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The Third Way Debate
From: London School of Economics and Political Science
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Anthony Giddens |
EDITOR'S INTRODUCTION |
 Anthony Giddens provides a penetrating corrective to common misperceptions about the Third Way. The Third Way does not refer to a political middle path between right and left. Rather, it is an overarching label used to refer to debates about the renewal of social democracy. In the age of globalisation and the knowledge economy, the traditional left has to rethink its political stance and solutions to perennial issues such as inequality, social exclusion and good governance. Giddens argues that the debate surrounding the Third Way is one effective way of approaching such questions. |
Anthony Giddens dispels myths about and discusses The Third Way.
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 he debate about the Third Way I think is often misunderstood. Many people think that the term "Third Way" refers to a middle position between traditional socialism on the one hand and free-market philosophies on the other. This is not at all how I see things. For me, the term "Third Way" is simply a label to refer to a debate which is going on across the world about the future of left-of-centre parties in the face of the tremendous changes affecting global society. |
The changing world
We all know a good deal now about the sources of change in the world. It's much more problematic how we respond to them, especially politically. Very briefly, there are three big changes transforming our societies. One is the impact of the by now notorious globalisation--notorious because it is the subject itself of a global debate, and in my view globalisation is a reality. It is a fundamental mistake to equate it with the global marketplace. Globalisation for me is a much more profound set of institutional changes transforming societies through the world. It's driven primarily by the communications revolution rather than by financial markets or the global marketplace. |
Second, the knowledge economy is not something for the future. It is here. If you look at the basic statistics of EU countries and the US, you find that a generation ago about 40 percent of the population were in blue-collar manufacturing. Now, in EU countries, an average of only about 16 or 17 percent of the population works in those occupations, with Germany having a higher proportion than any other EU country. It's not only information technology that has driven those changes; they are really fundamental changes in the occupational makeup of Western countries and there is a great deal more in the knowledge economy to which we have to respond. Third and not so often discussed, perhaps, are the enormous changes at the level of everyday life, affecting the family, personal relationships and especially the shifting position of the sexes across the world as women get closer and closer to something like equality with men in different parts of the world. |
Realigning the left
The Third Way debate to me is how the left should respond to these changes. The term "Third Way" refers to a left-of-centre position. It is an attempt to apply classic left values to a world where many of the leftist doctrines of the past (as everybody I think accepts) no longer wholly apply. The values of the left are fairly easily stated, even though of course they could be debated. If you stand on the left, you want a society which is solidary, you want a society which is egalitarian, you want a society which protects the weak and the vulnerable and, rather crucially, you believe that government, that active government, has a vital role to play in pursuit of these values. We know that the two dominant political philosophies of the postwar period have lost most of their purchase. No one thinks you can go back to the traditional doctrines of the old Social Democratic left with increasing government control of the economy and with nation-state-based Keynesianism. But, also, no one in his right mind thinks any longer that you can treat the world as though it were a gigantic marketplace, so that the irrationalities, the inequalities and the insecurities of the market invade every area of life. |
What is the Third Way?
