Embattled but Unbowed

By Marguerite Johnson

COVER STORIES

As Britain reels from recession and political turmoil, Thatcher soldiers on

Even by the rowdy standards of the House of Commons' "cheer and jeer" debate, Prime Minister Margaret Thatcher was in for a bruising confrontation as she rose from the government front bench last week to answer hostile opposition challenges about the country's unemployment, the worst since the 1930s. Days earlier, when she wore a black dress, Labor M.P. William Hamilton had pointed a taunting finger at her and inquired derisively, "Is she dressed in black because of the unemployment figures?" Now she was meticulously turned out in a tailored gray suit, a soft white bow at her neck, to face another onslaught. In her coolly accented voice, she delivered a forceful and familiar message: only sound money and competitive industry can bring down inflation and eventually create new jobs for Britain.

From the Labor benches jumped M.P. Dennis Skinner, a militant leftist. Stabbing at the air, he roared, "Same old story!" Thatcher, coming alive, snapped back, "Of course, it's the same old story. Truth usually is the same old story." Almost menacingly, Skinner leaned toward her and charged, "We'll get you out--either in this place or outside it." The threat of going outside Parliament to bring down a government brought gasps from many M.P.s. Thatcher did not flinch. "Rubbish," she replied. Then she added, "Indeed, he is the face of the true new Labor Party--not of its democrats--but those who have moved further and further left, towards the East European type of economy." Again came a momentary hush, and then Tory M.P.s broke into cheers at this flash of their leader's steel knuckles.

But hardly had Thatcher faced down her parliamentary opponents than she was confronted by successive challenges on the industrial front. The leader of the gigantic Trades Union Congress and the head of the Confederation of British Industry both lodged urgent demands that she act promptly to reflate the economy or "there'll be nothing left to revive," as one unionist put it. Word came of an impending collision between the government and unions representing 32,000 waterworks employees, who had just turned down a proposed 10% pay boost. The chief union negotiator for 583,000 civil service workers furiously rejected a 6% pay raise offered by Thatcher's government bargainers. Said he: "I told them to get stuffed." Through it all, the Prime Minister stood fast last week. In a TV appearance from No. 10 Downing Street, she had scoffed at past governments that "have taken fright and cut and run" when the going got tough. Said she: "If I could only get this message over: I will not stagger from expedient to expedient."

Few other Britons were quite as unruffled. The country has been stumbling ever deeper into the throes of its worst recession since the soup kitchen days of the 1930s. Unemployment has climbed to its highest mark since the Great Depression: 2.4 million jobless, or 10% of the work force, and the grim predictions are that it could reach a watershed mark of 3 million before the end of the year. As the lines of the jobless have lengthened, businessmen as well as trade unionists have despaired. Interest rates have hit unprecedented levels, as high as 22% for an ordinary consumer. Even the strength of the British pound, a sturdy $2.35 because of the North Sea oil bonanza, has not been a total blessing; it has hampered exports by raising the prices of British goods abroad.

On the political front, the country is being sharply polarized between the diehard right, represented by Thatcher's hair-shirt conservatism, and the increasingly strident demands for a "socialist transformation" issuing from the far-left ranks of the Labor Party. The opposition party itself has all but split asunder as a result of a ferocious internal struggle between its own right and left wings. Late last month Labor changed its rules for selection of its leader--a potential Prime Minister--giving much more power to the unions, with their huge bloc votes, and the left-leaning local committees. The action provoked the virtual defection of the leading members of Labor's right wing, which in turn could substantially alter the entire British political scene. An increasingly leftist-oriented Labor Party presents the potential for far-reaching national and international changes: a Britain bolting from the European Community, for instance, or the alteration of all NATO strategy if a Labor government should make good on its professed policy of unilateral disarmament and "sending the nukes back to Washington." Summing up the uncertainties felt by many Britons, Guardian Columnist Peter Jenkins observed: "We have all moved into unknown territory, and there is no clear vision of what the future will resemble."

At the heart of this political turmoil is the prime ministership of Margaret Thatcher, the Joan of Archconservatism. Does she have a clear vision of the future? Britons were asking. Is she leading the country out of the wilderness, or into it? The final verdict is not in, but the British public harbors considerable disillusionment with how she has fared to date. In recent weeks, the polls have shown her conservative party as much as 13 points behind Labor; the Prime Minister herself was given a mere 31% approval rating. No angry mobs were taking to the streets, no pitchfork militant was yet daubing down-with-the-rich slogans on the windshield of the nearest industrial executive's Rolls-Royce. Indeed, protest demonstrations by the unemployed were limited, and peaceable. As workers feared for their jobs, in fact, the number of strikes and other labor stoppages fell to a 40-year low. But there was no mistaking the public anxiety. With Britain at an economic and political crossroads, Thatcher's government is facing its severest time of testing.

