Philosophy.Com

a note on the Third Way

One of the ways that social democracy has attempted to renew itself in a modern open market economy set within a competitive global market has been in terms of The Third Way. The Third Way in Australia attempts to graft traditional concerns for equality and social justice on a free market economy. It is seen as the way to adapt social democracy to a world that has changed fundamentally over the last three decades due to globalization.

I mention this because Mark Latham, one of the current contenders for the Leader of the Federal Australian Labor Party, is a strong advocate of Third Way policies. Latham's conception of the stakeholder society for aspirational suburban voters is seen by the Canberra Press gallery as an advocate of a right wing brand of Labour.

The Third Way discourse is about social capital, social entrepreneurs, public-private partnerships and the enabling state. Social capital is seen as the key to wininng the war against social exclusion arising from poverty and unemployment. It is held that social capital is best achieved by mobilising the skills of social entrepreneurs who forge new connections between people, business practices to encourage risk taking and creativity in poor neighbourhoods. Social entrepreneurs are community brokers who promote social capital.

I guess the good thing about the Third Way is that it does attempt to address the long term unemployment (amongst young people and older workers). This has arisen from the state creating a modern open market economy set within a competitive global market and it has a cycle of downsizing, unemployment, retraining then redundancy. The Third Way focus is on the social exclusion at the 'bottom' of the economy, and on how the unemployed might be enabled to overcome their exclusion from a self-regulating market.

This does point to special training schemes to help people get back into work; into the casual employment of supermarket checkout counters or call centres.

The Third Way is more promising than the older approaches to unemployment through government expenditure on public infrastructure and social services to be funded through taxation increases. That way has been closed off. Taxation increases are a political no no these days.

Another solution is to use deficit spending to fund government expenditure on public infrastructure and social services. Public sector job creation will reduce unemployment. Again this solution has been closed off by the emphasis of small government, balanced budgets and cutting back the public service.

Two comments here. There is a strong neo-liberal emphasis on top-down, inflexible bureaucracies as a the source of problems and hence the need to downsize the government. Secondly, the emphasis on community, social capital and social entrepreneurs is limited to the extent that it takes the existing dynamics and limits of economic life as a given. What is not adequately addressed is the failures of the market---poverty, inequality and unsustainability in the information economy.

This gives us a very familar neo-liberal script of the market is inherently good and government intervention is bad; a dismissal of old style social democracy as hopelessly utopian; and an acceptance of market strictures on the state. This leads to an interpretation that the Third Way advocates accept the inevitability of free market capitalism and then ask whether and how a shrunken state should use its residual powers to ameliorate the worst effects of that system. So we have the enabling state that nurtures social entrepreneurs.

Alternatively, the Third Way can be seen as opening up a political space in which new thoughts and ideas about what the social democratic project might be in a globalised world, and how it can be carried through in a nation-state criss crossed by global economic flows. Yet there is more if you dig around. Thus Mark Latham wants the disadvantaged in the outer suburbs helped to build power through accumulating assets. This shift away from addressing inequality through the public ownership of essential services acknowledges the reality of the power relations built into the very structure of the free market.

Posted by Gary Sauer-Thompson at November 29, 2003 05:12 PM | TrackBack