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The Third Way/Die Neue Mitte

Tony Blair and Gerhard Schroeder

This manifesto, issued by the prime ministers of Britain and Germany, seemed to us to war- rant critical attention, which we asked Joanne Barkan, one of our editors, to provide. EDS.

Annotated by Joanne Barkan

OCIAL DEMOCRATS are in government in almost all the countries of the Eu- Lropean Union.S Social democracy has found new acceptance—but only because, while retaining its traditional values, it has be- gun in a credible way to renew its ideas and modernize its programs. It has also found new acceptance because it stands not only for so- cial 'ustice but also for economic dynamism and the unleashing of creativity and innovation. The trademark of this approach is the New Center in Germany and the Third Way in the United Kingdom. Other social democrats choose other terms that suit their own national cultures. But though the language and the in- stitutions may differ, the motivation is every- where the same. Most people have long since abandoned the worldview represented by the ( dogmas of left and right. ocial democrats must 7 be able to speak to t ose peop e. Fairness and social justice, liberty and equality of opportunity, solidarity and res on- sibility to others-4these values are timeless. Social democracy will never sacrifice them. To make these values relevant to today's world re- quires realistic and forward-looking policies capable of meeting the challenges of the twenty-first century. Modernization is about adapting to conditions that have objectively changed, andFt reacting to polls.) Similarly, we need=a1- 7T"3 y.- our politics within a new economic framework, modern- ized for today, where government does all it can to support enterprise but never believes it is a substitute for enterprise.iThe essential func- tion of markets must be complemented and improved by political action, not hampered by

.D 025 4.1. A. rftet tt .

wlvitiwr

Soc. Pet,s tkre Iti amernrAent" by 441tisselpts or It1/4 coo:U}kCIA? Or whelicr Akl e n Tartness are 10+ % O r

cottl4Isfs ?Is -Nue 04 ckiCitrckce 0.K3ftere bei-weeit. 0, govern -

own+ °Ad 4 cekter -

ate ?

Did, social democracyy really nt

strand

or these things lagtcore ?

APttr World. War Two, `` %nyder nt 241/4-

A-ion a was alwoi s 0,.r%

1420- and Cory.rAuslis#)

+keine . Didrit *he Swedisl Social

Democraiic, %Ay always *wad-

for etocm‘c. dynamism?

\AGA" wo.re

t *aogrnas vxac.Ety?

Curopeo" conservoekivt$ Aro,-

ctAkUNso.lky sioacl -Cos "marice#

Ilinera_112.a kicrn.,"

how \Nave +hey ,

axd. k4v2ir. su.ppor+er5 Owncst

-T4

possible ,

,-ko so. yy

kkse, basic values o4 (social y‘s-tice) Oh& Wit Y49h+

(Ct-et markets) s.k;\\ hold ?

eC-I.

So what do wo. accept 4N10:1 - o.boAdonee.

%v.+ &Iasi+ ahe i d\alr and Schroeder e1ection campaigns do exaei-ly

reliance ern poi1S o.

-f Q0,+wee cyc A-11% new, rnoclervt.

y1011- icleo10ca_\ -poliAicS?

This applies -6 Swed:vs‘k Since The 19303 • The'ir'eActsalt." soc dem. 'model was `‘ineAce, +he mork g # work,/ ---Cor everyone.

DISSENT / Spring 2000 n 51

Why to%-e.4-end,-41a,i *hese. two

can ips nea.+Iy o r o rnp i t i_oy se parozi-ed.?

This 541ance is 50 lener Sounds lt he. 4V1e.

1rh42.4*1- qc. 0-C the

ricaVA -

iv, Europe &thee

While subsilarn4;a,1 ely.o.Vtiy QC oppor+n.M-ty is *he" bes# csoo I cr- Sac. barn. ) *ireletes some

Okay"( e of 9.1).4‘trky 04.4.401fte Cceriolnly more *an 41.11t5AS in

Same Etkropc

fiver ohs

. 4wie. ths -

Part-ties

are

\oVutx,i. Wvncltr rni n e. (-C-u.-kure)

v-A-tAm at

c^ue sii(ryas an?

, 1Tf le rea.,1

riNktc.A. 04

todh Is need ea. and how

no

si.

cittirAeve, 'Ichern

This Viate mod accepts Avo easily and. Apo Lamptetely

the oy.ssv.pwri-ions 04- cimser- vo4- ive Nclea.105ue.s. Good public Schools Cve evtryme,

he0.14-h care t public k - rans - e+c . are nece.s -

sat)/ -hp crea-ke soc1.4 jv.skice, siortccd ty soc . derv.

socAtiies ce‘teci-exi,

nd_

3‘).4virt• rIA0Y42. ioac Minty

6%A:tick. -k-inese. Speed- e.Ciec- leortly, +tete money Improves

cornce.Aiktveness erApioy molt, coNck t tV t ns si-ando.rds

52. DISSENT / Spring 2000

e support a market economy, not a mar-) ket society./ We share a common destiny within the European Union. We face the same chal- lenges-Ito promote employment and prosper <Thf ity, to offer every individual the opportunity to fulfill their unique potential, to combat social exclusion and poverty, to reconcile material progress with environmental sustainability and our responsibility to future generations, to tackle common problems that threaten the co- hesion of society such as crime and drugs, and to make Europe a more effective force for good in the world. j e need to strengthen our policies by benchmarking our experiences in Britain and Germany, and also with like-minded counter- parts in Europe and the rest of the world. We must learn from each other and measure our own performance against best practice and ex- perience in other countries. With this appeal, we invite other European social democratic governments who share our modernizing aims to join us in this enterprise.

