In the last decade social democratic and labour parties have been dominated by the ideas of the Third Way. The term was coined as part of the reinvention of social democracy in response to the wave of neoliberalism that captured the world in the 1980s and early 1990s. Uneasy with the harshness of Thatcherism and with the untenability of socialism, advocates of the Third Way looked for a means of grafting traditional social democratic concern for equality and social justice onto an economic system based on free markets. Neoliberal economics seemed to have destroyed the case for greater social ownership and collective provision of many services. Although social democratic and labour parties had long since rejected the corrupt forms of socialism that had been imposed on Eastern Europe, it was the fall of the Berlin Wall in 1989 that seemed finally to bring down the curtain on an era in which even mild forms of collectivism could be pursued as an alternative to capitalism rampant. Within those parties, the left wing fell silent for want of ideas and was vanquished, while the ‘pragmatists’ of the Right argued that the parties must flow with the neoliberal tide and try to channel it so that traditional principles were protected. Thus emerged the Third Way, a political program described eloquently by Anthony Giddens in his 1998 book The Third Way: the renewal of social democracy.
As a political program, the Third Way implicitly accepts the two most important ideas of the First Way—that the principal objective of government should be to increase the rate of economic growth and that the best way to achieve this objective is through the free operation of private markets. Certainly, it is conceded by Giddens and others, in some situations constraints must be placed on markets, but this does not imply criticism of the free market as such. Having accepted these fundamentals of the First Way, the Third Way has had difficulty finding a rationale that differentiates it in any substantive way from neoliberalism.
One of the clearest statements of the Third Way can be found in a collection of essays by the Demos Foundation, a London think tank closely aligned with Prime Minister Tony Blair. The editors of the 1998 volume, Tomorrow’s Politics: the Third Way and beyond, noted that the Centre Left—which they defined so broadly as to include the then Clinton administration in Washington—had taken government throughout much of the Western world, but that to do so the Third Way ‘has had to accept some of the Right’s agenda’. Consequently:
the political contest is focused on how to balance prosperity with social inclusion, capitalism with community, how to modernise welfare systems, public services and labour markets, how to deepen democracy and how to connect progressive politics with the imperative of ecological sustainability.1
The implications are that prosperity (which means sustaining economic growth) is at odds with social inclusion, but only in the absence of ameliorative measures; that capitalism erodes community, but can be made consistent with it; and that welfare systems, public services and labour markets need to be modernised, where ‘modernisation’ means changed so that they do not stand in the way of the globalised world. The shallowness of democracy is not explained and is definitely not attributed to the convergence of parties of the Left on the conservatives’ program.
As this suggests, the central ideas of the Third Way remain slippery, although some have attempted to define it as a philosophy with three cornerstones:
the idea that government should promote equal opportunity for all while granting special privilege to none; an ethic of mutual responsibility that equally rejects the politics of entitlement and the politics of social abandonment; and, a new approach to governing that empowers citizens to act for themselves.2
While this triplet seems to match the pronouncements of Britain’s Labour government and social democratic governments in Germany, it is also entirely consistent with the views of modern conservative parties. It is not inconsistent to accept the prevailing system and at the same time put forward policies to mitigate some of its negative social and environmental effects, as long as one believes that the undesirable effects are not caused by anything fundamental to the system. As soon as one begins to reflect on the philosophy of the Third Way it becomes apparent that it is not based on any critical analysis of modern capitalism; thus a critique of the Third Way as a political philosophy must begin from what the philosophy fails to say rather than what it says it stands for. In contrast with traditional social democratic and socialist programs, one looks in vain for any discussion of classes, exploitation, the influence of the profit motive, the power of transnational corporations, the division of labour, the myth of free markets, the alienation of consumer society, or even the roots of unsustainable development and the forms of patriarchy.
