Is the 'Third Way' the right way?

At first sight, offering an explanation of “Third Way” politics and its implications for social policy seems to be an entirely dated exercise. It may be that the upbeat selling of “Third Way” social democracy has gone off the boil with the departure of former Prime Minister Tony Blair and maybe also in Australia with the 2007 victory of the ALP. But critical discussion of the underlying assumptions of the “Third Way” social policy agenda is still highly relevant and this paper argues that such historical discussion will assist our assessment of Prime Minister Kevin Rudd’s policies in Australia, Prime Minister Gordon Brown’s agenda after Blair in the UK and even President Barack Obama’s welfare policy strategies.

This essay seeks to draw attention to the need to maintain a critical discussion about the emergent forms of social democracy around the world. Has the situation the “Third Way” tried to address changed all that much just because “Third Way” has gone off the boil? Of course not. The rhetoric may no longer attract attention but its assumptions are still alive and need to be critically discussed.

A dominant political and social debate confronting societies around the world concerns the form and content of social democracy. The collapse of communism, the advent of globalisation, the transformation of social life experience for all citizens, along with profound social, political and economic changes, have together created a need within social democratic circles to rethink the policies and theories of social empowerment. Social democratic policy is thus in a state of critical self-reflection.

Former Australian Labor Party (ALP) leader and prominent “Third Way” author, Mark Latham, argued in his 2001 book The Enabling State that it is no longer sensible to subject economic markets to government planning and control. Nor are trade unions and working class solidarity still in good shape. He doubts that electoral majorities still support a concentration of political power at parliamentary and party levels. Somewhere between right and left, social democrats need a “Third Way”.

Anthony Giddens, a key influence on the Blair Labour government in the UK and prominent international author concerning the “Third Way” as a distinctive political viewpoint, argued that the political philosophy opens an escape from the burdens of history by capturing the best of both left and right politics. It promotes the neo-liberal ideal of the supposed self-sufficiency of the market, while also seeking to develop the social democratic ideal, and means, of social inclusion.

Adding to the political debate, Alex Callinicos in his 2001 book Against the Third Way argues that it is a continuation of the conservative market-driven policies which have dominated western societies since the late 1970s, and are themselves held together by good public services and state regulation.

Nobel Lauriate in Economic Science (1998) Amartya Sen wrote in his 1999 book Development and Freedom:

The intellectual climate has changed quite dramatically over the last few decades, and the tables are now turned. The virtues of the market mechanism are now standardly assumed to be so pervasive that qualifications seem unimportant. Any pointer to the defects of the market mechanism seems to be, in the present mood, strangely old-fashioned and contrary to contemporary culture (like playing an old 78 rpm record with music from the 1920s).

Central to the “Third Way” is its support of the neo-liberal belief that unfettered markets will benefit all of society. This belief has a profound effect on social policy processes. It is argued that neo-liberals believe that the attainment of social and public good is a by-product of an unhindered approach to markets. Latham, however, sees no reason for the marketisation of services essential for human conditioning, such as education, health and welfare. He argues that they should be provided on the basis of social justice. The challenge for the “Third Way”, in his view, becomes one of balancing the market and social justice.

However, the “Third Way” is much more market friendly than earlier forms of social democracy. Latham in his book argued that "[o]nly the political equivalent of Austin Powers could believe that government intervention achieves better results than market forces" and that the antiquated traditions of post World War II social democracy fail to meet the complex economic and social needs of globalisation.

It is evident that some of the theoretical objectives of the “Third Way” justify social democratic recognition. For example, the “Third Way” argues for the need to reconfigure the operation of public goods and services. The theory acknowledges the need to question how the public sector is owned, operated, funded and delivered, so that its services can generate an abundance of socially driven values in the communities they serve.

Amitai Etzioni in his 2001 book Next: the road to the good society, argues that a modern form of liberal politics that incorporates elements of communal and socialist political principles is the best form of political system to create a more inclusive society. Etzioni’s style of communitarian politics is closely aligned to principles outlined in the “Third Way”. He argues that liberal ideology can enhance individual freedom and respect, while ensuring and maintaining equality of opportunity for all people. For Etzioni, a system based on open market exchanges will allow the maintenance of economic freedom of choice, while also creating equality of access, according to merit, to areas such as education and training.