I. Learning from Experience Although both parties can be proud of our his- toric achievements, today we must develop re- alistic and feasible answers to new challenges confronting our societies and economies. This requires adherence to our values but also a willingness to change our old approaches and traditional policy instruments. In the past:

• The promotion of social justice was some times confused with the impos ition of equal l, ity of outcome3The resu t was a n eglec importance of rewarding effort and responsi- bility, and the association of social democracy with conformity and mediocrity rather than the celebration of creativity, diversity, and excel- lence. Work was burdened with ever higher costs. (The means of achieving social justice became identified with ever higher levels of public spending regardless of what they achieved or the impact of the taxes required to fund it on competitiveness, employment, and living stan- dardsj Decent puBlicsei'vices are a vital con- cern for social democrats, but social con- science cannot be measured by the level of public expenditure. The real test for society is

ffectivel this expenditure is used and how much it enables people to help them- selves. e e ie that the state should address darn:' aging market failures all too often led to a dis- proportionate expansion of the government's reach and the bureaucracy that went with it. The balance between the individual and the collective was distorted. Values that are impor- tant to citizens, such as personal achievement and success, entrepreneurial spirit, individual responsibility and community spirit, were too o ten su or inated to universal social safe- guardsr'

• Too often rights were elevated above respon-

sibilities, but the responsibility of the individual to his or her family, neighborhood and society cannot be offloaded onto the state. If the con- cept of mutual obligation is forgotten, this re- sults in a decline in community spirit, lack of responsibility towards neighbours, rising crime and vandalism, and a legal system that cannot cone.

• The ability of national governments to fine-

tune the economy in order to secure growth and jobs has been exaggerated.)The importance of individual and business enterprise to the cre- ation of wealth has been undervalued. The

( weaknesses of markets have been overstated and their strengths underestimated.

II. New Programs for Changed Realities

Ideas of what is "left-wing" should never be- come an ideological straitjacket. The politics of the New Center and Third Way is about addressing the concerns of people who live and cope with societies undergoing rapid change—both winners and losers. In this newly emerging world people want politicians

who approach issues without ideological pre- conceptions and who, applying their values and principles, search for practical solutions to their problems through honest, well-constructed, and pragmatic policies. Voters who in their daily lives have to display initiative and adapt- ability in the face of economic and social change expect the same from their govern- ments and their politicians.

• In a world of ever more rapid globalization and scientific changes we need to create the conditions in which existing businesses can

- 11.ti rd \Nay res never- ota.nly cork.

frorrt- \now very 417iperIVnre. ktnns is .

v4Cecktve -10b troArs1ttR60 n441 INec es -

sory ctAilat.co.re , INece-.41, co-fry t o. 4. iro.vet 0.11froconces)c.osIrs Yfu.kon-

more.

1h ptast e- .C.kpncltr‘5 44nan

voNfotre. Ancl_Ws worth the rnotte.y.

for 41*e lovernmtn+5 -4k-o* rc - lacer ly Avo$6. °vitt- CotAtd private.

et-A0 - 1)6 se s

*his has never

bee.% c. necessary cornversarlt

Social desmotracy. The. " SwerfAs h

Ir4"eA.„11

, ,,e

oinbiAte.

was \laity

ce.rfltroSt -zed, coni-ra0 b ox 2 013.1%1;115 °Ara ed. Ine•Ciic%ervt•

firms -Vo

wind. rewarded.

dynct.rntsret. An -Ong 4)eV142 Vit . CA" labor s avid v‘ok. ju.s4- co.040.1.

Marty people carve not LO4vtr- seSe5kka.r4s Cst4ch acs 1ma.alth

care) Co si 4 t Sok ciarlity and

bu,:a 0. cohesive ci-Vt.2

exact-ky v4V0.i-. 1.%n-te.ariA- by vbrm-

trCry. So

rnu.n14-y spit-I-I- there?

'ntsls vy.1-y rnv.cirt Opeln

dtbate.

1f &R-A-,-6,0 ). Dot sikt- ntar l

Greehspo.

k-kknell k4 vets

of Q colleen% c 9rovJA 311 cmcl. wntits-

91oy me rrt. mare? Cou.11rItt-44 -ki

central bank create more

rowTh in Europe?

Third Way-ers exacyseroke. -Vne. ov.poc.1•maricei• pamce .

Clol)al n2.a.iim 61 -s char -sacker isAicS

ands t csfec.is orx Yn0

ftiCKVAXttecl. SOC.

AVM.) is analyzed. SerIOUSly

two\nere. ON iS ckoc_uane tet e ancl tt,031 =AVM Is t - Vit charged.

-Ono* Supposedly mokes

*At old, Soc. a. vv, .

.

qmeite

rect. cioba.‘ 170-Vian

ckeee virea. as -One necQsSa-rY

u.yloAiero.N31e coni-e•er.

Ao

itcrnat

government-s ho.v2 1ost

DISSENT / Spring 2000 n 53

?ower. ove.r

ecov%ory) VAtO

prosper and adapt, and new businesses can be set up and grow.