The absence of any challenge to consumer capitalism means that much of the Third Way’s political agenda has now been adopted quite comfortably by conservative parties that are moving back from a hard-line position as the damage inflicted by the decade of neoliberal policies becomes a political liability. The absence of a rationale led Giddens himself to make the astonishing admission that governments throughout Europe claiming to represent the Left were making policy on the run and that practical policies are not guided by any political principles: ‘In the UK, as in many countries at the moment, theory lags behind practice . . . governments claiming to represent the left are creating policy on the hoof. Theoretical flesh needs to be put on the skeleton of their policy-making . . . ’3 In other words, we know what we want to do but we lack a justification for doing it. Although Giddens was writing in the late 1990s, no progress has been made towards putting theoretical flesh on the policy skeleton—except perhaps in the area of ‘social capital’ (the accretion of networks, norms and trust that binds communities together), itself a contested idea claimed as much by conservatives as by social democrats.
The aversion to social criticism means that advocates of the Third Way shy away from discussion of the motive force of political and social change—that is, the sources, forms and distribution of power in modern society. Traditionally, socialists understood power as deriving from ownership of capital, and oppression, injustice and inequality as arising from the struggle between capital and labour. Although most would agree that this is a simplification that conceals as much as it reveals, it nevertheless focuses on something fundamental to the structure of society. But in the Third Way no fundamentals are challenged; the world of the Third Way is characterised by complexity rather than conflict, and it is difficult to avoid the conclusion that talking about complexity serves as a means of avoiding consideration of conflict.
Giddens is quite explicit about the Third Way’s desire to reject class and avoid any discussion of power relations that may be built into the social structure. He writes that ‘Third Way politics is one-nation politics’,4 so that we are all united in one nation. We may have our disagreements but nothing fundamental divides us. The implication is that social and environmental problems are not the result of exploitation but of ignorance; when enough people understand, our problems will be resolved. The response to ignorance is education and persuasion, not compulsion. This suggests that when business organisations resist proposed new laws to cut greenhouse gas emissions or increase social security payments it is because they do not yet understand that the new laws are in the interests of us all. The Third Way is determined to be pragmatic, to avoid sterile ideologies, and to embrace change rather than resist it. It does not have a ‘world view’, only some practical policies to make the world a better place. It is apparent that the conscious rejection of ideology serves a political function. But by eschewing a world view the Third Way does not make itself innocent: contrary to the positivists of the economics profession, there is no economic system that somehow stands outside ideology. If the Third Way does not have its own world view, it has nothing to separate itself from the prevailing world view and must therefore share it. This is why many on the Left see the Third Way as in fact little more than an apologia for the prevailing system and its advocates as supporters of a system that is responsible for creating the very things they condemn—inequality, injustice and environmental decline.
In politics today it is de rigueur to claim that everyone will be a winner, and Third Way politicians have proved masters of conflict avoidance. Yet far-reaching social changes involve often-titanic political struggles in which progress requires the defeat of entrenched forces. It is naive to expect otherwise. It remains true that, although power structures are complex and multifaceted, the locus of power in modern society lies in the business community and especially those segments that created and prospered from the neoliberal policies of Margaret Thatcher, Ronald Reagan and their followers. Unless we are to resort to the fatuous escape route of ‘expanding the pie so that everyone can have more’, we must confront the realities of economic and political power. Indeed, we have had enough years of witnessing Third Way politicians warming the seats of power to know that serious attempts at social reform have run into trenchant opposition and that the representatives of the Third Way have repeatedly sacrificed the boldness of social change for the moderation of practical politics. Of course, the Third Way champions’ unwillingness to consider power is a predisposition they share with the defenders of neoliberalism. Nor has the Third Way challenged the model of human wellbeing on which the economics texts are based. It has not questioned the utilitarian philosophy of modern economics and the marketing society; it implicitly accepts the philosophy built around homo economicus, rational economic man, and all the anthropocentrism, individualism, materialism, and celebration of competition implied by it.
