The Third Way: New Approach or Recycled Set of Ideas?

Since the creation of the welfare state, much of public debate fell into a divide between economy and society. Individuals who had an interest in the efficiency of the economy were said to be faceless capitalists out to selfishly destroy society. Those committed to equal rights, especially for the economic underclass, were considered to be socialists or even communists out to steal the hard earned rewards of economic enterprise. With the two views seen as mutually exclusive, politicians found it convenient to define themselves by what they were against. During the last century, both methods of economic management were tested and eventually considered undesirable. Then towards the end of the century, a new idea was put forward; a "Third Way". It proposed to combine social democracy with neoliberalism in order to find a golden mean. This calls to question what the elements of the third way are and whether or not it presents a new progressive set of ideas. In order to give a comprehensive description of the Third Way I will firstly briefly describe the history of what lead to the dismissal of the "first two ways". I will then provide an outline of the Third Way's beliefs and some general policies it proposes. I will argue that due to the incomplete development of the third way and its attempt at combining two opposing paradigms under differing political conditions, it is not possible to consistently define a concise set of elements for the Third Way. Next I will argue that the Third Way has no new ideas of its own and is made up of elements of the two previous ideologies in a way as to benefit governments and aid re-election.

After the Second World War, John Maynard Keynes had become the world's most renowned economist. He proposed a set of economic reforms that gave the government more control over the economy. It was widely accepted that economic management and planning would allow governments to use their oversight to keep prices, wages and employment stable. The economy would flourish because of this stability and result in a happy society. However, despite short term benefits, long term growth was unobtainable. The 'Keynesian welfare compromise'  [1] was largely dissolved in western countries, while those retaining a nominal attachment to communism, chiefly China and Russia, abandoned their economic doctrines for more open economies. The election victories of Margaret Thatcher in the United Kingdom (UK) and Ronald Reagan in the United States (US) brought with them Hayek and his brand of neoliberalism. In New Zealand it was the fourth Labour Government, which was traditionally pro-welfare and controlled markets, that introduced what came to be known as "Rogernomics". The welfare state was gradually dismantled, public assets were privatised and the economies' leash was loosened.  [2] The market would in its own way provide economic growth which would in turn benefit society. However within developed economies, electorates began to recoil from neoliberal policies, which did little to create equality between the economic classes. The East Asian Crisis of 1997-8, after previous stock market crashes such as those in 1987 and 1993, further showed how unstable unregulated world markets can be. Left of centre parties, especially New Zealand Labour, which had practically adopted new values  [3], had to pioneer something new since the core doctrines of socialism and their new neoliberal ideas were no longer applicable.  [4]

Countries recovering from neoliberal governments turned to ideas championed by New Labour and Tony Blair in the UK and Bill Clinton and the New Democrats in the US. They attempted to find a "Third Way"; a middle of the road outlook that lay between the almost false divide of left social democracy and the right neoliberal politics. The term Third Way had been used by a diversity of political groups in the past, some more from the right than the left.

The Third Way is an elusive creature which is difficult to define, giving it the nature of an almost invisible superstructural cult. Even in countries where its ideas are being implemented, constituents often fail to recognise its presence or even existence. A voter in a Blair constituency is noted to have thought it was "a type of chocolate bar."  [5] In many respects it is a theory still under development and therefore it is difficult to define key elements of the paradigm. Nevertheless I will attempt to provide some key values and general policies presented by authors.

"A voter in a Blair constituency is noted to have thought it was 'a type of chocolate bar.'"

Anthony Giddens, considered to be the most classical authority on the Third Way, in his 1998 book The Third Way: The Renewal of Social Democracy highlights five "pressing new dilemmas" which he argues make traditional social democracy impossible and highlight a need for a Third Way. These are globalisation which weakens the ability of nations to pursue Keynesian economic management. A new level of individualism that reflects the movement away from tradition and custom and demands new ways of balancing individual and collective responsibilities. The ideology of left and right is less relevant due to globalisation and opens the way to consider new positions such as the "radical centre". Old ideas of government based national governments and orthodox political parties need to be reconstructed to accommodate new social movements and pressure groups which operate at the local and international level. Diverse ecological risks require a commitment to sustainable development while confronting, taking advantage of and protecting against risk.  [6]

