The Big Idea

At a moment when most stories of American politics are about sex and lies, it might seem odd, even perverse, to suggest that something serious is happening in public life. Odder still would be the assertion that the United States and President Clinton’s administration are at the forefront of an important transformation taking hold in the wealthy democracies of Europe and North America.

But that is exactly what is going on.

On both sides of the Atlantic, politicians and intellectuals are debating what sort of politics should replace the traditional liberal and social democratic doctrines of the left and the free-market ideas of the right. The parties engaged in that quest are winning elections—in the United States, Britain, France, Italy, Portugal, Holland and, if the polls hold up, Germany next month. The new ideas, or at least the quest for them, are coming to be known as the politics of “The Third Way.”

Just say those three words in this skeptical time and you run into a mountain of suspicion.

The skeptics raise fair questions. They ask whether the Third Way is a set of real ideas or an advertising slogan. They want to know if it represents a serious effort to create new forms of progressive politics, or is instead a capitulation to the right, the final triumph of Ronald Reagan and Margaret Thatcher.

Ultimately, they ask whether the Third Way is simply a clever form of political repackaging that encapsulates approaches that helped Clinton and British Prime Minister Tony Blair win elections. Is it just a ploy to distinguish yourself from some terrible “them” (the far right, the old left, etc.) without ever having to define who “we” are?

Hold those thoughts for a moment, and consider the new ideas and strategies that are being exchanged.

They include how democratic governments can influence a global economy that increasingly ignores national boundaries and rules; how to redress economic inequalities created by this bold new capitalism; how to equip individuals to keep up in a more competitive time; how to reconfigure social welfare programs constructed four to six decades ago; and how to balance the dynamism of the market with the need to protect families and local communities from its inevitable disruptions.

You could look at the victories of this movement and say that at the moment of capitalism’s high tide, voters are supporting parties that propose to put some limits on the free market and to offset some of the inequities it creates. Or you could say that all these parties have made large accommodations to the marketplace and entrepreneurial capitalism over the last half-century.

Both statements are true.

Getting a handle on the Third Way can be difficult, though, because its supporters often define it by what it is not. In an open letter to Prime Minister Blair published earlier this year in the New Statesman, a British magazine at the heart of the Third Way debate, social thinker Ralf Dahrendorf argued that this was one of the Third Way’s most profound problems.

The rhetoric of neither-this-nor-that, he wrote, “forces you to caricature the others.” Old Labor looks more socialist, Old Democrats more statist, Reaganism/Thatcherism more coherent and, perhaps, meaner than the reality.

“More importantly,” Dahrendorf continued, “when you define yourself in others’ terms, you allow them to determine your agenda.” If the Third Way is primarily a reaction to the Old Left and the New Right, it might be seen more as a captive of past debates than as a guide to the future.

Nor is the Third Way even a novel phrase. Decades ago, the American journalist Marquis Childs described Swedish social democracy as embodying the Third Way between American capitalism and Soviet communism. The new Third Way seems to lie somewhere between Sweden and the United States, suggesting that the content of Third Wayism is relative, heavily determined by who sets the intellectual and political goalposts.

“This is easily characterized as being the place equidistant between two points,” concedes Sidney Blumenthal, the White House adviser who is the administration’s leading advocate of Third Wayism.

But the current stream of Third Way thought does have some discernible characteristics. Anthony Giddens, director of the London School of Economics and one of Britain’s leading social theorists, sees the Third Way as responding to a decline of traditional class politics.

“With the rapid shrinking of the working class and the disappearance of the bipolar world,” he wrote this year in another of the New Statesman’s Third Way explorations, “the salience of class politics, as well as the traditional divisions of left and right, has diminished.”

One should always be wary of predictions of the decline of class politics, if only because they are sometimes used by those at the top of the heap to deny inequalities. In the United States, Britain and much of the industrial world, class differences—in circumstances certainly, but even in voting patterns—have not disappeared.

But Giddens is right that the manual working class, the base of traditional parties of the left, is shrinking as a percentage of the workforce and is being replaced by various kinds of service- and white-collar workers.

As class loyalties have diminished, so have party loyalties: Most of the parties in the West are rooted in different times and circumstances. Few still alive in Britain have personal experience of the socializing achievements of Clement Atlee’s Labor government, elected in 1945, and even fewer living Americans experienced the New Deal.

Thus were Blair and Clinton obsessed with the quest for suburban voters whose political loyalties are fluid, whose move away from urban centers weakened their ties to the traditional institutions of their parents, and who are influenced by mass media and their own search for information.

