Paul Foot

All fall down

(November 1990)

From Socialist Worker Review, No.136, November 1990, pp.13-14.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

WHEN SOMEONE comes to write a history of the Great Thatcher Decade (the 1980s), one of their basic texts should be a little book by a former City Editor of the Times, William Kay. Mr Kay called his book Tycoons, and based it on thirteen interviews with men who made millions in the early 1980s.

One of the self-made men was Gerald Ronson, whose Heron Corporation was unheard of when he launched his first ‘brilliant, daring’ take over bid in 1981. Ronson told Kay that Heron was a ‘very conservative business.’ He said he didn’t take risks, he just bet on certainties. What’s more, he kept strictly within the law. ‘There are plenty of crooks in the petrol business,’ he told Kay, ‘but they don’t come to work for us.’

This was surprising because perhaps the biggest crook of them all was Gerald Ronson. He made his fortune not so much by ‘daring’ bids but by gambling on the stock exchange. His greatest gamble was in 1986 when his friend, the super-swindler Sir Jack Lyons, asked him to buy some shares in Guinness to boost the share price in the firm’s takeover of Distillers. Ronson obliged with a cool £25 million. He lost not a penny on this investment of course, but as a reward for stumping up so much at an awkward time Guinness slipped him a personal donation of £7 million.

Ronson and Lyons were only caught when the biggest swindler of them all, the American stock exchange gangster Boesky, grassed on them to save his skin. The crooked transactions by which Ronson and Lyons rigged the institutions they loved could not possibly have been exposed by ordinary journalists since there was no public record of them whatsoever.

Ronson and Lyons were not ‘rotten apples’ in the capitalist barrel, as has been pretended. On the contrary they were both very close to the grandest apple of them all, the prime minister. Lyons was a personal friend, and Thatcher’s two closest advisers, Tim Bell and Gordon Reece, both in their own right entrepeneurs of the kind she admires, were paid advisers to Guinness at the time.

The ruthlessness with which Thatcher and her cronies pursued the values of free enterprise did not extend to obeying the rules laid down by that free enterprise. Indeed, in a way, one of the central tenets of that free enterprise was that its devotees should feel free to make up their own rules.

What can be called the Guinness syndrome haunts the whole of the rest of Mr Kay’s book. One rotten apple has gone to prison, but all over the industrial and financial scene other apples are falling off the tree. One such was Mr John Gunn. Here is what he told William Kay in 1985:

‘I am a free market socialist, in that I like lots of people to do well. The only way I can do that is to make sure the company makes a lot of money and the exchequer makes a lot of money. I am as capitalistic as you can get, but I do not think the trappings are important. Creation of wealth is almost a duty, because of the widespread benefits that flow from it.’

The only real wealth created by Mr Gunn, however, ended up in his own bank account. His business was ‘money-broking’, speculating, taking companies over and gambling on the outcome in the stock exchange. It can safely be said that he and his companies created not a single penny’s worth of real wealth. What they did was roll about in the mud of wealth created by others.

So successful was John Gunn with his money-broking that an old shipping family, the Cayzers of British and Commonwealth, appointed him chief executive in 1986. The Cayzers, crusted Tories every one of them, had made their huge wealth from a shipping line which mainly serviced South Africa.

John Gunn moved at once to sell anything which could possibly be of any real use to anyone. Away went the shipping line and onto the dole went thousands of people who worked for it. Instead, British and Commonwealth concentrated on ‘financial services.’ The Cayzers saw the danger, cashed in their millions, and ran.

The new British and Commonwealth, based on financial services, was applauded at every turn by the newspapers’ business editorials. Gunn and B&C moved from one glorious City takeover to another until earlier this year the whole ramshackle edifice collapsed into bankruptcy.

Until the end, John Gunn kept up the enormous payments £100,000 a year) which British and Commonwealth have traditionally paid to the Conservative Party. Another enthusiastic get-rich-quick Tory in the same mould was John Ashcroft, chairman of Coloroll, a group based on home furnishings, but which, under the impetuous Ashcroft, went into the stock market in grand style, taking over a whole series of harmless, old fashioned and often paternalistic old companies in the business.

Like Gunn, Ashcroft enjoyed the special applause of the liberal press. While Gunn’s main backer had been the Observer, Ashcroft’s was the Guardian. Indeed in 1987, at the height of the ‘Thatcher miracle’, Ashcroft was named Guardian Young Businessman of the Year. That paper wrote of him in March that year:

‘He is shrewd, personable, witty, unashamedly materialistic and fired by an almost boyish enthusiasm for stealing a market from under a competitor’s nose – “the idea of selling Japanese ceramics in Japan is quite amusing,” he says.’

