What we do in the shadows: dual industrial policy during the Thatcher governments, 1979–1990
| Author | Richard Woodward,James Silverwood |
| DOI | http://doi.org/10.1177/13691481221077854 |
| Published date | 01 May 2023 |
| Date | 01 May 2023 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/13691481221077854
The British Journal of Politics and
International Relations
2023, Vol. 25(2) 348 –364
© The Author(s) 2022
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DOI: 10.1177/13691481221077854
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What we do in the shadows:
dual industrial policy during
the Thatcher governments,
1979–1990
Richard Woodward1 and James Silverwood2
Abstract
Selective industrial policy in the United Kingdom is conventionally believed to have vanished prior
to the global financial crisis. This article, in contrast, argues that industrial policy remained an
intrinsic, if seldom acknowledged, element of neoliberal statecraft. The basis of this is a subterfuge,
conceptualised here as a ‘dual industrial policy’, which we explore via an empirical focus on the
Thatcher governments. Throughout this time, actions explicitly endorsed by governments as
industrial policy generally corresponded with neoliberalism’s hostility to intervention. These
conveniently distracted attention from a second set of policies which, although never codified
by government as industrial policy, were intended to affect the allocation of resources between
economic activity. Analysis of official government publications and expenditure reveals that
industrial policy expenditure under Thatcher was far higher than customarily reported. The
United Kingdom’s approach has important implications for debates about neoliberal resilience,
especially neoliberalism’s capacity to conscript apparently contradictory ideas.
Keywords
industrial policy, industrial strategy, neoliberalism, Thatcher
Introduction
Echoing developments elsewhere (UNCTAD, 2018), UK industrial policy has undergone
a seemingly remarkable renaissance in recent years. This reflects the fallout from the
2008 global financial crisis which compounded long-standing concerns about the com-
petitive challenge from emerging economies, the erosion of manufacturing industry, and
the propensity of the market mechanism to pinpoint and propel new sources of growth
and employment (Aiginger and Rodrik, 2020).
1School of Business, Technological University Dublin, Dublin, Ireland
2Senior Lecturer in Business, Bishop Grosseteste University, Lincoln, UK
Corresponding author:
James Silverwood, Bishop Grosseteste University, Lincoln LN1 3DY, UK.
Email: james.silverwood@bishopg.ac.uk
1077854BPI0010.1177/13691481221077854The British Journal of Politics and International RelationsWoodward and Silverwood
research-article2022
Original Article
Woodward and Silverwood 349
Academic analyses broadly accept that since 1979 UK governments have adopted a
largely neoliberal approach to economic intervention. Industrial policy was of a suppos-
edly horizontal nature aimed at improving the efficiency and competitiveness of the over-
all business environment. Consequently, the resurrection of industrial policy since 2008,
specifically the willingness to engage in vertical or selective industrial policies that chan-
nel resources towards chosen economic sectors, has been widely interpreted as a novel
development in UK economic policymaking, albeit one that is an element of statecraft
concocted to camouflage the continuity of neoliberal ideas and the interests and institu-
tions that nourish them (Berry, 2019; Lavery, 2019). This article is sympathetic to this
view; however, it argues that selective industrial policy has throughout been an indispen-
sable, if neglected, aspect of the United Kingdom’s neoliberal model (Silverwood and
Woodward, 2018). By putting neoliberal ideas in the spotlight, successive governments
have cast the persistent role of industrial intervention into the shadows.
Focussing specifically on the Thatcher governments (1979–1990) this article argues
that the United Kingdom has had a ‘dual’ industrial policy since 1979. With government
intervention in the market mechanism regarded as a damnable heresy, industrial policy
under Thatcher was supposedly confined to horizontal interventions that delivered an
institutional environment conducive to enterprise and the operation of market forces
(Crafts and Hughes, 2012: 27–28; Owen, 2012: 24–26). The reality was less straightfor-
ward with the Thatcher administrations continuing to engage in significant selective
intervention, not least to mitigate the effects wrought by the broader neo-liberal turn in
the economy.
The state, neoliberalism, and dual industrial policy
Among the myriad definitions of industrial policy (see Aiginger, 2007), most coalesce
around the suggestion that it refers to government ‘policy aimed at particular industries
(and firms as their components) to achieve the outcomes that are perceived by the state to
be efficient for the economy as a whole’ (Chang, 2003: 112; see also Tyson and Zysman,
1983).
Although widely accepted, such definition of industrial policy is limited, not least
because ‘if industrial policy is defined only as those policies with an explicit selective
orientation, then interventions with an important impact on industry may thereby be
missed’ (Warwick, 2013: 16). In justifying his definition, Chang (2003: 110–112) explains
that for ‘industrial policy’ to be analytically useful it must be specific and discriminatory,
thus excluding policies aimed at the provision of public goods, and those ‘policies aimed
at categories other than industry’ such as regional policy. While accepting the first exclu-
sion, the second is highly problematic, especially in the UK context, where regional pol-
icy has been a central mechanism through which UK governments have orchestrated
industrial policy (Pemberton, 2017). Likewise, an exclusive focus on macroeconomic
aims excludes measures implemented to secure less overarching objectives, a particular
difficulty in the UK context which for much of its history has been ‘characterised by the
absence of a coherent industrial strategy’ (Cowling and Sugden, 1993: 83).
Consequently, much writing on UK industrial policy conceives industrial policy more
broadly. Crafts (2010), for instance, defines industrial policy in a UK context as ‘any
public-sector intervention aimed at changing the distribution of resources across eco-
nomic sectors and activities’. In a similar vein, Wren (2001: 850–851) borrows El-Agraa’s
(1997: 1504) definition of industrial policy as ‘any state measure designed primarily to
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