski declared martial law on December 13, Rakowski fully supported the decision. By that time, the man who had originally proposed partnership as a means of overcoming the nation’s economic challenges had abandoned the idea as unworkable and threatening to the state’s very existence. In tracing his change of heart, we can gain insight into why imposing economic discipline in the antidemocratic systems of the Eastern Bloc proved to be so difficult and unstable. With each new blow to the economy, the Solidarity leadership felt compelled by popular pressure to demand more social and political power in return for its sponsorship of austerity and reform. And with each new Solidarity demand for more power, Rakowski came to view the union not as a partner but as a threat. The only thing that could have stopped this escalating cycle of forced demands and perceived threats was social trust, the very thing Rakowski had first sought to create. The final months of the Polish Crisis revealed that social trust was partnership’s premise rather than its product. Without it, the road to martial law proved unstoppable.
The downward spiral began in August when the two sides convened for their first general negotiations since the Bydgoszcz crisis. The backdrop for the talks was grim. The government’s announcement of a further cut in meat rations at the end of July had led Solidarity to sponsor “hunger marches” across the country. Because the union was not consulted about the change, its leadership refused to recognize the legitimacy of the government’s decision. They once again accused the PZPR of withholding food from the population in order to weaken its opponents.52 Such accusations understandably left Rakowski angry and disappointed. He confided to his diary, “If the warehouses were bursting at the seams with excess food, the government, struggling to gain public support . . . would throw all the strategic supplies on the market. There is nothing more important to us than social peace.” Alas, he noted, “the people unfortunately believe Solidarity.”53 The cutback in rations and the hunger marches had also led some Solidarity members to conclude that the government could not lead the country out of the crisis, so the union had to “take the helm.”54 Rakowski perceived these claims as growing calls to overthrow the state. Even as he held out hope that some in the Solidarity leadership shared his idea of partnership, he wrote in the days before the negotiations began, “I have the impression we are approaching a confrontation.”55
These mutual doubts predictably made the negotiations an acrimonious affair. Solidarity arrived at the meeting in Warsaw with just one primary demand: that it be given control and supervision of the country’s food supply. Rakowski saw this as a threatening bid for power.56 Despite their rough beginning, the two sides whittled away at their differences over the next three days until they reached the outlines of an agreement that would give Solidarity supervisory rights over food distribution and increased media access in exchange for the union’s guarantee of social peace. As the two sides worked late into the night on August 6, Rakowski presented Wałęsa with a final draft of the communique that included small changes not previously discussed. Two parties that trusted each other might have been able to look past these changes or would not have proposed them in the first place. But trust was nowhere to be found. Wałęsa refused to sign it. Infuriated and exhausted, Rakowski stormed out of the room, and the negotiations ended without agreement.57 “The talks ended . . . with a fiasco,” he wrote later that night. “I expected everything, but not such a finale.”58
The breakdown in negotiations only strengthened Solidarity’s conviction that the union had to take on a greater role in governing society. In its first national meeting after the negotiations, union leaders spoke openly for the first time about the necessity of changing Poland’s political system along with its economic one. Some proposed demanding free elections to local government and the Sejm; others thought it was time for a new second house in the Sejm, a “House of Labor” that would represent the interests of society alongside those of the government. Still others believed that the union should simply begin managing the economy without consulting the government and, in so doing, signal that it did not need the PZPR to govern. It was this last idea that led the union to publish an “Appeal to Society,” in which it called on the people to end all strikes and work longer hours for the good of the nation. Solidarity would now lead a “self-managing reform,” the appeal proclaimed, while it awaited the establishment of “institutions that will guarantee working people influence in the socioeconomic policy of the state.”59
The nature of these institutions became the subject of further debate at Solidarity’s first National Congress in September and October 1981. The congress proposed to create a Social Council on the National Economy to oversee implementation of the country’s economic reforms. The program adopted at the congress noted that “a condition for the successful struggle against the crisis lies not only in drafting a program acceptable to society, but also in public control over the implementation of the program.”60 The Social Council would serve this controlling function. The council would be composed of twenty economists and other professionals who maintained “social confidence,” and it would be given the power to propose its own economic reforms and to veto plans passed by the government. The congress program affirmed that, over time, the council should lead to “a new Sejm” that would enjoy the confidence of the people.61 To observers both within Poland and abroad, it was clear that the scope of Solidarity’s demands and ambitions had grown a great deal.
