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Electronic ed.: Bonn: FES Library, 1998 Date: Tue, 29 Apr 2025 16:39:41 +0200 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----MultipartBoundary--h2eK4YA3WMeN3pt73dPcXpVWyGwFf9LKurPtxuUWUa----" ------MultipartBoundary--h2eK4YA3WMeN3pt73dPcXpVWyGwFf9LKurPtxuUWUa---- Content-Type: text/html Content-ID: Content-Transfer-Encoding: quoted-printable Content-Location: https://library.fes.de/fulltext/bueros/london/00203.html The third way / by Raymond Plant. - [Electronic ed.] - London, 1998. - 15 Bl. =3D 48 Kb,= Text . - (Working papers / Friedrich-Ebert-Stiftung, London Office ; 5) <br>Electronic ed.: Bonn: FES Library, 1998
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The third way / by Raymond Plant. - [Electronic ed.] - London, 1998. - 15 Bl. =3D 48 Kb,= Text . - (Working papers / Friedrich-Ebert-Stiftung, London Office ; 5)
Electronic ed.: Bonn: FES Library, 1998

=A9 Friedrich-Ebert-Stiftung

=3D"INHALT"




Raymond Plant is the Master of St Catherine's College, Oxford, and si= ts in the House of Lords as Lord Plant of Highfield.

This is an abrigded version of a paper given by Lord Plant at the= Friedrich-Ebert-Stiftung/European Policy Forum seminar on "The Thir= d Way" in London, July 20, 1998

The views and opinions expressed in publications of the Friedrich-Eb= ert-Stiftung London Office do not necessarily represent the views of the Fo= undation but are those of the authors

3D"Page

The Context

Ever since Tony Blair assumed the leadership of the Labour Party, th= ere has been talk about his 'project' and since he became Prime Minister th= is talk has become crystallised into argument about the possibility of a th= ird way in politics. The Blair project or the third way has provoked a goo= d deal of comment and the Prime Minister himself has gone out of his way to= emphasise the importance of the third way to his government. He has been = involved in both academic and political discussion about it in the UK, Euro= pe and the USA. At the same time, the idea is elusive and the aim of this = paper is to contribute towards a constructive, but not uncritical, analysis= of third way ideas. The concern with these issues is not just a kind of o= ptional extra, rather there are forces deep in our culture and in the world= economy which could be taken to mean that traditional political options an= d the values and assumptions on which they rest have now become exhausted, = contradictory or inappropriate and that a new direction in politics is nece= ssary.

One of the basic issues at stake in this debate is what are the f= irst and second ways if the task is to find a third way, = and how does or would a putative third way relate to these alternatives? I= think that it would be fair to say that many of those who have been most i= nvolved in talking about the project have seen it in terms of a third way e= ither beyond or between free market, limited government economic liberalism= on the one hand, and social democracy, committed to state intervention, so= cial justice and greater equality of outcome on the other. Those committed= to the third way take the view that both of these alternatives are in fact= exhausted and that a new direction is necessary. =20

The Third Way

The neo-liberals mount a strong case for markets and a powerful crit= ique of government and bureaucracy together with a root and branch rejectio= n of the idea of social justice which social democratic governments are mea= nt to secure. The social democrats, on the other hand, are more trusting o= f government and its capacities and are more alive to the moral limits of m= arkets and the impact of markets on the rest of the fabric of society. Hen= ce, it is obvious that a central theme of the third way has to be about the= role and limits of both markets and government. Before embarking on that = discussion, however, I want to draw attention to how some theorists who hav= e contributed to the third way debate have conceived the defects of both ne= o-liberalism and social democracy, since it is in part a recognition of the= se defects that has led to the demand for a third way.

The Third Way and Neo-Liberalism

Third way politics involves some commitment to the neo-liberal agend= a in relation to markets. It rejects planning, it is very wary of state in= tervention. It does believe in a stable fiscal and monetary environment. = The commitment to bold public expenditure within conservative spending plac= es for two years; the decision to go for a comprehensive spending review to= plan public expenditure for three years; the decision to give independence= over interest rates to the Bank of England; the fiscal stability pact; the= se are all signs of the requirement not only to give the market a stable fr= amework, but also to make that framework relatively immune from political p= ressures. What is perhaps more interesting for the politics of the third w= ay, though, is to look more precisely at the view of the relationship betwe= en government and the market in relation to issues about social policy, soc= ial justice, the welfare state and social inclusion.

