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 6: Social democratic policy and economic reality: the Canadian experience

Jim Stanford

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


Jim Stanford1 6.1 OVERVIEW This chapter reviews the economic policies of Canada’s New Democratic Party (NDP) through the 1990s. To varying degrees during the decade, the federal and most provincial wings of the NDP have adopted more conservative, ‘Third Way’ style, economic policies. Canada’s political economy was dominated during the decade by a historically significant scaling back of public-sector programmes, regulations, and economic activities, nominally motivated by the need to eliminate the chronic deficits which were experienced by the federal and provincial governments through most of the last quarter-century. In general, the NDP has accepted, and in some cases even advanced, this sea-change in Canada’s economic and social policy, and the consequent downsizing of the public sphere. The NDP’s present policy stance is one which explicitly accepts a smaller and more defensive economic and social role for the state, the leading role of private profit-seeking investment in motivating growth and job creation, and more ‘disciplined’, deregulated, and unequal outcomes in the labour market. The ways in which the NDP’s economic policies differ from those of an increasingly conservative mainstream are becoming less evident. Indeed for the political strategists guiding the party’s reorientation, the acceptance of that mainstream vision - lower taxes, smaller state programmes, an orientation of policy towards fostering international and business competitiveness - forms a key element in their effort to present the NDP as a less threatening political alternative. The recent rightward shift in NDP economic policy is placed here in the context of the party’s failure...

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