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.