Download New Labour, the `Third Way` and the Sector Skills Agreement

New Labour, the ‘Third Way’ and the Sector Skills Agreement
Dr. Michael Hammond
University of Huddersfield
Abstract
This work in progress paper is a first attempt to begin to theorise past a simple
pluralistic definition of what the Sector Skills Agreement (SSA) primarily is about,
although per se this paper will touch on the wider political nuances surrounding the
Skills for Business Network, and the now defunct Sector Skills Development Agency
(SSDA). The primary function of this paper is however to begin to theorise the
practice of the author over the past two and half years or so since 2005. The concept
of the SSA was formulated at a time when at least nominally, the ‘New Labour’
Government was espousing the doctrines of ‘third way’ social democratic policies,
and no more so was this championed by Anthony Giddens. This paper therefore
could be seen as an analysis of Giddens work as part of building up the authors
knowledge base, through which he hopes to effect a complete theoretical analysis of
a key plank of Government reform in skills i.e. the creation of demand led system of
training through the SSA and the Sector Skills Councils (SSCs) and how this policy
fared or not.
The ‘Third Way’
Giddens (2001) answeres the question of why there needs to be a ‘third way’ in the
following descriptor:
“There is a general recognition almost everywhere that the two ‘ways’
that have dominated political thinking since the Second World War have
failed or lost their purchase. Traditional socialist ideas, radical and
reformist, were based on the ideas of economic management and
planning- a market economy is essentially irrational and refractory to
social justice. Even most advocates of a ‘mixed economy’ accepted
markets only grudgingly. But as a theory of the manaqed economy,
socialism barely exists any longer. The Keynesian welfare compromise’
has been largely dissolved in the West, while countries that retain a
nominal attachment to communism, most notably China, have
abandoned the economic doctrines for which they once stood.”
(Giddens, 2001, p2)
The ‘Third Way’ emanated from the ’perceived’ failures of the left to respond to the
neo-liberal discourses of the 1980’s and the 1990’s and the sweeping electoral
success that neo-liberal Governments in the USA, the UK to name but two enjoyed.
In his book the third way. Giddens (1998) pronounces the death of Marxism, and
poses the ‘third way’ as being an explanation of how Marxism became discredited
(Giddens, 1998, pvii). If Marxism is dead then to justify the new way, the neo-liberal
credo must also be in trouble (although as Callinicos (2001) argues, perhaps not as
in trouble as ‘third wayers would have people believe) and this is also a tenant of
‘third wayism’ that neo-liberalism obsession with non interference in markets has also
proved to be a failure. Marquand (1998) refers to this, when he speaks of the ‘New
Right’ being not prepared to manage the development of the ‘globalised new order’
(my definition) (Marquand, 1998, p20).
But it is to the critique of the old left that this paper looks first, as this is the main
thrust of much of Gidden’s writing in the first ‘third way’ book of that title. In Gidden’s
mind the super structure of socialism may have gone, but the values and beliefs that
socialism engendered remain, and it is these that need to be incorporated into the
new third way. Giddens (1998) concludes:
“A hundred and fifty years ago Marx wrote that ‘a spectre is haunting
Europe’- the spectre of socialism or communism. This remains true but
for different reasons from those Marx had in mind. Socialism and
communism have passed away, yet they remain to haunt us. We cannot
just put aside the values and ideas that drove them, for some remain
intrinsic to the good life that it is the point of social and economic
development to create. The challenge is to make these values count
where the economic programme of socialism has become discredited.”
(Giddens, 1998, p1-2)
Giddens (1998) goes on to argue that Governments on the left bereft of the old
certainties in particular economic management and planning are guilty of making
policy up ‘on the hoof’, and therefore the ‘third way’ is there to fill that theoretical
vacuum created by the ‘fall of Marxism’. Giddens (1998) concludes that central to the
socialist vision was the fact that Socialism was committed to economic planning, and
it was this commitment to economic planning that was eventually the undoing of the
communist countries economies that espoused it.
While Labour Governments 1945-1951, and 1964-1970, and 1974-1979, were
committed to economic planning, the economic plans rarely got off the starting
blocks, before being blown away by economic circumstances. Two very interesting
texts, which it is proposed in a further paper on planning to consider in more detail,
(as despite the Godden’s contention that economic planning per se is dead, in a
localised context it will be argued related to learning and skills is very much alive)
are Jewkes (1948) and Budd (1978). Budd (1978) points out that the 1964-1970
Labour Governments economic plan probably survived for one day. Giddens (1998)
defines his view on why the socialist system failed, he concludes:
“The economic theory of socialism was always inadequate,
underestimating the capacity of capitalism to innovate, adapt and
generate increasing productivity. Socialism also failed to grasp the
significance of markets as informational devices, providing essential
data for buyers and sellers. These inadequacies only became fully
revealed with intensifying processes of globalisation and technological
change from the early 1970s onward.” (Giddens, 1998, p4-5)
As Marxism is concentrated around an ‘interpretation of history’1 which resonated
around the ‘forward march of socialism’ and related to that the advance of science
and technology, emphasised perhaps by Wilson (not suggesting that Wilson was a
Marxist, despite his relationship with the Labour left in the Attlee Government of
1945-51) in his ‘forged in the white heat of technology’ speech (Giddens, 1998, p43).
The grand narratives attacked by Foucault and colleagues from the Post-modern
school did not appeal, Giddens concludes, to those on the right (although Foucault
1
This statement is by definition inadequate, and will be developed further. In future work within this
series.
and the post modernist while rejecting grand narrative would not it is suggested see
themselves as right wing). Giddens (1998, p43) speaks of Conservatives as
emphasising continuity, although it is less certain whether this is a more neoconservative ‘high tory’ concept rather than a neo-liberal one. In table 1 below the
definitions (subject to what has been said above) Giddens (1998) ascribed to the left/
right divide are described.
Table 1: Old Left/ New Right Values
Classical Social Democracy (Old Left)
Pervasive state involvement in social
and economic life.
State dominates over civil society
Collectivism
Keynesian demand management, plus
corporatism
Confined role for markets: the mixed or
social economy.
Full employment
Strong egalitarianism
Comprehensive welfare state, protecting
citizens ‘from cradle to grave’
Linear modernization
Low ecological consciousness
Internationalism
Belongs to bipolar world
Thatcherism, or neo-liberalism (the
new right)
Minimal government
Autonomous civil society
Market fundamentalism
Moral authoritarianism, plus strong
economic individualism
Labour market clears like any other
Acceptance of inequality
Traditional nationalism
Welfare state as safety net
Linear modernization
Low ecological consciousness
Realist theory of International order
Belongs to bipolar world
Giddens (1998, p7& 8)
Giddens (1998) argues that the history of political ideas means that the table above
is not strictly accurate except in a general sense in that meanings of what is left and
what is right has been in a state of flux. He states:
“In his history of political groups and parties that have described
themselves as ‘neither left nor right’, the French historian of fascism Zeev
Sternhell notes how contested the nature of the division how contested
the nature of the division has always been. Left and right have also
changed their meanings over time. A glance at the development of
political thought shows that the same ideas have been regarded as left
wing in certain periods and contexts and right wing in others. For
example, advocates of free market philosophers were seen in the
nineteenth century as on the left, but today are normally placed on the
right. The claim that the left/ right distinction is exhausted was made in
the 1890s by syndicalists and advocates of ‘solidarisme’. That claim has
been repeated across the years. Jean-Paul Sartre argued along these
lines in the 1960s, but the thesis has been advanced as often by those
coming from the right. In 1930, the historian Alain (Emile Chartier)
observed: “when I am asked whether the division between left and right
still has any meaning, the first thought that comes to my mind is that the
person who asks the question is not on the left.” Giddens (1998, p38)
Jewkes (1948) reflecting on the 1930’s and the Spanish Civil War concluded that
many young people of that generation were anti the democratic status-quo, rather
than strong adherents of either the fascist ‘National Socialism’ of Hitler and Franco,
or the Communism of Lenin, and that chance rather than grounded ideological
conviction determined which side they were on, which appears to give some support
to this notion.
The political ‘clothes swapping’ of political parties therefore is not restricted to New
Labour being accused of stealing policies from Thatcherism, a point Giddens (1998)
tacitly concedes (Giddens, 1998, p40), but the phenomenon is not unknown for the
‘boot to be on the other leg’ as Budd (1978) points out, where economic planning
was adopted by Conservative Governments between 1951-1964.