Americans will be scrutinizing Thatcher with particular attention when she visits Washington later this month, because she is considered the political pioneer in the application of the frugal, budget-cutting policies that the new Reagan Administration itself would like to try out on the U.S. economy. It is no accident that she and Reagan are often regarded as ideological soul mates. Former Republican National Committee Chairman Bill Brock, who went to Britain for a look at the Thatcher campaign in 1979, was so impressed that he brought video tapes of Tory broadcasts back to the U.S. as models for his G.O.P. campaign strategists. To Britons, the Reagan campaign was a distant echo of Thatcher's, and when he delivered his Inaugural Address last month, they heard themes, even phrases, that have become familiar litanies of Thatcher's government. Understandably, Thatcher expects to get on well with Reagan when she arrives at the White House as the first NATO leader to call on the new President. Says she: "We share the view that democracy works best when government doesn't take over too much."

Even with their similar perspectives, there may be marked differences in approach and degree. Thatcher, a self-styled "conviction politician," obdurately refuses to veer from the course she has set for her government. Her British critics, many of them in her own party, including former Tory Prime Minister Edward Heath, are sounding transatlantic alarms and warning Reagan not to follow Thatcher's economic course. One of Thatcher's own Cabinet ministers has expressed second thoughts. Said he: "If we have any advice to give to President Reagan, it is, 'Don't pack your first budget with too many campaign promises.' "

Hard-edged and superconfident, Thatcher swept into office 21 months ago with a handsome 43-seat parliamentary majority from an electorate that had soured on the Labor government of James Callaghan and was fed up with Britain's intractable unions in the bitter winter of 1979. Labor's image as the only party capable of dealing with the powerful trade unions was sorely damaged when strikes and industrial strife spread across the country. Touting the "monetarist" theories of Milton Friedman, the conservative American economist, Thatcher won big with pledges to cut government spending, reduce income taxes, revitalize industry and create a new climate for business.

With a survival-of-the-fittest philosophy, she warned that outdated, unprofitable industries would be allowed to die--but for the sake of new and vital ones. She promised Britons that she would get government off their backs and give them freedom to make their own choices. She called for a renewal of the British spirit she had known as a girl growing up over her father's grocery store in her Lincolnshire birthplace of Grantham.

In the international arena, she pledged to strengthen Britain's military defense and stand up to the Russians. Actually, her first successes were scored in foreign policy. She attacked her European Community colleagues over the inequity of Britain's $2.5 billion share of the E.C. budget, and ultimately succeeded in getting it pared by two-thirds. In the summer of 1979, she traveled to southern Africa and, under the tutelage of her able Foreign Secretary, Lord Carrington, changed her position and cleared the way for peace negotiations that ultimately transformed Britain's former colony of Rhodesia into independent Zimbabwe. She was the most outspoken backer of President Carter's hard line against the Soviets following their invasion of Afghanistan and his efforts to boycott the Olympics.

Her highest priority, however, was economic--specifically to "wring inflation out of the economy." She warned candidly, "Things will get worse before they get better," a prediction that proved accurate in the extreme. She stressed that, above all, if the government practiced discipline and the Friedman doctrine of strict control of the money supply, Britain could recapture its old place "in the first division among nations." In her initial budget, she promptly cut income taxes: from 83% to 60% for those earning more than $50,000, and from 33% to 30% for those below. To replace the $9.5 billion in lost revenues, she raised the value-added tax (VAT), a levy on all but barest essentials, to an across-the-board 15%. Public spending in the areas of foreign aid, education, housing and municipal services was cut; housing alone was reduced $3.5 billion.

Thatcher had one resource that was helping ease the nation's financial burden: the North Sea oilfields. They were to make Britain self-sufficient in petroleum by the end of Thatcher's first 18 months in office. Typically, Thatcher refused to distribute the oil at cut rates to British industry. British consumers had to pay the full market price.