One important issue is about the relationship that third way thinker= s believe exists between the market and the wider society in which a market= is embedded. Third way leaning critics of neo-liberalism have pointed out= that such economic liberalism is silent on the question of the kind of mor= al support the markets need to operate effectively. The neo-liberal view o= f values is subjective, individualistic, choice-centred, and its conception= of reason is instrumental (instrumental, that is, to the goal of utility m= aximisation). The more of social life and institutions that is made over t= o the market which embodies these individualistic assumptions, the more dif= ficult it will be to sustain the social and moral relationships on which ma= rkets depend. Markets do not exist in a social vacuum, nor are they impers= onal forces; they are rather social constructions and they presuppose all s= orts of attitudes and relationships relating to contract-keeping, promise-k= eeping, trust, respect for the nomocratic structures governing the market -= in short, some sense of an appropriate level of civic virtue to underpin c= apitalism. This is not remotely a new idea. It is to be found in Hegel, i= t is to be found in Durkheim in his stricture that 'not everything in the c= ontract is contractual' - that is to say, that contract-keeping depends upo= n a set of background conditions of trust etc; it is to be found in thinker= s as diverse as Schumpeter and Habermas, but it is overlooked by neo-libera= ls.

There are two issues here. The first is that market rationality can= of itself undermine the moral assumptions and attitudes, which are part of= an inherited moral tradition on which the market rests. But a subjectivis= t view of value and an instrumental view of reason may well erode this kind= of shared moral order without which the market will not be able to operate= . Neo-liberals assume that it will be possible to reconstruct these values= in terms of both moral subjectivism and instrumental rationality, and inge= nious attempts have been made to do this, usually by the deployment of game= theoretic models. There are, however, clear limits to whether this is in = fact possible and, if it is not possible, then neo-liberalism needs what it= cannot provide; namely, some sense of common value, some orientation to th= e public good, all of which makes very little sense on a neo-liberal basis.= =20

Take, for example, monopoly. For the neo-liberal, monopoly is a ver= y bad thing, and yet each individual producer in the market has every reaso= n to seek a monopoly in his product on the basis of instrumental reasoning = and a subjective theory of value. It could, of course, be pointed out to h= im that the pursuit of monopoly on his part will damage the market order of= which his trading is a part but, if he is convinced that he can be a free = rider on everyone else not seeking monopoly, then, according to neo-liberal= views of reasoning, he would have every reason to do so. Of course, monop= oly can be prevented by law, but law itself has to draw from people's moral= outlooks; so, without some sense of civic virtue directed towards the mark= et itself, the market may suffer from behaviour which in terms of individua= l market rationality is perfectly sensible. =20

It would be wrong to say that some of the most radical neo-liberals = have not had glimpses of the issue here. Hayek, for example, in Law Leg= islation and Liberty, Volume 2, having demonstrated to his own satisfac= tion that social justice is an illusory ideal, then goes on to say that, wi= thout some conception of morality in relation to markets, people may not fe= el loyalty to this impersonal, anonymous order (what he calls the Great Soc= iety). He goes on to speculate that the legitimacy of the market order may= depend on false moral beliefs which may have to be sustained even though t= hey are false, because the market and the conceptions of morality and ratio= nality which go with the market cannot sustain the authority of the free ma= rket order. So the first problem is whether the market itself erodes preci= sely the moral values and attitudes which it needs to sustain itself.

The second aspect of the problem is that, on a neo-liberal view, the= re is little in terms of social practices and social institutions which can= not be brought within the purview of markets. That is to say, they do not = have a sense of the moral limits to markets. In so far, markets are extend= ed to more and more areas of our life then the central elements of market r= ationality go with it: utility maximisation, instrumental rationality, mora= lity as subjective preference, contract as the paradigm of human relations.= We can find more and more areas of life being pushed into this marketised= pattern in a way that undermines other forms of value and relationship. E= xamples of this trend would be the introduction of market- based ideas in m= arriage and the family, in bureaucracies and professions in a way that unde= rmines the idea of service, in advocating trade in body parts and human tis= sues. =20

