Third Way? No way!

We hear a lot about the Third Way these days. But does this represent anything new or is it just the socialdemocrats recognising that there is no longer any room for manouvre? Barbara Humphries looks at where these ideas come from and what do they really mean.

According to Tony Blair the "Third Way" is about values- "traditional values in a changed world". "It draws vitality from the two great streams of left of centre thought-democratic socialism and liberalism whose divorce this century did so much to weaken progressive politics across the world".These values, according to Tony Blair are individual liberty and social justice, equal worth, opportunity, responsibility and community. The changes which have occurred in the world are globalisation, new technology and the changing role of government. If this does not sound like a new ideology this is probably because the Third Way represents the triumph of "pragmatism over theory." He says " we must acknowledge certain realities such as the fact that the state no longer has a major redistributive role, the earlier cornerstone of social democracy." In other words the Third Way accepts completely the philosophy of the capitalist economy, whilst attempting to govern with a social conscience.. The theory can be seen in the practicalities of the policies of New Labour - the Working Families Tax Credit, the New Deal and Minimum Wage, the development of public/private partnerships, and .the government's commitment to be tough on crime in the name of reviving a community spirit. It can also be seen in what New Labour has not done in terms of not reversing Tory cuts in public expenditure and not taking into public ownership industries which have been privatised.

Sociologist and supporter of Blair, Anthony Giddens has attempted to put more theoretical flesh on the "third way". He openly argues that old style socialism,by which he means both communism and social democracy, although they were both in their own ways completely different, is now finished for ever. They both relied on the state to redistribute wealth, be it through nationalisation or taxation. The fact that one of them accepted ownership of the majority of the economy by private capital and the other did not is supposed to be an irrelevent detail! The Third Way he believes is the response of social democracy to a changing world - the changes being globalisation which prevents effective government action by a nation state, the growth of individualism, the emergence of green politics, the decline of the nuclear family and the end of traditional notions of left and right in politics. So there is not much to go on there either. Where they both have a point is that social democracy "is" operating in changed conditions and that is why it seems worse than the Labour Party of the 1940s, 1950s or 1960s. It is not just that Labour leaders have mysteriously got worse! The changed conditions are a result of the end of the post-war economic boom which allowed for economic growth and an expanding welfare state in the main capitalist countries of the world. Marxists must analyse this and not react in terms of proclaiming new parties or announcing that the traditional organisations of the working class are finished. This is indeed social democracy at its worst.

Before analysing the origins of the Third Way or New Labour, it is worth looking at some quotes from the capitalist press. Tony Blair has campaigned to take Third Way values to Europe. In the run up to the European elections he and Gerhard Schroder of Germany drew up "Europe the Third Way", an attempt to reject tax and spend policies and embrace the free market. "We must combine the economic dynamism that Europe desperately needs with the commitment to social justice that remains at the core of our beliefs" said Blair. The Independent claimed that the Third Way was an idea "whose time is come". It argued that the attempt to reconcile the best aspects of the Thatcherite revolution (flexible markets and enterprise) with the traditional values of social justice was a worthwhile one. According to the Financial Times it said "most of the right things about the market economy". "More importantly it rejects some of the wrong-headed ideas still current on the left".Only the Daily Telegraph and the Wall Street journal expressed scepticism. particulary about the German Social Democratic leader. But the most emphatic endorsement of New Labour came of course from the Guardian, the paper which consistently campaigned against the Tories while they were in office, and is now seen as the guardian of New Labour, came this editorial coinciding with the 20th anniversary of the election of the Tories in 1979. The editorial was entitled "Thatcher's legacy-she changed Britain and created Blair" .-It read-

"Still Margaret Thatcher has earned a genuine place in history. She changed the face of the British economy. With her programme of privatisations, she slimmed down a state which had become flabby and overstretched, reconciling Britain forever to the market. She effected the change brutally, and with great pain,but it was a change we had to make. Our partners in Europe are having to undergo that process now; thanks to Thatcher we were ready for the global marketplace sooner than they were.