Rakowski looked on with mounting dismay. His language began to change in telling ways. “Our partners, or rather now our opponents,” he wrote in his diary on October 6, “underestimate the real threats from the outside [the Soviet Union], and in internal affairs publicly take the position that if the government agrees to give them control over the economy and government policy, then the economic misery and severe shortages . . . will disappear like morning fog.” Jaruzelski too began to believe that Solidarity was turning away from the possibility of partnership. The Solidarity Congress had “disregarded” the “line of agreement,” he told a meeting of the government on October 13. “The outstretched hand of the authorities was left hanging in a vacuum,” and the economy had “become an arena for the struggle for power,” he concluded. Neither Rakowski nor Jaruzelski took joy in their perception of Solidarity’s turn toward confrontation. “The disaster will not spare anyone—neither ‘Solidarity’ nor the authorities. We sail in one boat,” Rakowski wrote in his diary.62
Despite their growing despair, Rakowski and Jaruzelski did not abandon efforts to build a social basis of support for economic reform. To counter Solidarity’s Social Council on the National Economy, which he viewed as a proposal for a second government, Jaruzelski proposed a Council of National Accord among the PZPR, Solidarity, and the Catholic Church. The sincerity of this proposal is often doubted in histories of the Polish Crisis that see it as a propaganda ploy on the road to martial law, but Rakowski’s diary tells a different story. On October 22, Jaruzelski met with the Polish primate, Cardinal Józef Glemp, to introduce the idea of a national front and share his conviction that “to overcome the crisis, one must create a broad platform of national agreement.” Even as he described himself as “rather skeptical,” Rakowski recorded that “the General clung to the hope” that the national accord “could stop the unfavorable and very dangerous course of events.” To further explore the possibility of an accord, Jaruzelski convened an unprecedented meeting with Glemp and Wałęsa on November 4 to discuss the idea.63
The meeting only served to expose the growth in Solidarity’s demands and the growth in the party’s perception of Solidarity’s threat to the state. When Wałęsa announced to Solidarity’s National Coordinating Committee that he would meet with Jaruzelski, the radical wing of the leadership attacked him for playing into the hands of the party. Then, while he was attending the meeting in Warsaw, the committee adopted a resolution threatening a general strike if the Social Council on the National Economy was not formed within three months. At the meeting, Wałęsa tried to assure Jaruzelski that the Social Council on the National Economy was not intended to be a second government, but the general remained unconvinced.64 He had now made up his mind about Solidarity’s intentions. In a Politburo meeting on November 10, he told his comrades, “You cannot have any illusions about the strategic goal of the ‘S’ leadership, which is to take power and change the system.” Nevertheless, to demonstrate that the party was exhausting all peaceful options and to win the hearts and minds of undecided Polish citizens, he believed the party should continue to publicly pursue a national accord, even as it readied other measures.65
Negotiations between the two sides continued throughout November, but the die had now been cast. Discussions in both camps in the month before martial law reveal the stark, incompatible differences that had come to separate Solidarity and the PZPR. After the government forcibly broke up a strike in Warsaw in early December, Solidarity’s National Committee convened a meeting in Gdańsk, where the full scope of their expanding demands and intentions emerged. Wałęsa began the meeting by saying he had long pursued partnership and compromise with the authorities because it was a strategy that would win hearts and minds. But the time for that strategy had now passed. He stated, “Today the society must learn that a confrontation is inevitable.” Others seconded their leader’s conclusion and even expressed confidence that the Soviet Union would accept a Solidarity government as long as the union guaranteed Moscow’s security interests. When Jacek Kuroń took the floor, he stated that society’s need for “a government with social trust” compelled Solidarity to demand the immediate implementation of free elections, a free press, and the Social Council on the National Economy. Activist after activist followed with calls for some form of “social control” over politics and the economy, and when the meeting ended, the union issued a list of “minimal conditions” the party had to meet in order for negotiations to continue.66
