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The Third Way – An answer to Blair

by Patrick Harrington and the real Third Way

Introduction
part 1. What is Blair’s Third Way?
part 2. Re-creating “Community”
part 3. Democracy and Decentralisation
part 4. A Global Vision, but Which One?
part 5. The End of the Welfare State?
Conclusion

Introduction

The Third Way Party was formed in the UK on St. Patrick’s Day, 17 March, 1990. Third Way was founded to promote popular empowerment in both the political and economic spheres. We had become alarmed at the increasing atomisation of society and the erosion of community solidarity and standards.

Since that time, many who share our concerns have joined with us to promote practical alternatives to the “me first” society. On a local level we support community action initiatives to foster a sense of local identity and responsibility; nationally we argue the case for giving communities a direct say over issues which effect them. We advocate co-operative and employee share ownership and wealth redistribution, and are strongly critical of any institution which is undemocratic or unresponsive to public opinion, from Whitehall to Brussels.

The Third Way for us has been, and is, a radical alternative to the Establishment parties who have presided over decades of decline. In recent times, however, Prime Minister Tony Blair has frequently referred to his search for a “third way”. He has written a booklet entitled The Third Way, New Politics for the New Century.(1) Anthony Giddens, an academic who has been a major influence on New Labour, has also written a book entitled The Third Way, The Renewal of Social Democracy.(2) These writings have raised certain questions. What for Blair and Giddens is “the Third Way”? Does it offer a radical solution to the problems which face our society? Why has the that particular term been advanced by New Labour? I hope to answer these and other questions in this short booklet.

1. The Third Way, New Politics for the New Century by Tony Blair
ISBN 0 716305887. Published by the Fabian Society, 11 Dartmouth Street, London SW1J 9BN
Website : http://www.fabian-society.org.uk

2. The Third Way, The Renewal of Social Democracy by Anthony Giddens
ISBN 0-74562267-4. Published by Polity Press, 65 Bridge Street, Cambridge CB2 1UR
Website : http://www.polity.co.uk

To avoid confusion, the Third Way political party will be referred to as 3W in this text.

1 : What is Blair’s Third Way?

Some critics have stated or implied that Tony Blair and New Labour (NuLab) have not clearly stated what they mean by the Third Way. They have suggested that it is just a vague term to present a rag-bag of policies and initiatives. The Blair project has also been simply seen in terms of “triangulation”. This is not an analysis with which I agree.

Blair is quite clear in his definition of what the term third way means to him. He uses the term to describe a reformed version of social democracy; indeed, he states forthrightly: “The Third Way is a serious reappraisal of social democracy, reaching deep into the values of the Left to develop radically new approaches.” (p.1) The values on which his Third Way is based are also specified, as “democracy, liberty, justice, mutual obligation, and internationalism.” (p.1)

We should consider first whether the “Third Way” has to be defined in this way. Andrew Gamble and Gavin Kelly have argued that instead of merely a revision of social democracy it could be: “a new and heterodox alignment of ideas (which some are bundling under the rubric of the radical centre) which recognise that there has been a sharp break of political continuity which render many former certainties obsolete.” Our Party sees the Third Way as an alternative to both Capitalism and State Socialism. In determining whether a government is following a Third Way we need only ask two questions. First, are their policies leading to the ownership of property and wealth being spread more widely in the population (which of course would imply a redistribution of wealth)? Second, are their policies encouranging a more active citizenship and devolving political decisions to the lowest possible level? If the answer to either question is no, then claims of pursuing a Third Way are not genuine.

We also need to look at these underlying values and ask if they are indeed the core values upon which we should base decisions. We need to ask what policies are being developed to express these values; we need to ask whether there are other approaches which might work better.

2 : Re-creating “Community”

Prime Minister Blair has shown a preoccupation with the erosion of community spirit. Blair has, rightly, responded to the public desire “to refashion the bonds of commuity life” and has identified that “although they believe in the market economy, they do not believe that the only values that matter are those of the market place.” (The Times, 25 July 1998)

Giddens, too, has thought deeply about the problem. Whilst he distinguishes between egoism and the “institutional individualism” fostered by the welfare state, he accepts that social solidarity has been eroded.

