Margaret Thatcher, whose centenary it is this year, continues to haunt the Conservative Party and British politics. No government, left or right, since she was forced from office in a party coup in 1990, “has questioned the basis of the Thatcher economic and industrial settlement”, as Iain Dale puts it in his new biography, Thatcher, published to coincide with the centenary. But the Conservative Party is in a critical condition.

Today the so-called natural party of government, once renowned for its majestic pragmatism and scepticism of abstract ideas, is defeated and demoralised. If you talk to Conservative MPs, the mood is one of gloom and embarrassment. A party that has had five different leaders since David Cameron’s sudden resignation after the 2016 Brexit referendum is febrile with speculation about how long Kemi Badenoch can survive.

Badenoch herself has been looking to the past for inspiration and has been closely studying Patrick Cosgrave’s book about Thatcher’s early years as leader to find out not only how she overcame internal resistance but thrived.

The larger problem for Badenoch, however, is that the energy and momentum in British politics are not with what Thatcherites but the populist or dissident new right and Labour believes its main opponent at the next general election will be Nigel Farage’s insurgent Reform UK. Inside No 10 they are scornful of Badenoch and her party, its lack of energy and purpose, its defeatism, but they fear Farage. Badenoch pleads for time – and points out that Thatcher never had a rival party of the right to defeat – but she may not get it. Dominic Cummings has said that he thinks it’s already too late: the Conservatives may have passed what he calls “the event horizon” - reached the point of no return.

“There’s no going back for the Tories,” said Danny Kruger, MP for East Wilshire since 2019 and one of the most thoughtful politicians in the Commons, when he defected to Farge’s Reform UK last month. “The Tory party is dead. Its members now need to think the unthinkable and look to the future,” said Nadine Norrie, once a close ally of Boris Johnson, when she too joined Reform.

Yet for all the talk of the strange death of the Conservative Party conservative and right-wing ideas are flourishing everywhere. Here, the political energy is with Reform, which opportunistically mixes right and left economic populism with hard-edged social conservatism. In America, Maga has taken over the Republicans, once the party of the country club elites, and embarked on a long march through the liberal, or “woke”, institutions as it seeks hegemonic control. Throughout Europe nationalist populist parties and movements, are rising, and where they are not directly winning, they are profoundly changing the political discourse on immigration, borders, security and demography.

We are in new political times, however, and the spirit of the age is resolutely not Thatcherite. So what answers, if any, can Badenoch hope to find?

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Who was Margaret Thatcher and what is Thatcherism? The legacy of “Thatcherism”, an original coinage of the journal Marxism Today, remains as contested as it is misunderstood. What is caricatured as Thatcherism – the privatisation of state-owned monopolies, deregulation, tax cuts, weakened trade unions – was never a coherent or universalist ideology but a response to the unique economic and social crises of the era: inflation reached 24 per cent in 1975. The public mood in Britain through much of the decade, culminating in the winter of discontent of 1978-79, when rubbish lay uncollected and dead bodies piled up because gravediggers and crematorium workers were on strike, was conspiratorial and paranoid. There were simultaneously fears of both a general strike and a counter-revolutionary right-wing coup led by former generals. For Alfred Sherman, an ex-communist who co-founded the Centre for Policy Studies think tank, it was time “to think the unthinkable” – the same phrase Dorries used when she joined Reform.

Liz Truss’ calamitous 2022 mini budget was described as “Thatcherite”, but Thatcher would never have been so reckless or as careless about public expenditure and the consequences of unfunded tax cuts. She was a self-described conviction politician but more pragmatic than is commonly assumed. She prepared the ground rigorously for her counter-revolution against the postwar Keynesian consensus.

“Her own myth as a conviction politician is her own problem,” Charles Moore, author of the authorised three-volume Thatcher biography (a new one-volume edition is just out), told me. “She was careful, she was prepared to wait, and reverse if necessary. She was very keen to keep testing out a proposition and liked to say that time spent in reconnaissance is never wasted.”

Farage, a former metals trader in the City of London and an archetypal 1980s-style buccaneer, is the most consequential politician of the last 20 years and once considered himself to be an arch Thatcherite. But he is endlessly protean and adept at both channelling and containing the darker reactionary forces swirling on the dissident online right. “He is both an heir to Thatcher and an imposter,” says Brian Griffiths, head of the No 10 policy unit from 1985 to 1989 and author of the excellent book Inflation is About More Than Money.

Farage’s ambition is to destroy the Conservatives, Griffiths said, and Badenoch and her frontbench have no idea how to respond. A merger or pact to unite the right may seem inevitable but why would Farage want to be tethered to a corpse?

Like Thatcher before him, Farage has an instinctive feel for the mood in the country, especially among the working class and lower middle-class of deep and provincial England. But he is more popular in the old industrial heartlands of the north of England than Thatcher ever was. There she remains unforgiven because of what Griffiths calls the “unintended consequences” of her uncompromising anti-inflationary policies: the “devastation of traditional industries” and mass unemployment; under Thatcher, in 1982, unemployment surpassed 3 million.

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“Economics are the method,” Thatcher said, “the object is to change the heart and soul.” No Marxist would disagree, except that her method was to create a new economic consensus, liberate markets and roll back the socialist bureaucratic state not to strengthen its control over our lives.