In good Communist Party fashion, the PZPR had its security services wiretap the proceedings, so Rakowski and Jaruzelski soon found themselves listening to tapes with every word of Solidarity’s meeting. After the tape finished, “there was silence for a moment,” Rakowski wrote. Then Jaruzelski said, “Well, yes . . . I did not expect that.” Rakowski was more dramatic, confiding to his diary that he listened to Wałęsa’s speeches “with the feeling of a disappointed lover.” They decided the tapes should be discussed the next day in the Politburo. As Rakowski returned home in a “grim mood,” he convinced himself that he and Jaruzelski had given the idea of partnership a real shot. “It is beyond doubt that we recognized ‘S’ not only as a real but lasting force in Polish socialism.” It was the union rather than the party, he thought, that had destroyed the idea of partnership, and now it threatened the existence of the Polish state. He concluded, “What I heard cannot be called anything else but a call to overthrow the legal power of the state and its institutions. Is it possible to imagine any government in the world idly watching calls to overthrow it by force?”67
The next day in the Politburo, the party plotted its final move in light of the new strength of Solidarity’s demands. One member, Stanisław Ciosek, began with a summary of the tapes. Solidarity now demanded, he said, uncontrolled access to the mass media, a political transformation of the state, and economic reform. “Consent to the introduction of [economic] reform is subject to [our] consent to the first two conditions,” he reported. “So it is political transformation as a price for agreeing to economic reform.” When Rakowski took the floor, he made his private views from the evening public for the entire party leadership.68 The possibilities of partnership had been “exhausted,” he said. “Our partner decided to fight us. . . . We thought we would force him into limited co-responsibility. ‘S’ does not want it. . . . The ‘S’ leadership has gone from a union and social movement to the opposition party with a counter-revolutionary countenance.”69 After the discussion went around the room, the last word fell to Jaruzelski. “Faith in the omnipotence of martial law is mythology,” he told the group.70 It would not solve all their problems immediately. Their fight to regain the country would be long and hard, but at this point they had no choice, he believed. They had to defend the state. He asked the group to grant him the power to declare martial law at a time of his choosing, and everyone readily acceded. As Rakowski left the meeting, he shared the general’s conclusion: “There is nothing left for us except strength.”71 With that, his transformation was complete.
On the night of December 12, 1981, Jaruzelski brought discipline to Poland. Just before midnight, security forces surrounded a meeting of the Solidarity leadership in Gdańsk and arrested the entire group. Wałęsa was placed under house arrest, and within hours, thousands of the union’s middle ranks had been arrested across the country. Tanks rumbled into the center of Warsaw and Gdańsk, and at six the next morning, Jaruzelski appeared on national television to declare a “state of war.” Poland “was on the brink of an abyss,” he told the nation, and the new Military Council of National Salvation would impose the order and discipline on society that had been sorely lacking since August 1980. Under the cover of martial law, the difficult economic reform that had eluded the country for so long would finally be implemented.72 As the national anthem began to play in the background, he repeated its “immortal words” and asked all patriotic Poles to do their part to save the country.73
In the months that followed, prices went up, real wages went down, and many Poles were “redistributed” into new jobs. Estimates of the fall in Polish living standards put the decline at 20–30 percent. The economic reform program was officially introduced in early 1982. Under the banner of three new S’s—self-reliance, self-governance, and self-financing—the reform program announced that a new “criterion of economic activity” would govern Polish enterprises. “It is profit,” a government report proclaimed. Supposedly freed from government control and government subsidy, Polish enterprises would now be guided by “economic rationality,” which would “lower production costs,” “improve quality,” and force them “to strive for competitiveness.”74
Even as martial law gave Jaruzelski the blunt power of force to implement economic reforms, it sapped the last vestiges of legitimacy the Polish communists enjoyed at home and abroad. Accurate measures of Polish public sentiment in the aftermath of martial law were difficult to produce, but one comprehensive study of Polish public opinion in this period concluded, “The regime had destroyed Solidarity, but had also discredited itself, and the socialist ideology from which it claimed legitimacy.”75 The promise of socialist Poland had been broken, but as long as martial law ruled the land, a new vision for a just society and a legitimate state could not take shape.
As tanks rumbled into Warsaw, Margaret Thatcher faced long odds across the Iron Curtain. The immediate aftermath of the 1981 budget yielded only economic hardship and political unpopularity. The hot summer of riots that followed in its wake further dented Thatcher’s political popularity, and the threat of a run on the pound in the autumn called into question her government’s economic credibility. In order to prevent capital from fleeing the country, Chancellor of the Exchequer Geoffrey Howe was forced once again to increase interest rates, which was precisely the type of monetary discipline the 1981 budget had been meant to avoid. In September, the stock market fell to a seventeen-year low, and at the dawn of the new year, the number of unemployed Britons crossed the dreaded threshold of three million.
