Why Thatcher is wrong to argue that “the problem with socialism is that eventually you run out of other people’s money”.

Margaret Thatcher famously argued that the “the problem with socialism is that eventually you run out of other people’s money”. The quote is paraphrased from a 1976 interview on Thames Television’s This Week, where Mrs Thatcher was responding to a question about her desire to bring down Harold Wilson’s Labour Government. Since then, the quote has been glibly re-asserted as a truism by acolytes of the neo-liberal cause. It recurs in every twitter debate about socialism and has even been turned into a bumper sticker.

Its argumentative force is clear. We work hard to earn money that is legitimately ours and the state presumes to have the right to take this money from us through coercive taxation. From a Rothbardian perspective, there is little difference between this coercive taxation and a highwayman stopping us at the roadside and pointing a gun at us to demand “your money or your life”. In both cases the demand is non-voluntary and coercive and is, ultimately, backed up by force.

The point of disagreement, as I see it at least, is that socialists don’t accept that the money is legitimately acquired because we earned the money by benefitting from a social system that unjustly allocated resources. The argument above therefore misses the mark because it misunderstands the claim that is put forward by socialists. To give an extreme example, if I make money by owning a slave planation, the money and resources that I have by virtue of this enterprise might by mine according to the law of the land, but I don’t deserve the resources in a moral or philosophical sense and so can’t complain if some future government wants to redress this wrong through coercive taxation. Hence, more generally, if I benefit from a social system that unjustly allocates resources to me, I can’t complain when this wrong is redressed.

John Locke was one of the first thinkers to explore these issues and he is an instructive thinker to consider because he is also the father of many of the arguments used today by libertarians, Thatcherites and anarcho-capitalists. One of the key things he considers is the acquisition of land, which he considers to be legitimately acquired when we cultivate the land by mixing our labour with it. But there is an important proviso to Locke’s argument, because he acknowledges that my acquisition of land can only be justified if I leave ‘enough and as good’ land for other people, because, to fail to do so, would put other people in a worse position, precluding other people from having the same opportunity to cultivate good quality land that I had.

I think the acquisition of land is an excellent example because it seems clear to any reasonable person that land was not acquired justly in any European country as land was typically allocated by those who acquired territory through warfare and force. The Norman Conquest would be a good example of this, as William I rewarded the Norman conquerors with large plots of land and titles, many of which have survived to the modern day. Indeed, recent research from LSE found that almost a century after the conquest you are still advantaged in the UK if you have a Norman surname, like Darcy, Mandeville, Percy or Montgomery, compared to if you don’t.

My point in writing this blog post is not to conclusively settle the argument, but, rather, to re-situate the debate. Socialism has many problems, but before we start arguing about ‘running out of other people’s money’, it would be reasonable to engage in a debate about whether they acquired this money justly in the first place.

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