Clearly traditional collective allegiances, including class, nationality, and established religion have declined. Consumption is the dominant means of defining and communicating identity in our society. This has been elevated as the ultimate expression of personal choice and autonomy. The social fragmentation produced by the development of consumer capitialism has consequences. The new social democrats fear that they will pay a heavy price for the financial benefits they have derived from capitalism. They fear that they could become a victim of violent crime from a growing underclass that feels no obligation toward them. Let’s make no mistake. It is this fear, more than any other emotion, which leads them to seek ways “of regulating and ameliorating capitalism for social ends.” (The Third Way by Michael Jacobs, Fabian Society, published on the Nexus website)
What means will New Labour use to recreate community? Giddens dismisses two possible means of fostering this solidarity: “Social cohesion can’t be guaranteed by the top-down action of the state or by appeal to tradition”. (p.37) This rejection of using direct State action, or traditional authority structures, or even appeals to traditional concepts of identity, is a recurring theme. The concept of community advanced by Giddens is quite different from the way most people would think of the term: “‘Community’ doesn’t imply trying to recapture lost forms of local solidarity; it refers to practical means of furthering the social and material refurbishment of neighbourhoods, towns and larger local areas.”

In many cases appeals to tradition will mean nothing. Giddens is right about this. 3W is not, however, convinced that traditional sources of collective identity should be ignored. Such organisations within society, such as Christian churches, Mosques and Temples, could be encouraged to take more positive steps in practical social projects; for example the provision of nurseries and creches by these groups should be given generous state subsidies.

We should constantly review the impact of tradition. We should only replace it, however, when we have something better to put in its place. Consumerism isn’t it.

New Labour has also considered fostering social cohesion by emphasising “collective experience”. Our consumer society is promoting fragmentation rather than cohesion. Information sources are becoming more and more varied. Our identities are defined more and more by what we buy and there is a huge choice on offer. Sadly, when one looks for concrete suggestions as to what collective experiences might be created or emphasised few are presented. Michael Jacobs (to his credit) has at least sought to identify some. Yet his suggestions seem unlikely to unite our society in any profound sense:

“Protecting territorial television’s rights to broadcast major national sporting events would be one response. The Millennium Dome and celebrations might be another.”
Our concern in 3W is also to promote social cohesion. We do not, however, place much faith in the Milllenium celebrations. We recognise how far we are from a “property owning democracy” in either the US or UK. In the US for example in 1995 sixty percent of Americans owned no stock at all in any form, direct or indirect through mutual funds, through 401(k) plans. (Federal Reserve Board Study 1995) In addition, as Dr John Schmitt has pointed out: “If we make a cutoff of having some reasonable amount of money in the stock market — not just a small amount that you might of inherited from your aunt, but we have put a very low limit of just five thousand dollars or more — the number actually falls to only twenty-nine percent of Americans in 1995 who held even five thousand dollars or more in the stock market.” (Submission to The Third Way : is it for real? 10 September 1998, Washington) In the UK direct share ownership taken as a percentage is miniscule. Few investors trade on a regular basis.

We in 3W favour real stakeholding. In order to give people a stakeholding in their workplace (and, it might be added, to invest in training a highly skilled workforce) stable conditions of employment are needed. The current acceptance of casualisation of the labour market is a terrible mistake. State intervention to create stability is essential.

3W advocates widening employee participatation and increasing the links between the workplace and the wider society. Our policy is:

that employees be made members of their companies through trust funds set up on their behalf, allowing them to exercise their individual right to vote according to the number of shares their interest in the trust fund represents.
that company general meetings include representatives of employees and consumers.
that a Social Audit be introduced to appraise how far companies meet their stated social objectives.
In addition to this radical reform of limited companies, we favour the encouragement of co-operative development. 3W advocates:

A co-operative Act to enshrine this as an alternatave form of ownership and control.
Allocation of State funds for co-operative development, as in Italy under the Macora Law of 1985.
State action to rescue ailing businesses and transform them into “phoenix co-ops”.
It worries us that the New Labour emphasis on the role of the voluntary and private sector might simply be a means for the State to abdicate its own proper responsibilities. Nor can we ignore the fact that it is the present economic system which is the main factor leading to the fragmentation of our society.