But, inexorably, the recession affecting the whole industrialized West came to be felt more and more painfully, and in Britain the promised Thatcher recovery did not begin. By last autumn, the public mood had turned sour. When the poor year-end statistics were made public, Thatcher was being pilloried for what Labor's Denis Healey, former Chancellor of the Exchequer, called her "punk monetarism." Said Eric Varley, Labor's spokesman on employment matters: "The consequences of this doctrinaire obsession are still wreaking havoc in every part of the country." Thatcher's own Industry Secretary, Sir Keith Joseph, glumly admitted that his government "lost the first year," and the Economist magazine, which had supported Thatcher's election, characterized her economic experiment as "a prescription for electoral suicide."

Britain's economic condition is indeed worse in virtually every respect than when Thatcher took office. At the outset, she had said it would take 18 months to two years for results to show, but that timetable is nearly up and the turnaround is nowhere in sight. Inflation, 10% when the conservatives came in, is now 15%, though that is a considerable improvement from a high of 22% last summer. The gross national product has fallen from 1.5% growth in 1978-79 to a negative 3% for 1979-80. Some 10,000 businesses went bankrupt, a record. Unemployment climbed by a phenomenal 66% in 1980 --and 86% since Thatcher took office. In the manufacturing regions of the north, 14.8% of the male work force is jobless. Meanwhile, the government has been unable either to control the money supply or control public spending, the two keystones of its monetarist policy. The budgetary deficit for fiscal 1980-81 was first forecast at $20 billion, then revised last November to $27 billion. Now government sources expect the deficit to exceed $30 billion, an increase of $7 billion over last year's deficit. To compensate, Thatcher and her Cabinet are now talking about imposing new taxes. Ironically, it is the private sector--the area of her prime concern and source of her strongest support in the last election--that is suffering the most.

What went wrong? In initiating Milton Friedman's theories, Thatcher seems to have discovered a catch-22. Push interest rates to a record high, which she did, and it is private enterprise and individuals who have to curtail investment and spending. Force noncompetitive businesses to wring out their slack and unemployment rises. As workers "go on the dole," the nation's welfare costs rise dramatically.

Thus total public spending tended to go up instead of down. Just as welfare costs rose, so did government subsidies to public-sector industries. Some of the proposals advanced by Thatcher simply proved unrealistic, like her plan to cut government financing for such ailing nationalized industries as British Steel, British Airways and British Leyland, the automaker. To have allowed the companies to collapse would have meant a million new unemployed, including tens of thousands of jobs in supplier companies. Explained Deputy Prime Minister William Whitelaw: "In the real world, you cannot destroy your steel industry and remain an industrial power of any standing."

Friedman, a research fellow at California's Hoover Institution, refuses to acknowledge that his theories are to blame for Thatcher's troubles. Calling the Prime Minister "a remarkable woman," he says that "unfortunately, actual practice has not conformed to policy." Monetary growth increased rather than declined, he points out. (At 22.5%, it is more than double the target of 7% to 11%.) He criticizes Thatcher's decision to go along with a campaign promise to raise civil service salaries by 28%, so that they would approach salaries in the private sector. Says Friedman: "That shot into a cocked hat the hope of cutting down government spending." He also thinks it was a mistake to decrease upper-bracket income taxes while increasing the value-added tax, which could only add to inflation.

Thatcher admits that things have not gone well and looks to more difficulties ahead. "It will be another hard year," she told a recent Tory conference, "but I believe that if the government sticks--as it will--to its determination to get inflation out of the economy, and if the pay settlements this winter are reasonable, there is real hope that a year from now things will be looking distinctly brighter." Referring to the pressure for a policy U-turn, she says, "This lady's not for turning."

Confrontation, in fact, is her metier, and even the day-to-day combat in the highly charged arena at the House of Commons stimulates her. Recently she confessed: "The adrenaline flows. They really come out fighting at me, and I fight back. I stand there and I know, 'Now come on, Maggie, you are wholly on your own. No one can help you.' And I love it." Virtually every demand of public office seems to agree with her. Thatcher looks, if anything, more youthful than when she moved into Downing Street. There is little relaxation in her regimen. Her staff is awed by her "terrific appetite for work and her energy level." Her voice gets husky after particularly heavy weeks, but she rarely seems tired. Five hours of sleep are enough, she insists. She rises about 6:30 a.m., listens to radio news, prepares breakfast--coffee, toast and fruit --for herself and her husband of 29 years, Denis Thatcher, 65, a semiretired business executive. Their 27-year-old twins are off on their own: Carol is a journalist in Australia; Mark, a racing driver whose avocation and political gaffes have sometimes been cause for concern.

