ABSTRACT
This chapter argues that the government's success in reducing inflation by 1983 invalidated the incomes policy hypothesis that wage rates only decline if artificially made to do so. The Prime Minister's essential difficulty was that, as already mentioned, Mrs Margaret Thatcher was in a minority in her own Cabinet on the vital economic strategy of political monetarism. Apart from the dissension of the Cabinet wets, the greatest obstacles to political monetarism were thought to come from the Civil Service. The political-monetarist policy on which the government had been elected had been translated into policy reality in the first six months of office. The corporatist approach to trade union power and the incomes-policy mentality established in the first six months was to have far-reaching consequences as the Margaret Thatcher administration ran its course. Central to the government's new non-corporatist approach was the discarding of incomes policy as a policy tool.