Democracy itself is subtly undermined by the refusal to consider the nature of power and the glib assumption that ultimate power lies in unfettered consumption behaviour. Democracy asserts itself when great issues that demand collective decisions grip a nation. In practice, governments represent the people best when they are protecting the people’s rights against threats from the powerful and providing for things that are best provided collectively—defence, roads, schooling, health care and environmental protection. The act of collective provision is something that citizens do for one another. In contrast with the comatose sovereign consumer of neoliberalism, democracy needs something to do. By ceding so much decision making to the private choices of consumers in markets, electors have been transformed into political automatons. The capitulation of social democratic parties to the neoliberal idea has been central to this, so that the Third Way serves as a sort of civic tranquilliser, the post-modern opium of the people.
Advocates of the Third Way argue that the pursuit of ideology is old-fashioned, that society today is not marked by class division but by a ‘messy plurality’, and that politics is no longer the art of struggles for class dominance and social transformation.5 The politics of struggle has been superseded, writes Giddens, by the politics of lifestyle, and the real concerns of ‘life politics’ involve questions of autonomy and self-expression.6 There is some truth in this perception of modern attitudes and politics insofar as the dynamic of modern capitalism has shifted from the production to the consumption sphere. The problem is the uncritical acceptance of ‘life politics’ by advocates of the Third Way. There is no analysis of why people have retreated to lifestyle and no discussion of whether the messy plurality is a surface manifestation of deeper, systemic social changes. The Third Way seems to be saying that if people want lifestyle that is what we must give them, without asking what forces lie behind the pursuit of identity and self-worth through lifestyle choices and brand association and how these perceptions are created and manipulated in the marketing society. Thus the ‘life politics’ of the Third Way is precisely the politics that suits the consumer society: it focuses on manufactured identity and the flim-flam of marketing, rather than the deeper urges of humanity. It is the politics of the masses caught in a web spun by corporations and their publicists. Nowhere in the writings on the Third Way can one find an analysis of how social structures condition thinking; nor can one find discussion of class consciousness or false consciousness or any inkling of why people believe what they do. The political superficiality of the Third Way is the ideal counterpart of the emptiness of modern consumer capitalism.
Underlying all this is a belief that people are free to choose what is best for them, in exactly the same way that the economics texts cleave to consumer sovereignty as the guarantee that in free markets people will get what they want. But what the idea of consumer sovereignty and the political individualism of the Third Way refuse to recognise is that people’s preferences are not created ex nihilo: they are formed by the society they live in—which in the present case means in large measure and increasingly by the messages of the marketing society. Because the advocates of the Third Way have no social critique, they imagine that people are free to pursue their life goals and to ‘create themselves’, ostensibly from nothing. In the post-modern world people create their own selves, but they do not create them just as they please: they create them under circumstances and with materials made and transmitted by the ideology of growth fetishism and the marketing machine.
The Third Way is adamant that, rather than deciding for people what they want, its purpose is to provide everyone with the opportunity to express and satisfy their personal desires. A deeper critique would acknowledge that, because our desires are so bounded by the ideology of growth fetishism and so concealed by layers of images and distorted associations created by decades of marketing, until we individually and collectively stop to examine ourselves we do not know what is in our interests.7 In the Third Way, the model citizen is the highly educated, flexible, mobile worker—‘symbolic analysts’ or ‘bourgeois bohemians’,8 best represented perhaps by Tony Blair himself. We might call this model ‘Third Way Man’, a caricature that reaches its zenith with the invention of the ‘wired worker’, the exemplary worker of the information age who transcends the class struggle and stands as the model citizen, the Stakhanovite of history’s end.9 While one could venture a sociological critique of this type and argue that it will always represent only a small proportion of the population, the real question that must be asked is whether high incomes, professional mobility, disdain for community, and inflated self-image actually make Third Way Man happy. For if they are not happy, why would government policy attempt to create the conditions for them to multiply?