If we are to recreate social solidarity we must back State regulation of the economy which favours conditions which produce this. It is right to create secure and regulated conditions of employment. Our focus should be on creating a workforce which is highly skilled and motivated — not on seeking to force down wages and conditions, or on creating insecurity through an ever-present threat of unemployment.

3 : Democracy and Decentralisation

Tony Blair argues that: “The democratic impulse needs to be strengthened by finding new ways to enable citizens to share in decision-making that affects them. For too long a false antithesis has been claimed between ‘representative’ and ‘direct’ democracy. The truth is that in a mature society representatives will make better decisions if the take full account of popular opinion and encourage public debate on the big decisions affecting people’s lives.” (p.15)

I have two objections to what Blair says here. First, direct democracy means that the people have direct control and this isn’t what he proposes. Second, he refers to popular opinion as if media conglomerates were somehow outside of the loop; a strange viewpoint from someone who has proved so adept to doing deals with them.

To state as Blair does that good representatives should take “full account” of popular opinion is not enough. To characterise this as direct democracy is misleading. The issue is who has the final say. Representatives should be bound to act on the will of the people expressed in a referendum. We in the Third Way favour a Swiss-style system. We propose:

The right for the people to initiate legislation. 5% of voters should by petition, be able to compel the holding of a binding poll on whether a proposed law of their own choosing should be adopted or whether a particular law already in place should be replaced.’Initiative’ as this system is known works in Austria, the Swiss Cantons and twenty-three US states plus the District of Columbia.
Many people imagine that the referenda would tend to produce reactionary outcomes. It is worth mentioning that this is by no means always the case, as has been shown by the Swiss repeal of laws against homosexuality.

Tony Blair has promised a number of non-binding referenda, and held some on constitutional issues. Indeed, the present government has already matched the total of referenda previouly held in Britain. Questions need to be asked about the rules governing referenda. It was a disgrace that the referendum on the Greater London Authority merged the two quite separate questions of the establishment of an authority and the creation of a Mayor. It was wrong that boroughs were not given the right to opt out if a majority within them voted no. There can also be no claim to democratic legitimacy if only one side of the argument is put or if media coverage is weighted in favour of one campaign. Lord Neill who chairs the Committee on Standards in Public Life has made some proposals which go some way to addressing our concerns in his recent report. The Neill report suggests that both sides of a campaign should receive enough public money to set up a functioning campaign headquarters and to send a free mailshot to voters. We would also like to see a limit set on all campaign spending, clear rules governing media coverage aimed at ensuring balance and a ban on publication of opinion polls for a two week period before polling. The fact that the Blair government is lukewarm even to Neill’s suggestions (let alone ours) indicates that their belief in democracy is rather limited.

We are proposing nothing which is impossible or impractical. In Eire, the law in respect of constitutional referenda states that both sides of any argument are entitled to equal broadcast time and advertising space in the media. In the recent referendum on the Mitchell Agreement, newspaper adverts placed by the Irish government carried “The Case For” and “The Case Against”. They also give the addresses of each of the campaign headquarters. This prevents the whole might and financial resources of the State being used to promote one argument and bury the other point of view. The Irish Green Party is responsible for this as they mounted a successful constitutional challenge when the Eire government attempted to do just that in a previous constitutional referendum.

Reform of media ownership and access to media is an integral part of constitutional reform, because of the distorting role which media play. We acknowledge this implictly when we speak of the media as the ‘fourth estate’.

The “closed list” system of Proportional Representation favoured by Blair is the worst variety available. It favours Party placemen and in this respect will not give greater choice to electors, but less.

In the elections to the Scottish Parliament, 56 members are to be elected in this way and the rest through the old First Past the Post System. The system of PR to be used in the European election is a monstrosity which will only result in the appointment of party hacks to the European Parliament. Lord Jenkins report issued on October 29, 1998 favoured a form of AMS (additional member system) for Westminster elections. He proposes top-up MPs comprising 15-20% of the total to supplement constituency MPs.

3W favours the adoption of the Single Transferable Vote (STV) system for elections at local, national and European levels.

