BOOKS

New promise or false dawn?

The Promise of the Third Way: Globalization and Social Justice by Otto Newman and Richard de Zoysa, Palgrave, 2001; pages 255, £42.50.

R. MOHAN
V. SURJIT

THE ideology followed by New Labour in the United Kingdom, which has been espoused by Antony Giddens, Director of the London School of Economics (LSE) and British Prime Minister Tony Blair, is described as the Third Way. This book covers a wide range of views on Third Way and related subjects. It furnishes the necessary background to gain an insight into the circumstances of its emergence, the manner in which it gained prominence as well as its critique by the neo-Right and the traditional supporters of the Labour Party.

The introduction starts thus: "The Third Way in Britain is currently in doldrums, battered by critics both from Left and Right and disappointing its supporters by its inability to translate its ideas into a coherent programme of reform understandable to wider electorate." In the ten chapters in three parts, the authors discuss the various debates and the sequence of events such as the emergence of various schools of socialism, ascendancy of social democracy in the West and its retreat, the rise of the neo-Right and the challenge posed by the New Labour which has the Third Way as its ideology.

In their analysis of the "background to the Third Way", the authors compare, capitalism and socialism, analyse social democracy, and raise the question of the "End of Socialism". Socialism is traced to its very early days when class antagonisms were absent. The authors discuss the Marxian strand of socialism and the social democratic varieties. Socialism that is based on the tenets of Marxism-Leninism, gained ascendancy in East Europe, China and the Soviet Union. Social democracy was the reality in Western societies such as the U.K. In Italy and France, communists enjoyed about a third of the electoral support.

However, in the 1970s, there was stagflation in the capitalist economies and the view that the Keynesian panacea had failed started gaining momentum. The last years of the 1970s, when the Labour Party was in power in the U.K., were marked by what has been described as the "Winter of Discontent" of 1979, during which, there was unprecedented industrial disruption, shutdown of emergency hospital services and power cutbacks causing blackouts.

In the elections held in 1979, the Conservative Party led by Margaret Thatcher was voted to power. Thatcher's prescription for the ills was mainly the rollback of the state by introducing measures to privatise the economy, checking the power of the unions and so on. During the same period, the Republican candidate Ronald Reagan was elected President of the United States. Thus the market-oriented policies which steamrolled in the U.S. and the U.K. during the decade of the 1980s have been termed as the 'Reagan-Thatcher Revolution'. The theoretical basis of their reforms was monetarism and supply side economics; and the watchword of this (counter?) revolution was that the "government is the problem, and not the solution".

The free market system was considered as being capable of producing economic progress, and state intervention was seen as unwarranted. The cornerstones of the new agenda were privatisation, monetarism and "union bashing", flexi-time and de-routinisation. These put an end to the concept of lifetime careers. Reflecting on the consequences of the Reagan-Thatcher-led reforms, the authors quote Robert Reich, who was Labour Secretary during Bill Clinton's tenure as U.S. President: "The society is now two-tiered with a few winners and a larger group left behind. In U.S. and Britain, as much as one-third of the workforce is now contingent workers, doing part-time, casual and seasonal work". There is uncertainty and no one knows when the axe would strike, he said.

Tax giveaways to the rich were another key agenda of the reform process. While discussing this, the authors reveal an interesting piece of information - the global media magnate, Rupert Murdoch, had not paid taxes on seven years of British-based earnings amounting to œ1.4 billion. Two American researchers found that the benefits handed over to corporations and wealthy individuals amounted to $448 billion a year, a figure that was well in excess of Reagan's budget deficit.