Faced with the increasingly untenable nature of socialism and state ownership in the post-war period, and the absence of any coherent alternative to the crushing force of the neoliberal policy establishment, many social democrats felt they could do little more than fight a rearguard action as one after another of the pillars of the post-war social democratic consensus was knocked down. The tragedy was that so many of the most influential social democrats just surrendered. Instead of searching for a creative response to the new dispensation, they embraced Mrs Thatcher—secretly, of course. As the conservative commentator Geoffrey Wheatcroft observed in 1999, ‘Intelligent British Tories have quietly recognised that Blair’s New Labour is Thatcher’s greatest triumph’,10 an assessment confirmed in 2002 by Peter Mandelson, often seen as Tony Blair’s svengali, when he declared, ‘We are all Thatcherites now’.11
The creeping capitulation of social democratic parties led to an extraordinary bipartisanship on economic policy—that is, on the questions that mattered most. As opposition to privatisation, free trade, competition policy and deregulation of the financial sector fell away, an elaborate dance of deception began. The gap between the conservative and social democratic parties became one of product differentiation rather than ideology and, just as product differentiation and brand loyalty are marketing concepts, so political parties began to hire marketing specialists to help them sell their messages. In the same way that clever marketing is required to persuade sceptical consumers that one brand of soap powder is radically different from other virtually identical brands, so political parties now hire experts to persuade sceptical voters that one party is radically different from its opponent. Increasingly, modern social democratic politics is the politics of politicians who are not sure what they stand for but who employ advertising agencies to convince us that they stand for something. Today both conservative and social democratic parties complain that the other party has stolen its policies. So little that is fundamental separates them that almost any policy could be found in the platform of either party. The adoption of a particular policy is determined not by consistency with some broad ideology but by whoever thought of it first. With the advent of the Third Way, politics made a transition from ideas to personalities. The spin doctor replaced the policy analyst; the party platform can be found buried beneath the media strategy; image management substituted for bold reform; and choosing words became more important than choosing actions. ‘Staying on message’ means avoiding debate.
The disappearance of substantive difference between the conservative and social democratic parties has meant that both parties are more likely to attract careerists and opportunists instead of people committed to principles. We now see rising to prominence younger politicians who in their twenties were courted by both sides. They could have comfortably jumped either way but made a decision on the basis of which party would better facilitate personal advancement. The triumph of neoliberalism and the new right has led social commentators to conclude that people have lost interest in politics and that this is a threat to democracy. Writes Giddens, ‘Political ideas today seem to have lost their capacity to inspire and political leaders their ability to lead’.12 The loss of political idealism that Giddens bemoans is itself the product of the convergence of Third Way politics on neoliberalism. Third Way politicians say they want to revive political engagement by creating a realisable vision for a better future. But the Third Way has inspired no mass following because it does not know what it stands for—at least not beyond the things it does not want to talk about and the faith in free markets and materialism that it shares with its opponents. The result is that people are staying away from the polling booths, voting on the basis of personalities rather than policies, or seeking out alternatives to the traditional parties.
The unwillingness of the champions of the Third Way to consider power is a disposition they share with the defenders of neoliberalism. Nor has the Third Way challenged the model of human wellbeing on which the economics texts are based. It has not questioned the utilitarian philosophy of modern economics and the marketing society, the sovereignty of the consumer and all the anthropocentrism, individualism, materialism and celebration of competition implied by it. It has not confronted the simple belief in progress, and it has everywhere succumbed to the allure of technology and economic internationalism. Neoliberalism could not persuade everyone that markets are inherently good and government intervention bad, but one of its legacies has been to persuade almost everyone that once markets are opened up governments become powerless to change things. In other words, while one might not like neoliberal policies, once they are implemented they are irreversible. A parallel belief is that globalisation has created international economic forces that have emasculated governments, and the consequent diminution of the power of the state has destroyed for ever the appeal of ‘old-style social democracy’. The traditional values of social democracy may remain admirable, but in the new globalised world those who still adhere to its political program are hopelessly utopian.
