Europe's "New" Third Way -- Christian Watrin

The Blair-Schroeder Third Way -- a Commentary -- David Jessup

Europe: The Third Way -- Tony Blair and Gerhard Schroeder

Leading the discussion were commentator E.J. Dionne, Will Marshall of the Progressive Policy Institute (PPI), Michael Lind of the New America Foundation, Philippe Reltien of Radio France, Derek Shearer of the Economic Strategy Institute, Erika Mann, recently elected to the European Parliament from Germany, and Sidney Blumenthal from the White House. The discussion was chaired by Dieter Dettke of the Friedrich Ebert Foundation, which hosted the event.

The Blair-Schroeder declaration, which caused more of a stir in Europe than it did in the U.S., attempts to set forth a modernized governing philosophy for social democrats, whose political parties now dominate most European governments. The declaration seeks to maintain the traditional social democratic concern with social justice while embracing the dynamism and innovation market capitalism. It supports "a market economy, not a market society." (See entire document on NEIS website - link)

Nearly everyone agreed the document was significant, even historic. Will Marshall called it a "significant breakout from the Anglo-American dialogue into the continent," and an "unprecedented convergence" of center-left thinking. The rejection of the old social democratic views on equality, welfare and the role of government is a "wrenching philosophical shift" for the German Social Democratic Party, he added.

Michael Lind of the New America Foundation agreed, saying that "Social Democrats have retreated, step by step on little cat feet, away from Marxism without wanting to admit it." The Blair-Schroeder document represents a historic return to the transatlantic dialogue that existed in Woodrow Wilson's day, in which U.S. progressives tried to combine American liberty with Teutonic efficiency in designing a new welfare system.

Missing – a policy to manage the global economy.

Several participants, beginning with E.J. Dionne, felt that the Blair-Schroeder declaration fails to come to grips with the globalization of the economy. Although international competition for increasingly mobile capital is at the center of much debate, the declaration says little about how such competition might be regulated (aside from one brief mention of the need to avoid unhealthy tax policy competition). As several participants pointed out, the declaration makes no mention of the debate over incorporating environmental and worker rights standards into international trade agreements.

Instead of defining a new rules-based economic policy based on social democratic values, the Blair-Schroeder declaration embraces a deregulation strategy designed to unleash market dynamism coupled with a large-scale re-training and education effort to help workers adjust to the ever-increasing job instability unleashed by such dynamism. In this regard, Will Marshall quoted Italian Prime Minister Massimo d'Alema to the effect that "lifelong learning and skills development are "the highest form of social protection." The emphasis on continuing education prompted this quip from E.J. Dionne: "The Third Way never met a problem that training couldn't solve."

One non-government player ignored by the declaration is the trade union movement, said the AFL-CIO's Tom Palley. He questioned whether Third Way advocates may have accepted the myth that unions distort the market rather than seeing them as a "private sector solution to market failure." He expressed "shock" that two politicians who depend so much on unions to get elected would ignore them in their joint declaration. "How do you have a real partnership at work without unions?," he asked.

Dionne agreed with this criticism, but added that unions need to change and modernize too.

Michael Lind cautioned that economic turmoil is caused as much by technological change and automation as by increased globalization and trade. "Unions would still be hurt by automation even if globalization were stopped," he said.

Dionne agreed, but said that Third Wayers need to grapple with the questions of labor and environment as central issues in international trade policy. The problem, he said, is that no one is quite sure how to construct rules that would deal with this problem.

The Third Way as Government Savior

One contribution of the Third Way has been to derail the conservative attack on government, according to several participants. In the U.S., the Clinton Administration managed to salvage a role for government when it was most under attack, pointed out Derek Shearer. "Clinton's accomplishment should not be undervalued," he added.

For Sidney Blumenthal, a major accomplishment of the Clinton Administration has been to bring fiscal discipline to government combined with a new emphasis on social investment. Partly as a result of Clinton's success, he added "George Bush has given up on the decades-long conservative assault on government itself." Bush is desperately looking for a "Fourth Way," which accepts much of the Third Way approach to government but which will fail because it lacks an economic policy, he maintained.

According to Will Marshall, the reinvention of government is one of the three "anchors" of the Third Way, appropriately emphasized in the Blair-Schroeder declaration. Its aim, he said, it to keep an active role for government while making it less bureaucratic and more decentralized.

