The Third Way and the Future of Social Democracy

...Postwar Social Democracy The first stage of postwar social democracy lasted until roughly 1973...

...Never again will the left be portrayed as old and identified with an out-of-date political-economic model...

...And some of their appeal can be explained by public weariness with conservative parties that had held office for a decade or more and were showing signs of arrogance and exhaustion...

...But, in the public mind, it became identified with a grandiose rhetoric about the capacities of government and an exclusive emphasis upon the poorest of the poor...

...Meanwhile, the United States never developed a social democratic party or a mature social democracy...

...62 DISSENT / Summer 1999 Similarly, the growth of global trade requires that international investors and multinational corporations should be held accountable for their actions, from labor and environmental standards to restrictions on sudden capital flows...

...Far from avoiding anything that sounded like "class struggle," he tapped into public anger at irresponsible corporate behavior, declaring: "It's important to remember that the most irresponsible people of all in the 1980s were those at the top quarter, those who sold out our workers and our country with bad deals and spent billions of dollars on wasteful debt...

...RUY TEIXEIRA is director of the Politics and Public Opinion Program at the Economic Policy Institute...

...The basic reason is this: breaking the conservative economic consensus creates problems for the third way as a marketing plan...

...Americanizing the Third Way Could such a progressive third way be articulated in the American political context...

...An improved image, although very desirable in the short run, is no substitute for the material accomplishments of a successful politicaleconomic model, one that yields a period of sustained and broadly shared prosperity...

...4) There is a link between the moral imperatives of investing in people's skills and easing economic inequalities and the practical imperatives of improving economic competitiveness and strengthening social cohesion...

...Differences In short, U.S...

...The basic idea is: never again...

...3) There is an emphasis on the role of the state in empowering individuals to improve their own lives—especially through education and training...

...Putting It All Together The 1992 Clinton campaign, which predates the current third way discussion, was a model for how all these strands can be put together...

...There are promising signs that some of these points are being taken seriously...

...It is the development and institutionalization of a political-economic program that would constitute a third stage of postwar social democracy...

...Curiously, Lyndon Johnson and his liberal critics shared a flawed approach...

...Thus, a leading American advocate of this approach, Al From of the centrist Democratic Leadership Council (DLC), has declared that the third way is "the global generic brand name for the progressive politics of the Information Age...

...And Vice President Gore has repeatedly spoken of the importance of unions and the inviolability of the right to organize...

...He is a visiting fellow at the Economic Policy Institute...

...Better to develop an alternative plan that uses less of the surplus and shifts the focus from debt reduction to investment in public goods like health care and education...

...It reflects upon an ambivalence about the role of government that is characteristically American—the fa60 DISSENT / Summer 1999 mous observation that the political culture of the United States is "ideologically conservative," opposing government in theory, but "operationally liberal," supporting public services in practice...

...Swing working- and middle-class voters, whose loyalty to left governments is not yet cemented, may thereby be moved back into the conservative camp, ending the process before it has even begun...

...For example, the Clinton administration has embraced the concept of a global New Deal, with labor and environmental standards...

...But there's a different and better sort of third way...

...For example, if its content is simply the message that the current center-left is neither A (old bureaucratic welfare-state social democracy) nor B (heartless capitalism and the night-watchman state), then perhaps we are already there...

...By the late seventies and early eighties, these tendencies had settled down together as "interest group liberalism"—economically moderate, socially liberal, and addressing progressive constituencies with special appeals that isolated them from most voters...

...And this package could and should be broadened to the international level...

...Americans are understandably concerned about the effects of global economic instability on their lives...

...tax increases on only the wealthiest one percent...

...and a courageous but overly complex plan for universal health coverage...

...For some time, progressives in the advanced societies have understood that they cannot win elections only by relying upon their traditional constituencies: industrial workers, progressive intellectuals, racial and ethnic minorities, and the poor...

...A good way to start defining it is to take a 58 DISSENT / Summer 1999 quick look at how the politics of left and labor parties have evolved since the end of World War II...

...And, in light of emerging problems with the global economy, the fate of this third stage in all advanced countries may be closely tied together, since the economic problems of one country are difficult to solve without addressing the economic problems of all...

...If the third way remains primarily a marketing device, its potential is limited...