Giddens believed that the role of a third way government is to guide its citizens through these new changes. Governments should take a positive attitude towards globalisation as it is destructive to try to fight it. At the same time they should address its harmful effects which can be social and cultural, as well as economic. It should preserve a core of collective social justice, while at the same time allowing individuals freedom of action. Thus there should be a balance of rights with responsibilities. It should work to create and maintain a stronger civil society and promote a modernising strategy that is based on the principle of ecological care. Interestingly, it should be noted that Giddens' thesis has no theory of politics and power. This is because he believes that technology has changed the nature of capitalism so much that historic notions of class are now irrelevant. The government's job is to facilitate the globalisation of human and monetary capital, and help citizens adapt to the changes through education, training and welfare subsidies. From this he derives his core values of the Third Way: equality, protection of the vulnerable, freedom as autonomy, no rights without responsibilities, no authority without democracy, cosmopolitan pluralism and philosophic conservatism. [7] Charles Leadbeater, a leading figure of Demos, put it more concisely, "…The central ethic of the Third Way is disarmingly simple: cooperative self help. We believe the Governments job is to help people to help themselves…We believe passionately in self-help, self-reliance and self-improvement."  [8]

Nonetheless, it is important to understand that the third way is not as concise as Giddens and Leadbeater would make it seem. Various respected authors on the topic including Joseph Stigletz, Srinkanta Chatterjee, Paul Dalziel and Tony Blair would define the values and key concepts of the Third Way differently.  [9] It is for this reason that there are no specific economic and social policies, and thus elements, that the Third Way prescribes; the kind that could be outlined if one was explaining the Gold Standard for example. Austin Mitchell, a New Zealand Labour MP described defining the Third Way as "…like defining a meringue."  [10] Furthermore, since the Third Way can be anywhere between social democracy and neoliberalism, many governments can be defined to be within its bounds even though they may not openly say they practice it or simply define themselves as something else. In Germany it is called the "New Middle" while in Holland it is the "Purple Coalition". [11] The different conceptions of the Third Way in various governments reflect diverse factors such as a countries unique history, nature of its economy and the nature of its voting public. What unites them is that they were elected in an era when ideology is changing.

Therefore although I have outlined some values and beliefs of the Third Way, they are in reality not consistently agreed to by authors or policy makers due to the differing conditions they are applied in.

This brings us to the question of whether the Third Way represents a new and progressive set of ideas or one largely drawn from older ones. Firstly, the idea of a Third Way represents nothing new. Fascists used the idea of a middle ground in the 1920's, capitalists used it the 1930's, communists in the 1950's, German Greens in the 1970's and Swedish Social democrats in the 1980's. The idea of combining two opposing sets of values to keep their benefits while avoiding their twin sets of dangers is an old concept. [12]

Nevertheless, the current Third Way claims to be more than merely a middle road, defined by what it avoids. It aspires to be nothing less than a founding set of principles to underpin a new politics. However this argument is objectionable when one considers the ideas from which it is drawn, social democracy and neoliberalism. Social democracy aims to have a capitalist economy that is a means to achieve good social outcomes; however this is done through government intervention to achieve those goals. Equality of its citizens is of utmost importance, be this in income, opportunities or contribution to a common good. Redistribution of economic power and income is a key tool in achieving this. Neoliberalism on the other hand also places emphasis on the market to achieve its social goals; however the non-interference of the state is imperative to such an objective. Therefore there is a minimal state with low taxes, privatisation and small if any trade unions and welfare. As a result market rewards are seen as just and there should be minimal engineering of the states moral fabric.

Original political economists like Adam Smith argued that a strong economy (such as that emphasised by neoliberalism), and a strong society (such as that stressed by social democracy), were closely interdependent. A strong civil society was at the heart of both social solidarity and economic growth.[ 13]The Third Way picks up on this and tries to bring about a virtuous cycle of success to the economy and society, just as the previous philosophies had attempted to do. Furthermore, when elements of the Third Way are compared to the two other theories, it is possible to see that although it shares key principles with them it doesn't consistently stay true to any specific elements from either theory, often for electoral benefit. This has lead not only to a Frankenstein of Keynes and Hayek but to a theory which has confused its own sense of self. This further supports why the elements of the Third Way are hard to define.