Giddens also distinguishes between the old left’s version of the mixed economy, which outside the United States included state ownership of industry, and the Third Way’s acceptance of state intervention to help individuals within an economy that is privately owned and managed. (Here, aside from a few experiments in government ownership such as the Tennessee Valley Authority, America’s Democrats were prematurely Third Way.) And whereas the old left supported a “cradle to grave” welfare state, the Third Way center-left looks more to social investment, especially in education and worker training.

The Third Way is the fruit of the declining influence of socialist, and in particular Marxist, ideology—especially after the end of the Cold War. Intriguingly, both Clinton and Blair search backward for inspiration to a time that predates the rise of the Soviet Union—Clinton to our turn-of-the-century Progressive Era, Blair to the reforming 1906 Liberal government, which ruled before his Labor movement achieved major party status.

The heart of the Third Way’s quest and dilemma is how democratic governments are to deal with the global economy. The simple fact is that the regulatory state championed by American liberals and European social democrats has great difficulty working its will in a global market. Companies and private investment are footloose. Labor and environmental regulation is difficult to enforce across national boundaries. That, increasingly, will be true of tax laws, too.

In an essay on Third Way economics, Diane Coyle, economics editor of the Independent of London, notes that “although people are relatively immobile and most employees cannot avoid paying income tax, a growing share of transactions will take place online and will be either untrackable or easily disguised.” She concludes: “It is not that governments are powerless, but rather that their old levers are irrelevant.”

But what are the new levers? Here is one of the great divides within the Third Way. Many of its leaders, Blair and Clinton notably, embrace the global market and free trade The French socialists, led by Prime Minister Lionel Jospin, are decidely more skeptical.

The free traders argue that the key to “expanding the winners’ circle,” as Al From, president of the Democratic Leadership Council and a participant in Third Way conclaves likes to put it, is education and worker training.

The risk is that Third Wayers come to be seen as people who think that every problem can be solved if you just throw schooling and job training at it. Is that enough? Some advocates of the Third Way and most of its critics on the left think not. They argue that achieving the Third Way’s stated objective of a fairer economy will demand new forms of global regulation, especially in the areas of environmental and labor standards, and new efforts to control the speculation in national currencies, which can quickly undermine prosperous economies.

Also dividing Third Wayers is the proper way of reforming the old social insurance state. Welfare reform split both the Democratic Party here and the Labor Party in Britain. Many who share a broad sympathy for the Third Way in the United States are divided over what to do about Social Security. Third Wayers who gathered last month for a discussion organized by First Lady Hillary Rodham Clinton and Blumenthal were united on many things, but not on whether the partial privatization of Social Security would constitute an advance or a reverse.

But that discussion, Blumenthal argues, also underscored the extent to which a consensus has emerged in a once-fractious Democratic Party—on balanced budgets, crime, family policy, women’s rights, and the need for new spending on education, health care, child care and training.

That Clinton managed to achieve this consensus helps explain why most Democrats have stuck with him through the Monica Lewinsky scandal. As a House Democratic leader who is often critical of Clinton from the left said recently, most in his party will support him as long as they can. They see him, this Democrat said, as the only figure who can make the party’s case.

You could count that as the triumph of the Third Way. You could also see it as a measure of the price Clinton has paid for the scandal. Clinton was an inspiration for the remake of the Labor Party that Blair undertook. But Clinton, despite his successes, has been far less able than Blair to alter the tenor of the political debate. In Britain, they talk about the Third Way. Here, we talk about sex and perjury.

The Third Way is not universally loved by those to whom it is designed to appeal. “The fear,” former Labor secretary Robert Reich told the Nation’s David Corn, “is that Tony Blair and Bill Clinton, instead of charting a Third Way, will leave the progressive left in tatters and do little to rectify the social injustices experienced by modern capitalism.

That fear could prove justified if the Third Way turns out to be merely a slogan. But judging by the behavior of progressive parties around the world—and by the defeats suffered by conservative parties—there aren’t many alternatives to the efforts of Third Wayers to accommodate and reform the free market at the same time. It’s an idea whose time may have come simply because the other ideas don’t work anymore.

That fear could prove justified if the Third Way turns out to be merely a slogan. But judging by the behavior of progressive parties around the world—and by the defeats suffered by conservative parties—there aren’t many alternatives to the efforts of Third Wayers to accommodate and reform the free market at the same time. It’s an idea whose time may have come simply because the other ideas don’t work anymore.