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The route map of the Third Way

This chapter aims to place the debate about the Third Way in the wider context of European social policy. It builds on Amitai Etzioni's picture to examine the route map of the Third Way. The chapter explores the different definitions of 'the Third Way', and ways of differentiating it from first and second ways. It illustrates some of the themes in the context of Merkel's different ways or paths of social democracy in Europe. Jospin claimed that social democratic plans in Europe were faithful to 'all the values that lie at the heart of socialism: citizenship, social justice, democracy, the desire for progress and the will to control this progress and our collective destiny'. A number of commentators have suggested broad characteristics/themes of the Third Way, or new social democracy.


Although the ‘Third Way’ has had many previous incarnations, the current version is generally said to have originated with the New Democrats and the Clinton administration, from 1992 in the USA,1 and been taken up by Blair’s New Labour Government in the UK. However, there remains widespread debate over whether the term is applicable only to the Anglo-Saxon ‘liberal’ welfare states of the UK and the USA, or whether it is meaningful for the ‘social democratic’ and ‘Christian democratic’ countries of continental Europe. The main aim of this chapter is to place the debate about the Third Way in the wider context of European social policy. According to Merkel,2 at the end of the twentieth century the debate about the Third Way has become the most important reform discourse in the European party landscape. Giddens3 claims that almost all Centre-Left parties have restructured their doctrines in response to it. Callinicos4 writes that the Third Way has set the agenda for the moderate Left on a European, and indeed a global, scale. Gould5 claims that it is ‘now arguably the dominant political approach throughout the world’. The Third Way is seen as a trail-blazer for a new global social policy, a new model for a new millenium.6 As President Clinton’s former Secretary for Labour Robert Reich puts it: ‘We are all third-wayers now.’

However, if the Third Way is important, it is also difficult to define.7 As Pierson8 puts it, the Third Way has been hotly contested but consistently under-specified. Clift9 argues that it needs more rigourous definition before firm conclusions can be drawn about its compatibility with contemporary European social democracy. In the words of Przeworski,10 how many ways can be third?

Merkel11 claims that there are four distinct ‘Third Way models’ in Europe. Giddens12 argues that social democratic parties in Germany, France and perhaps the Scandinavian countries have been following their own ‘Third Ways’. Etzioni13 sees the countries of continental Europe, the UK and the USA as ‘different Third Way societies’. He points out that while societies such as the French and the Italian drive more in the Left lane with others such as the USA more on the Right, ‘the road they all travel is fully distinct from the one charted by totalitarian and libertarian approaches’. Moreover, ‘while the various Third Ways differ in their specific synthesis of the ways of the state and the market, they are pulling closer to one another’. The term ‘Third Way society’ suggests a greater permanence than a transitory ‘Third Way government’. However, in the period since Etzioni and Merkel wrote, the governments of such countries as the USA, France and the Netherlands have moved to the Right.

We build on Etzioni’s picture to examine the route map of the Third Way. Are different European countries travelling along the same or parallel roads? Is there any sign of convergence in the sense of travelling towards the same destination? We argue, however, that the current route map is not particularly helpful. As we show, the scale of the map tends to be very small. While broad features may be recognised, more precise details tend to be overlooked. Moreover, the road signs are not easy to read as they give information at a high level of abstraction. The key to the map is also fairly obscure and the classifications of the roads are far from clear. The discourse routes do not clearly flow into those carrying the traffic associated with values, goals or policies. Finally, it may not be possible to produce one route map to serve travellers on all the roads in Europe. Although there are some similarities between the various route maps, they are written in different national languages, with important national contextual differences. Our approach differs from some previous discussions in two main ways. First, in contrast with accounts that cover a wide range of social and economic policies,14 we focus on social policy. Second, we develop a ‘policy process’ approach, with different elements of discourse, values, policy goals and policy mechanisms.15

We use a simple heuristic model of the policy process in which discourse and values shape policy goals that, in turn, should be compatible with policy mechanisms. This illuminates a number of the problems encountered by earlier attempts at definition. Some have taken, essentially, the ‘Herbert Morrison’ approach: Morrison famously defined socialism as what a Labour government does. It follows that a government, like that of Clinton or Blair, is ‘Third Way’ if it says so. This focuses on self-proclamation rather than any ‘third party’ analysis. On the other hand, Giddens,16 writing before the recent European elections, declared that ‘across the world left of centre governments are attempting to institute Third Way programmes’ – whether or not they favour the term itself. He admitted that in Europe some have actively rejected it; while others have substituted different notions like that of ‘the new middle’ in Germany or the ‘purple coalition’ in Holland. He maintained that the Third Way is not to be identified solely with the outlook and policies of the New Democrats in the USA, or indeed of any other specific party, but a broad ideological stream fed by several tributaries. The changes made by Left parties in Scandinavia, Holland, France or Italy since the late 1980s are as much part of Third Way politics as those developed in Anglo-Saxon countries.17 This converse approach seems to suggest that a government is Third Way if a third party says that it is! For ‘old’ social democracy, Pierson18 points out that at times social democratic strategies were pursued by governments that would never call themselves ‘social democratic’, and social democratic governments pursued non-social democratic programmes.