According to this view, modern politics is no more than a reconciliation with global economic reality. Giddens, for example, writes that the Third Way ‘refers to a framework of thinking and policy making that seeks to adapt social democracy to a world that has changed fundamentally over the past two or three decades’.13 Above all, it is the strictures on government that make the Third Way necessary, for globalisation has robbed social democracy of its most effective weapon, the power of the state. Of course, it is a great comfort to neoliberals that, whatever one might think about the desirability of globalisation, there seems to be nothing that can be done about it. If any government attempted to resist the trend it would be severely punished by ‘the markets’ and compelled to fall into line. Staying in line requires governments to pursue a suite of economic policies that keep the markets happy—fiscal discipline, tight monetary policy, limiting taxes on the wealthy, restraining trade unions through ‘labour market flexibility’, divesting the state of ownership of public enterprises, a general commitment to small government, removing restrictions on the free flow of goods and capital, and so on.
Although conservatives, including advocates of the Third Way, like to believe that these ideas are the robust conclusions of economics, they are in reality based on the questionable beliefs of a particular school of economics, the neoclassical school. In fact, the leading ideas of the economics establishment have been shown to be highly contestable, both by recent economic history and by formal economic studies. One of the defining features of neoliberal economics is its disdain for the evidence. After all, the superiority of free-market solutions has been demonstrated over and over by the cleverest in the profession. One needs only to open a textbook to see the proofs reduced to diagrams that even the most dull-witted undergraduate can understand. Why bother with the evidence?
This is not the place for a disquisition on the leading propositions of the neoliberal canon,14 but a few comments on the foremost beliefs illustrate the point. Since the 1970s it has been argued that if a government attempts to push unemployment down too far it will spark a damaging outbreak of inflation, which will defeat the original intent. Despite some initial resistance from unreconstructed Keynesians, there is now almost universal acceptance among economists that there is a ‘natural rate of unemployment’ and that if the actual rate is pushed below the natural rate inflation will accelerate. Various attempts to estimate the natural rate have shown that, if it exists at all, it is disturbingly unstable. Moreover, as unemployment falls estimates of the natural rate tend to be revised downwards, so that it always seems to be marginally below the level that happens to prevail at the time. One begins to suspect that the purpose of the concept is to absolve government of the responsibility to pursue full employment. In 1995 US economists David Card and Alan Krueger created a sensation by showing that employment growth was higher in those US states that had rising minimum wages.15 This conclusion so flagrantly defied the most basic premise of neoclassical economics—demand for a commodity falls as its price rises—that vigorous attempts were made to discredit it. The attempts failed. Card and Krueger were right because the labour market deals in a ‘commodity’ that is unlike any other, and raising the price of labour can change the quality and amount of it supplied and the way it is used. Yet economists and business commentators argue daily that rising wages will mean loss of jobs, especially in a ‘globally competitive’ world.
Another unchallengeable belief of economic orthodoxy is that any restriction on the mobility of capital will harm investment and slow growth. This has been the central argument used to rationalise the insistence by the International Monetary Fund (IMF) that all countries, including those with underdeveloped financial systems, should liberalise their capital markets to allow the free flow of capital. But there is no reason to believe that measures to limit short-term speculative capital flows will harm long-term investment in productive enterprise. Indeed, greater stability in capital markets works in the interest of long-term investors because they need to take fewer precautions against volatility in exchange rates and interest rates. The IMF has been reluctant to admit this possibility, even after its disastrous attempts to deal with the Asian financial crisis of 1998. Its dogmatic approach was vehemently attacked by former chief economist at the World Bank (and subsequent Nobel Prize winner) Joseph Stiglitz, who pointed out that capital markets were liberalised in East Asia not because more savings were needed but because of political pressure from the IMF and the US Treasury.16 The flood of short-term capital caused the Asian financial crisis to spread and deepen, yet the IMF imposed austerity measures that only made matters worse.
