The limits of the 'Third Way'

The Labour Party's electoral victory highlights the unravelling of Margaret Thatcher's 'Conservative Revolution', but it also underscores the need for a radical Fourth Way that goes beyond Blairism.

THE Labour Party has registered a historic victory in Britain. Not only did Tony Blair become its first leader in 100 years to win two elections in a row; he was also the first Prime Minister to win a second time with a convincing margin - a clear 10 percentage points over the rival Tories' 32 per cent. Labour won partly because of a negative vote against the out-of-tune Conservatives. Only one out of four electors favoured Blair's party in Britain's lowest-turnout election since 1918. However, on a broader canvas, Labour's return to power marks a welcome turning point: the unravelling and end of the "Conservative Revolution" that Margaret Thatcher unleashed 20 years ago to alter the very contours of British society and politics. And yet, as we see below, today's New Labour shows up the limits of the neither-Left-nor-Right 'Third Way' ideology which Blair espouses.

Thatcherism uniquely combined elitist social conservatism, fiercely parochial nationalism, and devotion to predatory capitalism in a fangs-bared, property-worshipping, anti-trade union form. It proceeded to shift forcibly the relative weights of different groups in British society as never before: finance capital vis-a-vis investment-shy industrial capital, the home-owning middle classes against once-proud blue-collar workers, the de-industrialised North vis-a-vis the "prosperous" Southeast. Thatcher's great success lay in stoking, and then legitimising, deep antipathy among the middle classes towards the very idea of equality and welfare.

Thatcherism coincided with the rise of the ultra-conservative Republican Right in the United States under Ronald Reagan. It could thus command unequalled ideological ferocity. This was central to the imposition on the global economy of what has been called the Anglo-American model of capitalism.

Blair's New Labour never challenged Thatcherism frontally, leave alone consciously. Nor has it sought to transform or radically reform capitalism. Rather, it has developed a model for adapting to and managing capitalism "responsibly", while professing a vague, dilute commitment to the underprivileged. New Labour no longer represents a Socialist project. Blairism has explicitly abandoned the core of that Socialism which defined the Labour Party's programmatic orientation for more than eight decades: common ownership of the means of production. It has not hesitated to use Thatcherite methods even where its agenda promotes equity, welfare and social entitlements.

And yet, Blairism marks a break with the Thatcherite project. New Labour may not aim to restore the "welfare state" that Thatcher destroyed in the name of "workfare". But it speaks of modernising politics, moderating conservative nationalism, opening up to Europe, and making Britain a "fair and decent" society in which everyone gets a "chance in life". This itself represents an ideological departure from nationalist parochialism and from Thatcherite remodelling of society at the expense of the underprivileged. New Labour has also undertaken a far bolder programme of decentralisation and devolution than the Tories could even countenance: including independent Assemblies for Scotland and Wales, an elected London Mayor and a non-hereditary House of Lords.

All this spells a strong political break with Thatcherism. New Labour's social agenda is liberal, not conservative. But its economic break with Thatcherism is weak and hesitant. Labour's commitment to non-conservative social goals too is incomplete. This is fully reflected in Britain's evolution during the past four years into a more unequal society - despite moderate economic growth, itself hyped into a major "success".

The Blairite state has increasingly withdrawn from infrastructure investment, especially from the country's once-highly regarded public services, particularly health and education. Failing schools, acute teacher shortages, long queues and postponed operations in National Health Service hospitals, delayed or cancelled trains, and the growing disappearance of the reassuring bobby from city streets, have become hallmarks of British life. Today, British policy-makers speak enviously of "the French health system, the German education system and the Dutch transportation system" - in all of which spheres Britain once enjoyed decisive superiority.

Today, in public expenditure, the United Kingdom scores poorly in relation not just to countries with evolved social security systems such as Sweden, Denmark, Germany or Belgium-Netherlands, but even to Portugal, Spain and Greece. When Thatcher took over, net public investment stood at 2.7 per cent of GDP (Gross Domestic Product). Under John Major, it fell below 2 per cent. In the past four years, it has been consistently below 0.5 per cent. Overall public spending has decreased by 4.4 per cent a year since 1997 - a decline bigger than under Thatcher. This happened despite an overall tax growth of 4.8 per cent a year.

British public expenditure on health (5.6 per cent of GDP) is the lowest among all G-7 (Group of Seven) countries. Even overall expenditure on health at 6.7 per cent compares poorly with the U.S.' 13.6 per cent, Germany's 10.6 or France's 9.6. Britain's expenditure on education is lower not only than in "high achievers" such as Canada or the Nordic countries, but even than in the U.S., Ireland, Italy or Spain.

The British economy has performed somewhat better than many other OECD (Organisation for Economic Co-operation and Development) countries. But this has not produced significantly higher or better-quality employment. Chancellor Gordon Brown's "spectacular" success, that is, much-touted macro-economic "stability", was achieved through miserly public spending, which has deprived more and more people of their rights.