This extension of markets to fields which have been the site of othe= r sorts of values, usually of a tradition-based sort, in turn has the effec= t of eroding the broader value framework of the community and reducing what= is a complex value system, drawing upon different motives in different con= texts and reducing this complexity to rational utility maximisation across = the board, with little sense for the complexity of human life and motivatio= n. Society is reduced to a position in which there are no obligations to o= thers, unless they are self assumed and are set in contracts or quasi contr= acts. The only obligations that we have as citizens are to mutual non-inte= rference. In the view of third way thinking commentators, this is not a su= fficient basis of a common life. In this sense, thinkers of this sort make= a kind of communitarian critique of neo-liberalism.=20

Indeed, 'community' is not a word that looms very large in the lexic= on of neo-liberalism. For Hayek, for example, community is an atavistic, b= ackward-looking, anachronistic and primitive value more suited to pre-moder= n tribal orders. He compares this prejudicially with his own anonymous 'Gr= eat Society': the free market and limited government. In the view of third= way critics, the combination of a kind of formulaic neo-liberalism with re= sidual conservatism in the Conservative Party proved to be a fatal combinat= ion for it. The Conservative government's neo-liberal agenda, which was ex= tended to more and more areas of life, had the effect not only of marketisi= ng and commodifying goods, whatever the appropriateness of that, but throug= h this process led to the gradual erosion of precisely the traditional valu= es which Conservatism did wish to sustain. In the end, because it had not = addressed the stresses and tensions between its traditional emphasis on com= munity and tradition along with its own impetus to continue extending marke= ts, the government lacked intellectual coherence. =20

It is, however, one thing for third way thinkers to recognise the ne= ed to sustain the community and the social values within which markets are = embedded, a need which has been recognised at least since the time of Hegel= (1770-1831); it is quite another to produce both a theoretical framework a= nd a set of policies which will allow the market to flourish, as it must in= an intensely competitive global economy, while at the same time sustaining= the fabric of social life, which does mean keeping the market in check alo= ng with the motivations and patterns of human relationship that go along wi= th the market.

Some third way thinkers have looked to the Far East as examples of w= ays in which free markets, strong communities and robust values can co-exis= t. This may be a mistake, because their market systems are not yet fully d= eveloped. When they are, the social and geographical mobility required by = markets may well precisely erode those existing communities: both geographi= cal communities and communities of belief and other social networks of care= , for example, based on those communities. If this happens, then these eco= nomies will find it just as difficult to combine the market with community = and social values as we in the West have done.

Much the same arguments that we have been reviewing apply to the neo= -liberal account of freedom which was, after all, a central theme of the Th= atcher and Major governments. As we saw, the neo-liberals adopt a severely= negative view of liberty: liberty is the absence of intentional coercion, = whether that coercion be that of other individuals or the government. But,= on this definition of freedom, there is no link between freedom and some c= onception of human flourishing other than seeing the sheer fact of choice a= s central to such flourishing. However, without some link between freedom,= human flourishing and a series both of needs, resources, opportunities, vi= rtues and obligations that go with freedom, it is difficult to explain both= why we would want to be free and why we think our own society is more free= than some other. =20

The neo-liberals hold a de-moralised view of freedom, and again ther= e is the opportunity for a communitarian critique of this neo-liberal appro= ach to liberty. But, again, if value is wholly subjective and if reason is= purely instrumental, there is no way of making these links between freedom= and other goods, and we are left with the attenuated view that it is the s= heer act of choice that is important to human beings and not the sort of ch= oices people make. This kind of existential, antinomian view of fits very = badly within a Conservative Party which has wanted to sustain the importanc= e of the maintenance of certain kinds of traditional values and attitudes. = Again, however, this is a challenge to the third way: to point out the lin= ks between freedom, morality and responsibility is some way from articulati= ng these relationships in a coherent way.