On top of these economic hurdles, a new and potent political force had appeared on the British scene: the Social Democratic Party. Led by a group of disaffected Labour Party ministers known as the Gang of Four, the SDP disrupted the political landscape by taking ideas from both the Left and the Right in the hopes of occupying the increasingly wide-open political center. Unlike Labour, which continued to oppose Thatcher’s efforts to reform trade unions, the SDP favored limits on unions’ political power. But unlike Thatcher, the new party did not stridently oppose the welfare state and, in fact, sought to use the state vigorously to ease the nation’s adjustment to the global economy. Against the backdrop of Thatcher’s austerity and the Labour Party’s uncompromising opposition to any change in the old economic order, this centrist blend appeared to be an effective political combination. It was widely believed that in a general election, the SDP would combine forces with the minority Liberal Party, and a September 1981 Gallop poll found that such an SDP/Liberal alliance would receive 40 percent of Britons’ support, while the Conservative Party would only get 16 percent.76
Polls like these understandably made Conservatives nervous, and the numbers were made worse by the fact that the economy provided the Tories no riposte. “The Conservative Party faces grimmer prospects than at any time since the end of the second world war,” cabinet minister Peter Walker wrote to Thatcher early in 1982. “We are presiding over 3 million unemployed and, now, falling living standards for those still at work. . . . We are the first post-war government to have produced a substantial drop in the nation’s real output.” The SDP/Liberal alliance was the “most ominous third-party threat in modern times,” he wrote, and its existence put Britain “on the verge of one of those junctures in which a familiar political landscape is radically rearranged.”77 Walker’s judgment was a gloomy but hardly solitary opinion. As Thatcher’s biographer has concluded, in the early months of 1982, “few far-sighted observers . . . imagined that she was likely to win the next general election.”78 Almost three years into the Thatcher experiment, the results were meager, and the Tories’ political fate looked dire. If, as Walker sensed, the country was on the verge of a radical rearrangement, it seemed unlikely Thatcher and Thatcherism would find a place in the new political landscape.
But then history took yet another unexpected turn. Eight thousand miles away from London in the South Atlantic, Argentine armed forces under the direction of the military junta in Buenos Aires invaded the Falkland Islands on April 2, 1982. The Falklands had been a British colony for a century and a half, but by the early 1980s, they were a largely forgotten piece of a mostly bygone empire. Confronted with the Argentine invasion, however, Thatcher and the country at large quickly recaptured the nation’s imperial self-image and committed to reclaiming the islands and freeing the 1,800 British inhabitants from the tyranny of their newfound oppressors. Over the next two and a half months, the prime minister played the central role in a most improbable drama of tense international diplomacy and deadly military conflict. After bilateral negotiations broke down, a British expeditionary force invaded the Falklands while the Royal Navy and Air Force engaged the Argentines in the surrounding seas and skies; 255 British servicemen and 649 Argentines died in the ensuing battles, but British forces steadily retook the islands in late May and early June. On June 15, the Argentine high command surrendered, and the Falklands returned to full British control.79
The scale of the triumph on the battlefield was only surpassed by the magnitude of Thatcher’s newfound standing on the domestic political scene. Though her premiership had been teetering on the brink of failure before the conflict, she emerged from the war in resolute command of her own fate and that of the nation. “The Prime Minster has complete freedom of action now,” Alan Walters of the Policy Unit told a colleague on the day of victory. Thatcher, in Walters’s estimation, now had complete “freedom in imposing domestic, foreign and defense policies.”80 All three main parties—Conservative, Labour, and Liberal/SDP—went into the Falklands in a virtual dead heat for popular support, but the Conservatives emerged from the conflict with a roughly 15 percent advantage.81 The obvious question now was: how would the Tories use it?
