On Wednesday, Chris wrote a diary, "Great exchange between President Obama and Senator Lincoln", in which he used the example to illustrate the difference between Blue Dogs and New Dems. Along the way he quoted Ed Kilgore:
To put it simply, and perhaps over-simply, on a variety of fronts (most notably financial restructuring and health care reform, but arguably on climate change as well), the Obama administration has chosen the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results. This approach was a hallmark of the so-called Clintonian, "New Democrat" movement, and the broader international movement sometimes referred to as "the Third Way," which often defended the use of private means for public ends. (It's also arguably central to the American liberal tradition going back to Woodrow Wilson, and is even evident in parts of the New Deal and Great Society initiatives alongside elements of the "social democratic" tradition, which is characterized by support for publicly operated programs in key areas).
To be clear, this is not the same as the conservative "privatization" strategy, which simply devolves public responsibilities to private entities without much in the way of regulation. In education policy, to cite one example, New Democrats (and the Obama administration) have championed charter public schools, which are highly regulated but privately operated schools that receive public funds in exchange for successful performance of publicly-defined tasks. Conservatives have typically called for private-school vouchers, which simply shift public funds to private schools more or less unconditionally, on the theory that they know best how to educate children.
The First "Third Way"--Social Democracy, Was A GOOD THING.
In a comment, I raised the point that there often wasn't that much difference between conservative privatization and neoliberal "Third Way" privatization--see how little has changed since Bush in our use of mercenaries, for example. In this diary, I'd like to lay out a framework for understanding what I meant by this and why it must be so. The framework is that of the three "Third Ways". The first "Third Way" was social democracy, as exemplified by the German Social Democratic Party. It was a "Third Way" between naked capitalism and revolutionary socialism. Their main policy for gaining broad public support was universal health care-in the 1870s. It was a very popular idea-so popular, in fact, that conservative mastermind Otto Van Bismark decided to co-opt the idea, thereby depriving the social democrats of their signature issue, and implementing it in such a way that it furthered elite nationalist goals by giving German manufacturers a healthier, more secure, more productive and more loyal workforce to aid in their international competition with Britain and other industrial powers.
In my opinion the first "Third Way" was a good thing. The revolutionary socialists basically had the economics right, compared to the laissez-faire capitalists. It wasn't anything that indiividual capitalists did that was responsible for the enormous increase in wealth brought about by Industrial Revolution--they were simply positioned to capture a vastly disproportionate share of the proceeds--even as the working class, transformed from rural peasants into an urben proletariat, suffered a tremendous mass immiseration in the process. But the revolutionary socialists had most everything else wrong--especially the complete rejection of democracy, except for purely tactical purpose. By combining a socialist economic view with a democratic political view, this was a "Third Way" you could believe in. The others, not so much.
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The Second "Third Way"--The 19th-Century Liberal Welfare State--Not So Good
The conservative welfare state (as Gosta Epsing would identify it more than a century later in The Three Worlds of Welfare Capitalism) was designed to empower elites and the state apparatus that they controlled in virtually all of the Continental European countries where this version took hold, rather than empowering the people, as the Social Democrats intended. But it was still a rather robust-and non-market-affair. This then gave rise to the second "Third Way", a more scaled-down form of the welfare state that was primarily concerned to just clean up the mess that the market caused and couldn't handle itself. It therefore favored narrowly-targeted approaches that had as little systematic impact on the market economy as possible. This approach developed almost exclusively in the English-speaking world-Britain, Canada, the US, Australia and New Zealand. It reflected British history and the priorities of a commercially-based newer elite--opposed to the traditional landed aristocracy--that was far more autonomous and internally cohesive than its counterparts on the Continent. It was strong enough to lead the way on foreign policy in building up the British Navy as the foundation for its eventual imperial wealth, but it never enjoyed the kind of across-the-board political dominance of the state that made Continental conservatives see the state as a natural expression of their power. Consequently, the commercial liberal elites (more akin to today's neoliberals) only wanted the state to take up the slack. They didn't want it becoming a major center of economic and political power, which they could not reliably control. So they devised a strategy mix of small niche programs the market failed totally, and tried to steer clear of larger problems, pretending that the market would magically solve them sooner or later. The niche programs were sometimes public, sometimes private, sometimes non-profit, or some sort of amalgam.