According to Hugh Collins' article “Is there a Third Way in Labour Law” published in the 2001 book The Global Third Way Debate, it is not the agenda of the “Third Way” to argue that competition is best served by deregulation. Collins believes the “Third Way” views regulation as seeking to improve the operation of the market, “not to replace, or impede it”. This is consistent with Giddens' support for the “Third Way” as a search for the correct balance between regulation and deregulation.

A critique of the “Third Way’s” equitable outlook

In practice, the “Third Way” encourages meritocracy (a merit based philosophy). Meritocrats argue that people get out of the system what they put into it, based on a supposedly neutral concept of individual merit. Most “Third Way” and neo-liberal sympathisers conclude that meritocracy will tend to increase social mobility in a new era of equal opportunity, one that offers people every chance to fulfil their own potential.

In other words, meritocratic policies promote the worst of new world and old world political reflection. It is even worse than aristocracy because it attempts to valorise power and privilege as qualities which are merited rather than inherited. This indicates that meritocracy only offers a shift in patterns of inequality, unfairly exalting the rich, while condemning the poor to false hopes of individualised social mobility.

Meritocracy as a theory of political power and influence, is disputed. Many, like Michael Young, a well known author on the subject, express opposition in terms which show how sad, and fragile, a meritocratic society could be. If the rich and powerful were encouraged by the general culture to believe they fully deserved all they had, how arrogant they would become and, if they were convinced it was all for the common good, how ruthless in pursuing their own advantage.

Meritocracy is even worse than aristocracy because it attempts to acquire plus points because it connotes power and privilege as merited rather than inherited. This is only further proof of the argument that meritocracy is detrimental to most of those who also suffer from a socioeconomic divide, such as, people with disabilities and different abilities. Giddens, an advocate of most “Third Way” policies, argues that this form of equity is untenable, creating deep inequalities of outcome that threaten social cohesion.

The “Third Way’s” most fundamental action towards the attainment of equality is the promotion of equality of access. Equality of access is to be applied in circumstances that can assist those pursuing equality, which in theory becomes a means of enhancing social inclusion through equal forms of social mobility. Equality of access is both relevant and robust, avoiding both the theoretical drawbacks of equality of outcome and equality of opportunity. Equality of access will bring rationality to policies that involve equality, and are able to provide a benchmarked position by which to measure policies of equality. It is argued that equality of access provides a worthy ambition for a modern, reforming government.

Many advocates of the “Third Way”, believe, in part, in a system of civic responsibility. Civic responsibility recognises that you cannot renew a community by issuing a set of top-down instructions. There is a need for a community approach that can see the benefit gained in looking after society’s most valuable assets, namely ourselves, how we inter-relate one with another. A community that works towards the collective goals of a society is acting as a beacon for communal social cohesiveness.

Social entrepreneurs can be effective in providing policies that are measured and responsible, contributing to an economic use of state resources, and thereby driving down the need for a large public sector. Social entrepreneurs are defined by prominent “Third Way” thinkers, as entrepreneurs who do not work towards individual profit, but who work instead towards the community benefit, believing that social capital is a key element in any society's success.

The “Third Way” seeks to recapture previous social democratic views (R H Tawney) which explicitly defined success and happiness in ways than did not treat individual profit as the goal. The generation of social capital has a social and economic equalising effect throughout the entire society.

David Puttnam presented his definition of social entrepreneurialism at the annual meeting of the World Economic Forum in Davos, Switzerland:

Broadly speaking, social entrepreneurs are what you get when you cross Richard Branson with Mother Teresa. They do their most effective work at the fringe of the market place, where both the public sector and the market itself have failed to deliver important goods and services, particularly to those who can pay little. … They may or may not operate for profit, but their bottom line is social transformation, enabling all to take part in building sustainable livelihoods and just societies.

Puttnam argues that social entrepreneurialism has brought about change in the way current political leaders have pursued global corporatism. It is said to have brought social development within the corporate sector into vogue. Puttnam believes that this has been done by finding ways that develop the social inclusiveness of the corporate sector, while adding to its profits.

Hugh Stretton is another prominent critic of the taken-for-granted approach of the “Third Way”, but he acknowledges that the “Third Way” can be understood as one way in which social democrats are responding to globalisation.