Third Way
The Third Way is a predominantly centrist political position that attempts to reconcile centre-right and centre-left politics by synthesising a combination of economically liberal and social democratic economic policies.
The Third Way is a reconceptualisation of social democracy. It supports workfare instead of welfare, work training programs, educational opportunities, and other government programs that give citizens a 'hand-up' instead of a 'hand-out'. The Third Way seeks a compromise between a less interventionist economic system as supported by neoliberals and Keynesian social democratic spending policy supported by social democrats and progressives.
The Third Way was born from a reevaluation of political policies within various centre to centre-left progressive movements in the 1980s in response to doubt regarding the economic viability of the state and the perceived overuse of economic interventionist policies that had previously been popularised by Keynesianism, but which at that time contrasted with the rise of popularity for neoliberalism and the New Right starting in the late 1970s and throughout the 1980s.
The Third Way has been promoted by social liberal and social-democratic parties. In the United States, a leading proponent of the Third Way was President Bill Clinton. In the United Kingdom, Third Way social-democratic proponent Tony Blair claimed that the socialism he advocated was different from traditional conceptions of socialism and said: "My kind of socialism is a set of values based around notions of social justice. ... Socialism as a rigid form of economic determinism has ended, and rightly." Blair referred to it as a "social-ism" involving politics that recognised individuals as socially interdependent and advocated social justice, social cohesion, equal worth of each citizen and equal opportunity.
Third Way social-democratic interpreter Anthony Giddens has said that the Third Way rejects the state socialist conception of socialism and instead accepts the conception of socialism as conceived of by Anthony Crosland as an ethical doctrine that views social democratic governments as having achieved a viable ethical socialism by removing the unjust elements of capitalism by providing social welfare and other policies and that contemporary socialism has outgrown the Marxist claim for the need of the abolition of capitalism as a mode of production. In 2009, Blair publicly declared support for a "new capitalism".
Policies supported by self-described Third Way supporters vary by region, political circumstances, and ideological leanings. Third Way advocates generally support public-private partnerships, a commitment to fiscal conservatism, combining equality of opportunity with personal responsibility, improving human and social capital, and protection of the environment. But even in pursuit of these ends, Third Way advocates differ in their policies, owing to conflicting priorities. Anthony Giddens, for example – believing that society should be more inclusive to the elderly – called for abolishing the retirement age so people could exit the workforce whenever they have saved enough; French president Emmanuel Macron did the exact opposite, raising the retirement age to balance the budget. The Bill Clinton administration, influenced by the works of the controversial political scientist Charles Murray, was less friendly to the welfare state than Tony Blair.
The Third Way has been criticised by other social democrats, as well as anarchists, communists, and in particular democratic socialists as a betrayal of left-wing values, with some political scientists and analysts characterising the Third Way as an effectively neoliberal movement. It has also been criticised by conservatives, nationalists, classical liberals, and libertarians who advocate for laissez-faire capitalism.
Overview
Origins
As a term, the third way has been used to explain a variety of political courses and ideologies in the last few centuries. These ideas were implemented by progressives in the early 20th century. The term was picked up again in the 1950s by German ordoliberal economists such as Wilhelm Röpke, resulting in the development of the concept of the social market economy. Röpke later distanced himself from the term and located the social market economy as first way in the sense of an advancement of the free-market economy.During the Prague Spring of 1968, reform economist Ota Šik proposed third way economic reform as part of political liberalisation and democratisation within the country. In historical context, such proposals were better described as liberalised centrally-planned economy rather than the socially-sensitive capitalism that Third Way policies tend to have been identified with in the West. In the 1970s and 1980s, Enrico Berlinguer, leader of the Italian Communist Party, came to advocate a vision of a socialist society that was more pluralist than the real socialism which was typically advocated by official communist parties whilst being more economically egalitarian than social democracy. This was part of the wider trend of Eurocommunism in the communist movement and provided a theoretical basis for Berlinguer's pursuit of the Historic Compromise with the Christian Democrats.
Modern usage
Third Way politics is visible in Anthony Giddens' works such as Consequences of Modernity, Modernity and Self-Identity, The Transformation of Intimacy, Beyond Left and Right and The Third Way: The Renewal of Social Democracy. In Beyond Left and Right, Giddens criticises market socialism and constructs a six-point framework for a reconstituted radical politics that includes the following values:- Repair damaged solidarities.
- Recognise the centrality of life politics.
- Accept that active trust implies generative politics.
- Embrace dialogic democracy.
- Rethink the welfare state.
- Confront violence.
Bill Clinton espoused the ideas of the Third Way during his 1992 presidential campaign.