An example of problems with consistency can be illustrasted by observing its almost conflicting economic and social outlook. The Third Way and social democracy see social and economic goals as complementary. However, the Third Way promotes meritocracy along with neoliberalism which sees inequalities of wealth as justified and in fact useful. The result is a difficult balance between social and commercial interests that are difficult for policy makers to uphold. In the end, each government moulds the Third Way to fit the policies they would like to see implemented in order to please their constituency and get re-elected. This can be said to be true for Tony Blair's government. It is described by former British Labour MP Roy Hattersley to have picked his policies and then searched for an ideology with intellectual and moral authority to implement them. "It's not surprising that he has settled on the Third Way - for that can mean whatever he wants it to mean." [14] Therefore governments simply choose which elements of left and right wing politics they want to promote and place themselves under the banner of the Third Way. This also illustrates the reason why Third Way governments all over the world implement different policies and there is no concise definition for the philosophy. When one considers the fifth Labour government, which has on several occasions openly declared itself to be a Third Way government [15], the same points are reaffirmed. When Labour was elected into government in 1999 it set about dismantling the state controls it has established in 1984, largely because it was felt that this why the voting public had elected them. [16] However this was the exact opposite to what its British Third Way counterpart was doing in the UK, because it was believed voters had given them mandate to do so. Blair was accused of 'Thatcherism without the handbag' because of his mass privatisation, his alienation and demeaning of unions and liberal tax policy. [17] In fact I would go so far as to say that the Third Way is simply a philosophy adopted by governments as to justify populist policies that appease the rising influence of the middle class. This is a view shared by J. K. Galbraith when says that "…the increase in numbers and power of the middle income groups means that governments must choose to meet their needs first. The Third Way is a justification of this necessity." [18]

In conclusion, the Third Way does not present any new ideas of its own; it simply takes elements of its predecessors, social democracy and neoliberalism. Governments pick and choose which elements of each philosophy they will add to their Third Way stew in order to please the appetites of their nations voting public. It is for this reason that no concise elements of the Third Way can consistently be outlined, forcing readers to pick and choose which authorities opinion they will accept.





[1]Anthony Giddens (ed), The Global Third Way Debate. Polity, Maldon Massachusetts, 2001, p. 2

[2]Jane Kelsey, At the Crossroads: Three Essays. Bridget Williams Books, Wellington, 2002, p. 60

[3]Kelsey, At the Crossroads: Three Essays, p. 60

[4]Giddens, The Global Third Way Debate, p. 2

[5]Sunday Times, 27 September 1998 quoted in Jane Kelsey, At the Crossroads: Three Essays. Bridget Williams Books, Wellington, 2002, p. 58

[6]Anthony Giddens, The Third Way: The Renewal of Social Democracy. Polity Press, Maldon Massachusetts, 2000, p. 27-64. For comprised summary of the chapter, see also Jane Kelsey, At the Crossroads: Three Essays. Bridget Williams Books, Wellington, 2002, p. 54-55

[7]Giddens, The Third Way: The Renewal of Social Democracy, p. 64-68

[8]Otto Newman and Richard de Zorya (eds.), The Promise of the Third Way. Palgrave, London, 2001, p. 101. Demos is a highly respected advisory Third Way think tank for Tony Blair and his government.

[9]For information on what these authors would define the core values and elements of the Third Way to be refer to Joseph Stiglitz, The New Politics: A Third Way for New Zealand. Dunmore Press, Palmerston North, 1999. Srinkata Chatterjee, 'The World Economy, Globalisation and New Zealand: Which Way Now?' in Joseph Stiglitz, The New Politics: A Third Way for New Zealand. Dunmore Press, Palmerston North, 1999.  Paul Dalziel, 'A Third Way for New Zealand?' in Anthony Giddens (ed), The Global Third Way Debate. Polity, Maldon Massachusetts, 2001.

[10]Sunday Times, 27 September 1998, quoted in Jane Kelsey, At the Crossroads: Three Essays. Bridget Williams Books, Wellington, 2002, p. 58

[11]Giddens. The Global Third Way Debate, p. 2

[12]Nikolas Rose, 'Inventiveness in Politics', Economy and Society, v. 28, no. 3, August 1999, p. 470

[13]Mark Latham, 'The Third Way: An Outline' in Anthony Giddens (ed), The Global Third Way Debate. Polity, Maldon Massachusetts, 2001, p. 29

[14]Kelsey, At the Crossroads: Three Essays, p. 56

[15]For example this from an article in The New Zealand Herald from September 2002, "Ours is a Third Way government striving to achieve a better balance between a dynamic market and economy and a fair society which offers opportunity and security to all." (Helen Clark)

[16]Kelsey, At the Crossroads: Three Essays, p. 66

[17]Kelsey, At the Crossroads: Three Essays, p. 67

[18]J. K. Galbraith quoted in Roy Hattersley 'In Search of he Third Way', Granta, no. 73, 2001 p.231 quoted in Jane Kelsey, At the Crossroads: Three Essays. Bridget Williams Books, Wellington, 2002, p. 58