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The rise and fall of the Third Way

By Andrew Leigh - posted Monday, 9 June 2003

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:

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This is an edited version of an article first published in AQ, A Journal of Contemporary Analysis.

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About the Author

Andrew Leigh is the member for Fraser (ACT). Prior to his election in 2010, he was a professor in the Research School of Economics at the Australian National University, and has previously worked as associate to Justice Michael Kirby of the High Court of Australia, a lawyer for Clifford Chance (London), and a researcher for the Progressive Policy Institute (Washington DC). He holds a PhD from Harvard University and has published three books and over 50 journal articles. His books include Disconnected (2010), Battlers and Billionaires (2013) and The Economics of Just About Everything (2014).

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Related Links
Andrew Leigh's home page
Malcolm Weiner Center for Social Policy
The Third Way: A Policy Framework for Australia?
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