The following article by Ruy Teixeira, author of The Optimistic Leftist and other works of political analysis, is cross-posted from his blog:

Remember the Third Way, that crazy nineties thing? Or maybe you’re trying to forget it. Spearheaded by fearless leaders Bill Clinton, Tony Blair and Gerhard Schroder, it was supposedly a reinvention of the left to adapt to a new stage of capitalism and channel the benefits of that dynamic system to the middle class and poor. That meant jettisoning many traditional programs of the left and concentrating on unleashing capitalism, rather that criticizing it. The resulting cornucopia of growth would be good for everybody. That was, the Third Wayers said, the only road forward.

That didn’t work out so well. Turns out capitalism, left to its own devices, is still capable of great damage and dramatic underperformance for most of the population. It is therefore of interest to see former proponents of the Third Way admitting it’s time for a rethink–a big rethink. One such is William Galston, who was Deputy Assistant to President Clinton for Domestic Policy and one of leading theorists of the whole Third Way movement, especially in its US “New Democrat” form. Galston’s article at the British site, Unherd, “How the Third Way Lost Its Way“, is quite critical of his former movement and says:

“The Third Way’s programme of incremental adjustments to social democracy within a framework of optimism about globalisation, democratisation, and demographic diversity can do little to address today’s much deeper structural problems…

To stem rising economic inequality and geographical divergence, we will need more government intervention and regulation than the creators of the Third Way contemplated, along with much greater investment in the fundamentals of equal opportunity. To sustain a rules-based international order, the rules must pay less attention to economic aggregates – and more to sectors, regions, and economic classes – than the proponents of the WTO imagined. To be sustainable, immigration regimes will have to pay more attention to the economic and cultural effects of entrenched practices. What works in San Francisco will not necessary work in Scranton; the Midlands may reject what London cherishes.

In the international domain, the decision to allow China to enter the World Trade Organisation without committing to the practices of a market economy has produced distortions that the West must address – but from a far weaker position than it enjoyed two decades ago.”

No argument with any of this but I do think the article lets the Third Way off a bit easy in its original incarnation. Galston’s view seem to be that it was right on in the nineties, just times changed so it’s not so good any more. My critique is sterner.

The Third Way, as Galston notes, posited that the structure of capitalist societies was changing and that the traditional working class was becoming less important. But that analysis went little beyond observations on the white collarization of work and the assertion that the left was best-served by leaving capitalism alone to generate riches that could be redistributed and repurposed . The former view showed only a crude understanding of the depth of the social transformation affecting Western industrial societies, while the latter was simply wrong as an assessment of contemporary capitalism’s ability to function well without proper guidance and regulation.

It was not, and is not, unreasonable to argue that fast and equally distributed economic growth is critical to providing adequate levels of economic mobility for the middle class and poor. Third Way advocates, with their starry-eyed view of contemporary capitalism, thought they had found the right approach to producing such growth. They had not.

The left can and must do better. Time for a Fourth Way that deals with actually-existing capitalism instead of the benign version favored by the Third Way movement.