Margaret Thatcher: "We now know that it is the American model of free enterprise capitalism that works best to foster innovation and to create jobs."

Speech to the American Enterprise Institute 

("Re-learning old lessons: an overview of recent events")

Margaret Thatcher

It is a great pleasure to be asked to make some opening remarks at this conference, where I see so many distinguished participants, and not a few old friends. I first met President Ford, who more than qualifies in both categories, when I was very much a novice Leader of Her Majesty's Opposition. He brought dignity and integrity to the highest office in his country and the most powerful position in the world at very difficult times. I am honoured that he is chairing this session - my first visit to Beaver Creek.

It is equally flattering to be asked to perform a kind of duet with Mr Vaclav Klaus. I suspect it will even be quite harmonious, since he is in a way one of my heroes. Mr Klaus will be remembered for many achievements during his immensely creative and successful term as Czech Prime Minister. But perhaps most memorable for me are the lucid explanations he has given us of the merits of the market, the market "without adjectives" as he once put it. On another occasion he remarked that the "Third Way" leads only to the Third World. And this reflection provides an a apt starting point to the substance of my remarks.

When I was British Prime Minister I was not always popular. Reformers rarely are while reforms are going through, though if we struggle on we reap the rewards later. Among those who criticised my approach in the eighties were people who considered that socialism merely needed some modifications in order to deliver all the good things which socialists habitually promised. Some half-way house between collectivism and the free market was thought to be preferable.

There was, for example, an alternative European model on offer, sometimes described as "the social market", which involved a large state sector and a fair amount of state planning but also a significant role for private enterprise. There was also an alternative Japanese model, with a smaller state sector but even more corporatism and complex but powerful intervention exercised by government officials, principally through the banks.

Compromises of this sort are never very attractive. They have no logical justification. After all, if one really believes, as communists once believed, that the state knows best how to generate wealth, collectivism is the answer. If on the other hand one reckons that prosperity and jobs really flow from the interaction of individual consumers and independent businesses, the role of government should be kept to the bare minimum. In any case, the jury is no longer out. We now know that it is the American model of free enterprise capitalism that works best to foster innovation and to create jobs. We know that the more statist economies of continental Europe are not so successful. And we know - as a result of worrying developments in Japan, Korea and Indonesia - that the Asian brand of quasi-capitalism has even greater flaws.
.....................................

Read more: www.margaretthatcher.org