On a typical day, Thatcher walks down one flight of stairs to the Prime Minister's study around 9 for early appointments. Twice a week, her hairdresser will have already come and gone by then, maintaining the new darker shade of blond she has adopted on the recommendation of an image consultant. Lunch, if not official, is likely to be a salad brought in by her secretary. Dinner is regularly taken at the House of Commons with backbenchers, a habit that builds political capital. It also saves cooking: the Thatchers have no regular cook. After dinner she may have guests for drinks in the family quarters or settle down to several hours of paperwork. Says an aide: "Hers is a nononsense, no-fuss life."

The Thatcher style of leadership "has mellowed a bit," says one Cabinet minister with whom she often disagrees sharply. However, she still tends to dominate discussions among her inner circle, and Cabinet ministers, particularly those who do not share her views, grouse about her overlong lectures and lack of humor. She does display a thoughtfulness about personal situations and an unaffected directness in talking with "little people." On the same day that she has purposely discomfited a minister, she will stop and have a cup of tea with the Downing Street switchboard operators. At a recent Tory conference, a 15-year-old lad made a speech that was a great success. When he was brought to meet the Prime Minister, she first asked if he had called his mother to tell her how the speech went. When he said no, she fished out a tenpence coin from her purse and sent him to a telephone.

At the same time, Thatcher is accused of having no real compassion for the public at large. Critics claim the 2.4 million unemployed seem to be statistics to her, rather than individuals. When an interviewer recently pressed her about a seeming lack of sympathy, Thatcher replied sharply, "It's like a nurse looking after an ill patient. Which is the better nurse --the one who smothers the patient with sympathy and says, 'Never mind, dear. Just lie back. I'll look after you.' Or the one who says, 'Now, come on. Shake out of it. I know you had an operation yesterday. It's time you put your feet to the ground and took a few steps.' Which do you think is the better nurse?"

That sort of unbending self-reliance, when applied to monetarism at the expense of political considerations, has caused deep anxiety among many Tory M.P.s, who have to suffer the brunt of their constituents' discontent over unemployment, bankruptcies and shuttered businesses. Indeed, there is already speculation about Thatcher's political survival if economic conditions show no signs of improvement by next year. Labor M.P. Phillip Whitehead cites a British political rule of thumb: "The Labor Party always talks about getting rid of its leaders, but never does. The Tory Party never talks about getting rid of theirs--but does it." How could a coup against a leader with a 43-seat majority be brought off? One senior minister sketches a simple scenario: "If, after another year to 15 months, there are no signs of an upturn in the economy and a reduction in unemployment, I would expect a Cabinet consensus to force a change of policy. If Thatcher agreed, there need not be any change, except in policy. If she disagreed, it would go to a vote in the Cabinet, and if she were defeated, she would have to go." In such an event, adds the minister, the Tories "would have no alternative but to spend their way out of the crisis, which could split the Conservatives and possibly bring in Labor."

Across the land, unemployment has spawned some demonstrations; 50,000 workers turned out in bitter cold for a Labor "Day of Protest" on the gray and eerily lifeless docks of Liverpool. But there are as yet no serious signs that the social fabric cannot stretch with the strain. In the 1960s, British social scientists believed there would be riots in the streets if only a million people were out of work. Now workingmen sip their pint of lager in the pubs and union clubs and calmly discuss the bleak prospect of 3 million jobless. "People are bitter, but they're adapting so far," says Bruce George, a Labor M.P. from a constituency north of Birmingham where unemployment has doubled. "The one thing we haven't seen, thank God, is a major racial explosion. The easiest people to blame would be the immigrants."

At Johnson's Cafe, a wooden shack across the road from the main gate of British Leyland's Austin-Morris plant near Oxford, where workers can get a sausage, egg and chips lunch for 39 pence (92-c-), everyone agrees that times are rough. But the young tend to disagree with the old about where the fault lies. One maintenance worker, who approves of Thatcher's economic policy, insists that "the trouble with this country is the unions have got too much power." An assembly-line worker who has been at the plant for 25 years, and remembers the depression, fumes: "We haven't got a government, not as far as the working class is concerned!" In Manchester, proud birthplace of the Industrial Revolution and once the most dynamic manufacturing center in the world, unemployment has doubled in a year, from 20,000 to an estimated 40,000. The city is ringed with plant after plant full of outdated machinery, operated by sharply curtailed work forces. Says Norman Morris, the leader of Manchester's city council: "Nearly all of our industry is suffering now. This area has tremendous potential, enormous expertise and a great desire to push across new frontiers. What's lacking is the capital."