Reading the route map of the Third Way

The problem in examining the Third Way is that the term is used in very different senses. A number of commentators have suggested broad characteristics/ themes of the Third Way, or new social democracy. Many elements of the Third Way were flagged up in the report of the British Commission on Social Justice.19 It rejected the approaches to social and economic policy of the ‘Levellers’ – the Old Left – and the ‘Deregulators’ – the New Right, and advocated the ‘middle way’ of ‘investors’ Britain’. The report also featured much of the discourse which was to become central to New Labour: economic efficiency and social justice are different sides of the same coin; redistributing opportunities rather than just redistributing income; transforming the welfare state from a safety net in times of trouble to a springboard for economic opportunity; welfare should offer a hand-up not a hand-out; paid work for a fair wage is the most secure and sustainable way out of poverty; and the balancing of rights and responsibilities. Giddens20 suggests a ‘Third Way programme’ including the new democratic state, active civil society, the democratic family, the new mixed economy, equality as inclusion, positive welfare and the social investment state. White’s21 themes include: the state as guarantor, not necessarily provider; receptivity to forms of mutualism; new thinking about public finance, including increased use of environmental taxes, hypothecation at the margin, new consultative procedures on tax, and community fund; and asset-based egalitarianism. Vandenbrouke offers what Cuperus and Kandel22 term ‘the nine commandments of a post-pessimistic social democracy’. These are full employment for men and women, attention to new risks for the welfare state, an ‘intelligent’ welfare state, a revalorising of active labour market policies, subsidising low-skilled labour as a new redistribution target, preventing poverty traps, developing a competitive private service sector, finding non-dogmatic approaches to a fair distribution of burdens and benefits, and maintaining discipline with regard to growth of average wage levels. Blair and Schröder23 suggest a ‘new programme for changed realities’ that includes a new supply-side agenda for the Left, a robust and competitive market framework, a tax policy to promote sustainable growth, adaptability and flexibility, active government that invests in human and social capital, and sound public finance. Ferrera et al.24 list ‘elements of an optimal policy mix’ that consists of a robust macro-economic strategy; wage moderation; employer-friendly and efficient tax and social policy; labour market flexibility and flexicurity; investment in education, training and mobility; and new forms of fighting poverty and social exclusion. Thomson25 contrasts six ‘aims’ of classic and new social democracy (though these aims are not policy goals in our terms, and are best considered as broad themes): fairness; individual rights; ‘aiding the market’; individual initiative to achieve enhancement; the state as enabler; and community. Finally, Bresser-Pereira26 distinguishes the New Left from the Old Left and the New Right from the perspective of developing countries, or the view from the South. These characteristics are: party control by the new middle class; a complementary role for the state; managerial state reform; basic social services executed by public non-state organisations; financing of basic social services by the state; state assured basic state security; neo-Keynesian macro-economic policy; globalisation seen as a challenge.

The positions of the commentators are expanded in the original sources. Clearly such a brief listing cannot do justice to the variety of arguments advanced. However, it does illustrate the problem of constructing a composite ‘Third Way model’. The meaning of some elements of the lists is not fully clear. The term ‘basic’, for instance, appears frequently, but with little discussion of its significance. In particular, different dimensions, such as aims and mechanisms, are conflated. In other words, it is necessary to disentangle the various themes from their soundbite definitions.

Defining and differentiating ‘the Third Way’

This section aims to explore the different defininitions of ‘the Third Way’, and ways of differentiating it from first and second ways. This may be found in discourse, in values and ideologies, in policy goals and in policy mechanisms. While this classification is far from watertight, it is conceptually useful. First, it is important to compare like with like. For example, a similar discourse can mean very different things.27 Blair, Schröder and Jospin all ‘support a market economy, but reject a market society’ and all endorse ‘the active state’. However, all probably place very different interpretations on this. Second, it allows the degree of ‘fit’ or ‘flow’ between the dimensions to be examined. For example, are policy mechanisms congruent with discourse? Are there gaps between ‘rhetoric’ and ‘reality’.28 It is important to avoid comparing, say, Blair’s policy to Jospin’s rhetoric.