A further shibboleth of modern politics is that governments cannot run businesses profitably: only private owners have the incentives to operate enterprises efficiently. This belief has provided the rationale for the wave of privatisations of public assets throughout the developed and developing worlds since the 1980s and the public–private partnerships that have followed. Sell-offs have been a feature of conservative governments of the left and right, and any reluctance has been met with dire threats from international financial institutions, including the IMF and credit-rating agencies such as Standard and Poors. There are dozens of studies of the relative merits of public and private ownership. The broad conclusion is that, in markets where there is a natural monopoly or where heavy government regulation is necessary to ensure protection of the public, publicly owned enterprises perform at least as well as private ones, and in some cases better. Moreover, it has been shown by a number of studies that the profitability of private companies is higher in countries or regions where governments invest more heavily in the provision of sound infrastructure such as roads, ports and telecommunications. Yet any resistance to further privatisation—let alone calls to re-nationalise some enterprises to undo some of the damage caused by privatisation—is met with howls of outrage, threats of ‘capital strikes’ and editorials about the evils of a return to ‘socialism’.
The final article of faith of neoliberal economics that deserves comment is the belief that everyone benefits from free trade. The textbook theory is elegant, and faith in the benefits of free trade is perhaps the economists’ most strongly held belief. Yet it is obvious that the assumptions on which the theory is based—for example, that capital is not mobile and that firms compete on equal terms—are simply not met in practice. For many years, the World Bank claimed that the success of Asia’s ‘little tigers’ was proof of the enormous benefits of free trade. But South Korea, Taiwan and Japan did not practice free trade: they exported vigorously but they also protected their home markets fiercely. The evidence contradicting the World Bank’s views was so overwhelming that, in one of its own reports in 1994 and under pressure from Japan, the Bank was forced to concede that pervasive government intervention was an essential part of the industrialisation process that made these countries wealthy.17 Moreover, even with the abandonment of tariffs, quotas and other non-tariff barriers, there would still not be free trade. There are already a number of legal restrictions on trade that no one challenges: the World Trade Organization rules include bans on trade in products produced by prison and child labour and restrictions on trade in hazardous goods. Calls for ‘fair trade’ are based on nothing more than a demand for the extension of prohibitions on goods produced in conditions where basic human rights and working conditions are violated or which involve unacceptable damage to the environment.
Despite the accumulation of evidence contradicting the most basic assumptions of the discipline, neoclassical economists cling to these notions as firmly as ever. It is not only the academic economists who propagate these beliefs in lecture halls and professional journals; they are mirrored even more crudely in the prognostications of the ‘market economists’ we see quoted in the press and on television every day. The fact is that neoclassical economics has been spectacularly unsuccessful at developing a coherent explanation of how national macro-economies work or the forces that drive the global economy. Yet social democratic politicians and academic activists such as Giddens have been unwilling to challenge the neoliberal economic consensus. As a result, while ostensibly rejecting Thatcherism, they have uncritically accepted the economics on which it is based.
There is one political principle to which modern social democracy remains committed and that differentiates it starkly from Thatcherism—greater social equality. Giddens writes, ‘One major criterion continually reappears in distinguishing left from right: attitudes towards equality. The Left favours greater equality, while the Right sees society as inevitably hierarchical’.18 While this statement is, on the face of it, unexceptional, the Left’s understanding of the nature of inequality and therefore the solution to it has subtly but decisively changed under the influence of neoliberal social philosophy. The notion of equality has become ambiguous in the politics of social democracy. In particular, it is not clear whether advocates of the Third Way believe in greater equality of opportunity or greater equality of outcomes. Traditionally, the focus has been on equality of outcomes, with the emphasis on reducing income inequality. The primary response of social democracy has been the progressive tax system and public ownership of essential services so that the poor have access to them. The shift to equality of opportunity is attractive in an era of apparent public resistance to high taxes since, if disadvantage can be overcome, inequality of outcomes ought to be reduced. There is, of course, a trap here. If inequality of opportunity is the problem and the problem has been fixed, then inequality of outcomes simply has to be accepted. However, equality of opportunity can never be enough if an unacceptable level of inequality is built into the very structure of the capitalist economy. If so, there is no escaping the need for redistribution of outcomes.
