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When I was a young man, my high school social science teacher, an elderly man of great wisdom (or so I thought), and courage (it was in the early 1950’s) passionately defended the ”Third Way”.

He was a staunch advocate of social democracy against the tyranny of Communism and the heartlessness of capitalism. For those of us who grew up and lived in a grimy industrial city, just north of Boston, it was an appealing set of beliefs though some of us were perplexed by some incongruous events. No one really questioned the idea of social democracy but occasionally one or two of us would ask an impertinent question.

“Why,” asked one of our brightest and best, “does England, which has a social democratic labor government support the US against Russia, instead of following the ‘Third Way’?”

Our beloved teacher took off his glasses, stood up and paced the floor and began speaking. “A good question if we lived in an ideal world. But in the real world we have to make practical choices and it is clear that social democracy has more in common with a capitalist democracy than totalitarian communism. Humpf,” he cleared his throat. “Sometimes social democracy has to make compromises. Humpf. Tactical ones, of course , in pursuit of its ultimate goal of freedom and equality for all.”

On another occasion, speaking of the vital role that Social Democracy played in pursuit of World Peace, out beloved teacher was asked if the European Social Democrats supported the Korean War.

“Well of course, the United Nations authorized it?well the Security Council did. Social Democracy is not against just wars; it only opposes unjust wars – like the invasion of Korea by the Koreans. Humpf. The North Koreans are attacking the South.”

He then went on to forcefully and with utmost clarity define the difference between just and unjust wars, though some of the working class students – mainly those facing conscription after graduation, were not absolutely convinced, unlike the brightest and the best, those who wore neckties and were heading for the universities; they were greatly impressed by his erudition.

So I faced life with a background of practical skills, a classical education and what is now called a set of “human values.” Nonetheless upon completing the university I quickly went into the business world and, absorbed with frequent overseas undertaking and domestic responsibilities, I had little time to follow up the Third Way teachings of my favorite high school teacher, though I never completely forgot his moral strictures on the “good society”. However later in life, specifically in the early 1990’s, my business ventures took me to Eastern Europe and Russia. Opportunities for the adventurous and the ‘not too scrupulous’ businessman they offered handsome returns in the shortest of times.

I was lunching with a senior Czech official, who was obviously well educated (I believe he was one of the earliest MBA’s financed by the Soros Foundation) and as broad-minded as his “dear President” (I wasn’t sure if he meant the terms of endearment or whether it was pure cynicism) Vaclav “Grovel” Havel (as his adversaries referred to him, for his grandiloquent but ultimately vacuous toadying to Washington.) It was after our third drink that I ventured to ask him what he thought about the “Third Way”.

“It’s a nice idea,” he smiled. “We have our own version, you know. We combine German takeovers of the economy and the American takeover of our military installations – we create the Czech version of the Third Way by combining the two extremes, a client of the US and a vassal of Berlin: we are clients of both.” He had a playful smile and his eyes sparkled, “Third Way is good for Bizness.”

Through the mid-afternoon alcoholic glaze, I recalled my ancient mentor had spoken of full employment, universal public health care and other welfare provisions. I asked my Czech colleague if the Welfare State was part of the Czech Third Way.

He drew a deep breath, “That’s not the Third Way. That’s the Old Way. The Communist Way. For almost a half a century they tried to force us to live like ants, work and sleep. They stifled private initiative and Western expertise. There were no “Third Ways”, you were either with the Communists or with the West.” He stifled a yawn. I thought it was getting near his siesta time. “Before, you know, under the welfare state the workers pretended to work and we pretended to pay them.” He guffawed. So I didn’t pursue my inquiry as apparently the idea of the Third Way had taken on a new meaning, or was resolved in ‘Grovel’s’ higher synthesis of dual clientelism.

But I was now intrigued by the idea of the ‘Third Way’. I relived my adolescent days of learning, my high regard of ‘values’. On my way back to the US, I stopped over in London to meet with a senior banker from Barcleys to discuss some financial matters.