The number of patients treated in private hospitals has increased from 700,000 in 1997 to over one million and is growing. Almost half a million British children attend private schools - 19,000 more than in 1996. Despite Britain's unhappy experience with privatising telecom, railways and water, New Labour has persisted with the privatisation of sensitive public services. An example is the Abbeylands School in Surrey, the first in Britain to be entirely run by a private firm, Nord Anglia, on a seven-year contract. Nord Anglia will receive generous bonuses if it improves school enrolment and examination results. Despite its best efforts, Abbeylands is running a deficit of 160,000. One-third of its 540 seats remain unfilled.

Britain's biggest education "partnership", involving 29 Glasgow schools, has already become something of a public scandal. The 160 million project has resulted in smaller classrooms, bizarre laboratory designs and cutbacks in other facilities. But 20 education authorities (provincial school boards) are still outsourcing various functions.

Private business is also being awarded contracts for urban improvement and renewal projects with heavy subsidies, as in Liverpool and Sheffield. As local councils go bankrupt, even policing is being handed over to private agencies, including in Blair's own constituency, Sedgefield. So have many prisons. This experiment has been far from successful. Three prisons are being handed back to State services. The private takeover of health services has also run into problems. For instance, in one town, Kidderminster, patients have to travel nearly 30 km to the closest hospital for most ailments.

In its latest manifesto, Labour promised to raise public investment, but only in conjunction with private funding, and that too strictly till 2003. Despite a higher commitment to health and education, the manifesto lacks a serious redistributive agenda. Of all the three major parties, the Liberal Democrats alone have what may be called the Robinhood approach: take from the rich and give to the poor. The Lib-Dems have emerged much stronger from the elections, with 18 per cent of the national vote. The Lib-Dems have in many ways moved to Labour's Left, and emerged as its moral Opposition.

Blair himself recognises the limitations of New Labour's victory. He admits this is a "mandate to reform" and "an instruction to deliver". He promises to "invest in the future".

TODAY, Europe's Conservative Right is in a big mess, although it rules in Italy, Spain and Austria. Britain's Tories have emerged seriously weakened from the latest electoral mauling. The old Christian Democrats in many E.U. (European Union) states are barely able to cobble together a coalition, even an agenda. Parties further to their Right are not a Europewide force. The Right on the whole is not winning new adherents. It lacks appeal.

However, it is far from clear how the Third Way parties will perform in the coming round of elections in a number of E.U. countries where contests are due next year: Denmark, France, the Netherlands, Germany and Sweden. They are not on the downswing electorally (barring France, to an extent) or politically. But they have failed to enthuse the people or infuse new energies into the intelligentsia.

In some ways, New Labour's ideology, performance and promise show up the limits of the Third Way, the path of least resistance to capitalism adopted by the bulk of Western Europe's formerly Social Democratic parties. Even after Silvio Berlusconi's victory in Italy, these broadly Left-leaning parties rule in as many as 10 of the E.U.'s 15 member-countries. But their long-term future is uncertain.

In particular, the Third Way does not demonstrate any particular strength or spirit in resisting the more unsavoury aspects of contemporary capitalism: globalisation, jobless growth, de-industrialisation of large areas, decreasing ability of the state to intervene even in emergencies. Today's capitalism is comprehensively unable to raise living standard and generalise prosperity - even remotely in relation to its own Golden Age (1945-73).

Even starker is the Third Way's failure to conceptualise a grand political project which offers an alternative to the Right, based on participatory democracy, high-quality governance, maximum regional autonomy, and enrichment and extension of human rights - including economic and social rights as well as civic and political rights. In many ways, the values that Third Way parties stand for are somewhat more humane, incrementally better - not radical - versions of centrist or "middle ground" liberalism. They do not constitute a new paradigm. They fall well short of an alternative conception of a just society based on equality, and on caring and sharing - within a framework that puts popular control of economic activity above private privilege.

Globally, the Third Way parties do not match the strength of conservatism, reflected above all in the U.S. government, now strongly inclined to unilateralism under George W. Bush. They remain tied to a West-obsessed, largely Atlanticist, worldview which does not effectively resist the emerging U.S. hyperpower. That explains the supine to mild, and hence inadequate, reaction from the E.U. to aggressive U.S. postures on economic, security and environmental issues.

On Missile Defence, no Third Way government, including Blair's, has endorsed Bush. But none has provided the kind of leadership needed to dissuade him from that disastrous path either. The Third Way has proved timid at the global economic level too. The E.U., even more than the U.S., demands a fresh round of WTO (World Trade Organisations) negotiations. This will not do.

What the Socialist project or movement needs today is the Fourth Way - a bold, broad, anti-capitalist agenda to reform the global order by promoting human-centred, gender-just, ecologically sound, development based on a radical social transformation. The Fourth Way must take an unambiguous stand on today's structurally asymmetrical world, with its enormous maldistribution of power and the vulnerability of its existing global-governance mechanisms. It must seek to regulate global capital, trade and investment in the interests of equity and balanced regional development. It must limit the use of unilateral military force. Its social agenda must be conceptualised in pluralistic, uncompromisingly democratic terms. It must emphasise non-exploitative relations.

More than a decade after the end of the Cold War and the collapse of the USSR (Union of Soviet Socialist Republics) - with its model of excessive centralisation and lack of democracy - the time has come to combat market fundamentalism and fight for a human future based on decentralised popular democracy. Blair is right in saying that the election results are an "instruction to deliver". But unless he moves away from the Third Way, such talk will be all spin and no delivery.