The single transferable vote system of PR has been used in Ulster since 1973. It is used in elections to local councils, the Stormont Assembly and in Europe. The ‘first past the post’ system is retained for Westminster election. I will explain how STV works at council level. Each ‘electoral area’ is made up of five or six wards. Each elected councillor does not represent an individual ward, but the whole electoral area. Typically, a large party will put up three or four candidates. A smaller party is likely to put up only one. Under the STV system, electors vote for the individual and party of their choice in order of preference; 1 for the best, 2 for the next best, etc. Under this system small parties, independents and ‘mavericks’ still have a look in.

Under STV, voters have no problems in voting. In Ulster, they have become quite sophisticated in using their preferences to reward some candidates and to punish others. For example, Mr Brown and Mr Black are both Grey Party candidates. Mr Brown is a good hardworking councillor, popular with his constituents. Mr Black is a lazy, useless timeserver, but has the ear of his party’s hierarchy. Voters can give first preferences to Mr Brown and bypass Mr Black by giving second and subsequent preferences to the more acceptable candidates of other parties. Voters could either punish Mr Black by giving him a very low preference or by ignoring him altogether. Under the government’s proposed list system, party lackeys such as Mr Black would be placed in office by the party hierarchy, whether the voters liked it or not.

We in Third Way also favour a new Representation of the People Act governing fair treatment of parties at elections. We favour legislation guaranteeing the right of individuals and groups to correct misleading or inaccurate information published by any media outlet.

The whole question of Regional and National Assemblies needs to be re-examined. We support regional assemblies within England (the old kingdoms from Saxon times might be good starting points for regional boundaries). But if in England, why not Scotland? In Scotland, the Highlands and Islands might want to express their distinct identities, and parts of Wales would have greater cultural affinity with England than the Welsh Assembly — ‘England beyond Wales’. It should be possible for people to define their region by referendum. We oppose the top-down regionalism that is being imposed by NuLab. We also find opposition to the idea of an English Parliament baffling, given their support for a Scottish Parliament and a Welsh Assembly.

In this, the end we are aiming at (although we might differ on means) is the same as that of David Marquand: “The object is to replace the top-down statism characteristic of both old Labour (at least in the post-war period: the first half of the century was a different matter) and the Thatcherites with a politics of pluralism, heterogenity, diversity and creativity embedded in institutions strong enough to resist the inevitable depredations of central power”. (Concluding Thoughts, David Marquand, Nexus website)

4 : A Global Vision, but Which One?

Blair declares himself an internationalist. He rightly states: “Economics is international; the environment is international; crime is international.”

Yet he has no explanation of how he intends to deal with the corporations which now control most of the world’s economy. His foreign policy has been characterised by the same subservience to US interests shown by that of his predecessor. He has failed to tackle the international debt problem. He is, despite any short-term protestations of the contrary, ultimately prepared to surrender economic decision-making to a European central bank. He has failed to tackle that which is said to be the most important international crime — drugs.

He says little regarding the environment in his pamphlet. One of the transport and environment policies recently unveiled would seem more concerned to encourage the scrapping of older cars, regardless of condition, than anything else; we assume that this, though of very dubious benefit to the environment, is much to the liking of the manufacturers and dealerships, but also note that it comes in the wake of the remainder of the UK’s mass-production vehicle industry being subsidised into ownership by its former competitors!

If we consider the consensus on government and transnational business relationships as promoted by the heads of US multinational corporations during Blair the politician’s formative years that may, however, offer some insight into his present, and very orthodox, perspective — the more so as Blair and several of his ministers and advisors are (privately) involved in a number of mutual-support networks of like-minded politicians and business leaders….
In 1972, the Chairman of General Mills called for “genuine government–business partnership”, clearly seeking a more corporatist State: “… government and business and labor – and in fact all elements of society – should be sitting down to plan for the future, to establish national priorities and to agree upon objectives and strategy”; the intention being “the development of a national climate that will allow the orderly transition to a corporate structure able to meet tomorrow’s challenge.” (3)