Much recent work emphasises that discourse is more than simply rhetoric, empty words or cheap talk. In short, discourse matters.29 At root, the Third Way claims to be new and distinct from both traditional social democracy and neoliberalism. According to Fairclough,30 the Third Way is a political discourse built out of elements from other political discourses – of the Left and of the Right. For example, ‘enterprise’ belongs to the Right, while social justice belongs to the Left. The language of the Third Way is a rhetoric of reconciliation which talks, for example, of ‘economic dynamism as well as social justice’, ‘enterprise as well as fairness’. These terms are not deemed antagonistic: while neo-liberals pursue the former and traditional social democrats the latter, the Third Way delivers both. The more radical claim is that of ‘going beyond’ or transcending such contrary themes. It is one thing to say that there may be ways of reconciling, for instance, the promotion of enterprise and the attack on poverty; it is quite another to say that the two ‘themes’ can no longer be in conflict. It follows that it is important to identify not just the keywords of the Third Way, such as ‘new’, ‘tough’, ‘deal’, ‘reform’ and ‘partnership’, but also their relationship with the rest of the discourse. The discourse contains a mix of ‘Old Left’ words such as ‘equity’ linked with New Right words such as ‘efficiency’ (equity and efficiency), and words that attempt to stamp a Third Way identity such as ‘partnership’ or ‘contract’.


The values of the Third Way remain problematical, mainly for two reasons. First, an adequate understanding of values requires more than one-word treatments. This links with an extensive ideology/political philosophy literature.31 There is general agreement that ‘equality’ is a key value for social democrats, while ‘freedom’ and ‘individualism’ are the fundamental social values of the anti-collectivists. However, terms such as ‘equality’ denote essentially contestable concepts, meaning different things to different people. Greater specificity is needed to explain more precise meanings. It follows that values must be more clearly defined and linked with goals (see below). In other words, to suggest ‘equality’ as a value hides more than it reveals since many ideologies would claim to be in favour of some type of equality.

Second (and linked to the first point), it is not clear whether the Third Way is concerned with ‘old’ values, new or redefined meanings of old values, new values or with no values.32 Blair33 and Blair and Schröder represent the first position, claiming that the Third Way is concerned with linking traditional values with modern means. According to Blair these traditional values are equal worth, opportunity for all, responsibility and community. Blair and Schröder write that fairness and social justice, liberty and equality of opportunity, solidarity and responsibility to others are timeless values. Social democracy will never sacrifice them. White34 suggests opportunity, responsibility and community. Le Grand35 presents the acronym CORA: community, opportunity, responsibility and accountability, while Lister36 offers RIO: responsibility, inclusion and opportunity.37 As Driver and Martell38 sum up, there is broad agreement over Third Way values, but problems emerge over their interpretation and the extent to which they define a Centre-Left political project. Critics point out, however, that terms such as ‘equality’ are here redefined and diluted. For example, Cammack and Morrison39 claim that the Third Way appropriates the vocabulary and values of social democracy in the cause of neo-liberalism. Moreover, a few ‘new’ values appear to have been smuggled in. Positive uses of terms such as ‘entrepreneurship’40 rarely featured in the discourse of traditional social democracy.

A conflicting strand of argument stresses a move from ideology or dogma towards pragmatism, and is summed up by the phrase ‘what counts is what works’. It is generally claimed that this phrase is concerned with being flexible about means. It tends to focus attention on narrow technical (‘value-free’ or ‘neutral’) questions rather than on issues of principle. Moreover, it is difficult to totally separate means and ends. The seemingly innocent ‘what works’ may hide deep disagreements about values concerning the choice of variable (what works in terms of efficiency or of equity?) and the distributional consequences (what works for whom?).

Policy goals

Goals or objectives may be seen as a more specific operationalisation of values. For example, ‘equality’ is often referred to as a value, but this may result in very different policy objectives, such as equality of opportunity or equality of outcomes. Many discussions tend to focus on discourse and values rather than on goals.41 However, there may be a gap between discourse and values/goals. At the risk of some exaggeration, it might be suggested that while Jospin talked Left and acted Right – in some areas, such as redistribution – New Labour talks Right and acts more Left (see below). It follows that some of New Labour’s stated policy goals, such as the abolition of child poverty and reducing health inequalities – both of them more ambitious than the stated policy goals of ‘Old Labour’ – are invisible in some accounts. In other words, policy goals must be taken more seriously. Blair has stated many times that he wants to be judged on results. In the final analysis, voters may judge governments more by the congruence between goals and results (e.g. reducing NHS waiting lists) rather than on discourse or values.42 Although it is arguably too early to judge the outcomes of Third Way governments, analyses of success in meeting goals are vital even if relatively neglected.43

