Third Way

Third way believes in: 

Third way ideas developed as a response to the rise of neo-liberalism and the success of politicians such as Margaret Thatcher and Ronald Reagan in the 1980s. Left-leaning parties such as the Labour Party made the pragmatic decision to abandon many of their socialist commitments in an attempt to win elections and lead governments. Arguably, the third way is not a strand of socialist thought but actually a form of modern liberalism. 

The term itself suggests that it has moved beyond left and right. Third way ideas were developed by Anthony Giddens and influenced Bill Clinton as well as Blair and New Labour. Also referred to as neo-revisionism, it takes a pragmatic approach to socialism, embracing free-market capitalism and public–private partnerships, and favours the creation of more wealth rather than redistribution. Third way supporters believe in a more limited welfare state, with a ‘carrot and stick’ or ‘hand up not hand out’ philosophy. This approach to politics was responding to the decline of the industrial working class, the rise of the service sector and the need to appeal more widely to get elected. In some respects, it is pragmatic rather than ideological. New Labour recognised that globalisation meant it was difficult to reject the free market as businesses would simply shift abroad. Therefore they chose to accept it. Changes in class structure led the party to abandon class-based politics and to attempt to appeal to all and win votes from a broad section of society. Despite this apparent shift to the right and rejection of class-based politics, third way ideas are not based on individualism and can be described as ‘communitarian’, with a focus on communities and citizenship. 

Third way supporters ae happy to accept competition and support introducing competition into the public sector, for example into the education system and the NHS. Keynesian economics focusing on controlling demand and state intervention was rejected by Tony Blair’s 1997 Labour government in favour of a focus on monetary control. However, there are clear elements of third way policies connected to socialism. There is a focus on poverty reduction and social inclusion. 

social democracy




industrial society 

class politics 

mixed economy

full employment 

concern for underdog 

social justice 

eradicate poverty 

social rights 

cradle-to-grave welfare 

social-reformist state 

Third Way



information society


 market economy

full employability


opportunity for all

promote inclusion

rights and responsibilities


competition/market state 

The third way is a rather imprecise term and has been  subject to different interpretations. There are however some consistent themes. The first of these is the belief that traditional mid 20th century socialism in the form of ‘top-down’ state intervention, is dead: there is no alternative to what the revised clause IV of the UK Labour Party’s 1995 constitution refers to as ‘a dynamic market economy’. With this goes a general acceptance of globalization and the belief that capitalism has mutated into an ‘information society’ or ‘knowledge economy’. The big break with socialism is the  acceptance of the market over the state, and the adoption of a pro-business and pro-enterprise stance, which means that the third way attempts to build on, rather than reverse, the neoliberal revolution of the 1980s and 1990s.

The second key third-way belief is in the moral community where people take responsibility for the community. Community, is a strong theme in traditional socialism with a belief in common humanity, fraternity and cooperation. While the third way accepts many of the economic theories of neoliberalism, it firmly rejects its philosophical basis and its moral and social implications. The danger of market fundamentalism is that it generates a free-for-all that undermines the moral foundations of society. Some versions of the third way, notably the so- called Blair project’ in the UK, nevertheless attempted to fuse communitarian ideas with liberal ones, creating a form of communitarian liberalism, which in many ways resembled the ‘new liberalism’ of the late nineteenth century. The cornerstone belief of communitarian liberalism is that rights and responsibilities are intrinsically bound together: all rights must be balanced against responsibilities, and vice versa.

Peter Mandelson was a key architect of Blair's Third Way -New Labour project. He saw dynamic market capitalism as the best means of generation the wealth to create a better society.  Like Anthony Giddens he expected this to be led by an information rather than industrial economy.

The trade and industry secretary is enthused by suggestions the UK could build its very own silicon valley, writes David Wighton.

Perhaps it was the Californian sun, but Peter Mandelson seemed almost intoxicated with the heady entrepreneurial atmosphere of silicon valley last week.

“We are intensely relaxed about people getting filthy rich,” the trade and industry secretary assured an approving group of senior executives at Hewlett-Packard during his fact-finding visit. “As long as they pay their taxes,” he added hurriedly.

Following talks with top silicon valley entrepreneurs and academics, Mr Mandelson has returned enthused by the “vibrancy” of its high-tech business culture and eager to feed his experiences into the government’s strategy to boost competitiveness and enterprise.

 “Mandelson plans a microchip off the old block”  

Financial Times 23 October 1998

Third, Third Way socialists  tend to adopt a consensus view of society, in contrast to  fundamentalist socialism’s class conflict view of society. This is a communitarian view of society  which highlights ties that bind all members of society, and tends to ignore, or conceal, class differences and economic inequalities. This is similar the liberal view of the mechanistic society  however there is also a  faith in consensus and social harmony is also reflected in the framework of values of the third way, which rejects the them and us- 'class war' approach of conventional moral an ideological thinking, and offers a moral transcendence which rejects the duality of left and right or realism and idealism.  Third Way rejects the state socialist conception of socialism and instead accepts the conception of socialism as conceived of by Anthony Crosland as an ethical doctrine that views social democratic governments as having achieved a viable ethical socialism by removing the unjust elements of capitalism by providing social welfare and other policies and that contemporary socialism has outgrown the Marxist claim for the need of the abolition of capitalism as a mode of production.

 In 2009, Blair publicly declared support for a "new capitalism". 

Following the financial crisis of 2008 Blair called for more ethical values such as trust and unselfishness.  Ask not what your country can do for you.......

'To re-gain confidence, there must be trust. To have trust, the system as a whole needs to be inbred with values other than those of short-term profit maximisation. It must be about more than mere speculation and the clever bet. It must be also about investing and building. The best business people I have met, have been first and foremost passionate about what they are creating, rather than what they are accumulating.' 

Is this ethical socialism or ethical capitalism?

Fourth, the third way has substituted a concern with social inclusion for the traditional socialist commitment to equality. This is evident in the stress placed on liberal ideas such as opportunity, and even meritocracy. Egalitarianism is therefore scaled down to a belief in equality of opportunities or ‘asset-based egalitarianism’, the right of access to assets and opportunities that enable individuals to realise their potential. Third-way proposals for welfare reform therefore typically reject both the neoliberal emphasis on ‘standing on your own two feet’ and the social democratic belief in ‘cradle to grave’ welfare. Instead, welfare should be targeted at the ‘socially excluded’ and should follow the modern liberal approach of ‘helping people to help themselves’, or as Bill Clinton put it, giving people ‘a hand up, not a handout’. Welfare policies should, in particular, aim to widen access to work, in line with the US idea of ‘workfare’, the belief that welfare support should be conditional on an individual’s willingness to seek work and become self-reliant.

Finally, the third way is characterized by new thinking about the proper role of the state. The third way embraces the idea of a competition state or market state. The state should therefore concentrate on social investment, which means improving the infrastructure of the economy and, most important, strengthening the skills and knowledge of the country’s workforce. Education rather than social security should therefore be the government’s priority, with education being valued not in its own right, because it furthers personal development (the modern liberal view), but because it promotes employability and benefits the economy (the utilitarian or classical liberal view). From this perspective, the government is essentially a cultural actor, whose purpose is to shape or reshape the population’s attitudes, values, skills, beliefs and knowledge, rather than to carry out a programme of economic and social engineering.