A breathtaking example of Third Way theft from traditional conservatism is the
concept of one-nation politics, if one accepts that Disraeli in the 19th century coined
the term a ‘one nation tory’. Third way politics Giddens (1998, p69) concludes is one
nation politics, where a nation at ease with itself gives way to the ‘Cosmopolitan
nation’ promoting social inclusion and fostering transnational systems of governance.
Returning to planning however, Giddens (1998) concludes that the neo-liberal
agenda of the 1980’s and 1990’s had removed panning from the political agenda:
“Neo-liberalism might seem to have triumphed across the world. After
all, social democracy is in ideological turmoil, and if fifty years ago
everyone was a planner, now no one seems to be. It is a considerable
reversal since for at least a century socialists supposed themselves in
the vanguard of history.” Giddens (1998, p14-15).
Giddens (1998) goes on to talk about the needs of the socialism to abandon
cherished views of collectivism and state responsibility for the management of
society and move towards the individualism and personal responsibility identified by
neo-liberal theories, with the result that the new left was forced to abandon the
extension of public ownership. This has happened with the Social Democrats in the
US and UK, indeed as Callinicos (2001) argues, the new left has outdone the new
right in their moves to privatise former public services. Where Keynesian demand
management policies were followed, these have been discarded, although Giddens
(1998) doesn’t concede that these have been replaced by Freemanite neo-liberal
economic contexts. The reduction of Union power and the reliance for political
funding on big business has been documented by Callinicos (2001) as also being a
response of New Labour.
Giddens (2001) tacitly agrees with Callinicos (2001) that ‘Third Way’ politics involves
social democrat Governments in the carrying out of many policies that were an
anathema to earlier generations of social democrat left of centre thinkers. He
concludes:
“It is true enough that new left of centre thinking places in question
dogmas of the past. Thus some ideas and policies once mainly
associated with the political right (such as privatization or fiscal
discipline) have become commonplace in the programmes of left
parties. In a world experiencing such profound changes a certain
pragmatism, and a readiness to experiment, are necessary. Yet the
division between left and right has not disappeared. It essentially
reflects differences in political values. To be on the left is to want a
society that is solidary and inclusive, such that no citizen is left outside.
It is to have a commitment to equality and a belief that we have an
obligation to protect and care for the more vulnerable members of
society. As a crucial addition, it involves the belief that the intervention
of government is necessary to pursue these objectives. Rightists are
liable to deny each of these propositions.” (Giddens, 2001, p5)
This paper takes as axiomatic that Marxism is promulgated on the concept of class
and class war, however as Giddens (1998) argues, the class boundaries between
the traditional ‘blue collar’ manual worker and the middle class white collar worker
has broken down, with the result that the traditional working class caucus that the
labour parties relied upon has dissipated, leaving the democratic left with a need to
seek new voter constituencies if they are to obtain and retain power. Giddens (1998)
concludes:
“The class relations that used to underlie voting and political affiliation
have shifted dramatically, owing to the steep decline in blue-collar
working class. The large scale entry of women into the workforce has
further destabilized patterns of class-based support. A sizable minority
no longer votes, and is essentially outside the political process. The
party which has grown the most over the past few years is the one that
isn’t part of politics at all: the non-party of non-voters” (Giddens, 1998,
p20)
The self induced disenfranchisement of the working class through social mobility and
the creation within the inner towns and cities of the ‘underclass’, jobless, lowed
skilled people on the verges of society who are antagonistic to the political process
and do not vote has it is argued further pushed the parties that might feel more in
sympathy with them (the social values of socialism enunciated by Giddens (1998))
towards the more affluent voting middle classes.
In the new globalised world identified by Giddens (1998) there is still a role for
Government. Government can provide a means for the representation of diverse
interests within society and offer a forum for reconciling the competing claims of
these interests. Thirdly, Government can create and protect an open public sphere,
in which unconstrained debate about policy issues can be carried on, as well as
providing a diversity of public goods, including forms of collective security and
welfare. Government is also responsible for regulating markets in the public interest,
and foster market competition where monopoly threatens. Governments should also
foster social peace through control as the means of violence and through the
provision of policing and an effective system of law.
That said, Giddens (2000,p55) is not advocating as part of third way thinking a return
to state control per se in relation to public services:
“However, it won’t do to identify public institutions solely with
government and the state. Following the decline or collapse of the other
‘ways’, third way politics has to look for a different basis of social order.”
(Giddens, 2000, p55)
He continues:
“ Obviously social democrats should not join with the free-marketeers in
denigrating the state and all its works. Government and the state
perform many tasks essential to any civilized society. The democratic
left believed in the mixed economy, and therefore saw the state and
markets in some source of balance. Yet there is no doubt that in many
countries the state, national and local, became too large and
cumbersome. The inefficiency and wastefulness that state institutions
frequently display provided fertile ground for the growth of neoliberalism
and diminished the standing of the public sphere as a whole. As private
companies downsized, adopted flatter hierarchies and sought to
become more responsive to customer needs, the limitations of
bureaucratic state institutions stood out in relief.” (Giddens, 2000, p57)
Another Third Way thinker Barber(1998) makes a similar point in relation to
democracy and Government:
“Democracy is not a synonym for the marketplace, and the notion that
by privatising government we can establish civil society and civic goods
is a dishonourable myth. The freedom to buy a Coke or a Big Mac is not
the freedom to determine how you will live and under what kind of
regeime…[the neoliberals make a ] disasterous confusion between the
moderate, mostly well founded claim that flexibly regulated markets are
the most efficient instruments of economic productivity and wealth
accumulation, and the zany, overblown claim that unregulated markets
are the sole means by which we can produce and distribute everything
that we care about…” (Barber, 1998, p72).
According to Giddens (1998,p47) a further role of Government is through the
development of human capital 2through its core role in the education system.
Governments have a directly economic role as a prime employer in the macro and
microeconomic constructs as well as the main provider of infrastructure (albeit
currently through PFI and PPP).
Government according to Giddens (1998) can also have a civilising effect on society
through using educational systems and other factors to shape norms and values.
Which though Giddens argues is controversial, has been in great effect for example
in issues of sexual health and the use of condoms to prevent the spread of HIV and
AIDS. Finally Giddens (1998) concludes that Government can foster regional and
transnational alliances and pursue global goals (Giddens, 1998, p47-48).
Much of the pluralism that has been identified in previous papers related to the SSA
can be identified within this definition of the role of Government by Giddens (1998). If
the role of Government is to arbitrate across a range of different claims and interests
as Giddens (1998) suggests then it is argued that stupifying Pluralism is the only
possible outcome. There is no discussion from Giddens (1998) as to how, having
created a pluralistic system, in the case of the SSA, by creating such a significant
number of partners and stakeholders both English regional, devolved nation and UK
nationally, then the possibility of radical change is nullified and the creation of inertia
inevitable, apart from miniscule changes, where consensus can be achieved, if every
partner and stakeholder is to agree.
Indeed in Giddens (1998, p66) definition of third way values, ‘Cosmopolitan
Pluralism’ (although the role of the word cosmopolitan is not defined) is included.
Other third way values include: equality, protection of the vulnerable, freedom as
The use of term ‘human capital’ in the original by Giddens (1998) is a very provocative neo liberal
term from management science, which it is suggested has overtones of new managerialism and the
perception of labour as being only a factor of production.
2
autonomy, no rights without responsibilities, no authority without democracy and
philosophic conservatism (Giddens, 1998, p66).
So there it is, the clearest break with Thatacherism, in that the ideological
authoritarianism is replaced with a more caring listening culture from Government,
that theoretically builds consensus. It is this part of the ‘third way; philosophy that is
most likely to be attacked by this work on the Sector Skills Agreement, as pluralism
in the main cannot produce a demand led system of education and training in which
employers are in control, while the suppliers of education have to be in agreement
with the process. As discussed in earlier work on educationline, the often
diametrically opposed needs of partners and stakeholders (for example the needs of
Connexions and Jobcentre plus to get people in work or training, compared to the
needs of employers to have smaller numbers of people trained properly within their
specific area is a key problem in the development of an agreement) and the failure to
enact ‘joined –up Government’ inevitably leads to if not policy failure, then a failure to
enact that which was originally intended by the policy makers.
The Third Way is however also a political and life philosophy about living in a society
post the break down of tradition and custom, and the need to create a functioning
society. Giddens (1998) argues that the third way should ask not simply about social
justice, but how a society should live after the decline of tradition and custom,
recreate social solidarity and respond to ecological problems (Giddens, 1998, p67)
Giddens (1998) concludes:
“The overall aim of third way politics should be to help citizens pilot their
way through major revolutions of our time: globalisation, transformations
in personal life and our relationship to nature.” (Giddens, 1998, p64).