...In this sense, the third way leads nowhere except out of office with relatively little accomplished in the interim...

...progressives and those in Western Europe have much in common in terms of articulating a third way...

...DAVID KUSNET was chief speechwriter for President Clinton in the 1992 campaign and in the first two years of his administration...

...They rode this critique to their extraordinary political and ideological ascendancy in the 1980s...

...2) There is more recognition of the importance of social problems—crime, family breakdown, and social divisions of all kinds—as issues in themselves and not merely as reflections of economic trends...

...As the Clinton administration has realized, privatization of the system is a loser, both in terms of politics and policy...

...The workforce of the new economy—blue-collar, white-collar, and technical worker—provided their majorities...

...His forthcoming book (with Joel Rogers) is Archie Bunker's Revenge: How the White Working Class Holds the Key to America's Future...

...In fact, the decline in stable employment with rising wages, secure jobs, and stable benefits in most businesses may well argue for an enhanced role by every level of government and a revitalized labor movement to offer opportunity and security for the new workforce...

...Start with the fact that, in most advanced Western nations, progressive parties built mature welfare states—with comprehensive labor policies, universal social insurance, and high union densities...

...Indeed, the reform of public-sector institutions—the schools, the political process, and government itself—is a major element of their approach...

...None of this is new...

...Instead, the image of the left will be brought up-to-date and dissociated from the outmoded model...

...So far, left governments have found this difficult to do, with the United States being perhaps the most extreme example...

...So: no risk to the marketing plan, no reward in the long-term...

...More than any recent political leader, candidate Clinton rooted his appeal in the realities of people's daily lives...

...Progressives in the United Kingdom, Germany, and France likewise won as champions of working people pledged to fight unemployment, raise the minimum wage, and defend social insurance...

...All this argues for a new progressive politics that melds mainstream values with an appeal to economic insecurities...

...Entire regions maintain low standards for wages and social protection, while denying workers the right to organize unions...

...This "Golden Age" gave way to the problematic era we still live in: slower productivity and overall economic growth, higher unemployment, particularly in Europe, and slower wage growth and rising inequality (particularly in the United States and Britain...

...And, as Arthur Schlesinger, Jr...

...To be sure, the Great Society created programs that benefited the great majority of Americans, from Medicare to student loans, as well as addressing the moral imperatives of civil rights and voting rights...

...And this new kind of politics has seemed so successful that various schools of thought are eager to claim credit for its origins and ownership of its future...

...Coinciding with the "Golden Age" of capitalism, left and labor parties set the agenda, both in and out of power, for the institution and massive expansion of the Keynesian welfare state...

...This entails, however, jettisoning the current conservative economic consensus, which is based on fiscal austerity, increased labor market flexibility, and unfettered globalization...

...Social insurance programs are a patchwork...

...Implicitly, From is arguing that the DLC's style of third way politics—one that targets affluent voters, recommends the partial privatization of social insurance programs, and is wary of what it calls class warfareshould hold the American franchise for "the progressive politics of the Information Age...

...There is no political imperative to narrowly target the most affluent, educated, and secure...

...Willy Brandt was portrayed as "the German Kennedy...

...THE REAL debate about the third way should be about whether it helps the left reach this third stage...

...Absolutely...

...But what, then, will be the positive politicaleconomic model of the left...

...More than the Kennedy style makes the third way distinctively American—perhaps because Information Age societies are becoming more economically dynamic and socially fluid in character...

...Because living standards rose sharply, full employment was the norm, and the expanding welfare state provided many benefits that the working and middle classes viewed as unambiguously good, left-labor parties and their general programmatic approach had a lot of satisfied customers...

...In Western Europe and the United Kingdom, the third way may represent a recognition of the challenges the global economy presents to a mature welfare state, as well as a break with the veto power of organized labor...

...Yet all left governments in advanced countries face the same challenge and are havDISSENT / Summer 1999...

...Start with Social Security...

...After all, in the United States, "New Deal" liberalism is a shorthand for the most popular aspects of progressivism—universal programs that honor and reward work...

...On the other hand, if the third way means a message and program capable of shaping a new era of broadly shared prosperity and, in doing so, laying the basis for a new period of progressive dominance, we are certainly not there...

...If the third way is to be more than a clever short-term marketing slogan, we are just at the beginning of defining it...

