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The Return of the Third Way

August 24, 2004

Tags Free MarketsMedia and CultureOther Schools of ThoughtPhilosophy and MethodologyPolitical Theory

I never thought I'd agree with a Marxist. While researching Prime Minister Blair's Third Way, I fell upon a critique written by Barbara Humphries on marxist.com. She says: "The Third Way (if there is such a thing) has no solution to what is a fundamental inability of the capitalist system to ensure prosperity and security for working people."

Even coming out of the mind of a committed socialist, this sentence makes sense to me. And I'm not prejudiced, I will give credit where it is due. Of course I also realize that if Ms. Humphries knew of my opinions and recognized me on the street, she would probably scratch my eyes out. But no matter; as journalist George Putnam once quipped, even from my hospital bed I will fight to the death to assure her every right to hold any damn-fool opinion she pleases.

But permit me to forge ahead. A group of Democrats are working to revive the "third way" fashion from the 1990s. Led by Evan Bayh in the Senate, the group The Third Way seeks a shift away from the left-liberal-labor dogma toward "market-oriented" economic policies.

According to its inventor Tony Blair, speaking with Clinton and other heads of state at a 1998 NYU School of Law banquet, "[the Third Way] leaves behind, if you like, the old left that was about big government or state-controlled tax-and-spend, and [here he gets a little vague] it is not the politics of laissez-faire, either . . . it is essentially a belief that we can construct a different type of politics for the 21st century based on the values of what I would call progressive politics, but rigorously, in a really disciplined way, applying those in an entirely fresh perspective for the problems that we face today."

This admittedly lacks specificity, but I think we can safely say that the Third Way is an attempt at compromise between capitalism and socialism, a new-age effort to reestablish free-market roots while preserving and grafting onto them the aforewilting progressive leaf system. Just as I thought.

Now, I suppose I have to admit that I can't prove it won't work, but I think it is the following exchange between Mr. Clinton and Prime Minister Prodi that sent a spark through my mind as to why I am still fundamentally ill at ease with this Third Way:

"THE PRESIDENT:  Former Governor of New York, Mario Cuomo, used to say, 'People campaign in poetry, but they must govern in prose.' (Laughter.) . . . Romano, what's your biggest domestic challenge?

PRIME MINISTER PRODI:  My prose. (Laughter and applause.) My problem is that . . .

PRESIDENT CLINTON:  Italians never have to speak in prose. (Laughter)

At first, the beauty of it almost moved me to tears. But of course, as soon as my emotions subsided, I realized that we had here the crux of my problem: it is the hubris of politicians, which lures them to the preconception that even if they don't presently know how, they have the responsibility to find out how to spend the public's hard-earned wealth better than the private sector can.

This hubris is again very clear in the following Clinton paragraph:

". . . [F]or a pittance [he's referring to the 'pittance' US aid invested in Uganda on microcredit loans], over a period of years, we could maybe move so many more people toward the future we seek . . . how do we make the argument that some of the money they give us in taxes every year should be invested in the common future of humankind." 

How do we indeed. Shall we say that charm and eloquence helps?  But wait: I thought Coca Cola did a pretty darn good job of "moving people" all by themselves—and I don't mean just the investing, they also happen to shoulder all of the risks.

The self-enamored power-seekers of our species do not seem to be capable of seeing themselves as other than puppeteers of our national welfare, and not only that, but also of international finance, global temperature, and world peace. Where is the humility?  Where is the modest, observant curiosity about what really makes a healthy economy go around?  Clinton speaks as if that problem has been solved for some time now. I question that assessment.

So don't let them fool you. Third-Way economics is merely another political trial balloon. The politicians are still simply trying to twist fattened, round socialism into a lean, square, free-market hole, mainly to solicit our vote. The problem extends beyond the Labour-Democrat nexus to encompass the Tory-Republican nexus as well. Here we find Third-Way governance combined with free-market rhetoric.

The core problem is the one Mises identified. Every form of intervention generates an imbalance that seems to call forth a next step toward markets or toward further intervention. The choice determines whether the social system will be pushed toward the economics of prosperity or that of poverty. The Third Way, in short, attempts to combine policies that are internally contradictory. To attempt a pivot between laissez-faire and socialism is to be caught in precisely the imbalance that afflicts the US and Europe today.

I suppose I should at least give them credit for having noticed that economic centralism hasn't worked in the past. And I do realize that to take all the shackles off at once may induce culture shock, and that occasional injustice will need palliation. But it is imperative that some way be found to prepare ourselves, and to seduce the sidetracking rent-seekers back into their cages. We must communicate to them in no uncertain terms that we want our individual power and freedom back—all the way back.

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Katy Harwood Delay, a columnist specializing in the fields of economics and government, lives in Los Angeles. lavande@comcast.net. Comment on the  blog.


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