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There Is No Such Thing as the Economy

About the author: John Benjamin leads operations for a New York-based workforce development company. He writes about business and economics.

“There is no such thing as society,” then British Prime Minister Margaret Thatcher told an interviewer 35 years ago today. It’s an infamous phrase. Critics say it is a warrant for greed, while defenders see it as a realistic if brutal statement of the Reagan-Thatcher doctrine.

Though her office later attempted to quell the controversy, Thatcher never tried to distance herself from the line. It dogged her throughout her final term, into retirement, and after death. At her funeral in 2003, the remark was the only of her political quotes mentioned by the bishop of London in his eulogy.

Recently the idea has fallen out of favor—even Thatcher successor Boris Johnson denied it during a 2020 speech on the pandemic—but its staying power is a testament to the immense ideological triumph of Thatcherism. “Not many worldviews build worlds,” wrote historian Jill Lepore. “This one did.”

In context, the quote is an observation about political rhetoric. It comes in the middle of an extended interview. Thatcher is discussing children and the ways they can come to appreciate personal responsibility. She says, “Too many children and people have been given to understand ‘I have a problem, it is the government’s job to cope with it!’… They are casting their problems on society and who is society? There is no such thing!” Instead, she asserted, there are only individual men and women.

On a certain level, she isn’t wrong. “Society” is just a construct, fuzzy around the edges—stare at it long enough and the whole thing molders. In political debates, the idea is often used to justify liberal policies like welfare through familiar appeals to our mutual obligation and shared fate. Thatcher and her American counterparts dismantled this. A person’s right to keep what they earn is “the essence of a free economy,” she’d said: no more society standing between individual and market.

Today, the economy—not society—has become our dominant collective metaphor. We frame policy arguments about everything from legalizing marijuana to combatting climate change to defining abortion rights by asking the question, “How will this impact the economy?” Reference to “the economy” imposes structure on subjective arguments that might otherwise be contests of pure will. The economy, with its formulas and brute facts, makes a solid stand-in for the body politic. “How will this impact the economy?” is just a more serious way of asking, “How will this impact all of us?” 

Or so we think.

But “the economy” is a malleable piece of rhetoric that can justify many things. When President Biden announced student debt forgiveness last month, some argued that it would threaten the economy; others said it would strengthen the economy. The first camp pointed to the risk of increased inflation, the second to debt’s role in stunting new business growth. Both are right, at least on the narrow terms in which they appeal to “the economy.”

This pattern shows up everywhere. Key economic metrics either do not track human-level outcomes, or they have different effects on different people. Since 2000, the U.S. gross domestic product has doubled and the S&P 500 has tripled, but median family wealth has stagnated. Inflation may hurt savers but help those who borrow; free trade agreements lower the cost of many consumer goods but also reduce some domestic workers’ wages. Even macro cycles impact people in unique ways. Like short-sellers watching the market dive: one man’s crash is another’s treasure.

It’s not all relative, though. Pursuing what’s best for “the economy” tends to drive policy in a rightward direction. This is because, at least in consumer-capitalist systems, economic health ultimately reflects private accrual and the needs of capital. In contrast, “society” implies a common obligation beyond the market. There’s a reason we talk about a “duty to society.” 

If you shape policies on abortion or student debt in terms of the economy, you’ll optimize for economic outcomes. How does marijuana legalization impact GDP? One could speculate. But the analysis would be shorn of references to any effects that defy strict calculation, like how such a policy might change the criminal-justice system. It would also ignore human-level considerations beyond people’s roles as market participants. How do you place a value on a parent being at home instead of in prison for a minor drug offense?

Decades on from Thatcher’s most famous interview, her record still casts a long shadow. She knew her words would echo. When asked what she considered to be her greatest legacy, Thatcher once replied, “New Labour”: a brilliant, cutting assertion of how much she’d dominated the vision of her successor Tony Blair. (Reagan, had he lived to see it, could have said the same about Bill Clinton’s “New Democrats.”)

Thatcher’s legacy was to provide a new conceptual framework for political rhetoric, one where individual ambition came first and the economy replaced society as our main collective metaphor. If we want to inaugurate something else, let’s start with an equally scandalizing statement. There is no such thing as the economy.

Guest commentaries like this one are written by authors outside the Barron’s and MarketWatch newsroom. They reflect the perspective and opinions of the authors. Submit commentary proposals and other feedback to ideas@barrons.com.

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