Will Cameron grasp baton of Thatcherism and run with it?
One thing is obvious: after an economic crisis of this magnitude politics isn't going to be the same again. People don't just read the gloomy economic news they feel its effects in everyday life.
Job losses, the sterling crisis, the strikes and the general sense of insecurity mean the assumptions that politicians of all parties have shared for decades are not trusted any more.
At the coming election people will choose between a Prime Minister with 11 solid years of Cabinet experience or a novice — and will probably back the novice because the Prime Minister is the voice of a political consensus which has failed.
Welcome to Britain in 1979, 30 years ago, where high unemployment, a wave of strikes and a general sense that Britain was becoming ungovernable was about to sweep away the Labour Government led by ‘Sunny Jim’ Callaghan and bring an unknown named Margaret Thatcher to power. By the end of the 1980s everyone agreed that the only way to guarantee prosperity was through a deregulated economy in which every enterprise was privately owned, credit was freely available, the unions were weak and the rules for hiring and firing labour were highly flexible. That transformation of Britain's political culture is what gives the 1980s a powerful claim to be called the decade of revolution.
However, the similarity between the crisis that Thatcher confronted in 1979 and the one David Cameron will face if he becomes Prime Minister next year is only skin-deep. Most of Britain's problems back then were homegrown. They did not come from too much easy credit or involve banks going bust. But that was the upside. In almost every other respect the crisis then was worse than it is now. Not only was unemployment too high, there was also double-figure inflation. Somebody had to decide which to tackle first.
The choice made by Margaret Thatcher and her Chancellor Geoffrey Howe was to focus ruthlessly on inflation.
The Budget that Howe introduced in March 1981, for instance, overturned the view held by mainstream economists since the 1930s that when unemployment was high Governments should spend more to stimulate the economy, allowing Government debt to increase. Howe did the opposite, he cut Government debt and let unemployment rip. This achieved its stated objective — by mid-1982, inflation was back down in single figures.
His success looked all the rosier due to the peculiar interlude of the Falklands War. Public opinion was outraged and Thatcher was presented with a short, clean war that could be won outright — so very different from the intractable mess Gordon Brown faces in Afghanistan.
That, and a profoundly divided Labour led by Michael Foot, presented Thatcher with an overwhelming victory in 1983.
But there was a heavy price to be paid. The jobless total was below 1.1 million in May 1979 when the Conservatives won the election. It was never that low again for the whole of the 1980s. In July 1986 it was over 3.1m.
High unemployment was one of the weapons used to smash the unions. In 1979 there were 12.6m full-time employees in TUC-affiliated unions. Whole industries — from mining to printing — were ruled by closed shops. In the middle of the decade there was the year-long miners' strike, one of the longest and bitterest industrial disputes in British history and the last great national strike. When the miners surrendered it was obvious that the union movement was beaten. Today the TUC has barely half the membership it once had.
In 1980 the entire developed world including Britain, was divided into two ideological camps. The Communist bloc appeared then to be so stable that it would last forever, while serious people wondered how long capitalism could survive. The threat of nuclear war between Nato and the Warsaw Pact was too real for comfort and vastly overshadowed the terrorist threat, even when the IRA came close to killing Margaret Thatcher by bombing her hotel in Brighton in 1984.
During the rise of Thatcher and the fall of the Berlin Wall all Britain's political parties arrived at a new consensus: that the big industries that Thatcher privatised should stay private and that the best guarantee of prosperity was a deregulated, de-unionised economy where credit was freely available. That consensus has been holed by the international banking crisis. But where is the new Margaret Thatcher to create a new politics from the death of the old? In the US Barack Obama at least offers the outline of radical new solutions, but he is a Democrat dealing with problems created by Republicans. David Cameron's dilemma is that the regime of easy credit and weak regulation over which Gordon Brown presided is a regime learnt from Margaret Thatcher. Britain has been governed for a quarter of a century Thatcher's way.
It would be a very bold Conservative leader indeed who declares that that way is at an end.