Policy mechanisms

Mechanisms constitute perhaps the most important dimension.44 After all, the essential point of the welfare state is to make a difference to the lives of citizens, and it is policies that make a difference ‘on the ground’. Context is important: it is meaningless to place the Third Way on a Left–Right continuum that exists in a timeless policy vacuum. Rather than comparing Third Way policies to what traditional social democrats did in the ‘golden age’, such as Keynesian full employment, the more difficult counter-factual exercise is a comparison with what they might have done in today’s circumstances. Similarly, varying economic, political, social and institutional contexts in different countries will place effective limits on policy choices. Just as social democracy and neo-liberalism in practice varied from their textbook characteristics, there is unlikely to be a uniform Third Way, given the different national contexts, with their distinct histories, polities and economies.45

Table 1 presents a necessarily rather stylised account of the Third Way46 that has been created from a number of conceptual accounts of the Third Way.47 It does run the risk of some rewriting of history, caricaturing the Old Left, the New Right and the Third Way that has been a feature of both advocates and critics.48 For example, it may be objected that ‘responsibilities’ reflect a conservative rather than a neo-liberal discourse. It is unclear whether ‘insecurity’ is a value. Equality of opportunity may be more a means of creating incentives or a result of market rewards, and so better regarded as a mechanism than a value of neoliberalism. The next section discusses the extent to which these dimensions are found in a number of potential ‘Third Way’ countries.

Table 1.1

Dimensions of the Third Way in social policy

DimensionOld social democracyThird wayNeo-liberal
DiscourseRightsRights and responsibilitiesResponsibilities
EquityEquity and efficiencyEfficiency
Market failureMarket and state failureState failure
ValuesEquality of outcomeInclusionEquality of opportunity
SecurityPositive welfareInsecurity
Policy goalsEquality of outcomeMinimum opportunitiesEquality of opportunity
Full employmentEmployabilityLow inflation
Policy meansRightsConditionalityResponsibilities
StateCivil society/marketMarket/civil society
State finance and deliveryState/private finance and deliveryPrivate/state finance and delivery
High tax and spendPragmatic tax to investLow tax and spend
High services and benefitsHigh services and low benefitsLow services and benefits
High cash redistributionHigh asset redistributionLow redistribution
UniversalismPragmatic mix of universalism and selectivitySelectivity
High wagesNational minimum wage/tax creditsLow wages

The route map of the Third Way in Europe

This section illustrates some of the above themes in the context of Merkel’s49 different ways or paths of social democracy in Europe. Writing prior to the recent European elections, he argued that at least four distinct paths can be identified in Western Europe: the market-orientated way of New Labour; the market and consensus-orientated way of the Dutch polder model; the reform–welfare state way of the Swedish and Danish social democrats; and the statist way of the French socialists. He claims that no comparably clear profile can be established for Germany, the fifth country included here. All the countries are governed by ‘social democratic’ governments that have been in power sufficiently long for some details to emerge. In addition to evidence on particular countries (see titles listed in the References), a number of comparative studies50 have been used.


Blair51 claimed that the Third Way in the UK is new and distinctive, and he reconciled previously antagonistic themes such as economic efficiency and social justice. Busch and Manow52 pointed out that neue mitte in Germany was merely the slogan of the SPD’s 1998 campaign platform and not one of deeper programmatical dignity: the neue mitte is ‘a slogan in search of a programme’. Nevertheless, there were clear discursive elements of ‘newness’ and a reconciling of different themes. The 1998 manifesto Work, Innovation and Justice discussed in positive terms the market, innovation and flexibility. According to Lafontaine53 terms such as ‘innovation and social justice’ and ‘modernisation and tradition’ were no mere shibboleths but core principles of policy. Schröder clearly shares much rhetoric with Blair, as shown in the joint statement on the Third Way authored by the two leaders.54 This contained sweeping criticisms of ‘old style’ social democracy for imposing equality of outcome and neglecting effort and responsibility; for identifying social justice with ever-higher levels of public spending; for over-valuing the state and under-valuing the market; and for elevating rights above responsibilities. However, ‘modern social democrats were not laissez-faire liberals. Flexible markets must be combined with a newly defined role for the active state.’ Hombach55 praises pragmatism. He claims that we need an ‘alliance pledged to change – men and women who want practical solutions, are undogmatic and free from ideology’ (p. xli). ‘What is needed is a rigorous policy of pragmatism’ (p. 19). ‘We need a radical, pragmatic policy for the middle ground’ (p. 38). Blair and Schröder are regarded as examples of ‘pragmatism with vision’ (pp. 65–73) and ‘the time of dogma and ideology is past’ (p. 66). However, an unfavourable reception in Germany forced Schröder to retreat from the declaration with Blair, promising to be ‘more Jospin and less Blair’.56

