…attempts by the British government to curtail the failing welfare state of the 1970s actually began under Margaret Thatcher’s predecessor, a Labour prime minister, as Norman Barry relates:
Although Mrs. Thatcher’s election victory in 1979 is thought to be the first direct political expression of the new anti-consensus ideas, it should be stressed as a matter of historical fact that the Callaghan Labour Government, albeit under pressure from the International Monetary Fund, made the firs tentative moves towards the breakup of the old economic and social order. Towards the end of the 1970s the growth in public spending was restrained and the dangers of inflation recognised. Indeed, it was James Callaghan (in 1976) who first publicly pronounced the death of the crude Keynesianism that had been practised throughout the previous decades, with his admission that governments could no longer (if they ever could) spend their way out of depressions.
That’s from Barry’s book The New Right. He was one of Britain’s leading libertarian scholars, and one of a rather Rothbardian bent. That predisposed him not to accept easy characterizations of Thatcher’s Conservatives as straightforward classical liberals. Of the Conservative Party that emerged from the 1970s, he wrote:
The policy that was formulated in this period, and which to a small extent was carried out in Mrs. Thatcher’s administrations, bore a resemblance to classical liberalism only in certain aspects of economic management and in its general utilitarianism. There was less concern with personal liberty or with the dangers of group privilege (except in the case of trade unions) that has pre-occupied much anti-statist political thinking.
For those wondering about how Carter kicked off the Reagan revolution—it was by appointing Paul Volcker as chairman of the Federal Reserve and by deregulating airlines and trucking and a few other sectors. The point here isn’t that Carter really had the same economic philosophy as Reagan, or that Callaghan had the same as Thatcher—plainly that wasn’t so—but rather that the catastrophe of the late 1970s economy was plain enough that even before conservative/neoliberal leaders came to power in the U.S. and UK, governments were moving in the direction of liberalization.