The authors have rightly criticised the notion of the neo-Right that free trade would lead to universal democracy. The book states: "Generally, the New Right depict their campaign as a struggle for freedom versus tyranny. On the one hand there is constitutional government, free speech, individual rights and freedom of choice; and on the other collectivism, state control, suppression of liberties and the abolition of enterprise." The authors are of the view that while the statement might legitimately reflect the contrast between the Western democracies and the Soviet system, it is evidently misapplied in regard to the leftist regimes in the West. Here, one cannot ignore that some of the worst tyrants and dictators have been supported by the Thatcherites. When the question of the trial of Augusto Pinochet, the erstwhile military dictator of Chile, during whose rule large-scale human rights abuses took place, came up, they pleaded with the Labour government for a lenient treatment, citing the reason that Pinochet had supported Britain during the Falklands War. The authors have not exposed the Janus-faced 'defenders of liberty'.

The evening of the last century also saw the break-up of East European and Soviet states, which were called the socialist bloc. To many, the triumph of capitalism seemed final. The authors have gone in detail into the nature of problems, at various chains of the command economy. Their views on the fallout of the eclipse of the Soviet state are pertinent. According to them, it awakened the fear that many of the hard-won gains of the social reforms of the capitalist system over half a century would be jeopardised. Capitalism was sought to be tempered by reforms with socialistic content. In order to preserve the system, many considered a framework of the welfare state necessary.

According to the authors, critics like Carl Boggs were convinced that socialism and state leftist projects were dead. In their view the only possible resistance to capitalism is 'post materialist' protest movements, which reject the untenable lifestyles of 'mass consumerism' and focus on ecological and feminist issues. The word 'mass consumerism' is itself a contradiction in terms. However, the authors have not gone into this issue.

The incomes of the majority of the workers fluctuate with their employment status. It is only the high-earning minority, who can consume beyond their need, for self-originating reasons. For others, the scope for self-originating consumption is restricted. There are studies by Gorz (1999:89) and Offe (1996:12), which maintain that the purchasing power of the majority of the people living in Western societies is declining. American workers, who had lost their jobs in the recessionary years of 1990-92, suffered on an average, a 23 per cent drop in their wages by the time they found fulltime work again. About 25 per cent of the population in the U.K. own 72 per cent of its wealth ("On Explaining Consumption" by Conrad Lodziak, published in Capital & Class, Autumn 2000). If at all, there is increasing consumption, there are essentially three reasons. The first reason is the planned obsolescence of consumer products, the second involves changes in the social and physical environment, and the third is concerned with physical and mental depletion owing to inflated hours of work. If this view is acceptable, even the struggles that are being welcomed by persons like Carl Boggs, have to be struggles against the capitalist system, whose social relations are at the root of the problem of consumerism.

The authors give the final word on contesting views regarding the "End of Socialism", to Ralph Miliband, whom they describe as a long-term crusader for a socialist alternative to capitalism. Miliband argued for state cooperation with the private sector, but emphasised the centrality of public ownership as a corrective to corporate power. The views of Robert Conquest, one of communism's fiercest critics, are cited as acknowledgement of the fact that Russia was bequeathed with the durable legacy of an educated population. This is no mean compliment. Starting with Poland, many countries of the erstwhile socialist bloc saw transformed communist parties coming to power through elections. In the light of the above circumstances, it would not be unrealistic to conclude that the views regarding the demise of socialism as an ideology were hasty and that its resurgence, albeit in new forms, is a reality.

Having outlined its background, the authors proceed to analyse the emergence of the Third Way in Britain, which challenged the Conservatives' Thatcherite agenda. In his book The Third Way: the Renewal of Social Democracy in conjunction with Blair's Third Way, Giddens laid down the theoretical framework of the ideology, say the authors. According to Giddens, the guiding principles of the Third Way are: equal opportunity, personal responsibility and mobilisation of citizens and community. Equality, Giddens reminds us, is an elusive goal. The focus must be on equalisation of life chances and not on class conflicts. Giving good education and health care is part of it, which will enable a large number of people to compete. As far as globalisation is concerned, the Third Way's proponents disagree with anti-globalisation and argue for global justice. In Giddens' view the initiatives of the non-governmental organisations will have the countervailing power to check the undesirable consequences of globalisation.

