Third Way
Accept the market settlement, then use its proceeds for public investment and opportunity — neither the old left nor the new right.
What does this mean?
Third Way politics was the answer centre-left parties gave after losing repeatedly to market liberalism in the 1980s. Its premise was that the economic argument had been settled and the terms of it were not going to be reopened: privatisation would not be reversed, top tax rates would not return to post-war levels, and organised labour would not regain its former position. What remained was to accept that framework and use the growth it produced for public purposes — schools, health services, tax credits for low earners, childcare, minimum wages.
Its theorists described this as replacing equality of outcome with equality of opportunity, and redistribution with social investment. Rights were paired with responsibilities: welfare became conditional on seeking work, and criminal policy became markedly tougher. In foreign policy the same governments developed an interventionist doctrine on humanitarian grounds.
The record is genuinely contested. Supporters point to large falls in child and pensioner poverty, sustained growth and long periods in office. Critics on the left argue it entrenched the settlement it inherited and left its own base with nowhere to go; critics on the right argue it expanded the state under cover of accepting the market.
Where did it come from?
Set out by Anthony Giddens in The Third Way (1998) and put into practice by Bill Clinton’s New Democrats from 1993, Tony Blair’s New Labour from 1997, and Gerhard Schröder’s Neue Mitte in Germany. It dominated centre-left politics until the financial crisis, after which most of its parties moved away from it.
Major thinkers
- Anthony Giddens
- Amartya Sen
- Robert Reich
Historical figures
- Tony Blair
- Bill Clinton
- Gerhard Schröder
What it looks like today
- Statutory minimum wages combined with in-work tax credits, now standard across the centre-left
- Conditional welfare and active labour market programmes
- Public-private partnership financing of infrastructure and hospitals
Where it sits on each dimension
Wealth and inequality
Redistribution runs through tax credits and services targeted at the low-paid rather than through the tax rates or ownership structures the older left contested.
The state in the economy
Accepts privatisation and market mechanisms, including inside public services, while expanding what those services deliver.
Personal liberty
Tradition and change
Nation and the world
Religion and the state
Power and its limits
Environment and growth
Crime and punishment
Distinctly punitive relative to the rest of the centre-left: longer sentences, more police, and conditionality attached to benefits.
Its strongest arguments
- It produced the longest periods in government the centre-left has held in Britain and the United States, and used them to raise public spending substantially.
- Targeted tax credits and minimum wages cut child and pensioner poverty sharply without the political cost of higher headline tax rates.
- It took a real problem seriously: parties that lose four elections in a row do not implement anything.
Its strongest criticisms
- By accepting financial deregulation it left its governments exposed when the 2008 crisis arrived.
- Conditionality and tougher sentencing fell hardest on the constituencies these parties represented.
- Treating the economic settlement as closed left voters who rejected it with only the populist right to turn to.
Common misconceptions
- That it was simply conservatism with a different label. It introduced minimum wages, large increases in health and education spending, and devolution — measures the right opposed.
- That it was only a communications strategy. The theoretical case, particularly Giddens’, was worked out and published before the electoral success.
- That it has disappeared. Its assumptions still shape most centre-left parties in office, even where the label is avoided.
A caveat
Third Way and social liberalism overlap heavily. The usual difference is that the Third Way is markedly tougher on crime and on welfare conditionality than social liberals are.
Sources
- Anthony Giddens, The Third Way: The Renewal of Social Democracy · 1998
- New Labour: Because Britain Deserves Better · Labour Party · 1997