That time in a nutshell: the Tories were in power.
They attempted to implement policies based on an economic theory called "monetarism".
Monetarism is the doctrine that nothing has worth except a cash value determined purely by what buyers will pay for it.
Alongside this goes the belief that a free market to determine this worth will fix all problems.
In fairness, that's not quite what monetarism is, or at least it's only half the story. You have (as I know you full well know, Ian!) classical economics theory [do nothing and every economy will home in on perfect equilibrium of supply and demand, notwithstanding a few expansions and contractions on the way], Keynesian economics [believing that the classical theory is rubbish, as demonstrated by the Great Depression, and that what will tickle it along is demand-side fiddling - build a lot of roads, etc, meaning that you create jobs, and the whole thing gets going - spending your way out of a recession, as it were], and Friedman's Monetarism [Classical theory is right - economies gravitate towards equilibrium, but what prevents it is buggering about with the demand-side].
So monetarism criticises the approach of 'fiddling' the economy, but also believes that removing the barriers to equilibrium (mainly, removing the fiddling) produces long-term stability. So you remove false wage rises, remove the false power of trade unions, remove the falsifying nature of benefits, get people into work not by creating jobs, but by relocating them and improving careers advice, etc, etc.
And of course, the big question is which one is right and no one ever agrees.
As someone who is profoundly left wing, and a dabbler in economics and finance, I'm bothered by the idea that I believe there is probably on balance quite a lot of evidence to suggest that Monetarism works, in that it achieves its primary aim of economic stability. It's just that social justice is not the price I'm prepared to pay for that, and I would rather have boom and bust (which is effectively what left-wing fiscal policy can only produce) and social justice, than a stable economy for all and a society of the haves and have-nots...