A parallel point about the moral failure of neo-liberalism from a th= ird way perspective comes through the critique of the market as the instrum= ent for social inclusion and integration. The neo-liberal does not accept = any collective responsibility for market outcomes, whatever the degree of i= nequality and social exclusion, because those outcomes are unintended and a= rise out of free exchange. In the view of third way thinkers, the market c= annot be the full mechanism for social inclusion. The trickle down effect = and a minimal safety net, plus procedural equality of opportunity is not en= ough to produce a sense of belonging in society. More active steps have to= be taken to secure social integration and overcome the alienation that mar= kets can produce despite its indispensable nature. Because of this rejecti= on of collective responsibility for market outcomes and because of the crit= ique of government and bureaucracy, the neo-liberal lacks the moral and pol= itical resources (except via individually self chosen charitable giving) to= undertake a proper programme to secure greater social integration. On a t= hird way view, the government has a responsibility for social solidarity an= d integration but, given its nomocratic view of politics, this is hardly a = duty which neo-liberals could possibly credit to government.

So, from a third way perspective, neo-liberalism has many defects. = It was right to stress the indispensability of the market, but its failure = is essentially a moral one: not to have the moral and intellectual resource= s to think coherently about how the market relates to the wider society and= about how the sinews of community can be preserved in the context of both = the market and the state. This is an immense challenge for third way think= ers, since it has been a motif of pro-market thinkers that markets actually= mean an emancipation from community and a sense of the freedom of the indi= vidual from the pressure of social morality. In seeking to reverse that as= sumption, third way thinkers have certainly set themselves a major task. I= n aspiration at least, however, we can see that, if there is a third way, t= hen it is quite different from neo-liberalism.

The Third Way and Social Democracy

The emphasis upon community and social obligation is also used by th= ird way thinkers against the type of social democracy that I have described= in this paper. This applies particularly to social democratic ideas about= social and welfare rights. Those social democrats who have taken this lin= e have seen social rights as a form of social integration and cohesion foll= owing naturally the sense of belonging to a society and a political communi= ty that comes from civil and political rights. On this view, civil, politi= cal and social rights define the terms of membership and inclusion in a mod= ern state. For the third way thinker, however, this is a mistake. Instead= of social rights creating a robust sense of common citizenship, access as = of right to state benefits on an unconditional basis has created privatism,= lack of discipline, dependency, and a lack of involvement with the educati= onal and social aspects of the labour market. Receiving a Giro through the= post as part of welfare rights does not, in third way views, enhance a sen= se of citizenship. Like freedom, rights have to be linked to responsibilit= ies and common obligations. Dutiless rights breed alienation, not inclusio= n.

So there is undoubtedly a strong communitarian streak in third way c= ritiques of both neo-liberalism and social democracy. It is, however, the = same streak which leads to an endorsement of at least one theme in social d= emocracy which is wholly opposed to neo-liberal views: namely, the third wa= y commitment to social justice, that marginalisation, poverty and exclusion= are injustices which government should seek to rectify. Because such acti= on involves public expenditure, it has to be rooted in some kind of politic= al morality and this is where the detailed arguments of the social democrat= s rejection of the neo-liberals lack of concern with social justice come in= to play. =20

Community, Co-operation and Justice

In emphasising his commitment to what in a loose sense might be seen= as communitarianism, Tony Blair has described his position as social-is= m, thus emphasising the commitment to strengthening communities as a ce= ntrally important background to markets, and Peter Kellner at the Downing S= treet seminar on The Third Way called it mutualism. I want for a mo= ment to explore the links between these ideas and social justice which woul= d, as I have said, give third way thought a more social democratic perspect= ive. Mutualism or social-ism is rooted in the commonsensical idea, which p= resumably no one in his right mind would deny, that we can achieve more coo= peratively than we can achieve as individuals. If I had to meet all my own= needs as an isolated individual, my whole life would be attenuated. We ca= n do far more, achieve far more, flourish far more as part of society which= can be seen as a scheme of mutual cooperation. =20

As it stands, however, this is either very bland or very challenging= . The first challenge is the one posed by John Rawls in A Theory of Jus= tice. If we see society in a mutualist way, as a scheme of social coop= eration, should we not ask the following question: Are the terms of coopera= tion fair to those involved? Are the benefits and the burdens of cooperati= on fairly shared? Even if it crossed the mind of a neo-liberal to pose the= question about the terms of social cooperation, hostility to the idea of s= ocial justice would mean that the issue of fairness would not arise. Howev= er, I believe that third way proponents are keen on the idea of social just= ice which can then be asked about the terms of mutual cooperation. Given t= his commitment, then a number of things follow.