• New technologies radically change the na- ture of work and internationalize the organiza- tion of production. With one hand they de-skill and make some businesses obsolete, with an- other they create new business and vocational

opportunities. The most important task of mod-

ernization is tofinvest in human capital: to make the individual and businesses fit for the

knowledge-based economy of the future.

• Having ters7nejoh for life is a thing of the past. Social democrats must accommodate the growing demands for flexibi it and at the same time maintain minimum social standards, help families to cope with change, and open up fresh opportunities for those who are un-

able to keep pace.

• 1Ve face an increasing challenge in reconcil-

ing environmental responsibility towards future

generations with material progress for society

1105 -140k V.ower- snow 7. And_ why can 1 + a. sironi, rid% reslon lace i4t.e Ctk do some-0.14n 04.boa.A- 14?

at'vi411,13 atAtleS - thin:Noy poky)

t,e Ilrogro.rornocht. en-441as\ s

on eakkoo.-Nior‘ ondk-roAntnai -4or-

4o135

-141e•%

ecort o .n y.

-Vrulninok .Cor -Vhe

does4t

trgeock . e. -4%ejob— o. Cr i}tCIS wL.

leveled vk Roberk Reich ;or years.

is Eu.roran code -Cor \we In able 4o Cire people more easi ly and lower wogs . Dots 4llis policy make any sense. Wore anyoTne 4isi.kres ()Lk* how to c reorte cooct. jobs Irt these.

e co ,no rysl s

oeboLL+ cleaning vp and envIrorirno." -1- cre.a.-t-es jobs . Wasn't-+%-o-+ o. beiter position -for -14-$e

Two ImIlorani - co.veo.4

S t)Sorne

v.A.1311c. services Ccin'ack care,

t large; We must marry environmental respon-

/ sibility with a modern market-based approach.

In environmental protection, the most modern technologies consume fewer resources, open up new markets, and create new "obs.

ublic expenditure as a proportion of national

income has more or less reached the limits of acceptability. Constraints on "tax and spend" force radical modernization of the public sec- tor and reform of public services to achieve better value for money. The public sector must actually serve the citizen: we do not hesitate to promote the concepts of efficiency, compel

tition, and I

jiah performance. j

ecLuxo.kkon)dovit

koAck ikiernseAves positively

4-yins cF e-m- cicncy. CornpeWcior.

+Int public Seci-or

to

c

a.re.R-u.A.

) or you, 5e-l-

eg, Social nity systems need to adapt to changes in life expectancy, family structures, and the role of women. Social democrats need to find ways of combating the ever more press- ing problems of crime, social disintegration, and drug abuse. We need to take the lead in shaping a society with equal rights for women)

new disi -or 4- ions (ti, krytt13

4, 3 introduce compekikicr lothoteri hosoiu(s in Art-40.1 in CONJ. 0 yS

anSiln Sweden •

ir*U.V Vacuous

and men.)

Crime is a vital political issue for modern

social democrats. We consider safety on the street to be a civil right. A policy to make cit-

ies worth living in fosters community spirit, creates new jobs, and makes residential areas safer.

Poverty remains a central concern, especially among families with children.Feneed spe-)

54 n DISSENT / Spring 2000

cific measures for those who are most threat-

ened by mar inalization and social exclusion.

This also requires a modern approach to government:

• he state should not row, but steer: not so

much control, as challengej Solutions to prob-

ems must be joined up.

suol

as " • comp letoy

7 vol k,,a •

r.sri4 steer nci an i vsilor -k-iarCt"

pe af- cartra - l—cmt-r01 0;. direction ?.

• Within the public sector(bureaucracY\at all

levels must be reduced, performance targets and objectives formulated, the quality of pub- lic services rigorously monitored, and bad per- formance rooted out.

Modern social democrats solve problems

where they can best be solved. Some problems can now only be tackled at the European level:

others, such as the recent financial crises, re-

quire increased international cooperation. But, as a general principle, power should be de- volved to the lowest possible level.

For the new politics to succeed promote a go-a ea. mentality an a new en- trepreneurial spirit at all levels of society. That requires:

• a competent and well-trained workforce ea-

ger and ready to take on new responsibilities

• a social security system that opens up new

opportunities and encourages initiative, creativ-

ity, and readiness to take on new challenges

• a positive climate for entrepreneurial inde-

pendence and initiative. Small businesses must

become easier to set up and better able to sur- 2 vive

• e want a society which celebrates success- 1 ul entrepreneurs just as it does artists and, footballers-f—and which values creativity in all spheres of life. Our countries have different traditions in dealings between state, industry, trade unions, and social groues, but we share a conviction tha raditional conflicts at the workplace must e overcome. is, a ove a , means re n mg a spirit of community and solidarity, strength- ening partnership and dialogue between all groups in society, and developing a new con- sensus for change and reform. We want all groups in society to share our joint commit- ment to the new directions set out in this Dec-

laration.

Immediately upon taking office, the new Social Democratic government in Germany gathered the top representatives of the politi-

bureaucracy wasril-

necessa.rll deer. Tho tkserru

troMern -For Soc. ttkesikan ls WVI>e

1

it was io some places %nano+ atiners CSurecity.6.

-Onis WI*/ t htte lir rte V.601

Spinto

%ISO encl+ke +Go( brectics

S (AI Mil es, {ma con ?orate 6 al 1 -

outs +ytico 1

0C 13°14-W.•1a Wot-

Two cap i 4a.1%syn.