"That basic shift has been recognised, even embraced by Labour, They have ditched state socialism once and for all, reinventing themselves as the champions of enterprise. That has left the Conservative Party without a message, flailing around for something to say. They cannot escape the Lady's shadow; nor can they claim to be her true heirs. That mantle has gone, bizarrely to Tony Blair. It is probably this- the common commitment of both main parties to the market, coupled with a prime minister in her own image -that is Thatcher's greatest legacy". (April 1999)

Free market?

So if the Third Way is simply the adjustment of social democracy to the values of the free market, why and how has this occurred? What was characteristic of old Labour and what remains today? Why has the Labour Party embraced the free market?

The traditional values of the Labour Party, were set out in its early years. Formed from the trades union movement in 1900 the Labour Representation Committee aimed to get the cause of labour represented in Parliament. It had very clear class aims, recognising that there was a basic antagonism of classes in society. The existing two political parties the Liberals and the Tories represented employers and could not represent workers. The principle of labour independence was there right from the beginning. Although deals were done subsequently between Labour MPs and Liberals, the constitution of the Labour Party spelt out the fundamental conflict of interest. A leaflet issued by the Labour Representation Committee in 1901 claimed "This is a new movement" - "It originated in the desire of the workers for a party that really understands itand is prepared to deal with their grievances and has grown to its present strength by the systematic attacks in the press and the Law Courts upon combined labour and its funds. It is the workers' reply to the aggressive action of the Federated Masters and Trusts. But upon this conflict between capital and labour neither a Liberal nor a Conservative Ministry can be trusted to stand by the workers."

In 1918 the Party adopted a constitution committed to public ownership ( Clause 4, Part 4) None of this was accidental. It had a very clear political purpose. The 1945 Labour election manifesto reiterated the point that a vote for the Liberals was the same as a vote for the Tories. Blair may think that he can change the party in the present but he cannot change history! Old style socialism was associated with public ownership and class politics. In 1945 the Labour Government nationalised some of the basic industries in Britain - the mines, railways and public utilities. But this was not socialist nationalisation. These were industries which were losing money, the capitalists were glad for the government to take them over as long as they received compensation and they ran the boards. The workers had no say. Further nationalisation was not proposed until the 1970s, when the economic crisis and rising unemployment caused the Labour Party to move to the left.


Supporters of the Third Way and the free market also attack the tax and spend policies of Old Labour. In the 1930s the Labour Party after the 1931 election defeat was converted to Keynesianism. Indeed so was much of the capitalist class on a world scale. The New Deal in the United States was seen as an interventionist model for some trades union and labour leaders. The Conservatives however who ran Britain for the 1930s were reluctant to commit themselves to that path. But the destruction caused by World War 11 emphasized the need for economic planning in reconstruction and their was a popular determination not to go back to the years of mass unemployment. The post war boom formed the basis for a Keynesian strategy for the best part of a quarter of a century, not just in Britain but internationally. The Bretton Woods Agreement allowed the governments to take an interventionist role. Like selective nationalisation and the welfare state this was not fundamentally challenged by the Conservatives when they were returned to office in the 1950s. This was the post-war settlement of which the 1945 Labour Government was the architect in Britain. Growing prosperity and economic growth were taken for granted by both main political parties.

Nevertheless during the Wilson Government of 1964-1970 there were signs of some of the features associated with New Labour. The emphasis on modernisation. "the white heat of the technological revolution". These were issues which were classless and took Labour away from its grassroots. Just as Tony Blair likes to imitate President Clinton, Harold Wilson liked to model himself on President Kennedy. Political activism within the Labour Party was at a low ebb. The Party had run out of steam. Anthony Crosland in 1960 wrote that "The elan of the rank and file is less essential to winning elections. With the growing penetration of the mass media political campaigning has become increasingly centralised and the traditional local activities, the door to door canvassing and the rest and now largely ritual". The Labour Party machine collapsed. In local elections Labour lost cities like Sheffield and Leeds for the first time since the 1930s, only four out of twenty London boroughs were retained.