To reach this conclusion one needs a social analysis that identifies the sources of structural inequality, something the advocates of the Third Way assiduously avoid. Instead, the Third Way has resorted to the idea of ‘social exclusion’, the term used to describe lack of opportunity for individuals to develop their potential. There is no doubt that exclusion is a cause of misery and disadvantage and has, in some respects, intensified with the decline of the traditional working class, along with its cultural norms and social institutions. Structural change and globalisation have seen a large part of the working class shift into the middle classes and many of the remainder slip into a marginal existence of long-term unemployment or poorly paid casual jobs and entrenched poverty. However, instead of powerful social classes imposing unfair structures that benefit themselves and leave a segment of the population poor (relatively at least), in the world view of modern social democracy we must simply accept that what ‘the market’ delivers is natural and inevitable. All we can do is try to modify the impacts by programs that allow everyone to participate ‘equally’ in the market.
Such a world view is strongly preferred by social elites because it has a politically neutralising effect. There is no powerful oligarchy to point the finger at, only an impersonal system conditioned by the global market that defines the ground rules by which societies and governments must operate. After two decades of talk about ‘the economy’ as an immovable and all-conquering force, the market has become reified in the public mind, a victory for the economists’ textbooks. The consequence is that misfortune is seen to be a product of the relationship between an individual and the market, and it is pointless to look for someone to blame. The solution to disadvantage, therefore, is to fix the individual rather than the economic and social system. Social democracy—or at least the Third Way variant of it—has thus subtly redefined the Left’s traditional concern for social justice. It is now a question not of structural economic disadvantage but of the politics of life choices. In other words, social justice has become individualised and divorced from the essential structure of capitalism at a time when capitalism has reached its most purified form.
The emphasis on equality of opportunity in place of equality of outcomes has meant that education has become central to the political program of modern social democracy. Education has replaced motherhood as the goal no one dares oppose. It is a universal good and the more we have of it the better off we are. It can rescue anyone suffering from disadvantage. It is politically more attractive than motherhood because the state can provide more and better education simply by allocating more funds through the budget and training more teachers. ‘Education and training have become the new mantra for social democratic politicians. Tony Blair famously describes his three main priorities in government as “education, education, education”.’19 The parallel with the well-known slogan of real estate agents is not without significance.
It is undeniable that education is important in tackling social exclusion: the relationship between education and social mobility is well established. But education cannot be the panacea that social democrats and conservatives hope for. In short, what is good for the individual is not necessarily good for society. The rapid increase in investment in education in recent times has mostly been a form of ‘defensive expenditure’ as people attempt to maintain their position in the employment hierarchy while everyone around them upgrades their qualifications. There is no reason to believe that the new emphasis on education will bring about a more equal or just society, although it may stave off a worsening of inequality. Indeed, by transferring the blame for ‘failure’ to the individuals who do not take advantage of the educational opportunities on offer, the new approach may erode public commitment to greater equality and inclusion.
Information technology has become the other favourite cause of social democratic politicians. Indeed, for some, modern social democracy is characterised as an explicit attempt to reconcile the values of social democracy with the new world of IT. Information technology is considered to have fundamentally reshaped economies and work. For some, it has taken on a sort of mystical power: the ‘information society breaks down all forms of hierarchy’ and gives everyone access to wealth.20 The real division today is between the ‘information rich’ and the ‘information poor’, and ‘knowledge creation’ is a priority of the Third Way. The information age will resolve inequality and help ‘dissolve the class struggle’.