146.k. 0,13out

a. society -ONO* cele-

brates success Jik4 kekc.%le rs ?

move IA.s closer

A-kti Kind. of values wQ mio.n -t-

Do evvVra ire nears rea 111

stafer

4.rovn o. lack 04 ceSekirtutiont' os+ cif ou.r simr4s

And s-Vorr av,61, o.khor ce le kir %41 4 S a1re.o.ay u.r h VnernstiveS In+0

eni re ire near s

As long as ownershi? t c.on -kro1, and proiiks belong -ko one sroml #ko± employs +lle other, can +1,ere ever be o e.nct.-ko covvf-lici? Doesr0

an Qr, d froAM.tiono.1

imply 3htek- less

coq. kkikai-e? \AJ nno:k2S Nr4f0115

conflict

power-S-u.1

wilt

1.01 414.4 t4 W's played cher in

neptiaii Ora ? During Swedish sac. dent.'s heyday, the siTenstil oc 44146_

454-

vorKC-orce) mode prodmciiv t.

.1.42 %a orls

necsakicdions possible .11.tere,

were very -Caw strikes 1 tw

ckidn i mean 41-tere vias no con; liCt.

-t That

DISSENT/Spring 2000 n 55

abou.-4- co- defierrninckijoniI ty:A4 ***he German soc derv. model

.cot. 0. -kW decades . WheA does

4-he '"thircl, \day have say °Amu* espeetence

A) Doesr0+ maiter l)cnkl deep and widespread. +he tcohornic_

expansion

Sociekies like, "Thai Icthot. the,. -4 have

'ts? Who.* ctloot-Li-

booms vai4h new :lobs out mach

greater

oppori-tonli- y s-or some.

0.1t3‘4111cd- is

(owl- cexio.tylly

cohesive abowt vowing and clAsptr-ate people ;Its •o c.141es? iN) Who.* about' ccut-t-ttrosl cttkestion,?. Do 4.

shoppin3

110-tv-Is

banks, (Vila r•igl-A-c-lt.t,los make -Por 0, cohesive Socieiy?

1C4

w‘I lle Imo relying on 1002 "siYie-- deAcit spending ,socica demo -

crais should also avoid

dernoni2_Ins a kxseCv-1 4-aol deaMns wi%.k econovnic downtorts.

Does 'tine aerAcutiside hove no

posiAive. mlevctnce. %low?

56 n DISSENT /Spring 2000

cal sector, the business community, and the

unions around the table to forge an Alliance for Jobs, Training and Competitiveness.

• We want to see real partnership at work, with employees having the opportunity of sharing the rewards of success with em lo ers.

• We support modern tra. a unions protecting

individuals against arbitraryb

e avior, and

working in co-operation with employers)to manage change and create long-term prosper- ity.

In Europe—under the umbrella of a Euro-

pean employment pact—we will strive to pur- sue an ongoing dialogue with the social part- ners that supports, not hinders, necessary eco-

nomic change.

III. A New Supply-Side Agenda for the Left The task facing Europe is to meet the chal- lenge of the global economy while maintain-

ing social cohesion in the face of real and per-

ceived uncertainty. Rising employment and expan ing jo opportunities are the best guar-

antee of a cohesive society,/

The past two decades of neoliberal laissez- faire are over. In its place, however, there must not be a renaissance of 1970s-style reliance on deficit spendinglind heavy-handed state inter- vention. Such an approach now points in the wrong direction. Our national economies and global eco- nomic relationships have undergone profound change. New conditions and new realities call for a re-evaluation of old ideas and the devel- opment of new concepts. In much of Europe unemployment is far too high—and a high proportion of it is struc- tural. To address this challenge, Europe's so- cial democrats must together formulate and implement a new supp e agen a for the left.

Our aim is to modernize the welfare state, not dismantle it: to embark on new ways of expressing solidarity and responsibility to oth- ers without basing the motivation for economic activity on pure, undiluted self-interest. The main elements of this approach are as follows:

A robust and competitive market frame- work

Product market competition and open trade are essential to stimulate productivity and growth.

For that reason a framework that allows mar- ket forces to work properly is essential to eco- nomic success and a pre-condition of a more successful employment polic •jThe EU should continue to act as a resolute force for liberalization of world trade.)

• The EU should build on the achievements

of the single market to strengthen an economic

framework conducive to productivity growth.

A

tax policy to promote sustainable growth

In

the past social democrats became identified

with high taxes, especially on business. Mod-

ern social democrats recognize that in the right circumstances, tax reform and tax cuts can play a critical part in meeting their wider social ob- jectives. For instanceJorporate tax cuts raise prof- itability and strengthen the incentives to in- Higher investment expands economic activity and increases productive potential. It helps create a virtuous circle of growth, in- creasing the resources available for public spending on social purposes.

• The taxation of companies should be sim-

plified and corporation tax rates cut, as they have been by New Labour in the United King- dom and are planned by the federal govern- ment in Germany.

• To ensure work pays and to improve the fair- ness of the tax system, the tax burden borne

by working families and workers should be al- leviated, as begun in Germany (through the Tax Relief Act) and by the introduction of lower starting rates of income tax and the working families tax credit in Britain.

• The willingness and ability of enterprises— especially small and medium-sized enter-

prises—to invest should be enhanced, as in- tended by the Social Democratic government

in Germany through the reform of the taxes

on businesses and as shown by New Labour's reform of capital gains and business taxes in Britain.