...A third way that could successfully bear these risks and arrive at the other end at this third stage would be truly worthy of the name...

...It reverberates in the pronouncements of New Democrats in the United States, New Labour in the United Kingdom, and new Social Democrats in Germany...

...In the United States, it means something else, and those who call for "a break with the New Deal" find themselves drawn to a politics that wrongly minimizes the problems of economic insecurity and the potential of collective action by working people...

...As mentioned above, voters have bought enough of this product for center-left governments to rule in the United States, Britain, Germany, France, and most of the rest of Western Europe...

...But progressives have also benefited from a new political approach that presents itself as a response to the new realities of the Information Age and a dramatic departure from the politics and policies of their own parties...

...As with Clinton and Blair, Kennedy's youthful manner made moderation seem hip and contemporary...

...Much of their success can be traced to the economic insecurities and social dislocations resulting from the transition to economies based on high technology and global trade...

...But if the third way can evolve toward substantive engagement and transformation of today's advanced economies, then its potential is immense...

...investments in education and training...

...Addressing the same appeals to Americans from every background, Clinton explained that DISSENT / Summer 1999 61 activist government could advance mainstream values—work and family, opportunity, responsibility, and community...

...In others, like the United States, it seems much farther away...

...Conversely, a party that cannot take credit for these sorts of accomplishments will find voters' loyalties to be tenuous...

...It distinguished itself not from the socially inclusive and economically populist politics of the New Deal but from the newer and narrower incarnations of American liberalism...

...Although New Deal liberalism did need to be modernized, it was the liberalism that replaced New Deal liberalism that helped drive a wedge between American liberalism and working Americans...

...59 ing some of the same difficulties...

...That is why "breaking with the traditions of the past" means something different for progressives in the United States and their counterparts elsewhere...

...Time, then, to make a serious down payment on univeral health care security and rebuilding and modernizing American public schools...

...AND THEN he responded with a program: tax credits for low-wage workers...

...Announcing his candidacy, he asserted: "Middle-class people are spending more hours on the job, spending less time with their children, bringing home a smaller paycheck to pay more for health care and housing and education...

...All this could be wrapped into a package under the theme of "economic security for the twenty-first century" that would both appeal to the typical voter and seem in sync with vicissitudes of today's economy...

...The shock this produced on the left can still be felt today...

...In this spirit, the third way can represent an advance, not an abandonment, of progressive traditions, as political successes get translated into policy achievements that really improve people's lives...

...And it is in the spirit of the best traditions of progressive parties throughout the West, in keeping with the appeals that actually elected Clinton, Blair, and Schroder, and an appropriate response to the needs of working families in the Information Age...

...DISSENT / Summer 1999 63...

...This kind of politics is concerned with economic insecurity and inequality and focused on what progressives have always done best: setting rules, making investments, and building institutions to help working people make their way in changing times...

...Progressives should be pushing for such an outcome and not leave the third way discussion to those who wish to monopolize it and shape it as a political approach that disregards problems of economic insecurity, minimizes the role of government, and targets only the most affluent voters...

...The United States is obviously the country most capable of leading the world toward such reforms—reforms that recognize new global economic realities while continuing to pursue traditional goals of growth and trade expansion...

...Polls continue to show strong public interest in comprehensive health care reform and support that's practically off the charts for improving American education...

...Such achievements provide the cement that keeps voters and left parties together over time...

...In fact, the third way is rooted in progressive traditions, particularly the interaction between the Democrats in the United States and left-of-center parties in the United Kingdom and Western Europe...

...He linked anxieties about economic stagnation and social breakdown: "Our country is growing apart when we should be growing together...

...DUR1NG THE early 1960s, after John F. Kennedy became the first left-of-center leader of the major industrial democracies to break the conservative electoral monopoly of the 1950s, progressive leaders in other countries emulated his style of politics...

...And, if this is true, left hegemony will probably be of short duration, because unsolved economic problems will eventually catch up with these governments...

...Further, there are distinctive elements in the outlook and rhetoric of third way leaders that owe a lot to American politics: (1) They are less statist and more critical of government than the traditional left...

...And, then, as now, left-of-center leaders benefited from contrasting themselves to "yesterday's men"—Dwight D. Eisenhower, Harold Macmillan, Konrad Adenauer, John Diefenbaker...