At the labor exchange a few blocks from city hall, Frederick Holt, 64, emerges jubilant because he has just found a ten-day job as a census taker. Unemployed for a year, Holt is pessimistic. "All I can see is unemployment going up to 4 million by 1985. What's going to happen to this great country?" Another casualty of the crisis is William Sykes, 41, who was a skilled metalworker and shop steward for an engineering firm in Manchester that makes industrial gears. The plant was forced to lay off more than two-thirds of its work force in the past three months. Early in December, Sykes, who had been with the firm almost 27 years, got a letter saying he had been "selected for redundancy." Then, he recalls, "I got another letter next day saying, 'Finish up at four o'clock.' And that was it." He was handed a slip of paper as he left, noting his severance pay: a lump sum of $9,750 to tide him over until he became eligible for unemployment compensation in twelve weeks. Married with one child, he can then collect $82.37 a week. Trying to calculate how he will manage the mortgage payments, he shook his head morosely. "It's been a big jolt, what's happened."

The main reason for the relatively stoical mood with which Britons are taking the country's economic troubles is the elaborate social security system. A complicated infrastructure of welfare benefits, instituted by Clement Attlee's Labor government in 1945, cushions most families from real hunger or homelessness. In addition to severance pay and unemployment benefits, most workers with children are entitled to an income tax rebate, a rent rebate on public housing, and free milk and lunches at school.

However, Historian Asa Briggs, provost of Worcester College, Oxford, warns that "just because people are quiet now does not mean there will not be all-out trouble in the future." Lord Briggs believes that the era of rising expectations, in which the standard of living was expected to improve every year, is over, and the realization of this could lead to a leftist backlash. Says he: "Politics is all about being a little better off. If you can't have that, people may go in for wilder objectives like a real redistribution of income."

To judge from the increase in the Labor Party's popularity in the polls, some of the backlash may be under way. What better issue is there than hard times for a party that has traditionally been the champion of the worker? But Labor, caught in the throes of the worst internal split in its 80-year history, is hardly in a position to exploit it. Labor, in fact, seems in mortal danger of committing political suicide. On the one side is a noisy, growing claque of radical leftists, given to raising clenched fists and shouting Trotskyite slogans, who are maneuvering to capture the levers of party power (see following story). On the other is a handful of rising and ambitious M.P.s, accustomed to the prerogatives of Westminster corridors, who are threatening to bolt Labor and form a new centrist party.

These ideological divisions in the Labor Party are not new, but in the past the two sides have managed to coexist in dynamic tandem. The party's center-right dominated the real sources of power, the Commons and the Cabinet, where national policies are forged. The left, galvanized by the brilliant oratory of the late Aneurin Bevan, pursued its socialist goals through the giant trade unions. But the new left is no longer content with a passive role. When Callaghan resigned as Labor Party leader last fall, the left began to move in earnest to bring in one of its own. To stave off a party split in the fight for leadership, the M.P.s chose Michael Foot, 67, an amiable, cultivated Libertarian socialist in the old mode, with a reputation as a peacemaker.

The party had also adopted what to its right wing were two impossible positions: withdrawal of Britain from the European Community and a call for unilateral nuclear disarmament. Although he has long favored both positions, Foot sought to reassure the dissidents and pleaded with them to stay in the Labor fold. But then came a special one-day party conference in the London suburb of Wembley late last month to consider a rules change for choosing a party leader in the future. In the past, the party's mostly moderate members of Parliament held the exclusive right to choose the party leader. At the urging of the left, the party established an electoral college in which the combined power of the unions and the leftist constituency committees could outvote the establishment M.P.s.

Within hours, the right-wingers announced the formation of a new "Council for Social Democracy" as a prelude to forming a new political party. A trio of former Cabinet ministers, Shirley Williams, David Owen and William Rodgers --immediately dubbed "The Gang of Three"--were quickly joined by a fourth: former Deputy Party Leader Roy Jenkins, back from four years as president of the European Commission. They have appealed to other Laborites to join them. The acrimony between victorious leftists and the rightists was demonstrated at the next meeting of the national executive committee. Foot wheeled on Williams. "You had better make your mind up--if you want to join another party, it is quite intolerable that you should sit here." Tony Benn, the suave standard-bearer of the radical left, was even more virulent. He shouted at Williams: "If you are plotting to form a new party, you cannot sit here in the highest councils of Labor with all access to party documents available to you!"