The early years of her first premiership were marked by protest and hardship for many: rising unemployment, trade union militancy, inner-city riots. There was powerful opposition from inside the party from the Tory left and from patrician “wets” who disdained her lower middle-class origins as a grocer’s daughter from Grantham. “Show some compassion,” Harold Macmillan challenged her from the House of Lords during the bitter miners’ strike of 1984-85. But she was not for turning. After grammar school and Oxford, she worked as a research chemist, trained as a barrister and became an MP in 1959. She later served as education secretary under Edward Heath, whose premiership was broken by the miners. She defeated him for the leadership in 1975 after Keith Joseph, a fellow of All Souls and the intellectual leader of the New Right in parliament, decided he was temperamentally unsuited to stand.

It’s often assumed that Thatcher’s premiership was saved by the Falklands war, but her government’s popularity was improving before the Task Force sailed for the South Atlantic. After the victory over the fascist regime in Argentina, she won a landslide general election victory in 1983. The liberal left had fragmented across three parties. We had entered the long era of Conservative rule as her free-market transformation created a new economic consensus. Once asked about her greatest achievement, Thatcher is said to have responded: “Tony Blair and New Labour. We forced our opponents to change their minds.”

One of her longtime Labour opponents, Roy Hattersley, agreed. Reflecting on her legacy in 2010, he wrote: “She seemed to be a cleansing wind that would blow away all the old establishments, hereditary grandees no less than trade union barons. Perversely, she represented change in a society that longed for something new. Labour was the ancien regime.”

She was more than a cleansing wind. She was a “historical individual” – one of Nietzsche’s “untimely men” (or women) – and she defined the spirit of the age. Labour and the left (except for Marxism Today, edited by Martin Jacques, a former Sunday Times columnist) never really understood Thatcher until it was too late. The assumption, at first, was that she was just another Conservative leader and could be easily beaten. They were wrong. She represented a permanent shift in our politics and some of her policies, especially allowing council tenants the right to buy their properties, were hugely popular with the working class.

Thatcher has been called a classical liberal, but that isn’t quite right. More accurately, she was both a social conservative who believed in original sin (her father was a Methodist preacher) and a revolutionary. Her free-market radicalism unlocked the forces of individualism in the country that undermined her social conservatism. She prized liberty but was not a libertarian. She knew that liberty was not possible without order. For her the police, the army, the church, private property and the family were bulwarks against permissiveness and the coming anarchy. Her economics and ethics, therefore, seemed to be at odds or in conflict. Or as Peregrine Worsthorne, a high Tory journalist, once quipped, “She tried to devise a society based on the values of her father and produced a society based on the values of her son.”

But she was morally serious and deplored hedonistic individualism, according to Griffiths, who says: “I remember her saying to me, ‘Brian, when I cut taxes, I thought we would have a society in which people would give much more to charities, and we haven’t had it’.”

She never forgot her origins in the corner shop in Grantham. “She had a feel for what’s going on, a sensibility,” Griffiths says. “If you’re brought up in a flat above the shop and you have to figure out what the takings for the day were, and what your expenses for the week were, and how much you ultimately made, what that gives you, it’s not a bird’s eye view, it’s a very specific view, it’s tangible. It’s about how are we going to live next week? That was the beginning of it.”

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It is nearly 25 years since Margaret Thatcher’s downfall, and the start of a long civil war in the party. “It wasn’t [Michael] Heseltine, it was the cabinet [who did it]”, she said on the morning of her resignation, referring to Michael Heseltine’s challenge for the party leadership. William Waldegrave, a minister in her government who had been a Ted Heath loyalist, called her defenestration a “tragedy”. He understood how “irredeemably our party would be split in due course”.

Towards the end of her premiership, Thatcher had become increasingly imperious, intolerant of dissent and remote from the people she had once instinctively understood. The loathed poll tax (the replacement for the domestic rates), trialled first in Scotland, led to riots and a collapse in public trust. Griffiths blames her “loss of touch” on the “need for greater security which restricted her freedom” to meet the public.

Has the Conservative Party ever recovered from what Charles Moore calls “the assassination” of Margaret Thatcher. “To some extent, it had not,” he said. “Another thing it brought out, and one reason she fell, was Europe. It wasn’t because of what the public thought about Europe; it was what senior colleagues thought about Europe. During the November 1990 leadership campaign, she gave two press interviews, one to me, in which she said she wanted a referendum on Europe, on the single currency. Her colleagues hated what she said but that put the referendum idea into the bloodstream.”

After she left office, according to her former adviser Charles Powell, Thatcher never had another happy day. In May 1989, the tenth anniversary of the first of her three general election victories, her husband, Denis, told her that it was time to go. “She agreed but kept on prevaricating,” Moore said. “And essentially, she just couldn’t bear to go. It would have been better, honourable and ultimately healing if she’d been allowed to fight the next general election. If you kill a great leader – and it was particularly horrible seeing a group of men kill a woman – you pay a price.”

As Conservatives celebrate the Thatcher centenary while mourning the decline of their party, they would do well to reflect on what she got right and wrong and whether it’s now time for the party finally to break free from 1980s-style Thatcherite ideas and start “to think the unthinkable” all over again.