First of all, the emphasis on society as mutualism is no longer blan= d. It does raise questions about who is contributing to the cooperation an= d who is not and why not? Do the benefits and burdens at all correlate wit= h contribution? Who holds the power in the cooperative scheme and how do t= hey use it? All of these are recognisably social democratic questions whic= h invoking mutualism or social-ism does not side step, unless they are invo= ked in such a bland way as to be useless. It also, however, raises questio= ns about equality and exclusion, and I now want to move on to these, focuss= ing particularly upon equality of opportunity and the reform of the welfare= state. I think that it would probably be true to say that third way think= ers reject some of the key assumptions of the social democratic approach to= the welfare state and, in particular, the Croslandite view that public exp= enditure on welfare will make for greater social equality. Irrespective of= the virtues or otherwise of greater social equality, this kind of expendit= ure has not been very effective in fulfilling these egalitarian aims. =20

Equally important, though, is the empirical claim that, in the conte= xt of international competitive pressures, the fiscal costs of the welfare= state are not supportable and that, in the light of that, the role for the= welfare state assigned to it by social democrats is not now supportable. = This view is coupled with the reasonable assumption that Croslandite views = of public expenditure were adopted during a period when it looked as if his= diagnosis of the domestication of capitalism was plausible. Both neo-libe= ralism and globalisation have made his assumptions about the fundamentally = changed nature of capitalism look very optimistic and, in this context, the= welfare state has to be rethought, albeit in the context of social-ism, mu= tualism and a concern with social integration - the latter a theme which pr= ecisely animated Croslandite egalitarianism with its emphasis on the relati= ve position of the poor.

This rethinking typically takes a number of directions. Specificall= y in relation to benefits, however, there is the view that the welfare stat= e has to be reformed around the work ethic. Work is seen as a paradigm cas= e of the reciprocity and mutuality that third way thinkers are looking for = and, as such, it is relatively unproblematic in that it fits in with a comm= on framework of values, and the choice to work or not work is regarded as o= ne which is not really problematic and thus escapes the subjectivity of val= ue view of the neo-liberals.

Taxpayers will not be prepared to pay for unconditional benefits at = a level that will lift people out of poverty. So, given this fact, if we a= re really concerned about inclusion and integration, it is necessary to get= those who can (including single parents and the disabled) into work, becau= se this is the best route out of poverty. Uprating benefits, the typical s= ocial democratic response, is ruled out because of taxpayer resistance when= there is no reciprocation or imposition of an obligation on the recipient,= and because the effects of taxation for unproductive benefits will have an= effect upon competitiveness in the global market. =20

These arguments are used by defenders of the third way to challenge = the social democratic assumption that the welfare state can be an instrumen= t of greater social equality, improving the relative position of the poor i= n an extra-market way. On the contrary, it is argued, work for the able-bo= died is the only feasible route out of poverty. Windfall taxes on the util= ities will pay for the investment in these schemes, including subsidies for= employers to take on the young and the long term unemployed. Not only is = this quite a different view from social democracy, at least in its mid-cent= ury UK form, it also implies a role for the state, for bureaucracy and for = the purposes of taxation which could not be justified by neo-liberal ideas.= In this sense, welfare reform is a genuine alternative to both the first = and second ways.

Nevertheless, welfare reform is also connected to equality of opport= unity which was one of the concerns of social democracy. Defenders of the = third way reject equality of outcome, as did most social democrats, but the= y are keen on equality of opportunity. Spending on education and benefits,= it is argued, should be used to enhance employability skills which will eq= uip both school leavers and others to face a labour market which has change= d out of all recognition since the prime of mid-century social democracy. = It is argued that global markets and technological change require greater e= conomic adaptability and flexible labour markets. The idea of jobs for lif= e or a career path will, for the vast majority, disappear. Individuals wil= l have to take on a range of different jobs during a lifetime. The governm= ent cannot guarantee job security and the sense of middle class insecurity = which plagued the last government, and which of course has afflicted people= in working class occupations for most of modern history, cannot be cured b= y some kind of interventionist policy by the government. If an individual = is to have any sense of security, it is going to have to come through that = person's own skills, the adaptability of those skills and the willingness t= o take on learning new skills. =20