The third way is not about the wholesale transfer of Government to the private
sector, and the new dynamic of the third way in opposition to both left who want to
expand the state and right who want to contract it, is the view that the third way is to
reconstruct it. Giddens (1998, p75) makes this clear:
“Social democrats must respond to the criticism that, lacking market
discipline, state institutions become lazy and the services they deliver
shoddy. As the American political commentator E.J. Dionne points out,
the argument can become a parody of itself, as if the Government were
synonymous with inefficiency, ignoring the existence of fine schools,
public hospitals or parks. The appropriate response is not to introduce
market mechanisms, or quasi-markets, wherever there is the glimmer of
a possibility. The idea that Government should mimic the marketplace
was the main thrust of David Osbourne and Ted Gaebler’s book
Reinventing Government. Their work influenced Clinton’s policies in the
early 1990s. Reinventing Government certainly sometimes means
adopting market-based solutions. But it also shuld mean reasserting the
effectiveness of Government in the face of markets” (Giddens, 1998,
p75)
The third way therefore is a restatement of the concept of a mixed economy.
Giddens (1998) states that there is a need to differentiate this view of a mixed
economy from that which existed in the minds of democratic socialists post 1945,
where there was a separation between public and private sectors, but with a good
deal of industry in state hands, and the other being the social market (which Giddens
(1998,p99) doesn’t expand upon at that point).
The third way mixed economy is defined by Giddens (1998) thus:
“ The new mixed economy looks instead for a synergy between public
and private sectors, utilizing the dynamism of markets but with the
public interest in mind. It involves a balance between the economic and
the non-economic in the life of the society. The second of these is at
least as important as the first, but attained in some part through it.”
(Giddens, 1998, p99-100)
Socialists and fledgling third way social democrats must however lose their
resistance to markets, and embrace them wholeheartedly:
“Many on the more traditional left would accept Hall’s view that the left
is defined by its concern with the dangers of market, whose excesses
need constantly to be reined back by the state. Today, however, this
idea has become archaic. The left has to get comfortable with markets,
with the role of business in the creation of wealth, and the fact that
private capital is essential for social investment. The reformist left has
long accepted the markets have a role alongside government, but the
admission has in the past characteristically been a grudging one. As
one observer has put it, the left still sought to replace the fundamentals
of a market economy with centralised government control; to replace
market competition with strategic protection; to replace the price
mechanism with industry plans; and to replace market-driven profits
with the largesse of public subsidies and special deals” (Giddens, 2000,
p34).
From the arguments above the ‘third way’ can now be described, and it consists of
six points. First while accepting the old definitions of left and right, the definition of
these no longer helps, and many policy solutions emanate from the centre,
notwithstanding that third way politics should have some radical features. The
assumption though not stated is that these policies would emanate from the left,
although many critics would argue as Callinicos (2001) does, that they emanate from
the right as third way Governments go further than their ‘right wing ‘ predecessors
ever dared.
Secondly the key areas of power, being the Government, the economy and the
communities of civil society are in a third way paradigm all required to be constrained
by the interests of solidarity and social justice (discussed below), thus creating a
democratic order as well as an effective market state. The ‘third way’ speaks of
producing a social contract that talks about rights and responsibilities, as a
juxtaposition to old left emphasis on right, and new right emphasis on
responsibilities. Fifthly to develop a mixed economy, balancing both regulation and
de-regulation and national and transnational, as described above. Finally the New
Way stands for an acceptance and embrace of the concepts of globalisation
(Giddens, 2000, p51-54).
Third way politics however is not however a ‘sop’ to neo-liberalism:
“Third way politics is not, as it is so often portrayed, a capitulation to
neo-liberalism. On the contrary, it emphasizes the core importance of
active government and the public sphere. The public sphere does not
coincide with the domain of the state. State institutions can diminish or
discredit the realm of the public when they become oversized,
bureaucratic or otherwise unresponsive to citizens’ needs. The neoliberals were right to criticize the state in these respects, but wrong to
suppose that the public good can be better supplied by markets.”
(Giddens, 2000, p164)
In Giddens (2001) there is a re-commitment to eleven (not ten) commandments of
‘Third Way’ thinking. First, there is reform of Government and the state, but not
through transferring responsibility to Government as in the past. Government must
become activist in nature, and restore and refurbish public institutions, making them
transparent, customer orientated and quick on their feet (Giddens, 2001, p6).
The state should not dominate either markets or civil society although it needs to be
able to regulate and intervene in both. Government must be involved in steering and
directing social justice, but reiterating point 1 above, that doesn’t mean a strong state
is a large state (Giddens, 2001, p6-7). Thirdly Giddens (2001) describes an
understanding of the core role of civil society of the ‘third way’. It is interesting here to
note that Giddens (2001) proceeds to reject the classic pluralistic definitions. He
concludes:
“”Yet just as in the case of the state and markets, there can be ‘too
much’ of civil society, as well as too little. Important as civic groups,
special interest groups, voluntary organisations and so forth are, they
do not offer a substitutes for democratic government. Interest groups
and non-governmental organizations may play a significant role in
focussing issues onto the political agenda and ensuring public
discussion of them. A society could not run, however, by an
assemblage of such groups, not only because they are unelected, but
because governments and the law need to adjudicate between the rival
claims they make.” (Giddens, 2001, p7)
This is an interesting concept, when compared to the actually working out of the
SSA, the discourse of which will be developed through further papers, as clearly the
development of the concept of ‘agreement’ has facilitated just such a pluralism that
Giddens (2001) rejects as part of third way thinking.
Szreter (2001) decries the neo-liberal attempts to resolves societies problems
through the usage of voluntary groups to underpin the work that traditionally was the
responsibility of the state since probably the nineteenth century. He concludes:
“The first is the right-wing libertarian interpretation, which crudely hijacks
the idea of social-capital to buttress undiscriminating hostility to the state,
by arguing that the activities of the state are intrinsically inimical to the
vitality of social capital because it ‘crowds out’ voluntary associations.
This is a naïve simplification: […] voluntary associations are capable of
damaging, as well as contributing to, social capital. In a polity actively
nurturing its social capital, the state has to perform a vital partnership and
facilitation role in at least two obvious ways. Firstly, it needs to deploy
resources to empower disadvantaged individuals: the sick, injured, young,
old, poor and poorly-educated, and other groups subject to social
exclusion for reasons that are beyond their powers to alter, such as their
gender or ethnic affiliation. This is to endow them with their citizenship
and their liberties, and so enable them to participate with their fellow
citizens on an equal status basis, in all networks and associations through
which social capital functions. Secondly, there is the importance of the
locally devolved form of ‘state’: participatory, local self-government in
active partnership and responsive negotiation with the communities and
businesses whose environment it administers” (Szreter, 2001, p291)
The fourth thing developed by Giddens (2001) is the need to develop a ‘new social
contract’, which links rights to responsibilities, and fifthly, Giddens (2001) re-commits
the ‘third way’ to the creation of an egalitarian system, although as discussed within
this paper, this concept of egalitarian is not that traditionally recognised by the left
(Giddens, 2001, p8-9). Sixthly, the ‘third way’ is committed to the creation of ‘full
employment’, although while Giddens (2001) argues for Government to stimulate
markets etc to retain and increase employment there is a specific rejection of the
policies of the late 1970s where the Wilson/ Callaghan Government propped up
ailing industries through nationalisation. Seventhly, Giddens (2001) argues that
social and economic policy should be connected, and here economic prosperity
should be balanced through a taxation policy whose purpose is not redistributory
(Giddens, 2001, p9-10).
Eight, is welfare reform, with policies that look at the changes in society and the need
to devise policies towards the increasing number of single parent families and the
need to help the new families not to fall into poverty, by helping single parents into
work. Ninthly, there is the need to combat crime through both punative forms of
justice, as well as through welfare policies designed to reduce crime. Tenthly the
‘third way’ should take cognisance of the needs of the environment and coping with
environmental issues, and finally the third way should create a framework for
‘responsible capitalism’ (Giddens, 2001, p13).
Equality (and Social Justice)
As will be shown in further work related to this paper, the presence of equality and
social justice legislation and policy particularly in the devolved nations means that
the implementation of a demand led system in a pluralistic construct that SSDA
placed upon SSCs and the SSA process means that implementation of the demand
led system becomes entangled within these concepts, as policies that are proposed
to help business in meeting their demands are pitted against conflicting equality and
social justice policies.
