Our recollection of the 1970s is pure Thatcherite propaganda

“Crisis? What Crisis?” For more than three years, after September 1975, that phrase simply referred to the fourth album by the prog-rock outfit Supertramp. Only in January 1979 did a Sun headline – a twisted paraphrase of PM James Callaghan’s denial of “mounting chaos” from strikes – inscribe it as an epitaph for the post-1945 social settlement.

By 3 May of that year, Rupert Murdoch’s tabloid had ripped up its old loyalties to proclaim: “Vote Tory This Time.” If the rest is history, then that history remains in dispute. “Who controls the past controls the future; who controls the present controls the past”, as Orwell’s Nineteen Eighty-Four puts it.

The battle for the past goes on. This week, in Leeds, Jeremy Corbyn made some tentative remarks about the potential “lessons” to be drawn from a state-led industrial investment policy of the sort that the Labour Government of 1974-79 tried to devise. Speaking in support of his “Northern Future” strategy, the party’s leadership candidate called for public funding to underpin a manufacturing revival. From Stuttgart to Seoul, beneficiaries of the post-war world’s most dynamic economies might have yawned politely at such a banal statement of the bleedin’ obvious. Back in our free-market paradise, in The Times and elsewhere, weary clichés stood up to salute the dogma that they serve. Readers unborn at the time heard all about the Mad Max-style apocalypse of an age when “rubbish piled up in the streets and the dead went unburied”.

True, it’s harder to condense into a snappy one-liner the fact that the Gini coefficient measure of income inequality fell to its lowest point in Britain around 1977. At the same time, the share of total incomes earned by the top 1 per cent hit a 20th-century trough. We were never more equal. Crisis? What crisis? That was the attitude of the New York Times London correspondent Bernard Nossiter. In 1978 he published a paean to the “first citizens of the post-industrial age”, who were building such a fair-minded, tolerant and civilised society. He called his book Britain: a Future that Works. Yes, in 1978.

The capture of the British 1970s by the Thatcherite narrative was a decisive propaganda coup. It still pays a lavish dividend to her heirs. Endlessly recycled by under-informed TV researchers, one Saatchi & Saatchi-made Conservative election broadcast of April 1979 – West End rubbish-heaps and all – has arguably had a greater long-term impact than the same firm’s “Labour isn’t Working” poster. The jobless rate under Callaghan had peaked at 5.8 per cent of the working population, and then fell steadily. By 1984, it rose to 11.9 per cent.

So long as the mildest challenge to this Stalin-esque re-writing of history can provoke yelps of outrage, that past will colour the present and tint the future. Yet nostalgic reminiscences no more deserve blind trust than partisan myths.

Let’s take the year 1975. I could bore you rigid with a recital of classic albums released that year, from Bob Dylan’s Blood on the Tracks, David Bowie’s Young Americans and Led Zeppelin’s Physical Graffiti to Bruce Springsteen’s Born to Run, Queen’s A Night at the Opera and Patti Smith’s Horses. Take that, 2015! A sceptical historian would riposte that more people were listening to Barry Manilow, The Carpenters, Abba and the Bay City Rollers. Turn to TV. I might claim that the broadcast culture of the time knew how to take down fraudulent authority figures: Fawlty Towers first aired on 19 September 1975, when Basil sucks up to phoney toff “Lord Melbury”. A critic with 20/20 hindsight might trump that with the arrival of Jim’ll Fix It in May. The “Seventies” no more existed as a monolithic entity than any other decade.

The vicissitudes of politics make a nonsense of thumbnail sketches. In this instance, we scuttled from the surprise Heath victory in 1970 through two coal strikes, the short-lived “Barber Boom”, the oil-price spike and the Three-Day Week to Wilson’s return, hyper-inflation, the “Social Contract” with the unions, the IMF bailout, and a period of calm that collapsed in the public-sector insurrection of the “Winter of Discontent” and the Thatcher victory.

Decade-bound history also has to overlook the subjective experience that permits us to inhabit several eras at once. Think of all those period dramas in which everyone who lives in, say, 1973 drives cars, wears clothes, uses gadgets and voices opinions meticulously sourced from that very year. As you gawp at the freakish hair-dos – and freakish mind-sets – of Life on Mars, bear in mind that millions were then quite happily sitting on Saturn, Pluto or Uranus.