Giddens57 claimed that more than any other Centre-Left party in Europe, the French Socialists seem to have rejected the Third Way, and they certainly want nothing to do with the term itself. Nevertherless, Levy58 argued that Jospin attempted to steer between the discredited Jacobin dirigiste Left and neo-liberalism, forging a ‘new left’ or ‘Third Way’ strategy that reconciled efficiency and equity, social progress and fiscal rectitude. Similarly, Clift59 termed the Jospin project ‘realisme de gauche’ (Left realism) or the ‘nouveau equilibre’ (new balance). Jospin rejected Blair’s Third Way: ‘if it involves finding a middle way between social democracy and neo-liberalism, then this approach is not mine’.60 However, a closer inspection of Jospin’s rhetoric showed some similarities to Blair’s. For example, Jospin (p. 7) claimed: ‘Our ideals remain essentially the same . . . Nevertheless, we must pursue these ideals by different means from those we were using fifteen years ago.’ He went on to argue that a commitment to redistribution must remain but one that does not override other considerations. ‘We require a competitive production base in the new global market’ (p. 11). The state must adopt a ‘Schumpeterian’ role in order to promote innovation and growth. ‘Social classes can be brought together through equality of opportunity’ (p. 12). ‘We need to act before the event to prevent the accumulation of inequalities’ (p. 12). ‘We need both to preserve our values and to face reality’ (p. 13). Finally, Jospin recognised the need to build new alliances, to include the middle class: ‘In this, inevitably, he is not so different from Blair or Schröder’.61

Hemerijck and Visser62 claimed that the Dutch or ‘polder model’ became a catchphrase for progressive European politicians pondering the possibilities of a new ‘Third Way’ that reconciles employment growth with equity. The key ‘Third Wayers’ have all expressed admiration for the Dutch policy mix of fiscal consolidation, wage moderation, consensual welfare and labour market reform, and job creation. According to de Beus,63 the most prominent characteristic of the Dutch Left is its belief in the consensual politics of ‘common well-being’. He continues that Kok stressed sound public finance, communal responsibility for safety on the streets and the work ethic: the PvdA’s slogans ‘stern justice’, ‘work, work and work yet again’ and ‘strong and social’ will have a familiar ring about them for a British audience. The Dutch approach was based not on doctrine, but on pragmatic politics (p. 65). The PvdA’s cautious managerial approach does not arouse a passion for politics: its real problem may not be its departure from left-wing ideals but its failure to address – indeed its contribution to – the more profound depoliticisation of Dutch society (p. 68). Indeed, Kok declared that ‘the shaking-off of ideological feathers is a liberating experience’ (p. 63). The agreement on Flexibility and Security of 1996 (see below) illustrates the reconciliation of opposites.

Lindgren64 pointed out that in Sweden the ‘third’ or ‘middle’ way between capitalism and a planned economy – which is different from the British and German use of the term – is long established and uncontroversial. However, Swedish social democracy has ‘modernised’ itself more than it realises, being in a period of reconstruction with the probable result of the sort of pragmatic adjustment to new circumstances which has long been the defining feature of Swedish social democracy (p. 58). Gould65 claimed that modern social democrats are concerned with efficiency as well as equality, but they do not act as committed neo-liberal ideologues, and continue to share the aims and aspirations of their traditionalist critics.


Blair and Schröder insisted that their values had not changed. However, as noted above, there are reasons to be suspicious of such claims.66 Hardly surprisingly, in Germany Lafointaine67 charged the SPD under Schröder with a ‘radical change of direction towards a policy of neoliberalism’, but such ideological claims sit uneasily with Hombach’s rejection of ideology and his embrace of pragmatism (see above).

Jospin claimed that current social democratic plans in Europe were still faithful to ‘all the values that lie at the heart of socialism: citizenship, social justice, democracy, the desire for progress and the will to control this progress and our collective destiny’. Further on he claimed that our ideals remained essentially the same: justice, liberty, the collective mastery of our destiny, the development of the individual without damaging collective interests, and the desire to progress’.68

In the Netherlands, de Beus69 argued that the main Left criticism of the polder model focused on its approach to equality, particularly on the differences between active and inactive citizens, public servants and private-sector employees, and property-less and wealth-owners. This suggests that the traditional social democratic agenda of vertical rich to poor redistribution may no longer be the main or the only concern.

