Did Margaret Thatcher Send Britain Back To The Future?

Martin Wolf, writing in The Financial Times, argues that Margaret Thatcher's perspective on the economy was a 19th century point of view.  It was a view dominated by her desire to limit the role of the state in the economy.  One of the consequences of financial market deregulation has been less spending by business on R&D and innovation which is at the heart of the 21st century economy.  The City of London, which is Britain's Wall Street,  is focused on profit maximization in the current quarter.  CEO's manage the stock price more than they manage for the future.  To do otherwise, would cost them their jobs.  This also mimics the 19th century British economy which was a rentier focused economy.  The wealthy lived off of their investments and finance dominated the economy.

Wolf's description of the British economy after Margaret Thatcher seems much like the US economy after Ronald Reagan.  There has been technical innovation in the US economy, but the share of output and profits going to the finance sector has grown substantially.  The behavior of our large corporations has also been driven by stock price management.  There has been less spending on R&D and less risk taking by large firms.  A larger share of profits has been diverted to dividends and stock repurchases which increase shareholder value in the short term.