• Overall, the taxation of hard work and en- terprise should be reducecliThe burden of taxa- ('tion should be re-balanced, for examle toward environmental "bacisiGermany, t e United

Adt'S Wtm+ clleou-+

need. 4o moderate. desk - obiliz - In5 cati4a1 .Clow s Rrvi- -415

5ua.ro Mee

ishi's ozAck ehvi rorrwneMal if.reteckionsr Pt44er ani-I-NNTO cicarnonsraiioNS

labor ri5M -s, ktotatl

SQ°Ak‘e

even ?roioi - yitco.‘ Way -er PS% Ckihior% \'‘,044. rau.61

beater t•he-kor‘c cn 4hIs

question .

DoliskV ktints's ‘%ottshin5

s41n3q make, ck crustal potrl-

VW('

Zv

%\

nesses Woresk . vAth

A-Vtity see, market ov.poriioltite,s.

} o ac rates deli} a.trecVly Investment

ihcrease. - 0Ney ressk*. instead. (matt YAWe.

1.eme-r-

spar

k-tna,

ti.%/ wQa14h and u.nder-

ViVe. nrner*.1 Vnere Is

\Inm-k. oh kw./ kiahtmaltNess ttoce$ can cSo ti wva -k- is A? C't re we. Ik i-k‘e LtsKt. AM

below

cvny

cou.MrIes really above

IV?

Can -\-ckx dis% nctrerWe.5 vier. work as well . 40 Tbtsotitc -t- erwIrontAtnt as sixic# relyt.-

Icuktcms?

DISSENT / Spring 2000 n 57

Dtrk Vncti's Ao be done

supply of labor IS

A-Go csreo t?

\leip one srov-p

(yomxt5er worker,s expense of colo-lAvtY. 3r°k41 (retired people) ? \ Nove.td. Poverty among elderty people

Doesr

increa.se,?

58 n DISSENT / Spring 2000

Kingdom, and other European countries gov- erned by social democrats will lead the way in this regard. • At the EU level, tax policy should support tough action to combat unfair competition and fight tax evasion. This requires enhanced co- operation, not uniformity. We will not support measures leading to a higher tax burden and jeopardizing competitiveness and jobs in the EU.

•••• n n11

Demand and supply-side policies go to- gether—they are not alternatives

In the past social democrats often gave the impression that the objectives of growth and low unemployment would be achieved by suc- cessful demand management alone. Modern social democrats recognize that supply-side policies have a central and complementary role to play. In today's world most policy decisions have an impact on both supply- and demand-side conditions. ••Successful welfare-to-work programs raise incomes for those previously out of work as well as improve the supply of labor available to em- ployers. j • Modern economic policy aims to increase the after-tax income of workers and at the same time decrease the costs of labor to the em- ployer. e re uction o non-wage a i or costs t roug structural reform of social security sys- tems and a more employment-friendly tax and contribution structure that looks to the future/ is therefore of particular importance.• The aim of social democratic policy is to overcome the apparent contradiction between demand- and supply-side policies in favor of a fruitful combination of micro-economic flex- ibility and macro-economic stability. To achieve higher growth and more jobs in today's world, economies must be adaptable:

flexible markets are a modern social democratic aim. Macro-economic policy still has a vital pur- pose: to set the conditions for stable growth and avoid boom and bust. But social democrats must recognize that getting the macro-econom- ics right is not sufficient to stimulate higher growth and more jobs.thanges in interest rates)

or tax policy will not lead to increased invest- ment and employment unless the supply side of the economy is adaptable enough to respond. To make the European economy more dy- namic, we also need to make it more flexible.

• Companies must have room for maneuver

to take advantage of improved economic con- ditions and seize new opportunities: they must not be gagged by rules and regulations.

• Product, capital, and labor markets must all,

,be flexiblejwe must not combine rigidity in

one part of the economic system with open- ness and dynamism in the rest.

Adaptability and flexibility are at an in- creasing premium in the knowledge-based service economy of the future

Our economies are in transition—from indus- trial production to the knowledge-based ser- vice economy of the future. Social democrats must seize the opportunity of this radical eco- nomic change. It offers Europe a chance to catch up with the United States. It offers mil- lions of our people the chance to find new jobs, learn new skills, pursue new careers, set up and expand new businesses—in summary, to realize their hopes of a better future. But social democrats have to recognize that the basic requirements for economic success have changed. Services cannot be kept in stock:

customers use them as and when they are needed—at many different times of day, out- side what people think of as normal working hours. The rapid advance of the information age, especially the huge potential of electronic commerce, promises to change radically the way we shop, the way we learn, the way we communicate and the way we relax. Rigidity and over-regulation hamper our success in the knowledge-based service economy of the fu- ture. They will hold back the potential of in- novation to generate new growth and more jobs. We need to become more flexible, not less.

An active government, in a newly con- ceived role, has a key role to play in eco- nomic development

Modern social democrats are not laissez- faire neoliberals. Flexible markets must be

1-le re's an °dm\ small A-1 0-+ lower» th54e.ses cind‘niirest woh 14- necessa.rily mor e ihvesi.rawn4s and jobs. Pt h good -14%tn(ss depend. irusl .eaci

7 ornI Cte)eth'11\47. 0 yafi nowhere

are . 0re. SI)det.C.S te;

described. (A-vrnitorary and 1?ari--+Ime contracts, elMeirevrk- v4o.5e s -Cior same. worK, greai-er ease

for• ornpkoNpurs to Cire and.

lay oCC workers, C42.wer-

resu.laiicrns -Cot- lwo

1441

and

soSt4y), lei- alone

qt4ou

6

0

thexicans have

lovn ‘1.4- upti 411ese. cona't -

Aims ir e corv4groverma1

in Europe. where Vine labor move.vntrvIr had Won (in many places) %entre Set.u.rial-y.