It is not surprising that the Third Way debate is a truly global debate. It doesn't matter where you go--Latin America, Asia--there is a debate about how you develop a coherent left-of-centre politics when those two traditional positions have largely lapsed. Now you don't have to use the term "Third Way" to apply to this. You can trace the term back to at least 1895--it seems to have been first used in the writings of the French solidarist movement. It has a chequered history in Europe, Latin America and elsewhere, sometimes being used by writers' groups, most often used when Social Democrats are renewing themselves and when the Social Democratic tradition is being renewed. But I would stress that absolutely nothing hangs on the term. It is a completely dispensable term. |
For me, it refers to the latest phase in the renewal of social democracy in the face of large-scale change, a process that has happened before but which poses, perhaps, more radical problems for us than it did in the late 1950s, with Bad Godesberg and the other famous transitions in Social Democratic history. It is also crucial to stress that the Third Way is not anything particularly to do with Tony Blair, it's not anything particularly to do with the policies of New Labour, and it's certainly not anything particularly to do with the policies of Bill Clinton in the United States. The Third Way for me refers to the generic debate of the renewal of social democracy. |
So when you look at what's happened in Denmark and the Netherlands, when you look at this extraordinary range of success around the edge of the EU economies--from Denmark, Holland, Ireland, Portugal, Spain, and increasingly from Greece--these kinds of experiments with leftist transformation are different streams going into the Third Way debate, and are equally authentic parts of it. Different countries have different needs; they have different historical trajectories, and this is clear when you look at the case of Germany. Germany's socio-economic pattern is different from the UK's. We have far more poverty. We must attack that issue. In Germany you have a kind of partly frozen economy with large-scale structural under- and unemployment, which in my view will not be solved simply by increasing growth rates. So, different countries come to the Third Way debate with different needs and with different socio-economic makeups. |
Restructuring government and civil society
Nonetheless, I do believe that there is a kind of coherent framework for Third Way politics which is emerging across the world and which is very generally shared. First: reconstruction of the state and government itself. It's generally agreed by virtually all left-of-centre governments across the world (at least in principle, no matter how difficult it might be to achieve in practice) that big government, bureaucratic government, the overextended government is not the same as active and effective government. The point of the Third Way project is to retrieve the power of government. It is not to deny the power of government. |
The point of Third Way politics is to retrieve public space and to reconstruct public institutions, but it is also to make them as open, as effective and as quick-moving as some other agencies outside of government in contemporary societies have proven to be. It also involves a programme of constitutional reform in most countries in order to try to meet the issues of voter apathy and voter disinterest in politics--a characteristic feature of current times. Voters are disillusioned with politics partly because politics still has the traditional fabric (even in the most democratic countries) of backstage deals, old-boy networks, male domination of politics and so forth. The way to reconnect with voters is structural reform which allows us to get beyond those issues to renew local forms of democracy where federalism does not deliver it. |
Second: the renewal of civil society. I think we know now what a good society looks like. It's a kind of balance between government markets and civil society. Good societies have enough government to provide strategic steering and necessary social investment. (Social investment, by the way, must still be very large.) You cannot have a minimalist model of government investment. You don't want too much government, because too much bureaucracy does not allow you to have effective public space. You need to recognise the role of markets. The left has found this difficult to do, but it is essential. You don't want a society which is dominated by markets because of things I mentioned--rampant consumerism, insecurity and inequalities which tend to follow from that position. You want enough civil society to create decent government and an effective framework for market economy. In a way, you don't want too much civil society, either, because that way lies the fate of Northern Ireland and areas where there is not enough government purchase and where government is ineffectively developed in relation to the civic order. Civil society has to be modernised if it is to allow us to respond to the issues which it must face. |
Partnering social and economic policy
Third, the new left believes you must connect social and economic policy, and this is a rather crucial emphasis. In my view, both neoliberalism and the traditional left are what I call "half-theories." Neoliberalism had a theory of economic efficiency, but no effective theory of social justice. The traditional left had more of the theory of social justice but, certainly in contemporary conditions, no effective theory of economic growth and efficiency. Third Way politics looks to connect the two. The principle should be that no form of social policy should be attempted which does not discuss its economic consequences, and no economic or fiscal policy should be attempted which does not discuss its social consequences. |
Out of it you get a different package from the one you got in the past. I think what we're seeing in European Union countries is genuinely a kind of new European social model being constructed, which will look pretty different from the American one and which will give the European countries purchase in the new global knowledge economy. The EU countries are poised to become the next world leaders in these areas if these reforms can be undertaken, especially in France, Germany and Italy. We should look to create societies with high employment ratios without making a fetish of this. In Denmark you have an employment ratio of 78 percent, and in the UK it is something like that. In Germany the latest figure I saw was only about 63 percent; it was only about 64 percent in France and as low as 50 percent in formal employment in Italy. You want people in decent jobs. You want to get them there because then you can spend money where the citizens really want it spent, which is on education, on welfare, on health, and to some extent on pensions. Those are the areas where you should concentrate welfare spending, if at all possible. That is fully compatible with having a competitive economy in the new globalised conditions to which we have to respond. |