So investment in employability skills and lifelong learning is not o= nly a requirement for a dynamic economy, investing in human capital which i= s much less volatile and moveable than finance capital, but it is also a co= mmitment to equality of opportunity. So education reforms and welfare refo= rms are to be geared to this overall project of enhancing skills. In a sen= se it could be called supply side citizenship. On these assumptions, in a = global market there cannot be a rich and growing form of end state or statu= s citizenship; that is to say, a bundle of goods which are due to a citizen= as a right outside the market. Rather, supply side citizenship stresses t= hat citizenship is an achievement, not a status, it is availa= ble through participating in the labour market and reaping the rewards that= accrue from that, and investment in skills is part of equal opportunity as= a right of citizenship in this new economic context. =20

Although the details of this policy are rather different from Crosla= ndite social democracy, nevertheless it has more in common with social demo= cracy than with neo-liberalism: its emphasis on a central role for the stat= e, its acceptance of government responsibility in this area, its commitment= at least to a positive sense of equality opportunity. However, this empha= sis on combatting social exclusion by welfare reform and a work-oriented st= rategy leaves untouched what can be called the critical issue at stake betw= een the neo-liberal and the social democrat. The social democrat wants to = pursue a policy that will maintain the absolute position of the better off = while improving the relative position of the worst off; the neo-liberal wan= ts to do exactly the reverse, improve the absolute position of the worst of= f while being prepared for the relative gap between rich and poor to grow. = =20

Where does the third way stand on this? The answer, I believe, is t= hat it is agnostic. Increasing employability skills and equipping people f= or the market will give the worst off a stake in the only pathway out of po= verty. However, it looks as though the government wishes to leave the rewa= rd structure untouched and seems disinclined, for example, to raise higher = rates of tax. In these circumstances, the question of whether the position= of the poorest groups equipped with marketable skills will improve relativ= e to the rich will be, so far as I can see, a matter for the market to dete= rmine. Either these skills will allow the poorest groups to improve their = position in the market, or they will not. The social democrat, however, wa= nts to see such a policy pursued as a direct aim of government, not as some= thing to be left to the market. The important point is that, for third way= thinkers, the emphasis on combatting social exclusion, which is central to= third way politics, is not at all the same thing as the social democratic = aspiration of improving the relative position of the poor (or, to put it an= other way, diminishing inequality); nor is it, though, just a form of neo-l= iberalism, because the role of government and taxation in investing in thes= e skills goes way beyond the appropriate role for the state in neo-liberal = terms.

Deliberation, Democracy and Community

I want now to turn to constitutional reform and connect that with so= me of the third way themes I have discussed. Unlike the neo-liberal and th= e social democrat, third way politics invokes quite a strong sense of commu= nity, of common life, of common obligation. These are concepts not at all = at home in the individualistic cultures of neo-liberalism and social democr= acy. At the same time, however, they cannot just be invoked by ministers o= r policy wonks. If we are to see, for example, the politics of the welfare= state in terms of reciprocity and penalising those who do not reciprocate = (eg. by withdrawing benefit), then we have to be pretty sure of the moral g= round on which we stand. Equally, when the government asserts, as it somet= imes does, that it has to challenge vested interests in the public interest= , and thus challenge both public and private sector institutions, it has to= have a sense of moral authority. It is possible to see some benefits from= constitutional reform in these contexts. =20

First of all, if ideas about responsibility for choice are to be str= essed, there is no reason why this should not apply in the political sphere= too, and the devolution of power will enable communities, regions and nati= ons in the UK both to make and to take responsibility for their own destini= es. In this sense, communitarianism, in so far as it is a central theme in= third way politics, applies to politics as well as in the field of social = policy.

Secondly, if we talk about duties and obligations and wish to resist= the dutiless individualism of neo-liberalism and social democracy, then th= ere has to be some sense of the moral authoritativeness of such a social mo= rality. This has to be a matter of dialogue in a diverse society, it canno= t be imposed from one single authoritative source, eg. Christianity. In th= is sense, changes to the electoral system in devolved bodies, and possibly = in Westminster, will perhaps facilitate a more deliberative kind of democra= cy, together with other forms of political consultation including the derid= ed 'focus groups', which will allow discussions of the values on which comm= on practices and institutions are based to be conducted more adequately. T= he neo-liberal, of course, celebrates individualism and diversity and has a= deep distrust of political processes. The only way for the neo-liberal an= individual's values count is in the market place. If, however, we can rec= ognise that there are urgent matters of social morality to be addressed, th= en it may be that through dialogue in deliberative bodies it will be more p= ossible to address these questions. We are, of course, talking about achie= ving a degree of value consensus, not truth, and that this co= nsensus will guide public policy in seeking to restore some of the kind of = moral infrastructure without which society cannot be efficient or humane.