However the crucial change in direction was to come during the life of the 1974-79 Labour Government. The election of the Tories in 1970 had marked the re-emergence of classwarfare in Britain on a scale not seen since the 1930s. Unemployment rose to half a million. The Tories announced attacks on the trades union movement which led to national strikes of the miners, dockers and transport workers. The mood within the Labour Party changed, with the left making gains. The party committed itself in 1974 to an irreversible redistribution of wealth towards working people and their families. However by 1975 the effects of the end of the post war boom decisively hit the British economy. There was a crisis for sterling and the Inernational Monetary Fund demanded a cuts package. This was a defining moment for the Labour Party in the post war years as well as for British capitalism which was seen as the "basket case of Europe".The Labour Party abandoned its commitment to Keynsianism once and for all at the behest of the IMF. In 1976 Callaghan the then Chancellor of the Exchequer made an infamous speech, quoted favourably by monetarists such as Milton Friedman. He said:

"We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all honesty that that option no longer exists and that in so far as it ever did exist it worked on each occasion since the war by injecting bigger doses of inflation into the economy, followed by a higher level of unemployment as the next step. Now we must go back to fundamentals." He added "The willingness of industry to invest in new plant and machinery requires of course tht we overcome inflation but also that industry is left with sufficient funds and has sufficient confidence to make thenew investments- I mean they must be able to earn a surplus and that is euthemism for saying they must be allowed to make a profit. The wealth must be created before it is distributed."

Cuts in welfare state

This speech to the 1976 Labour Party Conference in full view of the world bankers was to tear the party apart. Cuts in the welfare state were now on the order of the day. The Labour Government was set on a collision course with the party membership who saw the crisis as a reason for more radical socialist policies, not less. The government was taking the line that the crisis of British capitalism had to be solved at the expense of the working class. This was to be the fundamental basis of every government, Labour or Tory to the present day! The social contract with the trades union movement, which had been based on voluntary wage restraint in return for maintaining the "social wage" was under threat. This was to lead to the winter of discontent and the defeat of the Labour Government in 1979. The Labour leadership launched a witch hunt against the membership of the party, directed initially at the Marxists in the Labour Party Young Socialists, but also at supporters of the Campaign for Labour Party Democracy, the Labour Co-ordinating Committee and hundreds of activists in the constituencies and trades union branches who supported the left, and left wing politicians such as Tony Benn and Eric Heffer. Marxists at the time predicted the possible split in the Labour Government, similar to 1931, when in times of financial crisis, the Labour Cabinet failed to get acceptance for cuts in unemployment benefit and the then Prime Minister Ramsay MacDonald set up a national government, with a handful of Labour ministers, Conservatives and Liberals. In the event this did not happen. The Labour Government soldiered on until 1979 when it lost the election.

Labour was not to win another election until the summer of 1997. During that time the gains of the labour movement were reversed by successive Conservative governments, including large scale privatisation, closure of industries, reform of the welfare state and attacks on trades union rights. Under the impact of these defeats the Labour Party itself changed. When Labour won the election in 1997 all vestiges of the election commitments of the 1970s and 1980s had gone.Tory policies including government spending targets were maintained. It seemed that the only difference was a set of values, putting a human face on capitalism.

Tony Blair claims that Labour lost four elections because of the influence of the left-wing of the party. The impact of the crisis in the 1970s led the left to make demands for changes in the Party The Campaign for Labour Party Democracy made was successful in obtaining the automatic reselection of MPs. Labour Party democracy was the main focus of the left in the party. It was the right wing establishment who were on the defensive and resistant to change at this time. The left was also commited to more nationalisation and increased public expenditure. The Alternative Economic Strategy however, which attracted support within the Party and trade unions was essentially a Keynesian document at a time when the ruling class were moving towards monetarism. Only a full socialist programme of nationalisation of the commanding heights of the economy would have been a genuine alternative. This was put forward by Marxists in the Labour Party at the time.

Labour Party left

However at no time, in spite of its growing influence did the left actually win control of the Labour Party! The right wing of the party always maintained the leadership. The policies of the left were most influential in the early 1980s. In 1980 after one year of the Thatcher government, Labour was at 50% in the opinion polls, the Tories were at 34%. Thatcher had become the most unpopular prime minister since the war! She could not win even the majority of her cabinet to monetarist policies. Unemployment soared to over 3 million. The Labour Party organised marches in Liverpool, Cardiff and Glasgow. Her contribution to globalisation however was the abolition of exchange controls in 1979, a critical IMF demand.