Welfare and inequality
Fourth, you must have reform of welfare systems for two well-known reasons. One is that welfare states were constructed, as we all know, in an era before these changes. They don't cover the kinds of risks which have become central to many people's lives, such as the risks associated with rising rates of single parenthood. The single biggest cause of economic inequality in the United States over the past 30 years is not the global marketplace, in the sense of free market, and it's not technological change; it's changes in the pattern of the family, where you don't have an effective welfare system to protect people in the right kinds of categories. Second, the left must recognise that the welfare state itself created problems. Those problems include unemployment benefits which lock people out of work when they could be in work under decent conditions with a decent minimum wage. For those reasons, you must have welfare reform. It's very difficult to achieve in practise, but if you look at countries like Portugal, you can see that they're learning from the mistakes of the older welfare systems as they construct new ones, and in Latin America I believe the same thing is also possible. |
Fifth, you must have a concerted attack on inequality and you must stress that the key to a decent society is a strong welfare state with decent levels of taxation--which is a policy that is difficult to define, because you cannot have a good society without thoroughgoing, effective public institutions. We know a good deal now about problems of dealing with inequality and exclusion. Redistribution still has to be quite central to any left-of-centre project. While recognising that there are electoral problems in many countries with too heavy a redistributional project, you have to (in order to get a winning coalition) structure equality around opportunity, because middle-class voters will vote for you if you're prepared to invest in the poor on the basis of opportunity-based egalitarianism. They're much less likely to vote for you if you're proposing large-scale passive income transfers. Parties which propose those, traditional leftist parties, get only about 8 or 9 percent of the vote in most EU countries, so there's no electoral avenue to success there. |
The best way to attack inequality is through economic growth in which the poor participate. In order for the poor to participate, you must have government intervention, you must have government funding of a large-scale form. You must also have targeted anti-poverty policies because social exclusion is real. It's not accidental that the Organisation for Economic Co-operation and Development (OECD) in the 1980s introduced the idea of social exclusion, because you have new mechanisms of exclusion affecting about 8, 9 or 10 percent of the population in most Western European countries. |
The impact of globalisation
Finally, Third Way politics must take globalisation seriously. It cannot be just a national politics. A framework for Third Way politics, a reconstituted left, must look at the problems of the global marketplace, it must operate on a transnational level. To me this means trying to find more stability in the global monetary regime, it means more effective regulation of global capitalism, it means things which are real and not just wishful thinking. If you look at the proposals of the OECD to regulate tax havens and anonymous banking in different countries, those proposals are already starting to take effect. We should, I believe, persuade left-of-centre political leaders to actively discuss the 25-year-old Tobin tax proposal to at least see whether it's a feasible phenomenon on an international level, and we should try to look at forms of democratisation above the level of the nation-state. Here I think the fate of the EU is crucial. |
The most interesting thing about the EU is that it's the first example we have not just of an international organisation like the United Nations but of an organisation where nations have voluntarily given up sovereignty in order to pool their resources in what has now become a governmental response to globalisation and the other changes affecting the European countries. The key question is, can there be a further wave of democratisation of the EU? If there can be, and I believe there can, this can surely be a model for other regions of the world. In Latin America there's an active discussion of MERCOSUR (the Common Market of the South), but it's not just a discussion of MERCOSUR as a trading arrangement. It's about what kind of elements of the EU could be borrowed and applied there. It's crucial, because I think today no country can develop on its own. The countries which I mentioned earlier that have developed--Ireland, Spain, Portugal and Greece--have done so because of their involvement in the European Union. |
If you go to Latin America you'll see there is an enormous amount to play for in Third Way politics. The politics counts for so much because there is the real chance in Latin America of moving away from the century-old cycle of oscillation between authoritarian political right on the one hand and a kind of ineffective populist left on the other. I feel the whole area can make this transition in the way that Portugal and Spain have successfully done in Europe, and if they can do so, it will be a major advance not just for the area but for the rest of the states in the world. |
So, in conclusion, there is a really fascinating debate going on here. I feel it's much wider than communitarianism, because it must involve effective economic theory; it must involve a range of elements which you couldn't just comprise within a straightforward communitarian framework. But I think there is a world out there to be reconquered for the left, and to some extent we're well on our way to making this a successful project. |
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