The punctilious timeliness of the set-designer has nothing to do with what goes on in our homes, or in our heads. We live instead amid a chaotic mish-mish of defunct, moribund, mainstream and emergent ideas. Label the Sixties as a period of progressive, permissive emancipation, and you have to acknowledge that it happened to most people only in the next decade. Vanguard fads evolve into shared common sense. State investment aside, Corbyn might have pointed to the social achievements of the post-1974 Labour government, from Control of Pollution and Health and Safety at Work legislation to Roy Jenkins’s legacy as Home Secretary: the Sex Discrimination and Race Relations Acts.

This sort of advance – allied to a lively arts scene, wider access to higher education, dependable social security and affordable property in Blitz-battered but handsome suburbs from Camden Town to Notting Hill – would have prompted the friendly Bernard Nossiter to reach his rosy view of Britain’s prospects. As far as it went, he was correct. Yet beyond his gaze lay the painful rather than picturesque sides of de-industrialisation, already a motor for workplace strife.

Although inflation fairly quickly dropped from its all-time peak of about 24 per cent in 1975, long-term competitive decline mean that GDP per head in Britain fell behind West Germany in 1966, France in 1972 and Japan in 1980. Recessions tended to bite deeper and last longer on these shores. Whether you treated it as salvation or silliness, the “Alternative Economic Strategy” championed by Tony Benn took shape as a real response to real events. One of its cornerstones was The Socialist Challenge, a manifesto published in 1975 by the academic Stuart Holland, later also a Labour MP. Still active, Holland co-authored “A Modest Proposal” in 2010 for a solution to the problems of the euro. You may have heard of his collaborator on that work: Yanis Varoufakis.

The Varoufakis seizure of the helm of state did not end prettily. Still, his stint in office in Greece reminds us that the “alternative” economic outlook crafted during the Seventies attracts many voters today as a chic retro fashion, not just a vintage curio. After all, the banking meltdown of 2008 and its botched aftermath did wonders for Seventies styling in politics. Hence the Corbyn Supremacy – or, if you see only ruin in his precepts, the Corbyn Ultimatum.

Even if we dismiss decades as largely fictitious units that mask the ebb and flow of change, almost everyone accepts the epoch-making quality of May 1979. Whether curse or blessing, Thatcher’s advent closed an era as well as a decade, slamming the door on cosy corporatism to begin an age of harsh free-market efficiencies.

Well, think again. A revelatory new study by Ken Coutts and Graham Gudgin of the Judge Business School at Cambridge University (The Macroeconomic Impact of Liberal Economic Policies in the UK) demolishes that orthodoxy. In a virtuoso piece of forensic revisionism, they argue that, after 1979, the UK economy became less efficient and less productive, as well as more unequal in its rewards. The duo leaves received wisdom in shreds.

Labour productivity, to pick one key measure, rose by an annual average of 2.9 per cent in the three decades to 1980, but by only 1.7 per cent from 1980 to 2007. It has declined since then. Remarkably, “total taxation is no lower now relative to GDP than in the 1970s”.

Spending on research has plummeted, while UK manufacturing suffered “the largest proportional loss of any industrial nation”. Coutts and Gudgin conclude that “the extreme assumption that free markets will generate optimal outputs is shown to be untrue”. Perhaps with post-war Europe and the Far East in mind, they modestly suggest that “a wider range of varieties of capitalism are available to policy-makers than is commonly assumed”.

Without such an ideologically skewed press, this intellectual dynamite might detonate more headlines than grisly folk-tales from the labour stoppages of yore. In response to what Coutts and Gudgin call “extreme de-industrialisation”, George Osborne’s Northern Powerhouse vision at least admits that a problem exists to be fixed. Corbyn’s “Northern Future” has declared his, opposing hand. For many years as risible as a pair of polyester bell-bottoms, industrial policy is showing signs of resilience to match the evergreen rock bands of the 1970s.

I had hoped to round off this tribute to Seventies revivalism with the news that Supertramp themselves would re-form for a European tour later this year. Sadly, the illness of their vocalist has just forced the group to cancel. Get well soon, Rick Davies. Meanwhile, macro-economic pundits of the same epoch will be hoping to be proved – in the title of one of his signature songs – “Bloody Well Right”.