On The Thatcher Revolution Of Counter-inflation

When the British ecnomic faced"stagnation and inflation"in 1970s,The Thatcher government which assumed power in 1979 adopted the idea of the Monetary ,opposed the first goal that takes the full employment as the macroeconomic policy, so it raised an economic reform which suppressed the inflation, improved macro economic environment. It is called"the Thatcher Revolution".After World War Two, British government, regardless of the Conservative Party or Labor Party, had implemented the economic policy that is called"the requirement's management"which Keynes had advocated:through increasing the disbursement and financial deficit to stimulate investment and expansion, to promote production growth and employment increasing. This policy's consequence is high inflation .Facing the high unemployment and inflation coexisting, Madame Thatcher thought curbing inflation can develop good environment for macro economic, Therefore the monetarism policy became the effective tool to cope with the inflation.she implemented the strict monetary policy and contracting financial policy. Through the formulation of "The finance strategy of intermediate stage", Madame Thatcher reduced the money supply gradually. Simultaneously she implemented the financial policy of increasing income and reducing expansion, to reduce Public sector's expenditure through privatization of the state-owned department and welfare systems, through tax cut to stimulate enterprise's investment and production; through the trade union reform, she broke the trade union's monopoly to the labor market, promoted the labor force to flow unrestrictedly. Finally the goal of holding down the price achieved.Although Counter-inflation had produced negative influence as unemployment increasing and the gap expansion between rich and poor. But it suppressed the high inflation rate, improved Britain's macro economic environment, promoted the restoration and development of British economy. British GDP growth rate in 1981-1989 was higher than the European Community. At the same time Economic growth has not presented high deficit phenomenon as the American Reagan administration."The Thatcher Revolution"rallied the British national prestige, obtained the widespread approval, caused Madame Thatch winning shree continual victories of reelection as the Prime Minister .Counter-inflation is aim and skill of"The Thatcher Revolution".Suppressing the inflation is not only Thatcher government's economic reform aspect; it is Thatcher government's economic strategy central content and penetration. In fact the"Thatcher revolution"is the process of opposing the inflation and reconstructing capitalism's free market. It has important meaning to policy's formulation of Chinese counter-inflation.