To Giddens (1998, p101) the neo-liberal concept of equality, that of equality of
opportunity or meritocracy can not form the basis of a third way concept of equality.
Giddens (1998) opposes a meritocratic society on the grounds that would create an
elite on the top of society and a lower strata below, which would be unable to
compete and therefore would become disillusioned, although as Callinicos (2001) to
name just one critic would be quick to point out, the gap between the have and the
have nots has widened during the ‘New Labour’ years.
“Unless it goes also with a structural change in the distribution of jobs,
which by definition can only be transitory, a meritocratic society would
also have a great deal of downward mobility. Many must move down for
others to move up. Yet as much research has shown, widespread
downward mobility has socially dislocating consequences, and produces
feelings of alienation among those affected. Large-scale downward
mobility would be as threatening to social cohesion as would the
existence of a disaffected class of the excluded. In fact, a full meritocracy
would create an extreme example of such a class, a class of
untouchables. For not only would groups of people be at the bottom, but
they would know their lack of ability made this right and proper
: it is hard to imagine anything more dispiriting.” (Giddens, 1998, p102)
The widening gap between rich and poor is conceded in Giddens (1998) as almost
inevitable. He states:
“Writing in relation to the US, the political journalist Mickey kaus has
suggested a distinction between ‘economic liberalsim’ and civic liberalism.
The gap between rich and poor will keep growing and no one can stop it.
The public realm, however, can be rebuilt through civic liberalism. Kaus is
surely right to argue that the emptying of public space can be reversed,
and that tackling social exclusion at the top isn’t only an economic issue.
Yet economic inequalities are certainly not irrelevant to exclusionary
mechanisms and we don’t have to give up on reducing them.” (Giddens,
1998, p106).
That being the case, the ‘Third Way’ is determined to ‘dent’ one of the main
traditional ways of income distribution, that of the tax system. Giddens (2000) states:
“Social democrats should therefore rid themselves of the idea that most
social problems can be resolved through increasing taxes to the
greatest extent possible. In some situations the reverse theorem
applies- tax cuts can make both economic sense and contribute to
social justice. If carefully applied, tax cuts can increase supply side
investment, creating more profit and more disposable income. A bigger
tax base is thereby created in the economy as a whole. Other taxcutting strategies such as Earned Income Tax Credit pioneered by the
New Democrats in the US can also be brought into play” (Giddens,
2000, p97-98)
Giddens (2000, p100) does not however wholly rule out progressive taxes as a
means of redressing equality issues, although he advocates green taxes, as
protection for the environment. There is however a strong caveat, that no tax should
discourage enterprise or wealth creation:
“The implications of all this are fairly clear, although not easy to
implement. Social democrats in all countries need to sustain a
substantial tax base, if public and welfare policies are to be funded and
economic inequality kept under control. They need to do so in the
context of the reform and further democratization of the state itself.
Progressive income tax needs to play a role in reducing inequalities, but
it is neither sensible nor necessary to try to return to the steeply
progressive systems of the past. In general, social democrats should
continue to move away from heavy reliance on taxes that might inhibit
effort or enterprise, including income and corporate taxes. Seeking to
build up the tax base through policies designed to maximise
employment possibilities is a sensible approach- indeed, it is a key
emphasis of third way politics…Obviously taxes that discourage the
production of ‘bads’, most notably green taxes, should be relied upon as
much as is feasible” (Giddens, 2000, p100)
One possible tax revenue indicated by Giddens (2000, p102) but definitely not
followed by New Labour is that related to inheritance tax, although Giddens (2000)
does not use this term. One interpretation of the paragraph cited below, might
suggest that Giddens (2000) is advocating a ban on inherited wealth, or certainly
severe penalising through tax on inherited wealth:
“Equality of opportunity is not compatible with the unfettered
transmission of wealth from generation to generation. Bill Gate’s rise to
extreme wealth is one thing; allowing such economic privilege to carry
on across the generations is not. As in other areas, tax incentives can
be mixed with other forms of regulation. Positive incentives for
philanthropy, for example, can have as significant a role as taxes on the
direct transmission of wealth.” (Giddens, 2000, p102)
Perhaps then it is this space of civic liberalism that the role of the SSCs and the SSA
could perceptively be seen to fit, as even in the bad old neo-liberal days, the need for
training and education was being identified by the Social Justice Commission (1994)
who concluded:
“It is…absolutely essential to help adults without basic skills or
qualifications to acquire them, to help people whose skills are out of
date to update them, and to raise the confidence of anyone whose
morale has been undermined by a long period away from employment.
People without skills are five times more likely to become unemployed
than those with higher educational level qualifications; in the end
employment goes to the employable” Social Justice Commission
(1994, p174).
Education and training therefore are the tool through which the Government will
develop the means of driving equality. The Third Way talks now not about equality
being achieved through a redistribution of income but by the concept of a
‘redistribution of possibilities’
“Investment in education is an imperative of government today, a key
basis of the ‘redistribution of possibilities’. Yet the idea that education
can reduce inequalities in a direct way should be regarded with some
sceptisim. A great deal of comparative research, in the US and Europe,
demonstrates that education tends to reflect wider economic
inequalities and these have to be tackled at source.” (Giddens, 1998,
p110).
Through getting people from worklessness to work, this becomes a way of reducing,
although not eliminating economic inequalities as this must now be deemed
impossible and a part of the socialist utopian state. The social democratic state
accepts this position and seeks through investment (although as later work may
show, nether efficiently nor effectively for either the tax payer or the learner) in
education. By creating possibilities, the state permits people from whatever
background to have a chance at improving the quality of their life, or escaping
poverty.
By 2000, Giddens (2000) was beginning to talk in terms of education as being a lifelong activity through which a worker may retain skills for employability. There is no
discussion of learning as being for any other function than the retention of
employability.
“Education needs to be redefined to focus on capabilities that
individuals will be able to develop through life. Orthodox schools and
other educational institutions are likely to be surrounded, and to some
extent subverted by a diversity of other learning frameworks. Internet
technology, for instance, might bring educational opportunities to a
mass audiences. In the old economic order, the basic competencies
needed for jobs remained relatively constant. Learning (and forgettingbeing able to discard old habits) are integral to work in the knowledge
economy. A worker creating a novel multimedia application can’t
succeed by using long-standing skills- the tasks in question didn’t even
exist a short while ago.” (Giddens, 2000, p74)
With the state abdicating responsibility for the creation of work and thus the
elimination of poverty then wealth generation and the creation of employment passes
to entrepreneurs, who are the new knowledge producers. Giddens (1998) concludes:
“Many countries, particularly in Europe, still place too much reliance
upon established economic institutions, including the public sector, to
produce employment. In a world where customers can literally shop for
workers, without the new ideas guaranteed by entrepreneurship there is
an absence of competition. Entrepreneurship is a direct source of jobs.
It also drives technological development, and gives people opportunities
for employment in times of transition. Government policy can provide
direct support for entrepreneurship, through helping create venture
capital, but also through re-structuring welfare systems to give security
when entrepreneurial ventures go wrong- for example, by giving people
the option to be taxed on a two –or three- year cycle rather than only
annually.” (Giddens, 1998, p124)
Third way thinking can be seen clearly on the SSA, through the SSDA, as the
requirement for the development of entrepreneurship through the SSA was clearly
visible in the SSA guidance produced by SSDA.
As pointed out earlier in this paper environmental issues form a large part of the
policy agenda of the ‘third way’ that was not present in the original socialist or neoliberal discourses, with Jacobs (2001, p330) talking of the need for the UK
Government needing to close the environmental productivity gap, with a view to
reducing environmental impact. Much of the Summitskills SNA was targeted to
meeting environmental needs within the Building Services Engineering Sector, again
this guidance emanated originally from the SSDA.
Globalisation
In the Summitskills SNA, the author dedicated a chapter to the potential impacts of
globalisation on the Building Services Engineering Sector. Although the work is very
one-dimensional in that it looks at the potential for threats to the relevant sector from
the perspective of threats from foreign competition, without any form of discourse on
globalisation theory save that of the then DTI. The fact that as part of the SSA, the
SSDA saw fit to mention globalisation in their guidance, shows that in relation to
skills, the globalisation potential was an imperative.
For political theorists, the impact on jobs and work patterns, while important is
subjugated by the discussion on the role of the state in the globalised economy. It is
axiomatic for any Marxist analysis for the state to remain strong, as only through a
strong state can the Marxist policies be achieved. The neo-liberal and here I draw a
difference that Giddens (1998) does not do, of splitting neo-liberals from neoconservatives3, are less concerned about a diminishing state. Giddens (1998)
concludes that globalisation while some claim globalisation is a myth, the fact of
‘borderless world’ is now with us, where the nation-state has become a fiction and
where politicians have lost all effective power (Giddens, 1998, p29).
