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The Third Way and Its Fatal Conceits

English Pages, 30. 8. 1999

When I got – several months ago – Milton Friedman’s letter in which he invited me to say a few words here about the “Third Way”, I answered positively without the slightest hesitation. All my life I have been trying to resist anything resembling a third way between socialism and freedom and because of it, it seemed to me that it would be easy to talk about it.

When I started to prepare my manuscript and to search for hard arguments, persuasive quotations and relevant literature and when I began to structure my thoughts, I discovered that the topic is not well-defined, that there are almost no serious academic contributions to such discussion, that we can find either crude, usually almost empty political statements or journalistic, very superficial articles but nothing in-between.

I am afraid I will not be able to make any substantial breakthrough today. I can only add some arguments to the discussion by looking at the chosen problem from the viewpoint of someone who had been openly rejecting the idea of a Third Way already while living in a communist society and in the process of its dismantling. In this respect, I am here in a minority.

After the fall of communism, almost ten years ago, during one of my first opportunities to address Western audience, I was applauded at the World Economic Forum in Davos by saying: “The Third Way is the fastest way to the Third World”. It seemed to me at that time that the third way thinking was so discredited – together with communism – that no one would dare to defend it or to come with it again.

I was wrong. The collapse of communism created a strange vacuum which was very rapidly filled with one, always available ideology. By ideology of those who disliked liberalism (in the Mont Pelerin Society sense), who did not believe in freedom and free markets, who believed more in themselves and in their own privileged role and position in society, who considered themselves enlightened and “anointed” (as the word is used by Thomas Sowell in his well-known book), progressive and better than the rest of us. They were clever to call their own ideology at that time “the end of ideologies”. The adherents of those views looked for an alternative name and some of them started to call it the “Third Way”. There is, probably, nothing more and nothing less in it.

The disillusion with communism on the one hand and the popularity of Margaret Thatcher’s and Ronald Reagan’s policies on the other made it impossible to openly advocate obsolete socialist dreams, fallacies and old-fashioned remedies of current economic and social problems. It was necessary to come with a new product or, what is usually better and easier, with an old product in a new packing. In this respect, the Third Way of the 1990´s is just a new attempt to save socialism, social-democratism and welfare state. As we know, there are only two “ways” in human society and some of us are convinced – and I belong to them – that the so-called third way is an euphemistic and dangerously misleading name for the second way – for socialism.

Tony Blair made recently a very apt statement: “The third way is a new alliance between progress and justice” (The Washington Post, September 27, 1998). I know that it is difficult or almost impossible for us to take it seriously but it should have been done. It was a mistake that such a formula was not immediately analyzed and attacked – we either did not care or were not able to easily discuss such fuzzy words like alliance, progress and justice and especially their unspecified combination. We can laugh at it but we must be aware of the fact that such loose phrases have been more or less accepted as a new basic dogma, as a currently dominant anti-liberal ideology.

For the adherents of the Mont Pelerin society way of thinking there is nothing new in this new version of “thirdwayism” and all our old arguments against socialism, corporativism, technocratism, social engineering, elitism, etatism, interventionism, etc. are relevant again. The advocates of third way thinking, however, do not listen. Therefore, we have to be more specific and more explicit. The target is fuzzy and moving. The thirdwayism is not a closed group of people, not a well-defined political structure, nor a clear philosophy or ideology. The term third way was used in the past by many, very different people – by Franco in Spain, by Tito in Yugoslavia, by Swedish social democrats after the war, by Ota Šik in my country at the moment of the Prague Spring era (and we all know that it provoked Soviet invasion), by Gorbachov at the time of perestroika, by Clinton and his New Democrats, by Blair and his new Labour, by Vaclav Havel and his fellow-travellers in post-communist countries and by many others. Each one of them tried (and tries now) to be considered a synonym for modernity, progress, wisdom, reason, openness, etc. It is not true.

The Third Way remains to be a very vague concept which has no operational definition, which has not been properly defined. It blocks its serious discussion but it does not block its use and its irresponsible dissemination, and it does not devalue the promises it contains.

It is not only vague, it is “wide” and expansive as well.

It was originally used in the economic field. Those who did not like both central planning and free markets (and I would add: did not understand both central planning and free markets) preferred to promote third ways which - in their naïve understanding - were shaky mixtures of central planning, interventionism and markets. It seems to me useless to repeat to this audience the arguments of Mises and Hayek which were used in their dispute with Lange, Lerner, Dickinson and other advocates of market socialism in the thirties. It seems to me superfluous to return to the arguments used against German “Soziale Marktwirtschaft”. It represents another example of a third way and we have to admit that its beginning was connected with a famous MPS member, Ludwig Erhard. To be fair, I have to stress that he defined it differently than current German politicians – both in SPD and CDU (see my Ludwig Erhard speech, reprinted in my “Tschechische Transformation und europäische Integration”, Neue Presse Verlag, Passau, 1995).

The present-day exponents of third way thinking have been relatively successful in pretending that they endorse conservative economic policies which is, of course, not true. We should not be misled by their rhetoric. They never discuss details, they never reveal what they have in mind when they talk about regulation and they never suggest how to solve grave financial problems of high level of government expenditures on their social welfare programs.