Unfortunately, this really wasn't a very effective way to do things in the long run. It was good enough so long as there were robust growth rates, and those who didn't get taken care could be called "losers" on the one hand, and promised that they, too, would get rich quick any moment now. But when things slowed down, and the market no longer seemed such an obvious lens through which to view all the rest of the world, there was a tendency for people to become acutely aware of its shortcomings. Even then, however, the English-speaking countries didn't tend to change the overall logic of their welfare states. They merely added and expanded programs-most notably universal health care, except, of course in the US, where it was only provided for those over 65. (It generally took social democrats to do this, but at least the second "Third Way" learned to live with it.) The US was the most extreme example of this second "Third Way," with private pension benefits accounting for a substantial portion of its overall social insurance, a situation that proved to be highly precarious as union power was deliberately undermined, beginning with the election of Ronald Reagan.
The Third "Third Way"--An Ideological Attack on Second "Third Way" Compromises With Reality
Still, fragmentary and mongrelized (between public and private, as well as between means-tested and universal programs) as it may have been, the American welfare state was the only welfare state most Americans had any knowledge or experience of. And that was one welfare state too many for the free market ideological zealots who wanted nothing more than its utter destruction, whatever the consequences for the American people. And so the rightwing sociopathic project of destroying the welfare state was unleashed. While the second Third Way's liberal welfare state was a mongrelized affair born out of necessity (see Michael Katz's The Price of Citizenship: Redefining the American Welfare State for excellent accounts of how different social programs first emerged), political necessity played a secondary role to economic necessity. Figure and ground reversed themselves with the coming of the third "Third Way". Its proponents were a mixed lot, but animosity toward the left was widespread among them, as was a default condition acceptance of much of the market fundamentalist worldview. They recognized that free-market ideology was economically impracticable at best, disastrous at worst. But they weren't about to defend the existing welfare state, just because it had some obvious, time-tested advantages. Instead, they wanted to replace it with a purer version of the original liberal welfare state-less government, more private entities, fewer broad universal programs, more niche programs, less taxes, more fees, less society, more marketplace. The fact that these ideas had proven inadequate the first time around fazed them not in the least.
While the third "Third Way" loved to portray itself as a "pragmatic" compromise between free-market fundamentalism and the welfare state, the reality was that America's welfare state was already precisely such a compromise, guided by the very same market-friendly orientation that also guided the third "Third Way." However, it had also been guided by economic and political realities that had once threatened to virtually destroy the entire capitalist order--realities that had receded into ancient memory, and that the resurgent right wing of the 1980s was determined to roll right over or ignore.
The new market fundamentalists were far more strategically duplicitous than their fore-bearers. Earlier market fundamentalists had not been able to use market rhetoric so sweepingly while at the same time basing virtually all their success on violating those same principles. A central example of this was Reagan's supposedly anti-Keyensian "supply side" tax cuts combining with a massive military Keyensian buildup that produced a modest, but hype-able economic recovery while drowning the government in red ink, a result that then lead to calls to further get rid of "wasteful government spending."
The third "Third Way" basically accepted the absurd premises that hypocritical pseudo-market fundamentalism had thus established. Their task was not to rebuild what had been destroyed, but to build a "new synthesis" blending the destructive insanity of the pseudo-market fundamentalists with whatever clever little small bore ideas they could come up with. Whether these ideas actually worked or not was entirely beside the point. (A vastly under-sized stimulus, a bank bailout that does virtually nothing for America's real economy, an education reform agenda with no actual educational content, etc., etc., etc.) They learned this lesson from the conservative pseudo-market fundamentalists. What mattered was the ability to sell whatever idea they came up with-and their competitors in the marketplace were not the conservatives, but the traditional Democratic Party mass constituencies and their more recent counterparts, all of whom could be dismissed as the archaic, backward-looking left-the folks that Blanche Lincoln just seethed with anger to do battle with, but whom Barack Obama was determined to smoothly co-opt, instead.