Giddens (2002) is committed to the principles of globalisation, and his book
‘Runaway World’ based on his Reith lecturers of 1999 concentrate solely on a third
way analysis of globalisation within a third way context. In the introduction , Giddens
(2001) appears to see an invisible enemy (invisible in that Giddens does not define it,
but probably emanates from the left, given previous comments in his earlier work)
who seek to define globalisation as a tool of the capitalist elite in the developed
countries, when he declares:
“Is globalisation geared to the concerns of America and the other rich
nations?There is plainly a good deal of truth in the assertion. The United
States is easily the dominant power in the world, militarily, economically
and culturally. Most of the world’s biggest companies are American, and
all the top fifty corporations have their home base in one or other of the
industrial countries. The vast majority of internet users are in the rich
societies. The wealthier countries dominate some of the most influential
world agencies such as G8, the World Bank and the IMF-and also,
many would say, the UN. World society is radically imbalanced in
respect of who holds the lever of power and who does not.” (Giddens,
2001, pxxii)
Although Giddens (1998) discusses the death or decline of the nation state, by
Giddens (2001) he had decided at least in relation to international finance control
that the radical view that nations have lost most of the sovereignty that they once
enjoyed, and thus politicians are incapable of influencing decision making is correct,
juxtaposed against the argument of the left that globalisation is a myth, and that
Governments can still control events, and that globalisation is a cynical façade
through which neo-liberal Governments and capitalists can dismantle the welfare
state (Giddens, 2001, p9). Giddens (2001) concludes:
“Well who is right in this debate? I think it is the radicals. The level of
world trade today is much higher than it ever was before, and involves a
much wider range of goods and services. But the biggest difference is in
the level of finance and capital flows. Geared as it is to electronic
money- money that exists only as digits in computers- the current world
economy has no parallels in earlier times. In the new global electronic
3
Neo-conservative and neo-liberals have coexisted in both the USA and UK within the Conservative
and Republican parites. In the US the strong and identifiable moral majority driven through Christian
evangelical and fundamentalist groups I would define as neo-conservative, for them I would argue see
a strong state interfering in issues of personal morality and conduct, within a context of free markets, as
opposed to neo-liberals, whose views on morality are more relaxed. Tensions between these groups
during the Thatcher period in the UK can be seen in the sex scandals of Cecil Parkinson, David Mellor
and Tim Yeo, where despite the desire by the respective Prime Ministers to save them, they received
resignation calls from within their own party from the neo-conservative traditional element.
economy, fund managers, banks, corporations, as well as millions of
individual investors, can transfer vast amounts of capital from one side
of the world to another at the click of a mouse. As they do so, they can
destabalise what might have seemed rock-solid economies- as
happened in the events in Asia” (Giddens, 2001, p9)
As already discussed within this paper, Giddens (1998) places more emphasis on
the role that environmental issues have on third way thinking than traditional left
thinking. In relation to the risks of globalisation, Giddens (2001,p29) places global
warming and scientific risks of increased industrialisation at the heart of the threats
that globalisation brings, he concludes:
“Our society lives after the end of nature. The end of nature doesn’t
mean, obviously, that the physical world or physical processes cease to
exist. It refers to the fact that there are few aspects of our surrounding
material environment that haven’t been in some way affected by human
intervention. Much of what used to be natural isn’t completely natural
any more, although we can’t always be sure where one stops and the
other begins.” (Giddens, 2001, p27)
Interesting within the Summitskills Sector Needs Analysis, again encouraged by
guidance from SSDA, there was a whole section on the training needs that would be
caused by the development of environmental technologies. This again suggests that
there was if unintentional influence of third way thinking on the development of policy
in this area.
In Giddens (1998) as seen above, the concept of tradition was attacked as being a
modernistic construct of Marxism, with its outmoded insistence on a grand narrative,
which was outdated, and prevented the left from reinventing itself. Giddens (2001)
continues to elaborate on this point within his discussion on globalisation:
“The idea of tradition, then, is a creation of modernity. That doesn’t mean
that one shouldn’t use it in relation to premodern or non-Western
societies, but it does imply that we should approach the discussion of
tradition with some care. By identifying tradition with dogma and
ignorance, the Enlightment thinkers sought to justify their absorption with
the new. Disentangling ourselves from the prejudices of the Enlightment,
how should we understand ’tradition’? We can make a good start by
going back to invented traditions. Invented traditions and customs,
Hobsbawm and Ranger suggest, aren’t genuine ones. They are
contrived, rather than growing up spontaneously; they are used as a
means of power; and they haven’t existed since time immemorial.
Whatever continuity they imply with the long term is largely false… I
would turn their argument on its head. All traditions, I would say, are
invented traditions. No traditional societies were wholly traditional, and
traditions and customs have been invented for a diversity of reasons. We
shouldn’t suppose that the conscious construction of tradition is found
only in the modern period. Moreover, constructed in a deliberate way or
not; Kings, emperors, priests and others have long invented traditions to
suit themselves and to legitimate their rule.” (Giddens, 2001, p40)
So although not supporting the Marxist modernist agenda, Giddens (2001) does
however re-state the mantra of third way thinking from his earlier work, by agreeing
that the neo-liberal concepts of free markets cannot create a good society within a
globalised world. He concludes:
“The democratising of democracy also depends upon the fostering of a
strong civic cultures. Markets cannot produce such a strong civic
culture. Nor can a pluralism of special-interest groups. We shouldn’t
think of there being only two sectors of society, the state and the
market- place- or the public and private. In between is the area of civil
society, including the family and other non-economic institutions.
Building a democracy of the emotions is one part of a progressive civic
culture.” (Giddens, 2001, p77).
The ‘Third Way’ Elsewhere’
To Latham (2001) (who was a social democrat member of the Austrian parliament)
the ‘third way’ is a response to the core ideological tensions between socialism and
liberalism, which seeks to reconcile the social values of socialism with the concepts
of a market economy. Latham (2001, p26) describes four sets of values that
underpin the ‘third way’, and these are: Interdependence, as nation states and
communities must work together to respond to the challenges of globalisation.
Secondly responsibility, with the need for people within society to accepts the rights
and responsibilities that the state requires of them. Thirdly, there are incentives,
because in a world of constant change, people will need to save more, study harder,
and work more intelligently. Finally there is devolution, with the power being pushed
down further to the people locally (Latham, 2001, p26).
Latham (2001, p29) identifies six policy agendas that he feels the third way should
promote. First there is co-operating internationally between nation states, secondly
there is investing by the state in education, because lifelong learning has the
capacity to improve economic efficiency and social cohesiveness. A thing certainly
not carried out within the UK, is the investment in boosting savings, as private
savings make the economy less vulnerable to shifts in international finance and
individuals feel more secure about their future. Investing in infrastructure, such as
road and rail, although Latham (2001) makes no mention of the PPP and PFI
methods of accomplishing this, which is not surprising as this is very much a UK
phenomenon. A strengthening of the workplace, and an encouragement of ‘collective
bargaining’ is also postulated, a thing that it is suggested is an anathema to the
‘Blarite’ ‘New Labour Government. Finally Latham (2001) speaks of developing
social services, unless there is a mechanism that the Government can use to
incorporate voluntary groups in to the provision of these services (Latham, 2001,
p29-30).
The notion of skills and education in the new economy cannot be discounted, and
this seems to be influencing Latham (2001) and Austria as well. He concludes:
“The new economy has a few home truths that none of us can avoid. Well
educated and higly skilled nations succeed in the global economy; poorly
skilled nations do not. The new growth theorists have shown how a
nation’s long term economic prosperity is linked to its inventiveness,
education and research capacity. In many respects, education has
become the first domino on the path to full employment. Nations and
regions with a strong share of knowledge-based employment are able to
generate new sources of income and wealth. The spending power of
these high income earners then help to create new jobs in their local
economy, particularly in the service and retail sectors. Hence highly skiled
economies follow a virtuous circle of new growth, new spending power
and new jobs- thereby giving semi-skilled workers their best chance of
making the transition from old industries to new types of employment.”
(Giddens, 2001, p32).