The party split, if it comes finally and formally to that, would not cleave the party down the middle but break off an influential splinter, made up mostly of "Oxbridge" (Oxford and Cambridge) educated, middle-class M.P.s. Tweaking their somewhat elitist image, the Guardian ran a cartoon about the hypothetical problem the dissidents would have when they met to choose a leader: "... They could always have a wine-tasting competition." Last week five moderate trade unions joined to declare they would fight to overturn the rules change at the next party conference. Deputy Party Leader Denis Healey, borrowing a phrase from Hugh Gaitskell's fight against the left in 1961, vowed to "fight, fight and fight again."

Meanwhile, Liberal Party Leader David Steel, the most popular such figure in the country at the moment, with a 63% approval rating, told the disaffected Laborites to "stop dithering" and form a new party. The Liberals, who have never held power, usually poll between 14% and 18% in general elections. Steel is eager to cooperate in an alliance with a potential Social Democratic party that could bring his own group into a bona fide governing coalition. Several new polls indicated that such a centrist alliance could win 38% to 40% of the vote, and even some disenchanted Tories talked of signing on. But few political analysts believed any such alliance could score heavily against the long-standing organizations of the conservatives and Labor when the next election comes some time before the spring of 1984. Says University of London Professor Esmond Wright: "The alliance hasn't a cat's chance, and that's a pity, because that's where the country is."

Many British intellectuals see this as a pivotal moment in the country's political history. Certainly, the influence of the new left, both inside and outside the Labor Party, is being strongly felt. The universities are full of noisy protesters. "A pacifist is a chap shouting at you when you're trying to speak," sighs an official spokesman on nuclear weapons policy.

An antinuclear lobby is growing larger and more vocal as bearded young militants in duffel coats and girls with CND (Campaign for Nuclear Disarmament) pins over their hearts express hostility to having U.S. bases in Britain, which would commit the country to war in a nuclear exchange. They also often oppose NATO as a capitalist prop. This upsurge of pacifism with an anti-American edge might have been expected in the twilight of the Viet Nam War, but why now, when America's reputation under Jimmy Carter has been that of a weak superpower with a strong human rights policy?

One reason, believes Christoph Bertram, the director of the International Institute for Strategic Studies, is simply frustration over the economy. Says Bertram: "When the government has finished administering its bitter medicine--whether it works or not--this will be a different country. My fear is that it's going to be a country that is more anti-American, more anti-European, more insular." Bertram contends that left-wing moralism and pacifism have traditionally played a role in British politics. But now "moralism has combined with the fear that nuclear weapons might actually be used. This has tended to blur the distinction, so vital for the nuclear age, between deterrence and actual warfare."

Certainly the economic crisis has driven home the realization that Britain is going to have to make some hard choices about its defense commitments. M.P. Bruce George, a member of the Commons Select Committee on Defense, says there is no way Britain can meet its varied defense commitments and pay for the proposed $12 billion Trident missile program, which would allow Britain to maintain an independent nuclear deterrent through the end of the century. Thatcher's position on Trident is clear: she will not cancel it. Nonetheless, her government is facing severe budgetary problems in maintaining a defense spending program that represents just over 5% of its G.N.P. As the economic crisis intensifies, so will the debate over defense--and the country's priorities.

North Sea oil has bought Britain some precious time in which to put its economic house in order. It is Thatcher's ambition--and almost religious determination--to seize this unique moment to transform Britain's economy in order that it may survive over the long term, with or without oil. Until now, she has concentrated on the radical surgery of cutting away the deadwood of ailing industries. But the signs are that, like the stern nurse she is fond of quoting, she soon will have to turn her attention to getting the sick patient back on its feet, to move from surgery to rehabilitation.

Her conservative government, with its big majority, seems safely ensconced until 1984, in part because Labor has not been able to mobilize a following that can truly bring it down before then. Michael Foot talks of legions of Britons taking to the streets in outrage, determined to topple the "criminal" Thatcher government. But instead his own party is tearing itself asunder, giving Thatcher a golden year virtually free of serious political fears. It may just be the piece of luck she needs to get through this perilous period in which she is struggling to bring her monetarist equation into balance. If she fails, she will have to alter course sharply or bow out. If she succeeds, she will have administered much-needed therapy to the Britain she believes in -- and she will have written quite a chapter for the political textbooks.

--By Marguerite Johnson

Reported by Bonnie Angela and Erik Amfitheatrot/London

With reporting by Bonnie Angela, Erik Amfitheatrot

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