For Sweden, Lindgren70 argues that the principles of universalism and redistribution have been redefined. There is talk of ‘redistributing opportunities’ and of obligations: the individual has to take responsibility for his or her own social security, even if this leads to increases in inequality. This view may not be radically different from the Third Way template outlined above.


New Labour set itself many detailed policy goals.71 Key policy goals may be seen in the slogans ‘Work for those who can; security for those who cannot’ and ‘Making work pay’. There will be ‘full employment for the twenty-first century’.

Although strong on rhetoric and emphatic about what it rejects, the Blair–Schröder paper72 contained few clear goals in the sense of policy objectives. It certainly rejected equality of outcome, favouring a widening of equality of opportunity. It also suggested the reduction of taxation on ‘hard work and enterprise’. Hombach73 was clearer: there is no way back to a politics of redistribution. We need equality of opportunity, equality at the outset, not at the outcome – a policy of second chances. However, Schröder argued that his government should be judged by its ability to tackle unemployment.74 With regard to Jospin, as with Schröder, detailed goals were difficult to detect. However, they included the thirty-five-hour working week, redistribution from rich to poor and from workers to non-workers, job creation, and combating poverty and social exclusion.


In the UK New Labour stressed welfare reform.75 It emphasised conditional or contractarian welfare. Rights were not ‘dutiless’ but tend to be given to those who have fulfilled their obligations.76 Services were largely financed by the State, but may be delivered by private or voluntary bodies in a ‘purchaser–provider split’. Rather than hierarchies or markets, co-ordination and collaboration through ‘partnerships’ or networks was stressed. In some cases, there was encouragement to supplement basic state services with a private or voluntary extension ladder (e.g. pensions). There was a general tendency to prioritise services such as health and education that can be preventative in nature and can increase human capital over reactive–passive ‘relief’ cash benefits. Redistribution was ‘for a purpose’ and was based on endowments rather than effected in terms of transfer payments, although there has been some ‘silent’ or ‘backdoor’ fiscal redistribution, especially to families. Work was central to the Third Way.77 Full male and female employment were to be achieved more by ‘supply-side’ employability than by ‘old’ style Keynesian demand management. Although this contained both carrots and sticks, it tended to emphasise advice from case workers and investment in human capital rather than ‘starving the poor back into work’ through low or time-limited benefits. The slogan ‘Making work pay’ included a national minimum wage, in-work benefits of tax credits (or fiscal welfare) and making affordable high-quality child care available. Debates about universalism versus selectivity are not to be dogmatic. On the one hand, inclusion through universal services or civic welfare is stressed; though, on the other, there may be increasing selectivity in cash benefits, such as a targeting of the poorest pensioners and new area-based policies.

There were clearer policy suggestions in Blair and Schröder’s ‘new programme for changed realities’, although they claimed to be ‘presenting our ideas as an outline, not a finalised programme’.78 There were positive references to a welfare system that promotes work; education, training, life-long learning and employability, and an active labour market policy. The balance between the State and the market needed to change. Although both supply- and demand-side policies, involving ‘macro-economic stability and micro-economic flexibility respectively’, were viewed as important, there was a clear message that the latter had been neglected, and there was a need for ‘a new supply-side agenda for the left’. Many of these points were made in a more forthright manner by Hombach. For example,

by distributing resources rather than opportunities the welfare state is following a collision course. We must change the welfare state from being a safety net into becoming a trampoline . . . State intervention is only justified if it encourages the individual’s abilities and challenges his sense of initiative and does not merely offer him some kind of material assistance . . .

‘Any job is better than none’ is the new motto. ‘Work, even in low-paid, menial jobs, contributes more to the individual’s self-esteem than any welfare hand-out, however generous’.79 In order to reach its employment goals, the SPD relied on a mix of short and long-term initiatives, and of long-established corporatist principles (the ‘Alliance for Jobs’) and supply-side measures.80