Assessment

In this final section I want to raise some rather skeletal queries a= bout the third way. They are skeletal only in the sense that the politics = of the third way are still in the process of formation and therefore it is = rather premature for a full scale critique.

It seems true to say that the third way does not have its own theory= about the economy and how it works which would, so to speak, incorporate i= ts own themes about community and responsibility into an understanding of t= he economy in the narrow sense. This is not to say that there are not more= cooperative and communitarian theories of the market but, so far as I unde= rstand it, third way thinkers are not following that path. They are more c= oncerned with the setting of the economy and the extent to which the market= undermines communities; with the inputs into the economy - with employabil= ity skills and so forth; and with social inclusion. This leads to an immed= iate issue. =20

If one of the criticisms of the Thatcher/Major governments is that t= hey did not have a way of reconciling their defence of the market with its = corroding individualism with the defence of more traditional values, why sh= ould we believe that there will be a third way which can both endorse the m= arket (within which, in a global context, competition is likely to intensif= y) and seek to rebuild a sense of community and common life? If market und= erstandings corroded the Conservatives' defence of traditional values, then= why will the third way be different?

One way, of course, would be for third way politics to accept a poli= tics of complexity of different spheres of human life, in some of which the= market dominates and others from which it is excluded, so that in the non-= marketable spheres non-market values should dominate. This seems to me to = be much the best third way solution to this dilemma, and a role for the sta= te would be to try to maintain the boundaries between spheres, eg. keeping = markets out of health care. Such a view would fit third way politics quite= well. It recognises the importance of non-market values, albeit outside t= he market and not in it. It strengthens a sense of common life, because th= ere would be a recognition of things belonging to an appropriate sphere whi= ch would have to be based on a negotiated common judgement. It would also = allow for the idea that human nature is complex and that we cannot just be = reduced to consumers in a market.

However, things are not quite so simple as this. If the government = takes a strict view of value for money in its policy delivery systems then,= by allowing cost to determine judgement and not allowing this to be counte= rbalanced by any other factors of moral concern, it could easily render suc= h an approach set out above redundant. Let me take a specific example: the= privatisation of prisons. In opposition, Jack Straw was totally opposed t= o private prisons on moral grounds, and those moral grounds were very power= ful and were to do with the inappropriateness of markets and profits in the= sphere of incarceration. As Home Secretary he has, however, sanctioned mo= re private prisons and has justified this on grounds of cost, private priso= ns costing up to 15% less to run. My point is not to convict the Home Secr= etary of inconsistency, only to show how difficult it is to keep the market= to what just over a year ago he regarded as its proper place. It is one t= hing to argue that there must be a framework of social morality around the = market, so that the market's individualism and subjectivism does not erode = all sense of common values; it is quite another to be able to maintain some= kind of barrier, if overriding all other considerations is the question of= cost.

I now want to turn to welfare reform where ideas seem to be most cle= arly worked out. Issues here are of great complexity, but I just want to i= dentify a few.=20

First of all, it is argued that welfare reform must focus on work an= d that for the able-bodied a life on benefit is not acceptable, because it = will lead to social pathology, poverty and social exclusion. If welfare is= being organised around an obligation to work, what if the work is not ther= e? This could either be because of recession or because technological chan= ge means the shedding of jobs more quickly than reskilling can keep up with= (assuming that there are jobs for reskilled people). At the moment, jobs = are being subsidised by the windfall tax, but this runs out in three years = and there is a question as to whether the incentive for employers is strong= enough to create enough jobs anyway. If the state sees work as an obligat= ion, can it rely on the market to produce jobs? And, if it fails, should t= here not be a role for the state as an employer of last resort? Unless it = is then the state is willing the end (namely, work as a basic obligation) w= ithout willing the means (namely, jobs). We are not in these circumstances= yet but, if the job situation deteriorates, we shall be faced with choices= of this sort. For the state to become the employer of last resort would b= e extremely expensive but, if the government itself is insisting on the dis= charge of the obligation and delegitimising the alternative (a life on bene= fit), then it is not clear that there is a morally justified alternative.

