Margaret Thatcher: Monetarism and the Control of Inflation

Many ideas influenced Margaret Thatcher’s economic policies, but broadly speaking two sets of ideas were particularly influential. Monetarism formed the basis of Margaret Thatcher’s macroeconomic policies. While her microeconomic policies were based on enabling decision-makers to make informed and coherent decisions.

In this film, Professor Kevin Lee explains how the ideas of economists Milton Friedman and Friedrich Hayek influenced Margaret Thatcher. Friedman’s emphasis on monetarism led to economic policies which emphasized the importance of the money supply in controlling demand. Hayek believed that prices and the market mechanism were a force for good decisions and this idea set the agenda for Thatcher’s microeconomic policies on privatization.

Which of these two sets of ideas do you think had the biggest impact on the UK economy? Comment below which was more important and whether you think these policies have led to a stronger and more dynamic economy.