The role of government under such a corporate vision is indeed as the “enabling” mechanism of which Blair has spoken — but one primarily serving the interests of the companies by establishing an environment conducive to their operations, and certainly not as an inhibitor of their activities. This we have already seen in the various tax-breaks, grants and greenfield-sites offered to induce “inward investment”, and in the efforts of government to patch up the human, infrastructural and environmental damage when such companies abruptly depart, usually in keeping with their overall global strategy rather than a decision based on local factors. Blair’s talk is of a workforce that must compete in the global marketplace, presumably against other workforces and with cheapness of labour as their main selling point; in other words, no change from the policy of previous Conservative governments. There is no intention in Blair’s “third way” to alter this scenario; no desire to switch the seemingly endless millions of pounds gifted to the transnational subsidy-junkies into investment in home-based companies which would not desert this country and their local workforce. Yet in the absence of such stability and security, how can there be any genuine UK employee “stakeholding”?

When we look to the financial side of government, there is little comfort there either. The NuLab government seem determined to enter a European Monetary Union in which the European Central Bank and its single currency will, by drawing parameters within which all EU members must operate, effectively determine all major economic and social policies. If that were not damning enough, consider the words of Clare Short, cabinet member and UK Governor of the World Bank, interviewed in the Spring 98 edition of Fabian Review: She envisages “a sort of Keynsian regulation of the international economy, replacing the old essentially nation-state version of social democracy with an international one.” Having conceded that “some good people think of the IMF and the World Bank as the enemy”, she makes it clear that she (and, one may safely assume, her government colleagues) do not share such reservations: “If the left remains in a period of intellectual lag and we don’t refresh our values for this globalising world, we’re letting history down, letting the world down. And that could be very dangerous.”

A spiel of typically pompous Blairite nuspeak, which translates into a claim that it is now the duty of the left to become servants of globalised capitalism. Certainly the government’s attitude to the ‘Jubilee 2000’ campaign for the writing-off of third world debt suggests that Ms. Short was serious in her comments; Blair and Mandelson having made it clear that their preferred interpretation of debt cancellation is not one of amortisation, but one of making the UK population repay the private lenders instead.

In all such matters, one thing becomes abundantly clear about Blair’s “third way” — that in reality it has nothing new to offer. It does not even mention impending issues such as UK (or EU) adoption or rejection of the M.A.I. We have assurances that the government is powerless to do anything at all in the face of “globalism” and its not-so-free market forces — tantamount to an admission that as far as economic policy is concerned this government might as well have abdicated. What, then, is the Blairite justification for their own existence?
And why were they not so open about their impotence whilst issuing a swathe of pre-election “third way” promises on which they must have known they could not deliver?

3. Global Reach : the Power of the Multinational Corporations, by R.J. Barnet and R.E. MÜller.
ISBN 0-224-01174-X. Published by Jonathan Cape, London 1975
P.111, quoting from “The Corporation in 1990” address by J.P McFarland at a White House conference in 1972.

5 : The End of the Welfare State?

Britain, along with other nations, faces a major problem. We have an ageing population and will therefore face increasing welfare costs. Although Britain scaled back increases in state pensions sharply in the 1980s costs for pensions and health care are likely to soar. We are not alone in facing this problem. Victor Fuchs, an economist at Stanford University predicts that health care in for the elderly could consume up to 10% of America’s GDP if current trends continue, more than twice their current share.

It is easy to understand in this light why the Blair project seeks to shift responsibility for welfare provision away from the State. John Plender of Prospect magazine summed up the strategy with remarkable candour in his article: “A New Third Way”:

“Much of continental Europe has difficulty in funding future state pension obligations, so a switch to private funding is probably inevitable. This may not reduce the cost of provision; but in a period of demographic strain it will provide a mechanism to help legitimise the division of resources between the working and the retired population. The snag is that the act of switching requires some workers to pay twice for their pensions, although the complexity of pensions means that the losers from the switch are unlikely to be aware of the additional costs incurred. This is inequitable, but the wider benefits outweigh the costs. It is a route already being pursued by the Blair government in Britain, with its proposal for stakeholder pensions”.
For the losers the “wider benefits” might seem somewhat nebulous. Persuading people to contribute to these “stakeholder pensions” might prove more difficult than New Labour imagine. Looking at research in America by Olivia Mitchell and James Moore of the Wharton School suggests that Americans in their 50s would have to save 16% more of their gross income to maintain current consumption in retirement, and the poorest among them fell 38% short. According to the Brooking Institution 31% of working adults in America are not saving for retirement at all.