Before providing an answer, Thatcher thought it best to win the next general election. Although some advisers were tempted to call an election while the post-Falklands glow burned bright, Thatcher concluded that such a decision would smack of opportunism and decided to postpone the election until 1983. The trade union issue remained unresolved, but politics demanded patience. “Democratic institutions and the need for a high degree of consent,” Thatcher wrote to Friedrich Hayek in 1981, made the reform process “painfully slow.”82 The economy required further restructuring, but it would have to wait for the election. The government had “to reduce the burden of the loss making state enterprises,” John Vereker of the Policy Unit wrote in a strategy memo in late 1982. The British Steel Company survived “in the face of all economic logic” for “political reasons,” he wrote, and British Rail also needed to be downsized. But the government would “do well,” he concluded, to wait until “after the election” to make any decisions.83
And then there was coal. In both political and economic terms, restructuring the British coal industry was the government’s most significant economic challenge.84 Since the start of the Tory government in 1979, both Thatcher and the National Union of Mineworkers had been biding their time, waiting for the right moment to strike the decisive blow to the other side. Both camps viewed a reprise of the events of 1974, when the NUM had brought down the Heath government through a strike, as inevitable. They had come closest to confrontation in early 1981, when the National Coal Board’s initial lowball wage offer to the NUM had brought the miners to the brink of calling a national strike. But against the backdrop of the dismal politics surrounding the 1981 budget, Thatcher had concluded she did not have the strength or support to win a strike and assented to the NUM’s wage demands.
Losing that battle only hardened the prime minister’s determination to win the wider war. In the wake of capitulation, the government launched a multifaceted strategy to prepare the British state for the next time the miners threatened to act. The strategy had three primary prongs: increasing the nation’s electricity endurance during a potential strike by building up surplus coal stocks at power plants, fortifying and coordinating the nation’s police force to keep working mines open during a strike, and molding public opinion to prevent other workers and unions from taking up the miners’ cause. John Hoskyns summarized the confrontational mentality that underwrote the strategy: “We cannot win a war of economic survival by pretending it’s peacetime.”85 The government needed, in his view, to build up the physical infrastructure and state capacity to withstand a strike and then let the strike unfold for the entire country to see. “We believe as a general rule . . . the only way to end the strike-culture,” he wrote in another memo, “is to let it happen.” Rather than try to prevent a strike, Hoskyns believed the government should concentrate its efforts on “mobilising public opinion to win the battle for us.”86
For its part, the NUM girded for action by electing a new, more militant leader—Arthur Scargill. Scargill had made his name as the local leader of the NUM at the so-called Battle of Saltley Gate during the 1974 strike, during which the miners had overwhelmed the police at Birmingham’s Saltley Coke Works and shut the plant down. Within weeks, Heath had capitulated to the miners’ demands and was soon out of office. Scargill believed—and the Tories feared—that he would be able to do the same thing to Thatcher. After his election to NUM president in December 1981, he pressed the union to strike twice in 1982 and again in early 1983, but each time the miners voted to keep working. Government ministers took this as a sign of “reluctance on the part of the miners themselves to strike,” but they nevertheless understood, on the cusp of the election, that Scargill was “by no means a spent force.”87
Thus, by the time the Economist declared simply, “The Issue Is Thatcher,” on the cover of its May 1983 election issue, the British people were sure to have a weighty sense of the implications that lurked beneath the name. At the time of the vote, 46 percent of the population believed the Conservatives had the best policies for the country (compared to 23 percent and 22 percent for Labour and Liberal/SDP, respectively), and 55 percent of the population believed the Conservatives had “the best team of leaders” (compared with 16 percent for Labour and 23 percent for Liberal/SDP). Such sentiments were a recipe for a landslide election. The Tories picked up thirty-eight seats in Parliament, while Labour lost fifty-two, and Thatcher returned to government with the largest majority of the postwar era.88
With a new mandate in tow, Thatcher set about unleashing the full breadth and depth of her vision for reform. This meant, above all, finally taking on the NUM. By the fall of 1983, the country’s endurance in the face of a prospective coal strike had reached six months, leaving no reason to delay any longer. “There is no case for making a special effort to avoid a miners’ strike this year,” an advisor wrote to Thatcher in September.89 The head of the National Coal Board (NCB), Ian MacGregor, agreed, and in September he laid out a vision for accelerating pit closures and downsizing the mining workforce over the next two years. He anticipated closing seventy-five pits and decreasing the size of the workforce from 202,000 to 138,000 miners by 1985.90 The plans were not made public in order to limit popular backlash, so industrial peace was maintained through the winter of 1983–1984. But on March 6, 1984, MacGregor at last made public his plan to cut 20,000 jobs over the course of the coming year, and soon the government was receiving reports of “the temperature . . . rising in the coalfields.”91 The miners of Yorkshire and Scotland, who would be particularly hard-hit by the closures, were soon on strike, and by mid-March about half the country’s miners had followed. The question now was whether Scargill would ballot his members to launch an official national strike.