Labour was on course to win the 1983 general election., until the Falklands War which cut across the continued crisis for British capitalism and gave the Tories 7% in the opinion polls. The election victory of 1983 gave the Tories, and the Thatcher leadership in particular the majority in Parliament they needed to take on the labour movement. Within a year we were into the longest national 1985 istrike in the history of Britain - the 1984/1985 miners strike. To this day the defeat of the miners is seen by the ruling class as the critical battle in the struggle against organised labour.

The Blairites blame the left for the disunity which took place in the party in the 1980s. But it was the right wing who organised the most vigourously to promote civil war within the Party. Organisations such as the Solidarity Group and the St Ermins Group of Trade Union leaders organised to defeat left wing resolutions on the National Executive Committee and the Party conference. Decisions taken by local general management committees and the Party conference were to be ignored. Left candidates such as Peter Tatchell in Bermondsey and Pat Wall in Bradford North were not endorsed. Former left winger, Michael Foot became party leader and a prisoner of the right wing. Not content with attacking gains made by the left in the party, some of the right split away to form the Social Democratic Party amidst much media hype. This short lived experiment split the Labour vote in the critical years of the 1980s allowing the Tories to win. on a minority vote. Furthermore the Labour leadership disowned the 1983 election manifesto, calling it the "longest suicide note in history". This was what lay behind the 1983 election defeat. Attacks on the left of the party continuned under the leadership of Neil Kinnock. Where the Labour left gained control of local parties, such as the Greater London Labour Party, Liverpool and Sheffield, successes were gained for the Labour Party. Like the miners these received more attacks than support from the leadership of the Labour Party! Neil Kinnock went on to lose another two elections. In spite of the approval he obtained from the Tory press for his attacks on the membership of the Party they felt that he could not be trusted in government.Labour even lost in 1992 when Thatcher had been discredited after the defeat of the poll tax. The defeat of the poll tax of course owed nothing to the leadership of the Labour Party.

Labour government elected in 1997

So why was Labour electable in 1997. The Tories were divided and discredited. Their handling of the economy after black Wednesday was under question. Their administration was littered with sleaze and incompetence. Perhaps even the ruling class in Britain were worried about the social consequences of the Tory's "counter-revolution." One third of children live in poverty. Unemployment remained high. An underclass had developed. Crime and drugs were rife in some estates and former working class areas, like pit villages destroyed by the mine closures.. A percentage of the population would never know what it was like to have a job. The social security bill was soaring in spite of public expenditure cuts.The destruction of working class communities had been all part of the Tory offensive against the labour movement. But now the social fabric of the country was under threat. These excesses had to be sorted out whilst maintaining a free market, low tax economy. So New Labour was called upon after 18 years to repair the damage! Electable meant acceptable to the capitalist press and the ruling class in general.

The Third Way has more in common with socially concerned Tories and Liberals of the 19th century, than with 20th century socialism. At the end of the 19th century the British ruling class were concerned about casualisation, ill health and malnutrition amongst the lower classes for similar reasons. The underclass was a threat. Lack of education and skills meant that Britain's workforce was not competitive. We hear the same things today. We hear alot about the politics of social exclusion. Much of Labour's strategy is aimed at these problems. To get people in to work, topping up wages to encourage them to work. The people, not the system is the problem! This will only work as long as the economy can provide jobs. And that means operating within capitalism. A world recession will undercut all Labour's commitments to the long term unemployed. Little or nothing has been done to address the problems faced the working class as a whole- job insecurity, longer hours and pressures at work, and declining public services. These all result from the crisis of capitalism. The policies of four Tory governments and now New Labour may be designed to stop people from fighting back but they have not solved the basic problems which faced the Labour Party conference 25 years ago. Privatisation has proved to be inefficient, corrupt and no answer to lack of investment in public services. It is still opposed by the majority of people in this country. The Third Way (if there is such a thing) has no solution to what is a fundamental inability of the capitalist system to ensure prosperity and security for working people.