Others were more critical of the declaration's view of government's role. Although democratic capitalism is the only way, suggested Shearer, the emphasis needs to be on the democratic. The Right's attack on government is an attack on democracy, he said. Ruy Teixeira of the Economic Policy Institute felt that the declaration gives insufficient importance to the role of government in managing the demand side of the economy. He pointed out that although fiscal discipline was achieved during Clinton's watch, "we haven't yet gotten the social investment." Echoing this complaint, Tom Palley of the AFL-CIO emphasized that "the market does not exist without government, and Third Wayers need to learn this."

It's the Culture, Stupid

Another missing element from the Blair-Schroeder declaration is a "moral language" for dealing with family and community concerns, according to Amitai Etzioni of the Communitarian Network. If government programs are to be cut, we need to support community-based alternatives to replace them, he said, adding that the declaration's failure to address such issues as the future of the family and multiculturalism will leave all the moral vocabulary to the religious Right.

Penn Kemble of the U.S. Information Agency also questioned whether the Blair-Schroeder declaration pays enough attention to moral-cultural questions. Without such an appeal, he worried, the ordinary person will have no reason to develop a "Third Way consciousness," and the movement will fail to gain traction.

Dionne agreed, noting that the Swedish Social Democrat's version of the Third Way in the 1930s was a "defending the family" type of movement. He also pointed out that a lot of people were unhappy with the workings of the "gun and culture markets," and suggested that there is an implicit moral message in the declaration's statement that it supports a market economy, not a market society.

From Welfare to Workfare

None of the participants took issue with the Third Way emphasis on welfare reform and aggressive stance against crime. Because of welfare reform's success, the idea of balancing rights with responsibilities has become accepted in the United States after initial resistance from some Democrats Blumenthal noted.

In Europe, however, the welfare issue is more controversial. The French welfare system allows the unemployed to say no to a job offer, explained Philippe Reltein – it's considered a matter of human dignity. French socialists want to maintain a social safety net, he said, but are looking for a better balance between the state and the private sector in providing it.

Third Way Internationalism

The war in Kosovo become a "Third Way turning point," according to Blumenthal, who noted that it was the first war pursued and won jointly by center left governments. Had it been lost, the Third Way project would have been in jeopardy, he said.

Shearer cautioned that some are suspicious the NATO strategy was a cover for American hegemony. Echoing this concern was Carola Kaps from Germany, who opined that the entire Third Way debate has been too America-dominated.

From Defense to Offense?

E. J. Dionne found the Blair-Schroeder document to be too defensive, reacting more to its own failures than setting forth a positive vision.

To Sidney Blumenthal, such defensiveness is understandable, a result of timing. "In the beginning, Clinton was on the defensive too," he said, noting that some had viewed as "heresy" Clinton's abandonment of several Democratic Party programs due to fiscal constraints. He predicted that the German government will become more self-assured as time goes on.

Not all of the Germans in the audience were so sure. Erika Mann, a German social democratic representative to the European Parliament, said that Party members were shocked when the Blair-Schroeder declaration hit the papers without any internal Party debate. She viewed it as a signal to the business community that a significant change in mind-set had occurred, and that Schroeder was "trying to bring vision and reality closer together by changing the vision." Trade unionist and most Party members were against the declaration, she said.

Will Marshall stated that the search for a new synthesis arouse from political defeat and the need to appeal to a middle-class electorate. "Wired workers have replaced the blue-collar unionized workforce," he said.

Dionne countered by pointing out that although the class configuration has changed somewhat from blue collar to knowledge workers, there is a danger in running away from your old base. He noted that when the Democratic Leadership Council started, it focused on the blue collar "Reagan Democrats" and only recently switched its attention to the high tech work force.

Different Ways Toward the Third Way

Born out of a decade of political defeats for left-of-center parties, the Third Way is as much a pragmatic search for electoral success as it is a coherent philosophy at this point. "The Third Way is to social democracy as Unitarinism is to Christianity," is the way E.J. Dionne put it. Marshall agreed that elements are still missing from the Blair-Schroeder declaration, but noted that the Third Way is not an ideology but an anchoring of common principles. Teixeira agreed. "It's not a doctrine but a debate," he said.

Michael Lind urged Third Wayers not to make the same mistake that the Right did. Some Reaganites tried to use Thatcherite privatization as a panacea for reform in the U.S., even though the level of state enterprise was already much lower in the U.S. than it was in Britain. Since most European nations have a vastly different state-market balance than the U.S., he suggested, "moving toward the Third Way may mean moving in different directions" for different countries.