Tsh^^ ter ro•1ller decepiive-ilo slide over '41e. intoning erC

contever -4‘10.4's so crucial documetnt?

DISSENT / Spring 2000 n 59

Wlisle.7classic"-Swectis‘, social

dernocrac y emphasized

ve molt "ivx ItutrActik and.

in-

combined with a newly defined role for an ac- tive state. he top priority must e investment

--- Lin human and social capital.f

social capi-1-al Cw 14V% eat-to:awn

and labor market polities),

ern 1, 1,-,a sl zed, Q./at:Lil 'flelptn5

p ople duri ncs the Cme

os4-

vu

irlerable

phases

-One,

li re cycle (in-Caney, old age

illness ) pareniin5 hew b orns). Tkle - ThIrci Way sterns 4o want cu4N- back ey, -‘41e latier

1peco

u,se

doesn't add

aS alrec4ty rnar Ciehc y andarrapetitiveness.

Aow reatithic -kIN'ts in socitiies

41-teer demo-it-4e 44%e`AvNot yeAn3 0

b4-

worlfers -C-or less VnOrtty

Cflexil:le wages)?

C4 11 0.130

younger

*a Is 0.6ctslo

or any

cierTsocracy 13%-t. third \Afay-erS

discuss -kAle 40.5 openly. No ed.u.c.o

one *II is a

Invesment.

price

4. every—

cold huge

‘40

ppeneci.

A-he. much

vo.A.oVred, German o.pp rerlA-ice Sys.k-ern?

If high employment is to be achieved and sustained, employees must react to shifting demands. Our economies suffer from a con- siderable discrepancy between the number of job vacancies that need to be filled (for example in the field of information and communication technology) and the number of suitably quali- fied applicants.

That means education must not be a "one-

off" opportunity:flifetime access to educations training and lifelong utilization of their opportunities represent the most important security available in the modern world ere- ore, governments have a responsibility to put in place a framework that enables individuals to enhance their qualifications and to fulfill their potential. This must now be a top social democratic riorit

• Standards at all levels of schooling and for)

all abilities of pupils must be raised.0 Where

there are problems of literacy and numeracy these must be addressed, otherwise we con-

demn unskilled individuals to lives of low pay, insecurity, and unemployment.

• We want all young people to have the oppor-

tunity to ain entry into the world of work by means o qualified vocational training. Together with loco employers, tra e unions, and others, we must ensure that sufficient education and training opportunities are available to meet the requirements of the local labor market. In Ger- many, the political sector is supporting this en- deavor with an immediate action program for

jobs and training that will enable 100,000 young

•Nel-Co.re 40Work."

good ctS

tong es -t-hose wet-to n3 earn wctc3e, and accessAo a lna care, V,e.a 1.41

ca.re l a.nd.-k-ranspor -4-aiion

r-s +Ms

C. -44‘e,95;000

in Drti-ain? Are AAvair

4-emprary

50 1no.4V.

-1.5

hltx# -for

people to find a new job or training place or to

obtain qualifications] In Britain the Welfare to Work program has already enabled 95,000 young eople to find work.; We need to retorm post-school education and raise its quality, at the same time modernizing education and training programs so as to pro- mote adaptability and employability in later life. Government has a particular role in pro- viding incentives for individuals to save in or- der to meet the costs of lifelong learning—and in widening access through the promotion of

kir

distance learning.

We should ensure that training plays a sig-

6o n DISSENT /Spring 2000

nificant role in our active labor market policies for the unem loyed and workless households. mo em an e icient pu is in rastruc- ture, including a strong scientific base is also an essential feature of a job-generating economy. It is important to ensure that the composition of public expenditure is being di- rected at activities most beneficial to growth and fostering necessary structural change.

Modern social democrats should be cham- pions of small- and medium-sized enter- prise

The development of prosperous small- and medium-sized businesses has to be a top pri- ority for modern social democrats. Here lies the biggest potential for new growth and jobs in the knowled e-based society of the future. People in many different walife e

looking for the opportunity to become entre- preneurs long-standing as well as newly self- employe people, lawyers, computer experts, medical doctors, craftsmen, business consult- ants, people active in culture and sport. These individuals must have scope to develop eco- nomic initiative and create new business ideas. They must be encouraged to take risks. The burdens on them must be lightened. Their markets and their ambitions must not be hin- dered by borders.

• Europe's capital markets should be opened

up so that growing firms and entrepreneurs can have ready access to finance. We intend to work together to ensure that growing high-tech firms enjoy the same access to the capital mar- kets as their U.S. rivals.

• We should make it easy for individuals to set up businesses and for new companies to grow by lightening administrative burdens, exempt-

ing small businesses from onerous regulations and widening access to finance. We should make it easier for small businesses in particular to take on new staff: that means lowering the burden of regulation and non-wage labor costs.

• The links between business and the science

base should be strengthened to ensure more entrepreneurial "spin-offs" from research and

the promotion of "clusters" of new high-tech industries.

