A decade ago, in common with other social democratic parties, Labour was casting around for an effective ideological position. In Europe, the centre-left was more electorally successful than ever, forming or participating in the majority of governments. Yet the ascendancy of neo-liberalism had badly weakened the salience of traditional social democratic politics. The centre-left was forced to define itself on hostile terrain, as the right aggressively reset the parameters of political argument.
The ‘third way’ emerged out of the wreckage of this Thatcher-Reagan hegemony, developing a policy framework responsive to the changing global order. Historically, it referred to finding a way between American capitalism and Soviet communism, and was taken up enthusiastically by the Socialist International in 1951. But the third way was presented by critics merely as capitulating to neo-liberal ideology, emptying Labour’s programme of any serious radical intent. This vision had little to say to social democrats in Europe or elsewhere, since it failed to challenge the underlying assumptions of new right ideology.
In making comparisons between countries, it is imperative to bear in mind not only cultural differences, but distinct political contexts. The convergence between Labour in Britain and European social democracy, however, has been strong, as Donald Sassoon has emphasised. All parties of the left have sought to discard the mantle of ‘tax and spend’, as symbolised by Tony Blair and Gerhard Schröder’s joint statement on the ‘Neue Mitte’ (‘New Middle’) in 1999. Across Europe, there is widespread acknowledgement of the fiscal limits to welfare spending and public service investment. Another striking element of convergence is that the issue of nationalisation no longer divides social democrats. European centre-left parties have abandoned it, alongside traditional hostility to privatisation.
This should not imply that all European social democratic parties have simply absorbed Labour’s third way doctrine. By definition, social democracy is heterogeneous. It is neither a particular programme, nor a set of class interests, nor even an unchanging constellation of values. No single social democratic model emerged. Instead, three distinct projects have developed since the early 1990s: the modernising statism of France, the consensual corporatism of Germany, and the globalised social democracy of Britain.
The third way began from the premise that the centre-left could not merely revert to the tried and tested methods of the post-war settlement. Profound social, economic, and geo-strategic challenges were undermining many traditional assumptions. This stream of thinking enabled Labour to break out of its habitual insularity. Labour historically had maintained an instinctive suspicion of Europe and the European project. It was sceptical that Europe’s nations could work together, preferring the uniqueness of British socialism and the struggle to build a socialist society within the bounded territory of the British Isles. These anachronistic assumptions were challenged as never before.
Yet the third way does not remotely constitute an adequate guide to the future. Its frame of reference was distorted from the start. It never developed a satisfactory account of power: how social inequalities in industrialised countries are reflected and reproduced. The notion of rights and responsibilities sought to emphasise the duties of the poor and under-privileged, for example, but was silent on the obligations owed by the wealthy to the rest of society.
The third way sought to replace dogma with pragmatism, but on its own, pragmatism is insufficient. In public policy, there is rarely enough information or experience to make a reliable judgement about what works: politicians need instincts and a sense of direction. Governments and societies function best where they have a clear sense of their values. Radical politics needs to contest obsolete assumptions, while challenging the excessive or unhealthy accumulation of power by a privileged few.
What the third way lacked was a coherent conception of social justice. There was a strong tendency to favour a society based on meritocracy, and equality of opportunity. But this was never credible. In the first place, radically meritocratic societies create deep inequalities of outcome that threaten social cohesion. The winner-takes-all phenomenon is grossly distorting income and wealth distribution. Someone who is marginally more talented is disproportionately rewarded; barely perceptible margins make the difference between success and failure. The CEO of a FTSE 100 company in the UK is now paid 100 times the average earnings of a shop- floor worker: 20 years ago is it was 30 times. The stakes in the modern economy are enormous.
Social exclusion is increasingly marked. There is the exclusion of those at the bottom, cut off from the mainstream of opportunities that society has to offer. At the top is voluntary exclusion – ‘the revolt of elites’ – as more affluent groups withdraw from public institutions, choosing to live separately from the rest of society. Meanwhile, prevailing notions of third way politics were not anchored in the social democratic tradition, having a tendency towards rootless vacuity. It is vital to come to terms with the historical weaknesses of social democracy, while being serious about remedying them.
This is the moment for a new generation to redefine left-of-centre politics. Social democrats have to escape their fixation with the nation-state. The challenge is to think through the implications of complex, multi-layered forms of jurisdiction and authority, dealing with pressing challenges such as world poverty and the regulation of the global economy. The Muslim world will need to be understood in greater depth, while the new dynamic of China and India should enable Britain to escape its troubled role as a bridge between Europe and America.
There will be enduring conundrums to resolve, such as developing a framework for the constitution and public services that promotes pluralism and diversity, while strengthening equity. Debating the balance between the state and the market – a historical reference-point for the left – misconstrues the argument: the issue is what kind of state and what kind of market do social democrats want to frame? Labour should draw on Scandinavian experience: Danish and Swedish social democrats, for example, have presided over the radical diversification of public services, giving a greater role to not-for-profit providers in education, health and social care.
New Labour has also lacked any fundamental critique of global capitalism to augment its critique of the monolithic state. It was assumed too often that Britain was a conservative country that would not wear change unless done by stealth. This made it more difficult to tell a coherent political story. It inhibited Labour from engaging fully with the growth of inequality. The party has lacked a clear account of how to understand and prepare Britain for the knowledge economy. This economy will be harder to tax and regulate, requiring new forms of collaboration between the public and private sectors, as social democratic governments from Finland to Spain are grasping.
The challenge is now to explore this uncharted political and intellectual terrain. If Britain wishes to remain engaged, it will have to listen to social democrats around the world, as well as preaching to them. That means continuing to develop modernising, progressive thinking across the globe.