After business hours he invited me to have a drink at his private club. Much to my surprise the banker turned out to be a Social Democrat, a member of ‘New Labor’, head of the City of London Financiers Local.

“Really James, you’re a bit out of touch with British politics over the past decade, aren’t you?” He had a way of insinuating in a jovial way that I was a typically uninformed US businessman.

“Well I thought, being a ‘labor party’, it was made up of workers not bankers.” I sought to cover my retreat.


“Really? We financial investor advisers are ‘workers’; hell we work longer hours than most of what you, I presume, call manual workers. I call you attention to the fact that the Party is now called ‘New Labor’, we’ve done away with all the class status humbug, and we are an inclusive party these days. A party of merit.” He went on in the style of a high school social science teacher.

“Do you still follow the ‘Third Way?” I asked in desperation.

“Of course. Tony’s speech writer put out a book on the ‘Third Way’ that provided an ideological gloss for our policies.”

“So you still pursue universal public health, a mixed economy, full employment?” I thought for a moment I had finally touched base.

“Oh heavens no! We dumped that sort of ideologically inspired baggage a while back. New Labor stands for public-private management of the health system and getting the state the hell out of the economy so that the entrepreneurial juices can flow freely. Full employment is never possible. That’s part of the old utopian dogmas. We are interested in raising productivity and a reasonable amount of unemployment is a good thing. It makes ‘em work harder, grumble less and forget about their tea breaks.” He raised his glass, “Cheers!”

“Cheers,” I answered. “This makes Social Democracy more like US capitalism, rather than a ‘Third Way’.”

“Listen James.” He was a bit bug eyed and breathing heavily, “With globalization there is only ‘One Way’, ‘there-is-no-alternative’. We live in a globalized world. There is only one way, the way we are going with Tony B. New Labor is rather good for the working financial advisers, I dare say.”

“Well, how do you square the ‘Old’ Labor with the ‘New’?” I asked now, duly reformed as a pupil of my British tutor.

“New ideas for new times: The scientific-technological revolution, modernization, computerization, the new service economy. You need a new inclusive party to accommodate changes in the labor market.” He was sounding like an op-ed writer in the Financial Times who lifted too many but still could grind out the litany of ‘zations’. “We even got a few, quite a few, coupon-clippers on board. You know they do work at looking over the financial pages once a week, which is some sort of labor.” He laughed at his own joke.

I smiled to accompany his mirthful mood.

After I returned to the hotel, I was dissatisfied and frustrated. My favorite high school teacher told us that there was a ‘Third Way’, a social democratic alternative. And I wasn’t about to let him down. My mission, my obsession was to vindicate him. I took a plane to Paris and contacted my colleague in the trade.

“I’d like to talk to a bona fide Social Democrat, a knowledgeable deep one who can enlighten me on the matter,” I emphasized.

“No problem. We’ve got a few running our IT networks. I’ll set up a meeting for tomorrow.”

“Thank you, I look forward to a continental , a Southern European, version of Social Democracy.”

“Yes, Mr. James. I am a card-carrying member of the Socialist Party, but we have many tendencies, I belong to the ‘mainstream group’.”

“Well, let’s skip the internecine squabbles. What do you think of the ‘Third Way’?” I asked hopefully.

“We in France are the leaders. We believe we are the alternative to savage Anglo-Saxon capitalism and statist collectivism. We, France, represent the independence of the European Union against US global ambitions.”

“That’s all well and good,” I interrupted, “but what about the welfare state, full employment, public enterprises, a mixed economy?”

“Ahhh,” he raised his eyebrows. “That was the ’second Wave’ of Social Democracy.”

“What was the ‘First Wave’?” I asked.

“A state economy, a collectivist utopia, a revolutionary dream of some of the founders of Social Democracy in the 19th century. The ’second Wave’ was the socialism of ‘Fordism’: capital pays for social welfare. That was the 20th century. Now we are living the ‘Third Wave’: the scientific-technological post-’Fordist’: Post-industrial revolutionary stage. We socialists are leading the way in Modernization, we privatized more public enterprises than any previous regime in French history.” His eyes blazed with post-revolutionary fervor. “Only we could do it. Because the workers or at least the Trade Union leaders trust us and anyway some of them get plenty of government funds for ‘job-retraining’ programs. ”

“Where has my teacher’s welfare state gone?” I said to myself inadvertently aloud.

