The Third Way is somethimes being portrayed as being a little more than a Thacherism with a smile.

The Third Way is sometimes portrayed as being little more than a Thatcherism with a smile. Why is this? To what extent is such position accurate?

It is amazing how such a small country placed on an island without excessive amount of resources managed to become one of the most important economies in the World. Through many years of different government?s approaches from ?nanny state? to intense individualism in free market the politics claimed to found the best way to manage its wealth ? the Third Way. The roots of this approach can be seen in Conservative legislations of 1980?. When in 1979 Margaret Thatcher took over the role of a Prime Minister the economy was in a recession due to the commodity prices crisis and economic recession inherited from previous governments. Her governance was characterised by significant decrease of state intervention in the economy and society following Milton?s Friedman monetarist policy. During Mrs Thatcher?s leadership the size of the government was cut down as well as welfare state. Trade Unions actions were limited due to new industrial laws and there was emphasis upon individual choice. New Labour came to power again after 18 years of Conservative rule nevertheless adopted their reforms straight away. This acceptance of free market philosophy and denationalisation of parties is known as a Neo-Liberal consensus. Brought to political live by Tony Blair, the Third Way claims to have the best of the Keynes policies of state run economy and Thatcherite Conservatism. But is it successful blend of both approaches or just a modified copy of Conservative approach?
The Third Way has its roots mainly in two periods of post-war British politics. The first period from 1945 till 1979 was characterised by a social democratic consensus between the Labour and Conservatism Parties. Following John Maynard Keynes Fiscal Policy the governments of that time agreed over the need for state intervention to secure full employment and emphasis upon universal welfare state that secured everybody?s needs from cradle to the grave which resulted in progressive direct taxation. To get the country out of recession and protect society from high unemployment the government had to increase its expenditure, most basic industries were nationalized and regional policies included planning and incomes policy. This however locked the government in a ?stop-go? cycle where once the economy expanded through low interest rates, low taxation and credit availability the import would outstrip export causing sterling overvalue which led to government intervention to stop rising inflation by increasing interest rates and taxation. While governments were busy with securing full employment the British industry remained underinvested when the state was in ?stop? period of the cycle. The crisis altogether with disputes with Trade Unions and ?winter of discontent? during 1978-1979 could have led to failure of Labour in May 1979 election. The enormously big public sector and welfare state resulted in society being dependent upon state which led to moral breakdown.
After taking over the ?nanny state? as Margaret Thatcher used to call it, the new Monetarist Policy was introduced. The first steps taken by the new conservative government were to cut down government in size and expenditures to reduce state intervention and allow free market economy. ?The Conservatives were pledged to solve Britain?s economic problems not by planning or incomes policies but through rigid adherence to monetarist orthodoxy.?(Budge et al, 2001). The government introduced control of money supply, reduced direct tax while increasing indirect ones and interest rates reached record levels. Reduced spending altogether with world?s economic downturn caused deep recession which lasted until late 1981. In 1983 the privatisation of many ?natural monopolies? began and new legislations were introduced in industrial law. New laws and high unemployment weakened trade unions and in mid-1990s the remains of coal industry were sold. As the unemployment was rising the new working schemes and other employment programmes were introduced. There was emphasis upon individuality and entrepreneurship which could be seen in increased competitiveness in the market. The internal markets within health and education were introduced. In 1987 the economy saw a boom that ended the annual PSBR, and as the surplus of revenue occurred the government was less intended to hold down public spending and interest tares were lowered. However the market crash in October 1987 meant that economy became overheated and inflation rose to 10% rate. As Budge et al (2001) points out ?remedial action in the form of punitively high interest rates followed rapidly, which in turn depressed the housing and property markets and helped precipitate the 1990-2 recession?. The Thatcher?s successor Major sustained the policies but due to divisions within Conservatives over European Union issues made the government look indecisive and unable to introduce nothing new and therefore lost the election of 1997.
In 1997 Tony Blair as a Prime Minister began an era of the New Labour and the Third Way. The Neo-Liberal consensus meant that the new government would continue Conservatives approach especially the need for strict money supply control and low income taxes. Thatcherite distance to Trade Unions with an emphasis upon strong currency and beating inflation was also continued by Labour. The only things that would distinct them from previous governments were the idea of more social justice and equality and even stricter control of public employees in various institutions. What is more an increase in direct tax meant that government was able to afford an extra finance for health and education. Comparing to Conservative euro sceptic attitude the Labour government had far more positive approach towards EU legislations for equal opportunities and greater social justice. The Labour also managed to introduce legislations for Scottish Parliament and Welsh Assembly and reform House of Lords. As Steven Fielding(2000, p.21) argues that ? if the Third Way was more a development of existing themes than a clean break with them, it still marked Labour?s further shift from the scale and from assumed by the post-war state.?
Third Way therefore can be portrayed as being a little more than a ?Thatcherism with a smile? as it continued so many policies of previous government that it is hard to distinct the New Labour government from the Thatcher one. As Budge et al (2001) states ? New Labour seems more rather than less Thatcherite in its general orientation, confirming the impression that on some issues a new consensus has emerged between the parties...?. The opposition: Hague?s Conservative party found it hard to differ themselves from the party that stole most of their core policies under second consensus and offer new ideas to society. They could not change many of economical policies; therefore they concentrated on social side instead, offering ?British Way? to the doubtful voters. The Conservative party is in a position similar to one during first consensus when the ?end of ideology? era occurred. The ?smile? of a New Labour towards the society and opposite party makes it too difficult for Conservatives to win elections unless they invent new, refreshing ideas that could win the voters. Smile in this case mean that although economic policy would not be different from the one that Mrs. Thatcher introduced, some policies like social welfare aspects would be adjusted in a such a way that it would be in favour of society for example, giving extra funding for health and education without significant changes to income taxation. The New Labour actively promotes the ideas of equal opportunities and reasonable (not like post-war Labour did) spending on welfare as an investment in ?social capital?. Thatcher government created a great distinction for all parties from old and new politics but at the same time made it difficult for both old and new the parties to distinct between themselves.
To conclude, New Labour?s Third Way can be seen as a continuation of Thatcher polices with a little more emphasis on social policies that fulfil Labours most basic ideas. However their economic and social strategies would not be much different from other parties since 1987 and probably in future as the general idea could be labelled as a Neo-Liberal consensus so it is not only the case of a New Labour?s Third Way, but probably the right or left government after them as well. The generally similar ideas to the one that New Labour performs would be continued as long as they prove successful. The same happened during Social-Democratic consensus when all parties agreed on one idea of running the state until the major problems started to occur and entirely new and different policies were introduced. Therefore the second consensus would continue until it proves no longer victorious.


References:
? Budge, I. et al (2001) The New British Politics. Second Edition. Harlow: Longman
? Dunleavy, P., Gamble, A., Holliday, I. & Peele, G. Eds., (2000). Developments in British Politics 6. Basingstoke: MacMillan Press.
? Fielding, S. (2000). A New Politics?. Dunleavy, P. Et al (eds.). Developments in British Politics 6. Basingstoke: MacMillan Press, p. 21


Bibliography:
? Callinicos, A. (2001) Against Third Way: An Anti-Capitalist Critique. Cambridge: Polity Press.
? Dunleavy, P. et al (eds.) (2003). Developments in British Politics 7. Basingstoke: Macmillan
? Giddens, A. (1998). The Third Way: The Renewal of Social Democracy. Cambridge: Polity Press.
? Giddens, A. (2000). The third way and its critics. Cambridge: Polity Press