...writes in A Thousand Days: "The American President was becoming a hope, if not a hero, for the Labor Party in England, the Social Democrats in West Germany, and for the followers of Mendes-France and Gaston Deferre in France...

...And it seemed to take for granted that most working people were and would remain economically secure...

...For most of the past half century, the leftofcenter parties have strived to modernize and moderate themselves, and, in Europe, they have abandoned their earlier commitment to public ownership and exclusive reliance upon organized labor...

...And it builds upon the fact that, from the Homestead Act to the GI Bill, the most popular programs are those that empower people to improve their own lives and require reciprocal effort by the individual citizen...

...Time to speak to that insecurity by advocating reform of the world economic, particularly financial, system...

...In some European countries, this stage may be aborning...

...Although this instability has yet to make itself deeply felt in this country, a distinct air of nervousness characterizes the public view toward the world economy...

...The American public would strongly support such an approach —and a global economy hanging in the balance demands it...

...A Closer Look at the Third Way After all, the real question about the third way is not whether it's a good idea, as Tony Blair says, to "take the essential values of the center and center-left and apply them to a world of fundamental social and economic change, and to do so free from outdated ideology," but rather what its content is beyond that...

...However, there are important differences between the United States and other advanced countries that suggest the need for a distinctive approach in the United States...

...However, it is not necessary from either perspective to wall off most of the surplus to "save" the system and pay down the national debt at the same time...

...This will enable the left to reposition itself with the electorate and take back the ground lost since 1973...

...Not coincidentally, it was right after this point that the parties and programs of the left generally began to suffer difficulties as conservatives, further fueled by political reaction to the higher inflation levels of the 1970s, blamed the left for the faltering of the Keynesian welfare state model...

...Similar appeals on social and economic issues —most notably the famous "E2M2": education and the environment, Medicare and Medicaid—contributed to Clinton's re-election in 1996...

...The New Economy Progressives should steadfastly reject the conventional wisdom advanced by opinion leaders from Newt Gingrich to some in the DLC: that the Information Age diminishes the need for public investments and progressive institutions...

...LEFT-OF-CENTER parties ROW hold or share power in most North American and West European countries, calling a halt to a conservative era that lasted from the end of the 1970s through the beginning of the 1990s...

...Here, their emphasis on empowering individuals rather than building bureaucracies has honorable origins—from the emphasis on decentralization by the early New Left to Robert Kennedy's work with community organizing efforts toward the end of his life...

...Meanwhile, as it opposed the Vietnam War abroad and the gap between Great Society rhetoric and reality at home, what came to be called "McGovern liberalism" further emphasized the concerns of social and economic outsiders at the seeming expense of "mainstream" Americans...

...The DLC has commendably entered into a dialogue with the unions about the role of workers' organizations in a new economy...

...Bill Clinton, Tony Blair, Gerhard Schroder, their supporters in their own countries, and their admirers abroad have all called this new kind of politics the third way—a title that emphasizes its differences from laissez-faire conservatism and welfare-state liberalism as well...

...It is not difficult to envision what such a politics might look like: a politics that would be both popular (in the sense of commanding majority support) and progressive (in the sense of meeting goals of social justice and broadly shared prosperity...

...Clinton combined the social values espoused by the DLC with the economic populism advanced by the labor movement and other progressive constituencies...

...Echoing Kennedy's call for a New Frontier, Harold Wilson promised to bring Britain into "the white heat of the technological revolution...

...It is here that a lack of clarity prevails and leads us to think that this current (second) stage of postwar social democracy is most usefully thought of as transitional, a stage that the left must pass through, but that does not yet constitute a stable political arrangement at the current time...

...Union density is among the lowest in the West...

...However, without the success of expansionary policies, a third stage will never be established...

...Aggressive, activist government and expansionary policies create a convenient target for conservatives, who are further aided by the reaction of financial markets to such policies...

...Such a third way would have a very good chance of outliving its buzzword phase—which we are now in—and truly transforming American politics and economics...

...We identify three stages in that evolution...

...Flows of financial capital should be regulated, labor and environmental standards should be enforced, and international institutions like the International Monetary Fund should cease their unrelenting focus on fiscal austerity that has imploded one economy after another in the developing world...