WEDNESDAY, SEPTEMBER 23, 1998
HOW THE THIRD WAY GETS IN THE WAY
by Peter Cook, Brussels
In the old days, it was Sweden that claimed to have invented a Middle Way between capitalism and communism. To judge by last Sunday's election in that country when the Social Democrats, for 60 years exponents of the Middle Way, suffered their worst electoral result and votes went instead to the ex-Communist Left Party, we can safely consign this aspect of Swedish moral superiority to history's trash can.
But the Middle Way sorry, the Third Way is not burned or buried it seems. Instead it has a claim to being just about the hottest property around.
This week, U.S. President Bill Clinton, British Prime Minister Tony Blair and Italian Prime Minister Romano Prodi have gathered in New York to proclaim themselves pilgrims on the Third Way. To light the road ahead, they have before them a just published book, titled (what else) The Third Way, by sociologist Anthony Giddens of the London School of Economics, a man billed as Mr. Blair's favourite academic and the brain behind New Labour.
At the risk of simplifying (which, given the level of generalization in Mr. Giddens' text, is hard to do), the idea is that a Third Way in politics that tempers unbridled capitalism with social caring and social justice is the way to go and will be hugely appealing to voters which, of course, it is.
Given what went before, Reagan-Bush in the United States, Thatcher Major in Britain, total corruption in Italy, it is not hard to see how middle of the roadism has cast its spell upon the careers of Messrs. Clinton, Blair and Prodi. But they, of course, never faced what Mrs. Thatcher or Mr. Reagan did on coming to office; instead, they had the luck to be handed power in good times.
Political fads and fashions do not matter much. What is important is the way they are used. And this is the case with the Third Way, which, by coincidence, has come to prominence when these same fortunate leaders suddenly face the prospect of having to mend a cracking world economy. Mr. Clinton has other distractions as well. Nonetheless, one can see in both his and Mr. Blair's utterances prior to their New York shindig with Prof. Giddens the intellectual debt they already owe to the vapidity and vacuity of his Third Way. As a means of getting elected, it was unstoppable. As a means of arriving at solutions to global problems, it is almost laughable.
First, Mr. Clinton. On Sept. 17, he gave a speech on the global economy that Business Week proclaimed was "Clinton's Call to Arms." Wisely, the magazine also acknowledged that it was short on specifics. He talked of rate cuts and a new "post IMF" global financial architecture that would include debt relief, a bailout for Brazil and stepped up export lending (which benefits U.S. companies). Second, Mr. Blair. On the eve of his trip to New York, he said the IMF and World Bank had failed to provide the world with economic stability. Perhaps the IMF should insist on a code of financial conduct from all who seek its assistance, he added. Perhaps speculators such as George Soros should be made to disclose how much money they had where. Perhaps the IMF and World Bank should be partly merged.
Now, there are two reactions to this. The first is that it is, indeed, short on specifics and shot through with holes. The lift that Mr. Clinton gave to stock markets with his talk of co ordinated rate cuts produced a selloff three days later when the two leading central bankers, Alan Greenspan of the United States and Hans Tietmeyer of Germany, said they were not about to do any such thing.
The second is that it is woolly thinking. A few months ago, Mr. Clinton was preaching the wonders of open markets and deregulation; now, suddenly, the world faces its gravest economic challenge in 50 years. Like old social democrats, he and Mr. Blair are thinking of a kind of revived Keynesianism for all, of attacking nasty speculators, of writing down debts without worrying whose debts they are, and of putting at risk the authority of the two institutions that are capable of steering us through crises (or would be if Mr. Clinton could get the U.S. Congress to vote money to support them), the IMF and World Bank.
We have been through public breast beating over the role of the IMF and World Bank before; Jean Chretien hosted a G7 summit in Halifax three years ago that was supposed to offer ideas on reform. But little has been done since. Surely now, at a moment of great emergency, with the U.S. House of Representatives refusing to back an IMF replenishment even as Brazil teeters on the brink, cannot be the time to undermine them. Better, perhaps, to recall what (in his wisdom) Mr. Chretien said in Halifax in June, 1995 that world problems would be minimized if the leading economies were good housekeepers and made sure that, when a crisis hit, the IMF had adequate funds to deal with it.
Are these Clinton Blair utterances Third Wayism? Yes, to the extent that they show us how "image" politicians, used to an easy ride, think lazily. Should the world be saved by free markets or interventionism? Yes to both, say followers of the Third Way.