Merkel (2001) looking at the performance of the New Labour Government from a
continental ‘third way perspective’ suggests that within the UK, the performance of
the labour Government has achieved both pluses and minuses against a theoretical
model. Merkel (2001) describes the strengths as being: the abandonment of the
protectionist measures of the 1970s and the enablement of the economy to flourish
as a result, aided by the refusal of New Labour to undo the deregulation of the labour
market initiated by Margaret Thatcher. Merkel (2001) is also impressed with the way
that the Welfare state has been re-orientated to remove the traditional bias against
the middle class, and towards meeting real needs, and finally the emphasis that the
‘New Way’ has put on the need for people to become more skilled and educated
(Merkel, 2001, p60).
On the negative side Merkel (2001) identifies a number of minuses of the
performance of ‘new Labour’ . First there is what could be described of the
abandonment of anti-cyclical and monetary policies in favour of market forces. The
surrender of the tax system as a method of redistributing wealth equitably around
society; and it is suggested that in this statement Merkel (2001) shows most clearly
the real differences between the UK and other ‘third way’ philosophies on the
continent. The downside of the de-regulated labour market identified by Merkel
(2001) is the discrimination by the market of older workers, an increased degree of
labour migration, and weak trade unions, leading to less redistribution of income. In
his final point Merkel (2001) makes an interesting argument to suggest that the
Governments current targeting of the vulnerable may re-bound on them, he
concludes:
“The targeting of the welfare state to the really needy, justified from the
perspective of social justice, makes the welfare state more vulnerable to
demands for its further reduction. That is, if the middle classes no
longer benefit from welfare transfers and social services they lose their
economic interest in the welfare state and will rationally call for further
cuts, as they receive little benefit from the welfare state, yet partly
finance it through their taxes. The welfare state will thus lose important
allies with an influential political voice. Further, the danger of a ‘twothirds- society’ is very real in Great Britain, as the number of people
living below the poverty line is currently already twice as high as in
Germany and most continental European states” (Merkel, 2001, p61)
Thus, the policies of the ‘New Labour ‘ Government, could ultimately reinstate the
neo-liberal desire to privatise the whole or the substantial part of the welfare state.
Ferrera, Hemerijck and Rhodes (2001) point to the need within the EU countries for
‘third way ‘ Governments to promote the demand for low skilled work, they conclude:
“Mainly as a result of technological change, all advanced welfare states
have to cope with the problem of declining demand for low-skill work in
the industrial sectors. But they differ in the degree to which they have
been able to compensate for this development by promoting demand for
low skill jobs in the service sector. Generally, the demand for low-skill
work is related to the level of female labour force participation. Higher
employment of women typically raises the demand for regular jobs in
the areas of care for children and other dependents as well as for
consumer-oriented services in general. Thus, demand and supply in
service employment are mutually reinforcing. By the same token, it
should not come as a surprise that the rapid increase of employment in
these service-areas we observe in the Netherlands since the mid1980s, occurred simultaneously with the quick expansion of female
labour force participation.” (Ferrera, Hemerijck and Rhodes, 2001,
p122)
They continue:
“Increasing demand for low-skilled workers has typically been achieved
by forms of wage subsidy, either using tax credits (following the logic of
a negative income tax as in Ireland and- to the greates extent in the
UK’s “New Contract for Welfare”) or as in the Netherlands, France and
Belgium, by exempting low-skilled skilled from social contributions. In
the Netherlands, employment subsidy schemes have significantly
reduced employers’ wage costs, through reductions in taxes and social
security contributions, instigating a decline in the tax wedge for
employers who hire long term unemployed. Employment subsidies can
add up to as much as 25% of the annual wage.” (Ferrera, Hemerijck
and Rhodes, 2001, p122)
Gosta Esping-Andersen (2001) in the same publication points out that ‘third way’
response in part to this problem, of education, education, education will not of itself
resolve this problem, leading to the need for state intervention to increase low skill
employment through the mechanisms described by Ferrera et al (2001). EspingAndersen (2001) refutes this:
“The most simple-minded ‘third way’ promoters believe that the
population, via education , can be adapted to the market economy
and that the social problem will, hence, disappear. This is a
dangerous fallacy. Education, training or life-long learning cannot be
enough. A skill-intensive economy will breed new in[eq]ualities, a fullemployment service economy will reinforce these. And if we are
unwilling to accept low-end services, it will be difficult to avoid
widespread unemployment. In any case, education cannot undo
differences in people’s social capital” (Eping-Andersen, 2001, p134135)
Esping-Anderson (2001,p138-139) points out, that while the ratio of the number of
children born per family is reducing, at the same time child poverty across Europe
is increasing. This is predominant among young people with low skills particularly
males, making it difficult for young people to move from school to careers and form
families of their own. In southern European countries the cost of this insecurity and
unemployment has to be borne by families , whereas in Northern Europe youth
unemployed are entitled to benefits, such that in Denmark which is the most
generous has low child poverty (Eping-Anderson, 2001, p138-139). EpingAndersen (2001, p142) points to the use of early retirement across Europe as a
response to the decline in need for unskilled workers as opposed to the lifelong
learning and re-education of older workers. To deal with low skills issues on the
continent, Eping-Andersen (2001) proposes three possible solutions:
“One pervasive problem across Europe today is that the stock of
low-educated and low-skilled ‘excess’ workers can be very high- in
part because of delayed agricultural decline, in part because of
heavy job losses in traditional, low-skill industries, and in part
because of an often wide gulf in education between generations of
workers. A massive investment in learning will probably reap most
of its benefits among younger cohort workers. The dilemma, then, is
how to manage the present stock of mostly older, low-skilled males.
Early retirement has, so far, been the leading policy and it may have
been the only realistic policy so far. Life-long education is an
attractive alternative, but may be overly costly and ineffective if the
main clientele are older low-skilled workers. A third policy would be
to de-regulate job protection and seniority wage systems so as to
align wages closer to productivity differentials- as is generally
American practice. This would cause the incomes of youth and older
workers to decline, possibly sharply so” (Eping-Andersen, 2001,
p149)
Whatever social democratic policy may be, the realities of Government often are
perceived by intellectuals to blow social democratic Governments from their
righteous path and into the arms of neo-liberal free marketers. Bresser- Pereira
(2001, p359-360) readily concedes that this is the case, although he states (and this
view may now be perceived to be slightly dated) that the political pendulum may be
swinging towards a desire for there to be more equality in society, although he
concludes that this will not anywhere mean a return to economic planning. There
would however be( a refrain made constantly by ‘third way ‘ thinkers within this
paper) a more humane usage of markets:
“The policies that the new left is adopting […] go ahead with […]
necessary market-oriented reforms (for instance, trade liberalization,
privatization of competitive industries, introduction of managerial
public administration). The new left believes more in the market than
the state as a co-ordinating agent of the economy, but it is not
dogmatically pro-market as is the new right. And it still attributes to
the state a major role. The state exists not to replace markets and
entrepreneurs, but to regulate markets and protect property rights,
maintain microeconomic stability, create an appropriate climate for
investment and growth, promote science and technology, foster
national competitiveness, guarantee a minimum income, provide
basic education, health and culture for all and protect the
environment and the cultural inheritance of the country.” (BresserPereira, 2001, p366-67).
From the brief discourses discussed within this paper, it would appear that there is
generally support from the social democratic ‘third way’ thinkers outside of the UK to
much of the social democratic vision within the UK, albeit with some differences from
the actual practice of ‘New Labour’. There is within continental Europe particularly a
commitment to more traditional regulated labour structures and welfare reforms.
There appears to not be the same degree of enthusiasm for de-regulation that there
was within the UK post 1997.
In the final section of this paper, the criticisms to ‘third way’ thinking (predominantly
from the left) are considered.
Criticism of the ’Third Way’
Giddens (2000) in response to academic critique wrote a further book, entitled ‘the
third way and its critics’, which sought to address these criticisms. Perhaps because
of its rejection of the modernist mantra of the ‘grand narrative’, it is subject to the
critique that within its more postmodernist perspective, the third way has become an
intellectually amorphouse substance, such that it is more like ‘ a political parking lot’,
where a diffuse number of ideas can be collected together, and applied to almost
every political leader not hopelessly wedded to either the extreme right or left
(Giddens, 2000, p8).
Much tension that the author has described in relation to the pluralistic nature of the
Sector Skills Agreement, and how in his opinion the radical nature has been
subsumed into inertia, can be summed up by Giddens (2001) in his definition of Hall
(1998), when comparing ‘new labour’ with Thatcherism. Giddens (2000) states:
“Tony Blair and New Labour claim to have a project at least as
ambitious as Mrs. Thatcher’s. But in practice third way politics shies
away from radicalism, opting for a middle course on everything. It
advocates a ‘politics with-out adversaries’ and therefore ends up
accepting the world as it is rather than truly seeking to transform it.”