However, the authors feel that Giddens' summary of the critique on the Third Way leaves out a substantial body of the British critique. Lord Daherendorf, former director of the LSE, has criticised the British Third Way for chronic timidity, and for wanting to have it both ways. New Labour, according to critics, has been seduced by the gospel that global markets are self-regulating and therefore require no institutional framework to function. Whether New Labour believes this or not, one person who surprisingly does not contribute to the view that markets are self-regulating is George Soros, who made a fortune in speculative currency transactions. One forceful criticism can be that the equalisation of life chances can seldom be achieved in a society with a high degree of inequality, and an ideology that shuns distributive measures to tackle this, can hardly be the prime mover for equalisation of life chances.

THE last chapter gives a wide canvas of critical views on Third Way. In the chapter 'Triumph of the market economy' the United Nations Human Development index, which shows that inequality has risen in many countries since the 1970s and the 1980s is cited. It says that in the U.S., 97 per cent of the income increment over the past two decades has gone to the top 20 per cent of income earners. A clear description of the British economy's inequality index has been given in the article "The Need for a new growth paradigm", by Robert U. Ayres (Economics of Nature and Nature of Economics, edited by Cutler J. Cleveland, David I. Stern and Robert Costanza, Edward Elgar Publishing, U.K.). The graph clearly shows that the decade of the 'Thatchertite revolution' (the 1980s) saw a secular rising trend in the inequality index.

Third Way is sometimes dubbed "Thatcherism in Trousers''. The authors feel that this is undeserved. They discuss the dilemma facing the proponents of Third Way. While any step towards major redistribution and higher taxation will create a backlash, the supporters will have to be kept content at the same time with a meagre diet of social reform. But the question is whether the supporters will be content with the meagre diet. In seeking an answer, the book quotes Pearce (Pearce 2000): "Confronted by a dying manufacturing base, car industry in its terminal stages and high levels of persistent unemployment in Labour's heartlands, activists plead for a return to traditional values: market intervention to protect the weaker and rectify irregularities; a tax system that helps levelling off inequalities..." The authors say that the workers in Blair's Sedgefield constituency have been demanding this. Growing unemployment and insecurity with employment contracts could be one major reason why the activists pleaded for a return to Labour's traditional values.

The cardinal question is whether Third Way, which has abandoned the traditional constituency of social democratic principles, can address the problems of inequality and unemployment. Can Third Way reconcile civil society and equalised opportunities with the forces of competition, in which, there will be few winners and many losers? Can the tendencies of globalisation that is affecting the West's labour also, be left only to the initiative of non-governmental organisations? Why is public ownership an ideological taboo? Is it because of the inefficiencies that marked the command economy? If so, why free market, whose failure has produced devastating results such as the Great Depression of the early 1930s and in subsequent cycles, considered a desirable, and feared to be interfered with? Has it not sent wrong signals and shown irrational exuberances? Can the same brush be used to tar the concept of public ownership with inefficiencies, while whitewashing the ineffectiveness of the market in so many spheres? This is not to say that the problem of inefficiencies in the public sector should be glossed over. But the baby should not be thrown out with the bathwater. While assessing the policies of New Labour these questions will bother many.

Third Way appears to be an enfeebled response to the social consequences of straitjacket market reforms, such as rising inequality and unemployment. It hesitates to undertake distributive measures and rejects the idea of public ownership. Proponents of Third Way consider these programmes of the traditional Left as irrelevant in the new era of globalisation. These factors also will weigh in the minds of people while deciding whether Third Way is indeed a new promise or merely a false dawn? Another pertinent question is whether the radical Left will resurge. The authors give a very interesting answer: "It seems likely that a radical Left wing resurgence would lie at a point of the 'weakest link', namely that point of the developed world's capitalist chain where enfeebled defences can resist neither internal pressure nor external competitive forces."

As regards Third Way, Newman and Zoysa have given the opinion after a rather thorough analysis, that if it is redirected towards deriving optimal benefits out of the techno-scientific revolution, for the good of mankind at large, it is worth undertaking.

R. Mohan and V. Surjit are research students at the Centre for Development Studies, Thiruvananthapuram.