Indeed, the existing programme is pretty expensive in that there are= input costs (employability skilling together with lifelong learning) and o= utput costs (for example, many long term unemployed who get back to work do= so in the public or state funded jobs in the voluntary sector). These cos= ts have to be met by government. At the moment they are being met by the w= indfall tax, but what about when that runs out? It is a third way criticis= m of social democracy that it was 'tax and spend', and that it found it imp= ossible electorally to persuade people to pay extra taxes to support social= ly desirable goals. Unless, however, some other way has been found to fina= nce the New Deal (which surely cannot be seen as just a transitory or inter= im programme and, if it is, that seems wildly optimistic), then there will = be a question about the long term costs of social inclusion which will have= to be answered. Third way defenders may well argue - indeed, they do argu= e - that tax payers will pay for social programmes which involve investment= in human capital and require reciprocity as the New Deal does, whereas the= y would not pay for unconditional increases in benefits without reciprocity= as in social democracy. This may be true and it may be a way around the s= ocial democratic dilemma, but the issue is still there since, except for th= e utilities, the New Deal is a kind of free good to tax payers.

The other point worth making about welfare reform, since it exercise= s people a good deal, is why work should be the only form of reciprocity re= cognised. Why, for example, should not caring, or looking after children, = or volunteering be recognised as a form of reciprocity in exchange for bene= fit? Part of the answer here I think depends on the fact of how far we can= take the moral consensus about obligation to extend. Work is, in a sense,= obvious: we know when people are doing it or not doing it, it has tangible= monetary value. The same cannot be said for other forms of reciprocity, a= nd I imagine that the government would not care to test too extensively the= idea that these other things could be taken as forms of reciprocity and ob= ligation in which people pay back their dues to society.

Given that welfare reform, particularly the New Deal, does not invol= ve a contraction of government (indeed, on the contrary, it seems to imply = a very large role for government in terms of its responsibility for social = exclusion), the defenders of the third way have to confront the neo-liberal= critique of bureaucracy. I do not think that this has been squared up to = directly in terms of a critique of the public choice approach to the explan= ation of bureaucratic behaviour. Nevertheless, I think that there is some = recognition, at least implicitly, of the neo-liberal critique and the failu= re of social democracy to deal with it. The government seems prepared to c= onstrain bureaucratic and professional behaviour in some ways: citizens' ch= arters, league tables, naming and shaming, performance indicators, pressure= from competition within the public sector (eg. private pensions), educatio= nal action zones. It is also forming partnerships, particularly with the v= oluntary sector, for the New Deal (although neo-liberals regard state fundi= ng for the voluntary sector as a form of corporatism). Given, though, that= the concern with social exclusion is an extension of the role of governmen= t, it would be useful to have a view from third way theorists about the gen= eral philosophical approach they take towards bureaucracy.

Finally, I want to raise the question of the position of those who w= ill not be able to take part in the government's new world of greater oppo= rtunity and obligation. So long as citizenship is defined in these terms, = where work becomes a kind of badge or passport to citizenship, what about t= hose who cannot work (the disabled being the most obvious group)? Unless t= here is a recognition that, for some groups, benefits without reciprocity i= s a perfectly acceptable status then, in seeking a reform of the welfare st= ate focussed on work, the government could be developing a mechanism for ov= ercoming one form of social exclusion only to create another those who cann= ot be part of an achievement-oriented view of citizenship.

Overall, then, there is a case for saying that there is a distinguis= hable third way which is definitely, in my view, radically different from n= eo-liberalism, except for the now unexceptional commitment to the central a= nd indispensable role for the market and a way which also is rather differe= nt from social democracy. It does share some social democratic concerns bu= t not others, particularly to do with inequality and relative positions. T= he third way is only in process of formation. I hope that this has been a = constructive contribution to a debate which will continue, I am sure, for t= he remainder of this parliament.=20

=A9 Friedrich Ebert Stiftung | te= chnical support | net edition=20 fes-library | September 1998 = =20
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