One answer NuLab is considering is to compel people to save more than they want to. The Australian experience suggests, however, that this approach too is fraught with problems. Although workers saved A$180 billion into superannuation funds in the first five years after payments were made compulsory, they increased their borrowing by roughly the same amount. As a result of this the government abandoned plans to increase the percentage of salary workers were compelled to pay in, and raised the income threshold above which they have to contribute.

Martin Evans (a research officer at the Centre for Analysis of Social Exclusion, LSE) has rightly commented that for those in the flexible labour market compulsory private provision and a means-tested minimum pension guarantee “represents a privatised tax for a means-tested old age.” (The Guardian, 25 November 1998)

Another interesting question not yet fully answered by Blair is how he intends to handle pensions for people on low incomes. If the State pays contributions on their behalf, the poverty trap will be deepened. Public spending would also be increased in the short term.

We need to study if and why our economy encourages such an age imbalance within the population, and take a long-term view of solving this problem. We need to look carefully at the effects of ageism on the employment of older workers. If we reduce the stress of work and hours involved it is not inconceivable that a re-thinking of the concept of retirement might take place. We should study whether pension credits could be awarded not on the basis of income but in return for work of a socially beneficial nature. But whatever happens, there must be no return to a society where people have no option other than to work till they die.

We are also concerned by the erosion of entitlement to non-means-tested allowances like widows, severe disablement and incapacity benefits. We believe that means tests discourage many people from being productive. Means-tested benefits tend to create poverty-trap disincentives for people to find work.

We believe a Basic Income (also known as Citizens Income) might offer a positive alternative to a benefit system which is basically a new poor law, which encourages fraud and criminality, which creates immense social dislocation. Basic income would enable unemployed people of all ages to do voluntary work without restriction, encourage small-scale entrepreneurship, enable parents (most often women) to work part-time or stay at home, and then climb back onto the work ladder when it suited them. This is something that NuLab could have considered instead of, for example, dogmatically seeking to split all single mothers from their children!

Conclusion

Blair in the conclusion of his booklet says his “third way” is “a modernised social democracy”. He says there is a “demand for new politics”. If that is so, then he has failed in almost every way to provide it. A rehash of extracts from Roosevelt’s prewar ‘New Deal’ in America, combined with neo-Thatcherite economic policies and a hefty dose of Victorian sanctimoniousness, is all that seems to be on offer. The Blairite “third way” is strong on the rhetoric of enablement, but hopelessly weak in its practical aspects, not least because he is himself very much a creature of the old system. An almost religious adherence to uplifting pamphlets and motivational slogans has totally blinded him to the fact that, for instance, when people are poor or facing a mound of debts they are not needing a pep-talk they are needing money, a decent income. All the positive attitudes in the world do not in themselves pay a single bill! And that epitomises the flaw in Blair’s “third way” — it is too busy playing to an affluent middle-class gallery to be concerned with the real (as opposed to marketable) problems of society. Creeping privatisation masquerading as heavily subsidised ‘partnerships’ between the State and private companies in the provision of public services, counselling for every conceivable eventuality, a law-and-order attitude that regards the entire population as a potential threat to be placed under constant surveillance — all to the gain of a certain section of middle-class ‘professionals’ or the protection of their assets, but doing little to alleviate the chronic underlying problems of the underclass. Combine that with a dose of political-correctness that is insensitively oblivious to the sub-cultural differences between upper-middle and working class communities, and you have the elements of a Blairite “third way” speech… or policy.

At the end of his booklet, Blair says “The time is now ripe to move … beyond compensating for past mistakes”. He may think so; it is unlikely those still suffering from the effects of “past mistakes” would feel inclined to agree. But what does that matter, since another batch of glossy leaflets, a couple of slogans and a quick Tony sermon should undoubtedly cure their ills; if not, then the problems are clearly down to naughty people being in need of some ‘tough love’. All, of course, imposed for their own good. That really does sum-up Blair’s brave new world — and, alas, his so-called “third way”.

[1] [2] [3] [4] [5]

COPYRIGHT © THIRD WAY 1998

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