“Welfare creates dependency, passivity, lack of initiative. So we reduce the unemployment payments and provide incentives to train for another job and take whatever employment the labor market offers. Social liberalism is the revolutionary idea of the 21st century.”

“Sounds to me like the ‘workfare replacing welfare’ doctrine of the US rightwing,” I interrupted his Gallic paean to French theoretical creativity.

“No, no, no. We believe in the withering away of capitalism, not through state encroachments, but through the action of civil society, the ‘Third Force’? NGO’s, IT, the EU, we are creating a new economy, a new empire based on merit and participation, an empire that breaks national barriers and integrates all people.”

“What’s that got to do with the ‘Third Way’?’ I asked, fed up with his self- important theoretical meanderings.

“Everything! We reject the old imperialism and nationalism. Between the two is the ‘Third Way’, civil society, which guides the Bourse to function for the social welfare of humanity?”

“There he goes again,” I thought. “Thank you. You were very kind to spend so much time explaining to me the meaning of the ‘Third Way’.”

“You are welcome, James.”

I went out the door very agitated. Nothing to do with what my teacher told me about Social Democracy. It’s gone. It’s all markets, unemployment, private hospitals and coupon clippers. Where has Social Democracy gone?” I yelled as I walked down the Champs D’Elysses.

Passersby looked up at me like I had just lost a bet on the stock exchange.

A friend in New York, A Russian-Israeli businessman advised me to try Israel.


I flew to Israel and met with senior officials of the Labor Party, one of whom was generous enough to give me an hour of his time. He spoke of Early Labor, the original settlers in the 19th century, the Labor Zionists, the Kibbutzniks, the belief in full employment, public health care, labor solidarity.

“Did that include all workers?” I asked.

“Absolutely!” he waved his hand, “We were and are a democratic socialist movement. We organized the Ashkenazim, Sephardics, Ethiopian Jews. We welcome all races.”

“What about the non-Jews, the Palestinians?” I asked.

“This is a Jewish state. We are a democratic Jewish state. The Arabs do not accept that. So we do not accept them. Let them form their our welfare state. Let them go to Jordan.” He stopped. “We include Israeli Arabs in some of our unions and they have voted for our Party in the past. But?the welfare state, as you call it, is very costly and the Jews that came here, especially from Russia expect everything to be given to them by the state. So we have a fiscal crisis. We have to make choices, like most democratic states: We choose to fund welfare programs for Jews first.”

“A kind of apartheid welfare state?” I asked in all innocence.

“What are you, some kind of anti-Semite?” he lost his cool.

I took a plane out the next day, but only after I was strip-searched, had all my orifices probed, and was fingerprinted and photographed in three dimensions.

I headed directly for Latin America. I made a strategic decision given time constraints. I chose to go to the heart of the continent: Bolivia, which happen stance had a Social Democratic government, a member in good standing in the Socialist International, which was governed by a party with the highly improbable name, ‘The Revolutionary Left Movement’ or MIR. It was none of that; its leader was accused of trafficking in drugs, it backed an IMF plan to close the tin mines and fire all the miners, and its modus operendi was to use the state treasury to buy malleable trade union leaders, bus in poor peasants for rallies and pay them with meat pies and beer to chant political slogans in favor of the regime.

As I flew back to the States, I admitted the obvious that Social Democracy as my teacher described it no longer existed. That it had been transformed, renovated, subverted, surpassed or whatever its new ideologues sought to label it. Social Democracy, the real living thing was today and forever a vehicle for investment bankers, technocrats, speculators, racists and drug traffickers. It no longer has to compete with the communists, only with the Liberals.

“Has it touched bottom?” I asked myself.

(Republished from The James Petras Website by permission of author or representative)
• Category: Ideology • Tags: Social Democracy 
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