(Giddens, 2000, p12)
This argument appears to have significant influence to explain the phenomenon of
the SSA and policy, and therefore will be revisited in subsequent work. More
traditional left critique responds to the third way, by comparing its attitude towards
markets, as being at one and the same as that promoted by neo-liberals. A party of
the left should be dissatisfied with markets is their contention. The attack on the third
way from the left within Europe has been even more robust. Giddens (2000)
paraphrases Lafontaine (a former German left of centre finance minister in the
Schroder Government):
“The idea of ‘modernization’, Lafontaine says, comes down to little more
than an endorsement of global free-market capitalism. The concept is
reduced merely to economic categories. The questions of how we
should live together, and of what sort of society we want, are declared
irrelevant. Social democrats should have a different concept of ‘the
modern’, one that stands in the tradition of the Enlightenment, and
which places as its prime value the freedom of the individual. The left
must fight against the intrusiveness of the market and against the
insecurities the global economy brings in its train.” (Giddens, 2000,
p15).
It is not just in Germany that third way thinking has been attacked by some on the
left, with Giddens (2000) citing the Finnish writer Erkki Tuomioja arguing that the
third way is calling for the reform of the welfare systems in the Anglo Saxon
countires, because they have not been very successful, leading to considerable
inequality, whereas in Finland and other places, the welfare system has worked very
well. Giddens (2000) description of the Spanish Socialists advisor Navarro is
interesting as an important point is made, in that most of the Conservative European
Governments had not embraced the concepts of neo-liberalism as practiced
predominantly within the UK and USA. The end result of this is that in Navarro’s
view, the third way therefore was nearer to the views of Christian Democrat parties
than it was to any new left of centre theory. Giddens (2000) concludes:
“In Europe most conservative governments haven’t taken a neo-liberal
line. Christian Democrats have long been suspicious of unfettered
capitalism, and advocate a role- although a restricted one- for the state,
as well as endorsing developed welfare institutions. Third way politics
steals some of their clothes. In third way politics, ‘there is more than a
touch of Christian Democracy with a sprinkling of Liberal Party”
(Giddens, 2000, p18).
Throughout this paper, reference to the work of Callinicos (2001) has been made,
and his book ‘Against the Third Way’. This book is interesting in that it is published
by the same publisher as Giddens, and was instigated at the request of Giddens
(Callinicos, 2001, pvii). Callinicos (2001) complains that one of the problems with ‘
third way’ thinking is its amorphous qualities, he concludes:
“The biggest obstacle facing this enterprise [criticising the third way] is
that, as commentators frequently complain, the formula is so vague and
slippery. Winston Churchill famously once called the Labour Prime
Minster Ramsay MacDonald a ‘boneless wonder’. It is tempting to say
the same about the ideology used by MacDonald’s latest successor to
justify his policies.” (Callinicos, 2001, p4).
The use of the ‘third way’ as a term has been used by groups on the left since 1912
when MacDonald used it, thus Sedgewick (1970) could write:
“Winding up the last of the volumes that comprised his History of
Socialist Thought, the late C.D.H. Cole added shortly before his death
in 1959, a short personal credo: ‘I am neither a Communist nor a
Social Democrat, because I regard both as creeds of centralization
and bureaucracy.’ Such a statement, at the time it was written and for
decades previously could be no more than a solitary confession of
faith…To , be a socialist- at the same time to be out of sympathy with
the ideologies offered within the Communist and Social- Democratic
paties- was an extraordinary position, requiring a special explanation.
Today, Cole’s declaration could be inscribed as a banner to which
tens of thousands of young Socialists, not only in Britain but in
France, in Germany, in the United States, would willingly rally. “
(Sedwick, 1970, p37)
Callinicos (2001, p5) also takes issues with the contention that he finds within
Giddens (1998) work, that capitalism can be humanized through ‘third way’ policies.
He also takes issue with Giddens definition of socialist economic management (p5)
arguing that it must be concluded that Stalinism and traditional social democracy
shared in common was that the injustices and dysfunctional effects of capitalism
could be resolved through adopting a centralized planning or Keynesian demand
management system. Callinicos (2001) concludes:
“Giddens comprehensively ignores the fact that many versions of
socialism do not seek to transcend capitalism by increasing the power
of the state precisely because such a solution would simply expand
what Cole calls ‘centralization and bureaucracy’. Marx, for example,
would have dismissed the expression ‘statesocialism’- regularly used by
Giddens in his earlier theoretical writings- as an oxymoron. ‘Freedom
consists in converting the state from an organ superimposed on society
into one completely subordinate to it’, he wrote in the ‘Critique of the
Gotha Programme’” (Callinicos, 2001, p6).
A critique of the third way is that it has ceded much of the ground to neo-liberal
policies, such that neo-liberal ideas subsist long after the parties and politicians that
championed them have past into the footnotes of history. Anderson (2000, p11)
makes this point well:
“The winning formula to seal the victory of the market is not to attack,
but to preserve the placebo of a compassionate public authority,
extolling the compatibility of competition with solidarity The hard core of
government policies remains pursuit of the Regan- Thatcher legacy, on
occasion with measures their predecessors did not dare enact: welfare
reform in the US, student fees in the UK. But it is now carefully
surrounded with subsidiary concessions and softer rhetoric. The effect
of this combination, currently being diffused throughout Europe, is to
suppress the conflictural potential of the pioneering regimes of the
radical right, and kill off opposition toneo-liberal hegemony more
completely. One might say that, by definition, TINA [Mrs Thatcher’s
slogan ‘There is no alternative’] only acquires full force once an
alternative regime demonstrates that there are truly no alternative
policies. For the quietus to European social democracy or the memory
of the New Deal to be consummated, governments of the Centre-Left
were indispensable. In this sense, adapting Lenin’s maxim that ‘the
democratic republic is the ideal political shell of capitalism’, we could
say that the Third Way is the best ideological shell of neo-liberalism
today.” (Anderson, 2000, p11).
In the previous section of this paper, Merkel (2001) argued that the deregulated
labour market that ‘New Labour’ had inherited from the Tories in 1997, had helped to
affect effective social democratic third way changes. Not surprisingly, Callinicos
(2001, p11) sees things slightly differently, although making the same point, that New
Labour was able to use the weakened labour movement to deliver their policies, a
situation not enjoyed by any social democratic Government in main land Europe for
example.
Callinicos (2001, p19) points to the claims of Social Democrats that as a result of
their policies continuous economic stability and growth can be maintained without the
periodic ‘boom- bust’ cycles experienced by neo-liberal Governments in the 1980s
and 1990s is open to critique. Callinicos (2001, p19) concludes:
“In any case, those doubtful about the claims that American (and
potentially world) capitalism has broken free of past constraints and can
expand indefinitely into the future include not merely the usual Marxist
suspects, but also, as we shall see, more orthodox economists such as
Robert Gordon, Wynne Godley and Bill Martin. This division between
boosters and critics cuts across views over globalisation. It is perfectly
coherent to believe both that global economic integration has
qualitatively increased over the past generation and that the probable
outcome will be greater rather than less economic instability”
(Callinicos, 2001, p19).
Callinicos (2001, p43) is contemptuous of this view, he concludes that the ‘third way’
has not changed the essential nature of markets to go cyclically up and down, and
cites in support neo-liberal economists:
“Martin’s and Godley’s work shows that you don’t have to be a Marxist
to think that the New Economy will go belly up. Two of the most
persistent critics of the boosterism surrounding the Wall Street bubble
are the Financial Times leading economic commentators Samuel
Brittan and Martin Wolf, both of them firmly committed to neo-liberal
orthodoxy. Brittan, who could with justification claim to have invented
Thatcherite economics before Thatcher herself, dismisses assertions
about Wall Street’s ability to reach the stratosphere’ as ‘ nonsense on
stilts’. He adds, however, no one can say whether the break will come
within one week, one year, or five years. “ (Callinicos, 2001, p43).
