I never know what to make of these claims. The Dems often really suck, but 1) they've always been good imperialists, and 2) though the New Deal and Great Society are long dead, there are still big differences between D and R on labor law, minimum wage, tax policy, and health care. Look at the current fight over expanding the Child Health program - Ds for, Rs against. As I keep saying, to no apparent effect, the differences between the two parties are wider now than they were in the 1950s and early 1960s. It's a mathematical fact.
[WS:] Not according to Hotelling's law: http://en.wikipedia.org/wiki/Hotelling's_law
In essence the law should apply regardless to the number of vendors or parties involved - three or four party solution would yield a similar trend toward the center. The only difference would be increased triangulation - the parties would make more effort to appear different while gravitating toward the center. I think that is what is happening in European parliamentary systems - political parties, left or right, follow a very similar set of policies despite their ideological rhetoric and appeals.
If the above is true, the only way to achieve a lasting change of political balance is to move the center of gravity of the electorate i.e. move the "median voter" to the left or to the right. So far, the right managed to move that center to the right thanks, in a large part, in a skillful use of cognitive framing cf. George Lakoff's argument of using metaphors of the family to frame the political discourse. The left lost that rhetorical battle.
Wojtek