Shrewdly, personably, wittily and materialistically Ashcroft went on stealing markets from competitors’ noses (and managed to treble his own salary in the process.) In the summer of this year Coloroll called in the receiver. It owed £300 million. Hundreds of workers (the lucky ones who had not been sacked while the boyish Mr Ashcroft pursued his fantastic ambitions) were thrown onto the dole.

The stories of Ronson, Gunn and Ashcroft have been repeated over and over again in the last twelve months. Celebrated Thatcherite entrepreneurs like Sophie Mirman of Sock Shop, George Davies of Next, Azil Nadir of Polly Peck, have all come crashing down. Harris Queensway, the brainchild of another Thatcher knight, the carpet king Sir Phil Harris, is now bust (though Harris himself sold out well before the disaster, for a little matter of £60 million).

Even the two top spokesmen for the Thatcher miracle – Murdoch and Maxwell – are in desperate trouble. Scandal after scandal has rocked the City: Barlow Clowes, Dunsdale, Fer-ranti. What does it all mean?

Four years ago the doomed Chancellor of the Exchequer, Nigel Lawson, first uttered the phrase which identified the greatest glory of the Thatcher years: ‘virtuous cycle.’ The theory was that the slumps and booms of capitalism, the endless cycle of recession followed by boomlet were all in the past.

Miraculously, the modern Tory government had found a formula which would ensure perennial growth, the gradual lowering of balance of payments deficits, inflation, taxes, interest rates all at the same time. A new virtuous world opened up, in which the capitalist economy went on growing and growing forever, and in which everyone had a chance to make themselves into millionaires as the Thatcher millionaires had done. In this atmosphere, there was no problem at all about borrowing more and more money to expand the already vast new empires of the self-made men who typified the Thatcher era.

The feature which is common to all the cases above (and all the others not mentioned) is overconfidence. There was overconfidence to borrow endlessly in the certainty that interest rates would never rise again; overconfidence to break laws and regulations at will; over-confidence that the very fact of having a fortune ensured a fortune forever. What motivates these people? Is it all personal gain? In one of the more glorious passages in Capital, Marx traces the history of avarice in the development of capitalism. To begin with individual capitalists showed the most rigorous self-sacrifice in their personal lives.

‘But the progress of capitalist production not only creates a world of delights; it lays open, in speculation and the credit system, a thousand sources of sudden enrichment ... Luxury enters into capital’s expenses of representation.’

But however great the avarice or enjoyment of luxury by these creatures of speculation and the credit system, the real driving force in their lives is ‘the passion for accumulation’:

‘The capitalist gets rich, not like the miser, in proportion to his personal labour and restricted consumption, but at the same rate as he squeezes labour power out of others, and enforces on the labourer abstinence from all life’s enjoyments.’ The drive is always to go on accumulating and exploiting long after the individual capitalist has stashed away a million times more cash than he can hope to spend on himself in ten lifetimes. His motto is (in Marx’s words): ‘accumulate, accumulate! That is Moses and all the prophets!’

These grand accumulators, half-crazed with their own self-importance and their invulnerability, acted as stalking horses for more cautious capitalists who held back, urging, like the gallant second lieutenant: ‘through that gap, sergeant, I’m close behind.’ Into the gap, sweetened by New Years Honours and egged on by sycophants in the press, plunged Thatcher’s New Entrepreneurs sacking and borrowing, sacking and borrowing in a virtuous crusade to usher in the capitalist millennium.

The game has been up since the great stock exchange crash of October 1987, which, like the great gales of the same month, was predicted by absolutely no one. Suddenly the cycle is not virtuous any more, but vicious. We are back with the same old stop and go, boom and slump. The decade of the Thatcher knights has come to an end at almost exactly the same time as has their own glory. They borrowed too much. They sacked too many skilled workers, and trained no one in their place. They are suddenly an embarrassment, to be disposed of as quickly as possible, in prison or in bankruptcy, while the real rulers try grimly to hang on to their credibility and their profits.

The demise of the great bounty hunters of the 1980s is a symbol of the demise of the crude confidence which sustained their class ten years ago. The brash assurance with which, for instance, Sir Keith Joseph told his chauffeur in 1980, ‘we need four million out of work’ has gone.

They have played their cards, and found them useless. Rather like the Labour leaders at the end of their last term of office in the late 1970s, the Tory leaders are stumbling from one crisis to another, uncertain what will happen next, no longer confident they can win. They are falling back more and more on what was beyond doubt their most remarkable achievement in the 1980s: their bludgeoning of the Labour opposition into a pale and pathetic shadow of their own self-serving capitalistic selves.


Last updated on 17.1.2005