Oddly, it is the very seriousness with which advocates of the Third Way declare their belief in the transformative power of the information economy that marks them as innocents. Only those unfamiliar with the use of computers can truly fall for the hype of the information economy. Information technology and information are sources of power and influence, and the emergence of the ‘information economy’ has seen some realignment of economic and political power. But having access to a computer does not give the user access to this power. Adoption of information technology has transformed the work of those at the bottom end of the employment market as much as it has transformed that of those at the top, and has been as much a cause of entrapment as liberation. The fact that computers are useful does not mean we should worship them, yet any number of pundits and politicians have substituted the marketing slogans of infotech for genuine political philosophy. To achieve this new world more quickly, we are told we must transform education systems. By replacing knowledge with information, a specific set of skills is placed above a well-developed critical mind, and this reflects the essential anti-intellectualism of the politics of the Third Way.
Despite all this, the nature of inequality does need to be reconsidered in post-scarcity societies. Such a rethinking must, however, be based on a proper understanding of the implications of abundance rather than on the social philosophy underpinning neoliberal economics. In doing so, it is worthwhile reminding ourselves why social democrats have traditionally been concerned about inequality. The first reason is that inequality is associated with poverty; wealthy societies that have a fairer distribution of income have less poverty, and poverty is unambiguously a bad thing.21 It is well established that those at the bottom of unequal societies have less access to basic services such as good health care and education and that more unequal societies are more unhealthy societies, even if the average level of income is higher. In addition, inequality is responsible for greater social division, so that the rich and the poor inhabit very different physical and social worlds and have little understanding of the other. It is also associated with differences in political power, so that the wealthy are in a better position to look after themselves at the expense of others. Finally, gross inequality tends to generate envy and resentment on one hand and arrogance and feelings of superiority on the other, all of which lead to a less contented society.
This simple exposition is important because in all the discussion of inequality the reasons why it should be fought are frequently forgotten. But the reasons matter when we consider ways of reducing inequality. Some of the more important reasons why inequality reduces individual and social wellbeing have nothing to do with the distribution of physical wealth as such but are instead related to social and cultural attitudes. A more unequal society is more unhappy, even if most people’s incomes are higher than they would be in a more equal society. As discussed in Chapter 2, within a nation a person’s actual level of income has less influence on their perceived wellbeing than how their income compares with the incomes of other people, and with their own expectations of the income they would have and the income they should have. In other words, changes in personal attitudes and prevailing social expectations can result in a sharp improvement in individual and social wellbeing, without any change in the physical distribution of a nation’s wealth. Even at the high end of the income scale, where more income can have no appreciable impact on standards of living, inequality of incomes can severely affect wellbeing. The very rich are afflicted by feelings of envy and inadequacy. This is because in our societies incomes are a signalling device: they communicate to other people how much the world values what we do, a fact that explains the obscene blow-outs in executive remuneration of the last few years. If there were other markers of social worth, or if people were simply unconcerned with how the world sees them, inequality would matter much less.
In post-scarcity societies, mass poverty no longer exists. Although the figure varies from country to country, 5–15 per cent of populations are significantly or seriously deprived in a material sense. Recognition of this fact leads us to focus directly on poverty itself, rather than on the general distribution of income and wealth in a post-growth society. A change in perceptions about the factors that are important to wellbeing and a devaluation of wealth as the leading indicator of social worth would mean an end to the fixation on the level and distribution of material riches and a much greater emphasis on the factors that do contribute to more rewarding lives. These observations on the features of a post-growth social formation are explored in subsequent chapters, but they should not be taken to mean that we ought to retreat from redistributive policies such as progressive taxation, which ensure fairness in funding public services, including poverty eradication. Policies of this kind will always be needed, no matter how much equality of opportunity is achieved.