In France the Socialist Party had a crowded policy agenda. According to Levy,81 this can be distilled into four main lines of action: imposing the costs of austerity on the well to do; giving a progressive twist to neo-liberal ideas; targeting tax relief at average- and low-income groups; and channelling scant resources to highly visible, progressive projects. First, partly as a result of the Maastricht EMU criteria, the Socialist Party continued the austerity budgets of Balladur and Juppé. However, Jospin attempted to place the burdens on the broadest shoulders by placing an income ceiling on family allowances. Second, some commentators noted that a government of the Left, despite campaign promises, privatised more than the previous governments of the Right.82 However, Clift83 explains this paradox as a result of laws passed by the previous government, a history of toleration of ‘partial privatisation’ and, most importantly, using privatisation as a new means of strategic control. Similarly, Levy84 views this, and the introduction of company-sponsored private pensions as redirecting seemingly neo-liberal policies along progressive lines. Third, within a broadly revenue neutral budget the tax burden has been shifted from low to high income groups. Finally, reform of health services aimed at making healthcare freely available to low-income groups, a youth employment scheme aimed at creating some 350,000 positions in public and private organisations, and the thirty-five-hour working week were introduced. The latter has been termed ‘by some way the most interventionist employment policy now being attempted in Europe’.85

For the Netherlands, de Beus86 outlined the main characteristics of the polder model. First, it adopted a consensual mode of decision-making. Second, it used a pragmatic approach to the use of market mechanisms in the public sphere, from internal pricing to full-scale privatisation. Third, fiscal policy aimed at reducing overall public expenditure and the burden of public debt using innovative ways of financing public goods, Fourth, there were regular refinements of the agreement between employers and trade unions, leading to wage restraint and a moderation of wage inequality. A main theme was tax reform. The reform of 1990 lowered tax rates, while 1999 saw a further reduction in rates, and shifted the tax burden from workers and employers towards energy consumption. Social security reforms focused on disability pensions, sickness benefits and unemployment benefits. In general there were trends towards the tightening of eligibility criteria, and the privatisation of benefits, placing the risks on employers. There were also increasing moves towards an active labour market policy. Jobs were created in the public sector and, for target groups, subsidised in the private sector. Obligations increased, backed by penalties since 1996. Young people’s entitlement to benefit was replaced by entitlement to a job. The limit for activation for single parents was reduced from the child’s age of 12 to 5 years of age. Labour market flexibility was an integral part of the Dutch policies,87 but this is linked with greater security for part-time and temporary jobs, as encapsulated in the ‘flexibility and security’ or ‘flexicurity’ law of 1996. Much of the ‘Dutch miracle’ of employment growth has been in part-time and temporary jobs for women. As Levy88 pointed out, this shows a gendered division of labour: by and large, men work full-time and women work part-time; men pursue careers, while women have jobs. In conclusion, Green-Pedersen et al.89 stated that the policy elements in the Netherlands closely match those outlined in the Blair–Schröder document. To some extent, the Netherlands has been practising the ‘Third Way’ for some years.

Finally, Sweden has long been at the forefront of left-of-centre thinking in labour market policy: ‘workfare instead of welfare’ has for many years been part of the Swedish Democratic Party’s creed.90 This appears to use ‘workfare’ in the context of active labour market policy, with clear rights and obligations for both workers and government, rather than its usual restriction to neo-liberal strategies. Flexibility has always been an element of Sweden’s active labour market policy, but this is coupled with protection for ‘flexible workers’ such as agreements on working conditions and a minimum salary.91 Contrary to widespread misconceptions, during the ‘golden era’ of the 1950s and 1960s the SAP was already pursuing supply-orientated policies more strongly than neo-Keynesian fiscal policy. In 1994 the Government reacted ‘in an almost perfectly anti-Keynesian way with a combination of tax increases and expenditure cuts . . . Like almost all social democratic parties in the nineties the Swedish social democratic government declared both its programmatic and actual support for fiscal orthodoxy.’92


Our ‘policy process’ approach suggests that it is conceptually important to disentangle the different elements of discourse, values, policy goals and policy mechanisms. A country that ‘talks’ a Third Way may not have Third Way policies in place. Conversely, a country that does not use or even rejects the label may have been practising the Third Way for many years.93 Similarly, there may be some policy drift between values and goals, or between goals and policies.

Supporters of the Third Way claim that it consists of both old and new roads that successfully bypass the different gridlocks associated with the Old Left and the New Right. However, this glosses over four main problems in reading the route map. First, the junctions of the roads do not clearly allow the traffic from the Left (e.g. social justice) to merge with the traffic from the Right (e.g. economic efficiency). Second, the classifications of the roads are far from clear: the discourse routes do not clearly flow into those carrying the traffic associated with values, goals or policies. Third, the road signs are not easy to read as they give information at a high level of abstraction: for example, active labour market policy can be seen as an important component of the Third Way, but it appears in many guises, and one variant was a distinctive characteristic of ‘old’ social democracy in countries such as Sweden. Finally, it may not be possible to produce one route map to serve travellers on all the roads in Europe. Although there are some similarities between national route maps, they are written in different languages, with important national contextual differences. Etzioni94 may be correct that the road travelled by Third Way countries is fully distinct from the one charted by totalitarian and libertarian approaches, but the scale of his route map must be revised before it becomes of real value to travellers or road protestors trying to stop the highway from being built.


