The rise and fall of the Third Way

In 1998, a new term hit the political scene. According to two of the most powerful leaders in the developed world, US President Bill Clinton and British Prime Minister Tony Blair, the "Third Way" was the ideology of the future. Their declarations, and a series of subsequent Third Way summits, evoked strong responses from political parties in all parts of the ideological spectrum. For a while, momentum began to build behind the phrase. But five years on, the Third Way movement seems largely to have lapsed, at least as measured by media and academic interest in the past three years.

It is possible to distil five ideas that encapsulate the core of Third Way thinking: transcending the distinction between left and right; advancing equality of opportunity; employing mutual responsibility; strengthening communities; and embracing globalisation. Both favour a renewal of liberalism, and are unabashedly modernist.

Which way did the Third Way go?

If one accepts that the theory of the Third Way was relevant to modern social democratic parties, then there are two possible reasons why it might have slipped from prominence in recent years. One is that it explained too much - and has now been accepted by the majority of social democratic parties in the developed world. The alternative is that it explained too little, and has declined because policymakers have realised that it does not provide guidance on the most difficult choices to be made in government.

First, the more optimistic approach. One theory that might be put forward for the drop-off is that the theory has now dominated the field. In 1992, Francis Fukuyama contended that the success of liberal democracy had ensured that all serious political discussion would take place within its cultural horizons. Does the Third Way now define the horizons of serious political discussion within social democratic parties?

Perhaps the strongest evidence for such a proposition is the shift towards more market-oriented policies that took place in most OECD nations between 1980 and 2000. To this should be added the fact that few social democratic governments have retreated from globalisation to autarky in the face of strong protests from their citizenry. Large-scale demonstrations against international institutions such as the World Trade Organisation and the World Bank have resulted in greater transparency, but no major policy shifts.

Yet it is difficult to distinguish correlation from causation. Well before the advent of the Third Way, its core principles - transcending left and right, redefining equality, rediscovering liberalism, responsibility, community, globalisation and modernism - had gained widespread acceptance among centre-left policymakers in the developed world. In Britain, the most significant evolution of policy took place in the early-1990s, before Labour won office. In the US, President Clinton's mantra of "opportunity, responsibility, community" emerged from the 1995, 1996 and 1997 State of the Union addresses. In Australia, the fiercest debates over the Labor Party's shift towards more market-driven policies took place in the late-1980s (and arguably helped influence policies elsewhere - particularly in the UK).

The mere fact that the Third Way arose in the late-1990s makes it difficult to see how it could have affected the move to the right by many social democratic parties over the previous two decades. Indeed, it seems more likely that the electoral success of conservative political parties in Britain, the US and Germany during the 1980s was a much more significant factor in a transition that had begun even before the collapse of Eastern European state socialism in 1989-90. But likewise, critics of the left are wrong to say that the Third Way has declined because of its rejection of their values. Most mainstream policymakers in social democratic parties today sit comfortably within the scope of the Third Way. Yet so would many conservative policymakers, and therein lies the rub.

For many policymakers, the very generality of the Third Way has meant that it does little to help them choose between competing proposals. As Ralf Dahrendorf, Director of the London School of Economics, has argued, the Third Way is a politics that speaks of the need for hard choices but then avoids them by trying to please everybody.

Dahrendorf's critique is particularly apposite when applied to contemporary policy challenges. Take for example some of the toughest questions currently confronting the US Democrats: What level of immigration is appropriate for the US to accept? How can the quality of education for poor inner city children be improved? Are more curbs on civil liberties appropriate in order to increase chances of preventing future terrorist attacks? It is difficult to see how the broad nostrums of the Third Way provide guidance one way or another.

Likewise in Britain. How might the pensions system be reformed? Is reform of the health system likely to require inducing greater competition with the private health system? Should Britain adopt the Euro? While it offers a view on some of these issues, there is nothing in the broad Third Way principles that answers the questions.

Finally, the same is true in Australia. Contentious debates within the Labor Party over recent years have included questions of whether trade sanctions are an effective tool to improve labour standards, how paid maternity leave might be implemented, to what extent welfare resources should be geographically targeted, and whether refugees should be detained. The Third Way offers little by way of guidance to those looking for the best solution. Indeed, while Mark Latham (the strongest advocate for an Australian Third Way) has put forward a variety of policy initiatives in recent years - including banning trade in goods produced with child labour, providing tax incentives for first share purchases, and using the community sector to deliver employment services; one could well imagine Third Way counter-arguments to each of his proposals.

One reason that the Third Way provides so little guidance on such issues is that its very status as a political ideology is tenuous. In his introduction to Contemporary Political Ideologies, Roger Eatwell defines a political ideology as:

... a relatively coherent set of empirical and normative beliefs and thought, focusing on the problems of human nature, the process of history, and socio-political arrangements. … Political ideologies are essentially the product of collective thought. They are 'ideal types', not to be confused with specific movements, parties or regimes which may bear their name.

Among bona fide political ideologies, Eatwell lists socialism, nationalism, liberalism and conservatism. Against these, he distinguishes propaganda (deliberate attempts to gain political influence), socialisation (the process by which values are transmitted), and culture (the value structure of a society).

While Eatwell does not deal with the Third Way in particular, there are three bases on which his definition could be used to suggest that it does not constitute a political ideology. First, it lacks coherence, due in part to the fact that it is often defined in opposition to other ideologies. Secondly, it is often defined around identification with particular political parties (eg. the British Labour Party), ginger groups (eg. the Democratic Leadership Council) or individuals (eg. Mark Latham). Thirdly, the Third Way verges on a form of culture, since it tends to centre around values such as responsibility, community, and modernism.

Third Way Out

Ultimately, while electoral exigencies have affected the fortunes of the Third Way, they are insufficient to explain its decline over recent years. And while Third Way adherents might like to claim that they have set the boundaries for serious political debate among social democrats, it seems at least as likely that the Third Way largely attached a label to changes that had taken place in the 1980s and 1990s.

The main reason the Third Way has diminished in relevance is its failure to provide sufficient guidance to policymakers on everyday policy challenges. The Third Way lacks the coherence of established ideologies such as liberalism and socialism. Indeed, it is even arguable that it does not amount to a political ideology at all.

Over the past two decades, social democratic parties across the developed world have moved towards more market-oriented policies. The Third Way may be a useful way to describe this transition within social democracy; but it is much less useful as an ongoing strategy for parties of the mainstream left. As in the past, social democratic parties must develop new ideas or risk atrophying. But it is unlikely that the ideas which make up the Third Way will contribute much of substance to this process.