Third way has its place in political thinking as well and these days it represents a very fashionable approach to politics and policy making. It has appeared in many countries but there cannot be a better example of it than in the apolitical politics of Vaclav Havel in my country in the whole decade following the collapse of communism. It has been based on a strong disbelief in classical liberal democracy, in political parties, in representative democracy and, on the contrary, on a strong belief in direct democracy, in the leading role of intellectual elites, and in their ability to introduce “a civilization of peace and love” without complications connected with the standard mechanisms so typical for the twentieth century “age of politics” which they want to overcome.

Third way exists in international politics as well. The bureaucratic, non-genuine, non-spontaneous, non-evolutionary, and therefore artificial unification of Europe, the enormous growth of various international institutions (with dubious competences), the attempts to introduce universal jurisdiction, the NATO´s bombing of Yugoslavia are a few examples of the third way approaches to international politics. What is probably new and definitely dangerous is the fact that current third-way politicians abandoned the traditional, deep-rooted pacifism of the left and are ready to disseminate their ideas by force – if necessary.

Together with the birth of communitariarism (or civic society as it is called in some countries) we witness a third way in moral or cultural field as well. Its advocates propose a new ethical system of thought but do not understand that morality and culture are complex systems which cannot be designed, that they represent a typical example of systems which ought to evolve in the process of human activity, which cannot be created by law, decree or advice. They want to impose their own view of morality and culture upon us whether we want it or not.

What is the origin or source of all that? I am convinced that it is connected with the faith in socialism, with the aprioristic disbelief in liberalism and individualism, with the inherent collectivism and etatism, with the neglect of the tragic experience with the totalitarian systems of the 20th century, with non-reading of Hayek, with non-listening to those who try to warn against well-known, widely discussed and sufficiently documented ills of this strange century. It is based on constructivistic rationalism, on the pretence of knowledge, on the misunderstanding of limitations of human reason, on the ambitions of the elites. It is based as well on the misuse of humanistic or pseudo-humanistic ideas. In this respect, it is fair to mention another MPS founding father, who also accepted the term third way – Wilhelm Roepke (see his recently reprinted book “A Human Economy”, Intercollegiate Studies Institute, 1998, originally published in 1960). But it seems to me that today he would prefer “free” society to society with all other adjectives, including something which sound so positive and sympathetic as the adjective “human”.

The third way advocates, exponents and propagandists never discuss methods which would have to be used in order to realize their goals or promises. They do not explicitly describe the substance and logic of the vertical relations in society they propose. And this is their fatal error (or maybe a clever omission). I agree with Kenneth Minogue who recently said that “any discussion that talks about society and does not deal fully with the state is dishonest” (Policy, No. 1, 1997). The propagandists of thirdwayism have not suggested new methods of governing and commanding society, new methods of overcoming the problem of dispersion of knowledge, new methods of solving the Public-Choice school arguments concerning motivation of individuals who represent the government, etc.

Anthony Giddens, a very influential adviser of Tony Blair, in a recent book “The Third Way: The Renewal of Social Democracy” (Cambridge, UK, Policy Press, 1998) already in the title puts together third way with social democratism. He is – at least – sincere. His book suggests 7 basic reasons for the activity of the government in society he would like to promote:

1. the provision of public goods;

2. the regulation of markets in the public interest;

3. the fostering of social peace;

4. the active development of human capital through a central role by the state in the education system, thereby shaping norms and values;

5. the provision of infrastructure;

6. the fostering of regional and transnational alliances and the pursuit of global goals; and finally,

7. the role as a prime employer in macro- and microeconomic institutions and, especially, in ecological matters.
(quoted from Ch. Watrin, Europe´s “New” Third Way, Heritage Lectures, No. 634, May 7, 1999). When we look at the list we have to admit that 3 items belong to the classical liberal way of thinking but we have to stress that the rest of them would give an enormous power to the politicians at the expense of individual freedom.

The relevant question in this context is about the future, about the potential inner dynamics of society based on third way ideas. Where will it lead Western society if implemented? Will it make a fundamental change as compared to the current state?

It is – probably – an exaggeration to make a cheap point that the Third Way inevitably leads to serfdom as some of us were or are inclined to suggest. The socialist and social democratic ideas have been with us for a long time. There is no doubt that they visibly underminded the functioning of the markets and especially the inherent morality of free markets. Will the third way suggestions (if implemented) be only a marginal extention of old socialist ideas and will not, therefore, fundamentally change contemporary society or will they bring about a significant change?

I have to admit that I do not expect an important change. The Third Way represents rather a new justification for old socialists ideas and practices than anything else. This is, nevertheless, dangerous. For those of us who are concerned about various “creeping” phenomena and tendencies – where I include welfare state, expanding government, bureaucratization of society, attempts of various interest groups to better themselves at the expense of others, a hostile and irrational distrust of free markets and their protagonists, etc. whose support fluctuates in time - we must expect that the new wave of “third-wayism” may complicate our efforts to defend free markets and freedom in general because it may seduce some people who have been our original supporters.

I do not see an imminent danger in the economic field in a narrow sense. I see a much bigger danger of “thirdwayism” in the field of politics (domestically and especially internationally) and I am really afraid of the preachers of new morality and culture. It may come back to the economy, but with a delay.

To conclude, it is our task to fight the Third Way and to expose the pretension of innocent romanticism of various contemporary gurus of thirdwayism because it is (and they are) not innocent.

Václav Klaus, Speech given at the Mont-Pelerin Society Regional Meeting, Vancouver, Canada, August 30, 1999.