Sound public finance should be a badge

Ft.r4kNe u.rntr6a.e i-1l Mvne,Whare.

are +Vie jobs?. itm.170-cl,

answer lower -k-Ixes a.nol - re 5u.tcrt-e labor mark.e.A-.

Sounds Wce. 1160.4c!,er '‘

\gay

Why? Becaukseiey Ceet CovolAttely 'Insecure in re.-

5t.s.Var- :Os?

l aeCOAkSiit Ailey

(*li+

a. crock *rb ?

13•Jencea. budge-Es were 44Z Poiintof pride for Svied.101 Soul Dem:Kra:IS .

The. non-Soc. De s (cettVe r

faxa censervo.frive pa.ri-tes)

r.„4

of pride for social democrats)

In the past, social democrats have all too of- ten been associated with the view that the best way to promote employment and growth is to increase government borrowing in order to fi- nance higher government spending. We do not rule out government deficits—during a cycli- cal downturn it makes sense to let the auto- matic stabilizers work. And borrowing to fi-

nance higher government investment, in strict accordance withfthe Golden Rulejcan play a

key role in strengthening the supply side of the economy. However, deficit spending cannot be used to overcome structural weaknesses in the economy that are a barrier to faster growth and higher employment. Social democrats also must not tolerate excessive levels of public sec- tor debt. Increased indebtedness represents an unfair burden on future generations. It could have unwelcome redistributive effects. Above all, money spent on servicing high public sec- tor debt is not available to be spent on other priorities, including increased investment in education, training, or the transport infrastruc- ture. From the standpoint of a su of the left, it is essentia that igh levels ogov- ernment borrowing decrease and not increase.

IVJAn Active Labor Market Policy for the Left ) The state must become an active agent for employment, not merely the passive recipient of the casualties of economic failure. People who have never had experience of work or who have been out of work for long periods lose the skills necessary to compete in the labor market. Prolonged unemployment also damages individual life chances in other ways and makes it more difficult for individu- als to participate fully in society. A welfare system that puts limits on an individual's ability to find a job must be re- formed. Modern social democrats want to transform the safety net of entitlements into a spring- board to personal responsibility. For our societies, the imperatives of social justice are more than the distribution of cash transfers. Our objective is the widening of

r

rs de ti+s du‘ , 1 n5 AiNenr-

aft V1 1 +

41 me.

tct4G, -2 2.) in Sweden .

44,te. mem _

Goickt irk? ?

1115 of 41n1s sureos e to be

se ti-tv deo+

\,4140.-ViC rer 'me ills (like. coi- -

porectiolls)seA- t p separate.

bud5tis -For ca.pii -04 invest.-

me ht?

e

s

-:here•40u-ick-

6e Mine beco.u.se a r e

A-uxrt

or% produ.okive ve stment -

i s ex pea-

Robert

1-ke i rone r- Wrote 460txl- 411s in +k,e.Ic11105 .

Tie Swedes ' wrott -the book"

Oh +inls decades ago • 'Prot

{-lot of view, ctc.3/4-ivt

lo

bor.

markt+ *iv

.ts

" cickssic " Sotto-1 democracy.

62• DISSENT / Spring 2000

equality of opportunity, regardless of race, age, or disability, to fight social exclusion and en- sure equality between men and women. )

J

People rightly demand ig -quality public

services and solidarity for all who need help— but also fairness toward those who pay for it. All social policy instruments must improve life chances, encourage self-help, and promote

personal responsibility)

With this aim in mind, he health care sys- tem an t e system or ensuring financial se- curity in old age are being thoroughly modern- ized in Germany by adapting both to the changes in life expectancy and changing life- long patterns of employment, without sacrific-

ing the principle of solidarity.jThe same think-

ing applies to the introduction of stakeholder pensions and the reform of disability benefits in Britain. Periods of unemployment in an economy without jobs for life must become an opportu- nity to attain qualifications and fosteryersonal development ; art-time work and Tow-paid work are better than no work because they ease

the transition from unemployment to .orbs

people

jobs and training are a social democratic prior- ity—but we also expect everyone to take up the opportunity offered. But providing people with the skills and abilities to enter the workforce is not enough. The tax and benefits systems need to make sure it is in people's interests to work. A stream- lined and modernized tax and benefits system is a significant component of the left's active

New policies to oirerunemployed--

supply-side labor market policy. We must: "7

• Wake work pay Tor individuals and families The biggest part of the income must remain in the pockets of those who worked for it.

• Encourageco employers to offer "entry" jobs to the labor market by lowering the burden of tax

and social security contributions on low-paid

jobs.

ur

We must explore the scope to lower t en of non-wage labor costs by environmen-

e

tal taxes.r

• Introduce targeted programs for th–e–ro.r7-'•

term unemployed and other disadvantaged groups to give them the opportunity to reinte- grate into the labor market on the principle of rights and responsibilities going together.

• Assess all benefit recipients, including people

to.%c

policy ins.rrtortemt.s rec^v ire

signi4Accknt itt.x money- au.-1- Thi rctWoy-ers assv.rne 4-4Ney CAA lower k-o-y es g rnore-

seriou,sty,a.liiitese socla.1

economic growth collect- `more i-o

Domd. voodoo economics o.11 over

d. +hen

x."revt.nues .

rno.n

h

'

I.kow

nl done. s eerVi -

caal y? I4nd why Vw.ve people-

protested. McathS4

reforms?