1 See chapter 2, this volume, by Stephen Driver.
2 Merkel 2001: 51.
3 Giddens 2002: 3.
4 Callinicos 2001: 1.
5 Gould 1998: 256.
6 McGuire 1998–99.
7 The Economist 1998; Powell 2000a; Callinicos 2001, but see Etzioni 2000.
8 Pierson 2001: 130.
9 Clift 2001a: 72.
10 Przeworski 2001.
11 Merkel 2001.
12 Giddens 2002: 18–19.
13 Etzioni 2000: 13–14.
14 Green-Pedersen et al. 2001; Krieger 1999; Thomson 2000; Pierson 2001.
15 Bonoli and Powell 2002.
16 Giddens 2001: 1.
17 Ibid., pp. 1–2.
18 Pierson 2001: 19.
19 Commission on Social Justice 1994.
20 Giddens 1998: 70.
21 White 1998.
22 Vandenbrouke 1998; Cuperus and Kandel 1998: 25.
23 Blair and Schröder 1999.
24 Ferrera et al. 2001.
25 Thomson 2000: 159.
26 Bresser-Pereira 2001: 368.
27 See Fairclough 2000.
28 Ibid.; Clift 2001a.
29 See chapters 8 and 9, this volume; also Schmidt 2000, 2001.
30 Fairclough 2000: 45.
31 See George and Wilding 1985 for an application to social policy.
32 See chapters 8 and 9, this volume.
33 Blair 2001; Blair and Schröder 1999.
34 White 1998.
35 Le Grand 1998.
36 Lister 2000.
37 See chapters 5–7, this volume, for discussions of community which occur in three of these five listings.
38 Driver and Martell 2000: 151.
39 Chapters 8 and 9, this volume.
40 E.g. Blair 1998; Blair and Schröder 1999.
41 E.g. chapters 8 and 9, this volume.
42 E.g. Gould 1998.
43 Powell 2002.
44 Green-Pedersen et al. 2001.
45 E.g. Cuperus and Kandel 1998; Clift 2001a; Bonoli and Powell 2002.
46 Cf. Bresser-Pereira 2001.
47 Notably Giddens 1998, 2001 and 2002; Blair 1998; Blair and Schröder 1999; Driver and Martell 1998, 2000; White 1998; Vandenbrouke 1998.
48 See Pierson 2001.
49 Merkel 2001.
50 Levy 1999; Thomson 2000; Clift 2001a; Green-Pedersen et al. 2001; Merkel 2001.
51 Blair 2001.
52 Busch and Manow 2001.
53 Lafontaine 2000: 42, 70.
54 Blair and Schröder 1999.
55 Hombach 2000.
56 Lees 2000: 135–6.
57 Giddens 2002: 5.
58 Levy 2001: 271.
59 Clift 2001b.
60 Jospin 1999: 4.
61 Bouvet and Michel 2001: 212.
62 Hemerijck and Visser 2001: 190.
63 de Beus 1999: 60.
64 Lindgren 1999: 48–9.
65 Gould 2001: 185.
66 Blair 1998; Blair and Schröder 1999. See chapters 8 and 9, this volume.
67 Lafontaine 2000: xiv; Hombach 2000.
68 Jospin 1999: 3, 7.
69 de Beus 1999: 63–5.
70 Lindgren 1999: 51–2.
71 Powell 2002.
72 Blair and Schröder 1999.
73 Hombach 2000: xxxiii.
74 Lees 2000 112.
75 Driver and Martell 1998; Powell 1999, 2000a.
76 See chapters 2, 6 and 9, this volume.
77 See chapter 2, this volume.
78 Blair and Schröder 1999; see Green-Pedersen et al. 2001.
79 Hombach 2000: xxxix.
80 Lees 2000: 112–15.
81 Levy 2001.
82 Bouvet and Michel 2001.
83 Clift 2001b.
84 Levy 1999.
85 Bouvet and Michel 2001: 208.
86 de Beus 1999.
87 Hemerijck et al. 2000: 226.
88 Levy 1999: 264.
89 Green-Pedersen et al. 2001: 320; Blair and Schröder 1999.
90 Lindgren 1999: 53.
91 Thomson 2000: 105; Lindgren 1999: 55.
92 Merkel 2001: 65–6.
93 Cf. Green-Pedersen et al. 2001.
94 Etzioni 2000.


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The Third Way and beyond

Criticisms, futures, alternatives


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