In Giddens work reviewed earlier within this paper, the concept of ‘equality of
opportunities’ is discussed, with education and skills being the main determinants of
this policy. Callinicos (2001, p48) concludes:
“More concretely, it is a case of what Stuart White calls ‘endowment
egalitarianism’ , that is, equalizing ‘ the background distribution of
productive endowments so that market interactions lead to a greater
initial equality of income, lessening the need for subsequent
redistribution. In this case, however, it is access to only one productive
endowment that is to be made more equal- namely skills, through
improved education and training. This reflects Brown’s more general
belief that paid employment is the ‘route to opportunity’- a belief
informing, among other measures, his New Deal welfare-to-work
programme for the long-term unemployed. This strategy is in any case
economically desirable, since in the ‘knowledge economy’
competitiveness depends on the skills of the workforce. As Brown puts
it, ‘equality of opportunity is also an economic necessity. Economics
that do not bring out the best in people will ossify and fall behind…so
enterprise and justice can live together” (Callinicos, 2001, p49)
Callinicos (2001, p24-25) describes how in the early 1990s the Clinton administration
in the US was controlled by capitalist bond holders whose influence could undermine
the US economy, making the administration quintessentially in ‘hoc’ to external
foces. From this Callinicos (2001) plots Clinton’s move to the right. He concludes:
“If there is anything to this view of Clinton’s evolution, then it invites two
comments. First, it contrasts strikingly with New Labour’s entry into
office. Far from bashing their heads on the structural constraints
imposed by global capital, Blair and Brown sought to anticipate the
demands of big business- first by adopting Tory spending targets in
January 1997 and then, on taking office that May, by surrendering
control of interest rate to the Bank of England. These self-denying
ordinances may have reflected the bitter experience of Labour
governments in the 1960s and 1970s, but they suggest the surprising
thought that there was a brief moment at the start of his administration
when Clinton was to the left of New Labour, at least at the equivalent
point in their evolution” (Callinicos, 2001,p26)
Another explanation for the factors that Callinicos (2001) names is that the Labour
Government in transferring interest rate control to the central bank, in line with other
central banks within the European Union, may have been preparing for an early entry
to the Euro, should the political environment have become right. Wilson (1974)
however, does provide support to Callinicos (2001) and his contention that economic
power in a capitalist system often resides outside democratic control:
“Not for the first time, I said that we had now reached the situation
where a newly elected Government with a mandate from the people
was being told, not so much by the Governor of the Bank of England but
by international speculators, that the policies on which we had fought
the election could not be implemented; that the Government was to be
forced into the adoption of Tory policies to which it was fundamentally
opposed. The Governor confirmed that this was, in fact, the case. I
asked him, if this meant that it was impossible for any Government,
whatever its party label, whatever its manifesto or the policies on which
it fought an election to continue unless it immediately reverted to fullscale Tory policies. He had to admit that this was what his argument
meant, because of the sheer compulsion of the economic dictation of
those who exercised decisive economic power.” Wilson (1974,p65).
As was seen in the last section, in continental ‘third way’ thinking full employment is
a prerequisite, although according to Callinicos (2001) this was a policy that early
into the tenure of ‘New Labour’ this concept was an early casualty:
“In his 1999 Mais lecture Brown explicitly endorsed Friedman’s revival
of the classical liberal doctrine of the natural rate of unemployment. This
is the idea that the economy tends to an equilibrium rate of
unemployment at which the rate of inflation is stable (the so- called
‘Non-Accelerating Inflation Rate of Unemployment’, NAIRU). According
to Friedman and his followers, any attempt to reduce the rate of
unemployment below this level- through for example, Keynesian
demand-management policies- will simply cause the rate of inflation to
rise without any long term increase in the rate of output or the level of
employment” (Callinicos, 2001, p48-49).
Callinicos (2001,p62) argues that the problem of the New Labour Government is that
it has accepted a central tenant of neo-liberal thought in that it like Thatcher seeks a
‘free economy, with a strong state’. In relation to unemployment this leads to a rather
remarkable conclusion:
“There is, moreover, an important sense in which New Labour
authoritarianism is a consequence of Gordon Brown’s version of neoliberal economics. Assuming (as Brown does) the basic truth of
Friedman’s conception of the economy, then, if macro-economic
stability is secured and the right supply-side measures are in place, any
further unemployment is voluntary. Unemployment is in these
circumstances a consequence of the dysfunctional behaviour of
individuals who refuse work, and this behaviour must in turn be caused
either by their individual moral faults or by a more pervasive ‘culture of
poverty’. The kind of coercion implicit in the New Deal for the long-term
unemployed, where government benefits are denied those refusing to
take part, is therefore legitimate. “ (Callinicos, 2001, p62).
To Callinicos (2001) therefore despite certain cosmetic changes, there are within the
third way philosophy little to commend it as being fundamentally different from the
neo-liberalism that it sought to supersede, and while paying ‘lip-service’ to the
traditions of socialism for which it claims to have absorbed into a modern. Most
importantly, the claim to have escaped from the capitalist cycles of boom and bust
and thus to have built a platform for more economic success for all are equally
questionable, as Callinicos (2001, p55) concludes:
“Yet Brown’s regular claims to have freed the British economy from ‘boom
and bust’ suggest that he has fallen for the particularly naïve version of
monetarist economics according to which the right mix of policies can
allow capitalism to transcend the business cycle. In thus refusing to
recognise the constitutive instability of capitalist economies- a theme,
whatever the differences between them, common to the thought too of
Marx and Keynes, Schumpeter and Hayek- Gordon Brown has exceeded
the ambitions even of his antagonistic twin Nigel Lawson. History is likely
to have some surprises for him up its sleeve.” (Callinicos, 2001, p55)
Conclusion
As this paper remains work in progress as a body of knowledge around the Sector
Skills agreement begins to build up, it is probably not apposite to arrive to
presumptuously at a detailed conclusion. Much of this paper like an artist sets out the
canvas, from which more detailed work can take place. ‘Third Way’ thinking however
does appear to have inadvertently affected the way that the process of the Sector
Skills Agreement has been arrived at, in a way that the author had not perceived at
the beginning of the study. ‘Third Way’ thinking it is argued can create the pluralistic
circumstances which directly impact on the ability of Government policy to act on
society. Have created the pluralism that underpin the Sector Skills Agreement, the
provision within ‘third way’ thinking for no enemies, guarantees that there is no
mechanism in place to move past the inertia of pluralistic agreement and
compromise. It is this failure so neatly encapsulated in the experience of the Sector
Skills Agreement that guarantees the ‘failure’ of New Labour despite large commons
majorities to affect any real and lasting change, despite the best will of Ministers to
affect such change through ‘agreement’.
References
Anderson, P (2000) ‘Renewals’ New Left Review, II (1) p11.
Barber, B. (1998) A Place for Us New York, Hill and Wang.
Bresser- Pereira, L. ‘The New Left Viewed from the South’ in Giddens (ed) (2001)
The Global Third Way Debate Cambridge, Polity Press.
Budd, A (1978) The Politics of Economic Planning Glasgow, Fontana/ Collins.
Callinicos, A (2001) Against the Third Way: An anti-Capitalist Critique Cambridge,
Polity Press.
Esping-Andersen, G. ‘A Welfare State for the 21st Century’ in Giddens (ed) (2001)
The Global Third Way Debate Cambridge, Polity Press.
Ferrera, M, Hemerijck, A & Rhodes, M ‘The Future of Social Europe: Recasting Work
and Welfare in the New Economy’ in Giddens (ed) (2001) The Global Third Way
Debate Cambridge, Polity Press.
Giddens, A (1998) The Third Way: The Renewal of Social Democracy Cambridge,
Polity Press.
Giddens, A (2000) The Third Way and its Critics Cambridge, Polity Press.
Giddens, A , in Giddens (ed) (2001) The Global Third Way Debate Cambridge,
Polity Press.
Giddens, A (2002) Runaway World: How Globalisation is Reshaping our Lives Profile
Books, London.
Hall, S. (1998) ‘The great moving nowhere show’ Marxism Today , November/
December 1998.
Jewkes, J (1948) Ordeal by Planning London, Macmillan & Co Ltd.
Latham, M. ‘The Third Way: An Outline’ in Giddens (ed) (2001) The Global Third
Way Debate Cambridge, Polity Press.
Marquand , D (1998) ‘The Blair Paradox’, Prospect May 1998.
Merkel, W. ‘The Third Ways of Social Democracy’ in Giddens (ed) (2001) The
Global Third Way Devbate Cambridge, Polity Press.
Sedgewick, P. ‘Varieties of Socialist Thought’, in B. Crick and W.A. Robson, (eds)
(1970) Protest and Discontent London, Harmondsworth.
Szreter, S, ‘A New Political Economy: The Importance of Social Capital’ in Giddens
(ed) (2001) The Global Third Way Debate Cambridge, Polity Press.
Social Justice Commission (1994) Report of the Social Justice Commission London,
Vintage.
Wilson, H (1974) The Labour Government: a Personal Record London,
Harmondsworth.