How does 0. person live durins

"1/4"Vte bransiktort ?

men+ pro Ade o

-}4‘e 5overivi

su.?plemen+40

e. adedecent rni r nl-

town ?

i-ces re ally keep ‘o we r workers out o F the labot-

iorce nActny eo.rntc140o llitie.

40 pixy -4-my es. Or is keep \14

Ycat earn ct 5 ° Tz ."

For lower-

tine' +axes -For upper VINcome peciple?

when 4rieol, in "r4o.ly,Mtis policy oVren yielded only tempor -

,ary o.not. poling ,1013.S.

?

DISSENT / Spring 2000 63

as cut +his *sera -I-hawka work" helpfu,.1 for ihose econoth‘eS

whose. *main ?rot: wls are a.

chronic shortar off- .00d :)013s and sluggish fob creozhcm -?

\n-k-e.r ?re+ -kklis mean

Vno+ the go vernrank sVtou.kd

e li rti note any obsku.cles *hat

regent war*,ers downs\ zed.

p h one inct4si-ry-From +G low-vvo,e jobs etsevAere .Why does ihts n ti-se 4 F lead 4o any- thinck better? What - problem have we solved?

,

N

This

6 .17. ar re tank

wranoi 'neaded. claim wi4- 11 wh A -Iry end +he. poYncy sec- 4-ion so.C. ck. Social dernocr-o - -kic. %Ivan 1 - Cesio . Good. %r\e4 -

c4

truly

is ktils where kAlt Ihird V107 wanks 4o te-ke. Social de.nlocracy?

64 n DISSENT / Spring 2000

1,

of working age in the receipt of disability ben- efits, for their potential to earn, and reform state employment services to assist those ca-

able of work to find appro riate work.

• Support enterprise an setting up one's own business as a viable route out of unemploy- ment. Such decisions contain considerable risks for those who dare to make such a step. We must support those people by managing these risks. The left's supply-side agenda will hasten structural change. But it will also make that change easier to live with and manage. Adapting to change is never easy and the speed of change appears faster than ever be- fore, not least under the impact of new tech- nologies. Change inevitably destroys some jobs, but it creates others. However, there can be lags between job losses in one sector and the creation of new jobs elsewhere. Whatever the longer-term ben- efits for economies and living standards, par- ticular industries and communities can expe- rience the costs before the gains. Hence we must focus our efforts on easing localized prob- lems of transition. The dislocating effects of change will be greater the longer they are re- sisted, but it is no good pretending that they can be wished away. Adjustment will be the easier, the more la-

and product markets are working properly.

Barriers to employment in relatively low pro- ductivity sectors need to be lowered if employ- ees displaced by the productivity gains that are

an inherent feature of structural change are to

find jobs elsewherelThe labor market needs a

,bor

low-wage sector in order to make low-skill jobs )

available. Vhe tax and benefits system can re- plenish low incomes from employment and at the same time save on support payments for the unemployed.

V. Political Benchmarking in Europe The challenge is the definition and implemen- tation of a new social democratic politics in Europe. We do not advocate a single European model, still less the transformation of the Eu- ropean Union into a superstate. We are pro- Europe and pro-reform in Europe. People will support further steps towards integration where there is real value-added and they can be

clearly justified—such as action to combat crime and destruction of the environment as well as the promotion of common goals in so- cial and employment policy. But at the same time Europe urgently needs reform—more ef- ficient and transparent institutions, reform of outdated policies, and decisive action against waste and fraud. We are presenting our ideas as an outline, not a finalized program. The politics of the New Center and the Third Way is already a reality in many city councils, in reformed na- tional policies, in European cooperation and in new international initiatives. To this end the German and British gov- ernments have decided to embed their exist- ing arrangements for exchanging views on policy development in a broader approach. We propose to do this in three ways:

• First, there will be a series of ministerial meetings, supported by frequent contacts among their close staff.

• We will seek discussion with political lead-

ers in other European countries who wish to take forward with us modernizing ideas for so-

cial democracy in their respective national con- texts. We will start on this now.

• We will establish a network of experts, far-

sighted thinkers, political fora, and discussion meetings. We will thereby deepen and continu- ally further develop the concept of the New Center and the Third Way. This is the priority for us. The aim of this declaration is to give im- petus to modernization. We invite all social democrats in Europe not to let this historic opportunity for renewal pass by. The diversity of our ideas is our greatest asset for the future. Our societies expect us to knit together our diverse experiences in a new coherent program.

Let us together build(s'ocial democrac 's success for the new century. Let the politics of the Third Way and the Neue Mitte be Europe's new hope. •

JOANNE BARKAN is a New York-based writer.

New NV - ft:Kra: 1;6

1 %A +kw. Lt.S.4.

4rieek .for years Ao lose

" liberal" label white sWICAi

-One. vecm-A-y!s ?O I#

rth-twardias

The eves s•A anck Ger sah - NrcL Way-ev-s stilt eve4reee +kw, -6zr SOC(CIA cle.rnec racy" wInile-

Inakinok one &One

no+ Sue +VtIS lanytase choice

INK

will be posiAive or hecakive.-C-etr.

koh5 t'U•VAI wk-

4-1Ne

m nWay hot-ewer-4yin (AA rwl se vac u.ou.s cold- v-hinspirIns &c -mutt.

ih