The Third Way has been defined as such:
omething different and distinct from liberal capitalism with its unswerving belief in the merits of the free market and democratic socialism with its demand management and obsession with the state. The Third Way is in favour of growth, entrepreneurship, enterprise and wealth creation but it is also in favour of greater social justice and it sees the state playing a major role in bringing this about. So in the words of... Anthony Giddens of the LSE the Third Way rejects top down socialism as it rejects traditional neo liberalism.
The Third Way has been advocated by its proponents as a "radical-centrist" alternative to both capitalism and what it regards as the traditional forms of socialism, including Marxian and state socialism. It advocates ethical socialism, reformism and gradualism that includes advocating the humanisation of capitalism, a mixed economy, political pluralism and liberal democracy.
The Third Way has been often hard to holistically summarise, partly due to its flexible nature of putting ends before means, that is prioritising achieving social justice rather than focusing on the methods by which one achieves social justice. Often cited as the easiest summary of the Third Way is 'rights with responsibilities' – for example, pairing the right to education with the responsibility to put effort towards achieving good grades. On economics specifically, a great deal of the emphasis of the Third Way is placed on tax revenue, and the means by which it is generated. The Third Way argues that wealth must be enticed in a globalised economy, and that any capital flight caused by high taxes is counterproductive to generating tax revenue, for future tax revenue will be lost. The Third Way argues that growth is the best way to raise tax revenue, and that growth can be achieved through a free market economy, fiscal discipline and a healthy human capital stock.
Within social democracy
The Third Way has been advocated by proponents as competition socialism, an ideology in between traditional socialism and capitalism. Anthony Giddens, a prominent proponent of the Third Way, has publicly endorsed a modernised form of socialism within the social democracy movement. However, he argues that traditional socialist ideology, specifically referring to state socialism involving economic management and planning, is flawed. Giddens asserts that as a theory of the managed economy, it barely exists any longer.In defining the Third Way, Tony Blair once wrote: "The Third Way stands for a modernised social democracy, passionate in its commitment to social justice".
History
Australia
Under the centre-left Australian Labor Party from 1983 to 1996, the Bob Hawke and Paul Keating governments pursued many economic policies associated with economic rationalism such as floating the Australian Dollar in 1983, reductions in trade tariffs, taxation reforms, changing from centralised wage-fixing to enterprise bargaining, restrictions on trade union activities including on strike action and pattern bargaining, the privatisation of government-run services and enterprises such as Qantas and the Commonwealth Bank and wholesale deregulation of the banking system. Keating also proposed a Goods and Services Tax in 1985, but this was scrapped due to its unpopularity amongst both ALP and electorate. The party also desisted from other reforms such as wholesale labour market deregulation, the eventual GST, the privatisation of Telstra and welfare reform. The Hawke-Keating governments have been considered by some as laying the groundwork for the later development of both the New Democrats in the United States and New Labour in the United Kingdom. One political commentator agreed that it led centre-left parties towards the path to neoliberalism. Meanwhile, others, particularly former Labor MP and current National President Wayne Swan, acknowledge several economically conservative reforms, but at the same time disagreed and focused on the prosperity and social equality that they provided in the "26 years of uninterrupted economic growth since 1991", seeing it as fitting well within "Australian Laborism". Swan also mentioned the fact that the policies and reforms of the Hawke–Keating governments, described as Third Way, predated the idea by a decade or more.Both Hawke and Keating made some criticism too. In the lead-up to the 2019 federal election, Hawke made a joint statement with Keating endorsing Labor's economic plan and condemned the Liberal Party for "completely up the economic reform agenda". They stated that "Bill Shorten| Shorten's Labor is the only party of government focused on the need to modernise the economy to deal with the major challenge of our time: human induced climate change".
Various ideological beliefs were factionalised under reforms to the ALP under Gough Whitlam, resulting in what is now known as Labor Left which broadly advocates for democratic socialism, economic interventionism, and progressive social policies; and Labor Right, which tends to align more closely with social democracy and has been the main proponent of Third Way style economic policy within the party.
Former Labor Prime Minister Kevin Rudd's first speech to parliament in 1998 stated:
Competitive markets are massive and generally efficient generators of economic wealth. They must therefore have a central place in the management of the economy. But markets sometimes fail, requiring direct government intervention through instruments such as industry policy. There are also areas where the public good dictates that there should be no market at all. We are not afraid of a vision in the Labor Party, but nor are we afraid of doing the hard policy yards necessary to turn that vision into reality. Parties of the Centre Left around the world are wrestling with a similar challenge – the creation of a competitive economy while advancing the overriding imperative of a just society. Some call this the "third way". The nomenclature is unimportant. What is important is that it is a repudiation of Thatcherism and its Australian derivatives represented opposite. It is in fact a new formulation of the nation's economic and social imperatives.