The Third Way Revisited

The title was regrettable, misunderstood and misinterpreted yet the issues raised in the book still have relevance for the renewal of social democracy today.

My book The Third Way was first published in 1998. I first of all planned to call it The Renewal of Social Democracy (which eventually I relegated to the status of sub-title). If I had published the book under the original title, it would have been clear that it was rooted firmly in social democratic traditions. However, it would probably have reached only a limited audience of academics and policy specialists and I wanted to attract a wider readership. I wasn’t by any means the first to use the term “third way” itself, which  crops up recurrently in the history of political thought – used most often by authors on the left but also occasionally by those on the right. The phrase was resurrected by the Swedish Social Democrats in the late 1980s, but its return to popularity came mainly from its adoption at roughly the same time by Bill Clinton and the thinktank to which he was closely connected, the Democratic Leadership Council. The “third way” was self-consciously associated with the invention of the term the “New Democrats” in the US – and later with “New Labour” in Britain under the leadership of Tony Blair. I wrote the book initially in part as a result of taking part in dialogues which Bill and Hillary Clinton had established with Tony Blair in 1997 and which continued in expanded form for some years afterwards.

On its appearance The Third Way did in fact spark a lot of attention in the Anglo-Saxon world. What I didn’t anticipate was just how great an impact the book would have in a diversity of other countries around the globe. Its success allowed me to meet and talk at first hand with a large number of centre-left leaders in those countries.  At that point there was world-wide interest in Clinton and Blair, who had led their respective parties out of a long period in the electoral wilderness. Yet in the end I came to regret having chosen the title The Third Way, even if it did bring the book so much attention. The reason was precisely that “the third way” became so widely associated specifically with the New Democrats and New Labour. Although I was sympathetic to some of the core policies of both I had a lot of reservations too, especially as the years passed. The “third way” became a corrupted term, not just because of some of the policies followed by the two parties but because of the attacks on them by critics, especially from the left. Some of these seemed to me misinterpretations – such as the idea that New Labour was ideologically empty, had abandoned the ideals of the left, or was a continuation of Thatcherism with a softer face. But these misinterpretations increasingly came to be how the “third way” was seen, as a weak, poorly-developed substitute for left-of-centre thinking, rather than, as I intended, a means of promoting its revival.

So let me reassert what in my terms the “third way” (tw) was about, and what it was not. The tw for me was NOT a “middle way” between left and right, socialism and capitalism, or anything else, but a left-of-centre political philosophy, concerned with exactly what was stated in my original title, the renewal of social democracy. It was NOT a succumbing to neo-liberalism or market fundamentalism. On the contrary, I argued  that social democrats had to move beyond two failed, or compromised, philosophies of the past, one being neo-liberalism, the other being “old-style social democracy,” characterised by a top-down state ownership of the “commanding heights of the economy” and Keynesian national demand management. The tw was NOT merely some sort of pragmatism. On the contrary, the values of the left retain their essential relevance, but as I saw it far-reaching policy innovation was needed to realise them in a world experiencing major social and economic changes. I identified these changes as the intensifying of globalisation; expanding individualism; the growth of reflexivity; and the increasing intrusion of ecological risk into the political field.

So far as globalisation is concerned, some more “nots” are in order, given the misunderstandings of the notion that abound. Globalisation, I argued, is NOT a single force, but a complex set of influences. It is NOT to be identified solely with the global marketplace – the communications revolution is at least equally important as a driving influence. Nor is it an implacable power before which we must all bow down. Rather it is a fractured and contradictory one – in the emerging global age, although we are all far more interdependent than ever before, nation-states retain a great deal of influence because they are the prime source of political legitimacy, and of legal and military authority. Individualism, I asserted, operates at the opposite pole from globalisation but is deeply influenced by and at the same time influences it in return. The rise of individualism remains as contentious as when I first wrote the book. Many see it as essentially noxious, as undermining social solidarity and common moral commitments, but for me important elements of emancipation are involved – the capacity for self-determination and an escape from the fixities of tradition and habit. Individualism isn’t intrinsically the enemy of social cohesion or common morality; rather, these have to be recast in terms of more active forms of mutual obligation and personal responsibility than in the past.

When I wrote The Third Way the internet was in its infancy. Yet for the most part the internet has deepened and extended processes that were already visible at that time. I referred to these generically as the increasing reflexivity of modern social life. Reflexivity means that individuals and groups have regularly to decide how to act in relation to a flow of incoming information relevant to those decisions; its advance fundamentally alters the nature of politics and government. Political support becomes more de-aligned than in the past and levels of party membership start to plummet. Attitudes of deference to authority figures, and established institutions, including politicians and parliaments, decline. The consequences are multiple and shifting. Activism can increase, but often operates outside the orthodox sphere of parliamentary government. At the same time, disillusionment with politicians and the orthodox parliamentary process can produce periods of widespread apathy.

Finally, there is the increasing intrusion of ecological risk into the mainstream of political life. We are living “after the end of nature” in the sense that many formerly natural processes have become anthropogenic – they are influenced, sometimes even determined, by human intervention. Climate change is the most significant and far-reaching expression of this process, but its impact stretches much more widely. I would have included a more extensive discussion of climate change had I been writing the book today. The crucial theme I introduced, however – the penetration of “outer” and “inner nature” (the human body and even mind) by science and technology – remains intact. The opportunities this circumstance produces are dramatic and far-reaching. Yet they are accompanied by risks quite different from any we have had to face in the past, because we can only to some extent use past experience to guide us.

