The Economics of the Third Way

The Economics of the Third Way

Experiences from Around the World

Edited by Philip Arestis and Malcolm Sawyer

The ‘third way’ is a term often used by politicians and others to indicate a set of new policies adopted by former social democratic parties throughout the world. This book is an attempt to dissect the ideas and economic theory behind the rhetoric of the ‘third way’ through a critical evaluation of the experiences of ‘third way’ administrations in a diverse range of countries.

Chapter 1: Economics of the ‘Third Way’: Introduction

Philip Arestis and Malcolm Sawyer

Subjects: economics and finance, post-keynesian economics, public sector economics


Philip Arestis and Malcolm Sawyer ‘Third Way’ is a term loosely used to describe the emergence of new social democracy governments throughout the world. Whilst it is easy to explain the term in this way, it is by no means a simple matter to analyse coherently. In view of this difficulty, and yet topicality, we decided to hold an international conference (26 May, 2000, University of East London) to which economists were invited from a number of countries where policies of the Third Way type had been implemented. In doing so we had thought we might be able to define Third Way and, more concretely, ‘Economics of the “Third Way”’. In the UK, for example, the emergence and then election of ‘New Labour’ has been closely associated with the development of the notion of the Third Way. ‘New Labour is neither old left nor new right ... Instead we offer a new way ahead, that leads from the centre but is profoundly radical in the change it promises’ (Blair, 1997, p. l). In a similar vein, Giddens appears to locate the Third Way by reference to two other ways of ‘classical social democracy’ and neo-liberalism. Classical social democracy thought of wealth creation as almost incidental to its basic concerns with economic security and redistribution. The neoliberals placed competitiveness and the generating of wealth much more to the forefront. Third way politics also gives very strong emphasis to these qualities, which have an urgent importance given the nature of the global...