Part II: The Third Way, economics, equality and the State
in The Third Way and beyond

One major theme in discussions of New Labour and the Third Way more generally has concerned the Third Way's credibility as a social democratic force. Anthony Giddens's Third Way rests on a social theory of modernisation and globalisation and uses the notion of 'generative equality' to propose a new model for social policy. Private Finance Initiative (PFI) has been seen as an important part of the government's strategy to modernise public services and an economically feasible way of rebuilding the decaying public infrastructure, especially in the health service.

Part II

The Third Way, economics, equality and the State

One major theme in discussions of New Labour and the Third Way more generally has concerned the Third Way’s credibility as a social democratic force. As Part III shows, that credibility is based in part on its appeal to community, although there are some doubts about whether the appeal is a convincing one or whether community is genuinely social democratic, especially if it displaces values like equality. But the Third Way has also hung its social democratic credentials on its claim to promote a more equal society and save public services.

There is some controversy over its promotion of social equality, however, because the Third Way also says that it is no longer concerned with the Old Left’s concern for equal outcomes and because saving public services requires private sector involvement. These two propositions go against traditional Left support of redistribution in creating more equal outcomes in society. They also challenge the Left’s perception of public services as something that should be run by public actors according to social need, without the involvement of the private sector and profit. The controversy goes further when some critics see the replacement of equal outcomes by equality of opportunity as not even that. Equality of opportunity seems to envisage minimum opportunities and sufficiency for all as a baseline beyond which opportunities will not be equally shared, especially in the absence of some sort of redistribution of income and wealth. Stephen Driver, and Pete McCullen and Colin Harris investigate such issues, with an emphasis on defending the Third Way’s egalitarianism, although not without their own reservations about the Third Way. Public–private partnership, furthermore, has been defended in the name of pragmatism – the Left should not be so dogmatic in its antipathy to private sector involvement in public services. If the public sector can be improved through private sector investment, then the Left should be open-minded about such investment. Eric Shaw, however, questions whether New Labour’s pragmatic arguments actually work. For him, the pragmatic case for the Private Finance Initiative does not stand up. It seems that there may be more than a merely pragmatic belief in the private sector among the politicians of the Third Way.

Welfare reform has been central to the Third Way in both the USA and UK. Stephen Driver asks whether New Labour’s US-influenced welfare reforms involve a continuation of the New Right, rather than a Third Way break from them. Can an approach based on social exclusion and ‘work first’ promote egalitarian social democratic goals? Driver argues that there are continuities between Labour and Conservative approaches to welfare reform. However, he suggests that there are important social democratic elements in New Labour policy which cast doubt on a straightforward ‘neo-liberal convergence’ thesis. There is some egalitarianism and social democracy in New Labour’s Third Way.

For McCullen and Harris equality is what differentiates the Left from the Right, and they suggest that the redefinition of equality by Giddens and by New Labour marks a significant departure from post-war social democratic goals. Giddens’s Third Way rests on a social theory of modernisation and globalisation and uses the notion of ‘generative equality’ to propose a new model for social policy. McCullen and Harris critically assess this idea of ‘generative equality’ from a managerial perspective. On the positive side, they argue that Giddens’s prescriptions for generative welfare policies and equality have much in common with those of the management literature of the last two decades which emphasises the importance of individual responsibility and ‘empowerment’ over Taylorist command and control approaches. It is argued, however, that Giddens’s use of Maslow’s hierarchy of needs as a model for the creation of ‘happiness’ and ‘self-actualisation’ is open to misinterpretation and that a stronger egalitarianism is needed for the realisation of generative equality and happiness, and for self-actualisation.

Eric Shaw discusses New Labour’s Private Finance Initiative (PFI), which separates the commissioning of public services through public authorities from the provision of those services which the private sector is encouraged to undertake. PFI has been seen as an important part of the government’s strategy to modernise public services and an economically feasible way of rebuilding the decaying public infrastructure, especially in the health service. It is presented as a pragmatic approach, which goes beyond both the right-wing dogmas that the private sector should own and provide public services and the leftist belief that the State should be the sole provider. Partnerships between public and private, it is argued, can secure higher public sector investment. The New Labour Government argues that PPP–PFI ‘works best’. Shaw, however, argues that there is little substance to the British Government’s claim that the PFI is, on pragmatic grounds, the most effective way of renewing the capital infrastructure of the NHS. There must be other reasons for the Government’s preference for private sector involvement. The alleged pragmatism of the Third Way is cast into doubt.

The Third Way and beyond

Criticisms, futures, alternatives

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