The point of the book, to repeat, was to find a way beyond market fundamentalism on the one hand and old-style social democracy on the other, and to apply this framework to political problems ranging from those of everyday life (such as the future of the family) through to issues of a global scale. The core preoccupation of social democrats should be with the re-establishment of the public realm, public institutions and public goods, following the long period in which market-based philosophies ruled the roost. The public sphere is not the same as the state; reform of the state has to be high on the agenda, wherever it is unresponsive to citizens’ concerns, captured by producer interests or has become overly bureaucratic. Markets have their distinctive qualities – chief among them their fluidity, capacity to respond to a multitude of pricing signals and to stimulate innovation – and social democrats should recognise and help deploy these.  However, markets need regulation to shape them to the public purpose. In the book I picked out especially the need to regulate world financial markets, which I identified, to quote from The Third Way, as “the single most pressing issue in the world economy.”

In the work I gave a lot of attention to civil society – the Big Society, as the Tories now call it. Yet civil society will not flourish if the state is pared back. Public goals can best be achieved if there is an effective and dynamic balance between the state, marketplace and the civic order. Each acts as a check on the other and also provides a stimulus and challenge to them. The recovery of community, civic pride and local cohesion should be a major concern of social democratic politics. These can’t be founded (Tories take note) upon nostalgia for a disappeared – and often imaginary – past of social harmony but have to be achieved through new mechanisms. This theorem applies to the family as well as other areas.

Because it was so widely misinterpreted I gave up using the term “the third way” itself some years ago. Yet, as I hope I have shown, most of the issues that I raised in the book are still with us.

© Reprinted with the permission of Policy Network

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  • Jonathan

    Wait a minute here. 3rd way, like Beyond Left and Right before it, was based on two key arguments – that Keynesian demand management was unworkable (an argument that had some relationship to rational expectations theory) and traditional social democratic state intervention was unworkable – an argument explicitly based on Hayek's tacit knowledge arguments. Recently, though Prof Giddens has decided that Keynesian demand management is actually an effective response to global recession and that concerted state intervention is necessary to combat climate change. I wouldn't argue with either of those, I'm just pointing out that neither rational expectations economics or Hayek's fashionable but nebulous concept of tacit knowledge provided a sound basis for 3rd way arguments in the first place.

  • Maarten

    Somewhere the nuance of it got lost, didn't it. I'd attribute that to the difference between (mr. Giddens') individual intelligence and the 'wisdom of the crowd'.

    The more freedom of choice we gain, the less we seem to trust the choices we make. This to me is the key question which arises from the peace and democracy we've enjoyed since last century's world war. Personally, I expect this (global) polarization to get worse before it gets any better. This century's world war will be all about solidarity vs. ownership, like war always is.

  • Stephen Braun

    Stephen:
                There is in fact a ‘third way’ and it does coincide with the only credible way in which Social Democracy can dfferentiate itself from neoliberalism and ‘old Style’ Social Democracy.  This genuinely different way is called ‘Shared Ownership’ : a system in which employees jointly own shareholdings in the enterprises in which they work.  This third way radically transcends the old division between working class and owning class; it even renders obsolete the old dichotomy between capitalism and socialism.  Shared joint ownership is the key to overcoming the powerlessness of employees, and it virtually guarantees high productivity by giving employees a vested interest (for the first time in history) in the success and profitability of the companies in which they work.   The fact that employees would hold their shares collectively, rather than individually, is the vital antidote the the self-interest and competitiveness which individual share-holding inevitably fosters.  The future of Social Democracy lies in new solutions, new ideas and new ways of thinking — not in such failed experiments as ‘New Labour’ or the German ‘Hartz IV’, both of which were little more than examples of Social Democrats betraying their core constituency to win the approval of neoliberals. 

  • Henning Meyer

    I would like to point out here that there is a big difference between what Tony Giddens wrote on the Third Way (much of it is right and very useful indeed) and what so-called Third Way governments did (much of it not very useful).

    The regulation of international financial markets for instance was already a big topic in Giddens’ book. But nobody did anything about it. It always seemed to me that governments picked the parts they liked and just disregarded the rest. So the intellectual Third Way was something completely different from many party and government experiences.

    Even Oskar Lafontaine said he would support Giddens’ arguments but the problem was that very few people knew them properly.

    So in the wake of the renewal of social democracy it is well worth revisiting the intellectual Third Way again and see what is still useful and what not.

  • Tony Brooke

    An erudite attempt to describe where we all are, in a way that might seem reasonable from every point of view. Hinting at anarchy while advocating control. But surely complication is the root of all failure and complete transparent simplicity the key to success?

    Leo Tolstoy observed that no one but every one can influence the course of history. We are where we are and individuals must make what they can of it despite the past. The best we can wish for from politicians is complete honesty, but for transparency we would perhaps do better to refer to Wikileaks, then draw our own conclusions.

  • James Doran

    If I recall correctly, the Third Way as an intellectual trend did not have what the Third Way governments lacked – which was an alternative to capitalist ownership. We have existing alternatives – co-operatives of all kinds, building societies, credit unions, etc.

    Though co-operative and mutual enterprise is the third way in terms of enterprise, there would nonetheless be the same pressures on a government committed to promoting co-operative enterprise in the private sector as a government committed to a programme of extending state ownership, but the strength of these pressures would not be as disruptive.

    The renewal of social democracy has a lot to learn from the way neo-liberal reforms to capitalism were accompanied with reforms such as the sale of council housing and shares in privatised utilities at below-market rates. I’m not suggesting public asset sales, but rather that something along the lines that Stephen Braun suggests below, as a central part of social democrat policy.

  • James Doran

    I suggested that the UK Labour Party adopt such an approach to corporate ownership in an article for LabourList: http://www.labourlist.org/ideas-for-electability-….