He never did. Having already been turned away by the NUM membership three times, Scargill decided he could not risk another ballot. It was an enormously consequential decision that robbed the NUM’s cause of legitimacy and made it difficult for other unions to justify supporting the miners with parallel action. Scargill enthusiastically tried to turn the strike into a national coalition against Thatcher’s government, but the absence of a ballot gave his calls to action a hollow ring. “The NUM is engaged in a social and industrial Battle of Britain,” he wrote to the country in March. “What is urgently needed is the rapid and total mobilization of the Trade Union and Labor Movement.”92 Unable to mobilize even a majority of his own union, it proved difficult for him to attract a majority of the country. Three months into the strike, 71 percent of the country believed it was “sensible” to close “uneconomic” coal pits; only 25 percent favored Scargill to win, and 51 percent wanted the NCB to emerge victorious.93
The yearlong strike that followed crystalized in almost pure form the politics of breaking promises and the way in which those politics took on divergent meanings on either side of the Iron Curtain. Much as Wałęsa eventually did in Poland, Scargill declared the overthrow of the government “the explicit objective” of his efforts.94 But unlike the ten million Poles who flocked to join Solidarity’s ranks, the NUM was never able to develop a popular base of support, and Scargill’s exhortations to take “extra-parliamentary action” against the government fell on deaf ears.95 Large majorities of the British public disapproved of both any attempt by striking miners to force working miners to join their strike and any prospect of other unions joining the miners to start a general strike against the government.96 A full 69 percent of the country believed Scargill’s motives were political, but unlike in Poland, this was not a good thing.97
Just as Jaruzelski did in his declaration of martial law, Thatcher painted the actions of her government and the police as the state’s appropriate response to lawlessness and violence. But whereas martial law destroyed the Polish communists’ legitimacy both at home and abroad, the miners’ strike only served to cement Thatcher’s image around the world as the determined and legitimate Iron Lady. “What we have got is an attempt to substitute the rule of the mob for the rule of law, and it must not succeed,” Thatcher told the nation as a battle between thousands of strikers and police unfolded at the Orgreave Coke Works in May 1984.98 The British people by and large agreed with her. Even though only 40 percent of the country approved of Thatcher during the strike, an overwhelming 92 percent approved of the police who were upholding her policies on the ground.99 The country may have been deeply divided, but the state remained overwhelmingly legitimate.
For twelve months, the strike raged on, but the country never ground to a halt. The electricity endurance built up over the previous three years kept the economy supplied with power, the police protected working mines and miners, and public opinion never deserted the government. Scargill’s obstinate refusal to compromise ensured that when defeat came, it would be complete, so when the miners at last returned to work on March 3, 1985, they did so without any commitment from the coal board to secure at least some of their jobs and mines in the future. Within five years, more than half of the NCB’s 170 coal mines would close and 79,000 miners would lose their jobs. These losses were only the proverbial canary in the coal mine of industrial and working-class Britain. During Thatcher’s time in office, manufacturing employment fell from 30 to 22 percent of the country’s workforce, and union membership fell from 54 to 42 percent of workers. All told, unions lost three million members across the 1980s.100
The defeat of the miners’ strike signaled the culmination of the process Hoskyns had first laid out in the Stepping Stones report eight years before: enough citizens’ “Mental Sets” had been disrupted by “New Data” to produce a change in the horizons of political possibility. Democratic institutions and neoliberal ideology proved decisive in facilitating this process. At the height of the strike, Thatcher infamously described her adversaries as “the enemy within.” By the time he declared martial law, Jaruzelski could not have dreamed of a better epithet for Solidarity than “the enemy within,” but he failed to convince the Polish people that this was true. Without the sense of legitimacy or distance from past policy that democratic elections bestowed on Thatcher in Britain, Jaruzelski struggled to get the Polish population to trust his government. And without the precepts of neoliberalism to make a virtue out of discipline, Jaruzelski struggled to justify his actions in Marxist-Leninist terms. Poles made their acceptance of a new, more disciplined social contract conditional on greater control over the political process. This was a deal Jaruzelski could not accept, so martial law became his only choice. Like Thatcher, he defeated Poland’s “enemy within,” but the means he employed to do so ensured that the enemy would one day rise again.