In short, even before this latest "Third Way," we've already had one "Third Way" too many for our own good. The original Third Way-best realized in the Scandinavian countries that score very high on a broad range of international comparisons-struck a very good practical balance. What's more, there was nothing archaic or old-fashioned about it. To the contrary, the Scandinavians have been able to lead the world in dealing with new problems and recognizing new social obligations to make their citizens lives better, and to improve the condition of the planet as a whole. Even the Continental European conservative welfare state counterpart to the Scandinavian social democratic welfare state has done quite well in the same regard.
The Third "Third Way" Charade of 'Pragrmatism'--And Branding Their Critics As Ideologues
Going back to Kilgore's piece, recall that he said:
[T]he Obama administration has chosen the strategy of deploying regulated and subsidized private sector entities to achieve progressive policy results. This approach was a hallmark of the so-called Clintonian, "New Democrat" movement, and the broader international movement sometimes referred to as "the Third Way," which often defended the use of private means for public ends.
This is how the "Third Way" likes to see itself. But for the most part, today's social democrats are not opposed to this sort of approach--when, where, and if it can work. Which is to say that most of today's social democrats are much more the pragmatists than the "Third Way" neoliberals who love to deceptively market themselves as such. It's just that social democrats want policies that actually work for everyone--not just for those on top, and not just for the politicians themselves, looking for something they can tout as a win, regardless of what it actually does.
For example, the problem with regulating private health insurance, rather taking a single-payer approach is not actually one of ideology. If we had a truly well-regulated insurance industry-akin to the public utilities that used to bring us electricity in the long-lost pre-Enron past, for example-then it's altogether possible that such an industry could come close to equaling the performance of a single-payer system. But, of course, (a) we don't have such an industry, and (b) even if we did, the current trend is for once well-regulated industries to turn themselves into the wild west, which is why it's a matter of pure practicality--not ideology--to support a single-payer system.
What's more, this pragmatism was the spirit in which the public option was originally conceived by Jacob Hacker, as a way to ease the transition into a single-payer system without forcing people to abandon their private insurance, so long as they were happy with it. This is precisely the sort of flexibility and choice in the short run that "Third Way" neoliberals claim to just love, while also gaining the enormous cost savings of a single-payer system in the long run--thus providing the long-term efficiency that "Third Way" neoliberals also claim to love. In short, Hacker's original concept of the public option was a work of sheer political genius, providing a unifying policy framework that both "Third Way" neoliberals and social democrats could both support. There was just one catch: Hacker's concept was only a work of political genius if the "Third Way" neoliberals actually believed in what they claimed to. Now, it's beyond a doubt that some of them really do. But it's also beyond a doubt that "Third Way" neoliberals--Obama chief among them--were responsible for gutting the essential genius of Hacker's concept, and doing so with the casual carelessness of a sociopath. That's because their anti-leftism and anti-populism was more important to them than anything else.
Conclusion, Looking Forward--America's New Conservative Welfare State
What all the above tells us is that at its core the third "Third Way" is conceptually and politically much closer to the conservatives it purportedly opposes than it is to the social democrats who are supposedly its allies. This isn't necessarily true of the third "Third Way" base, such as it is, but if Obama's first year tells nothing else, it is certainly true of the third "Third Way" leadership. What Blue Dogs, New Democrats and conservative Republicans all have in common is a shared hostility toward the welfare state that social democrats broadly support--as do a substantial majority of the American people. This creates a political difficulty for the enemies of social democracy: how to leverage an unpopular minority position into law, when doing so also entrails causing a great deal of economic pain.
The conservatives came up with an answer to this some time ago--the strategy they called "starving the beast." Take away the funding, they reasoned, and the welfare state will have to shrivel and die. Easier said than done, however, which is why a fall-back strategy emerged: If you can't dismantle the welfare state, you can re-purpose it, much the same way Bismark did: redesign it so that it serves primarily to strengthen conservative institutions, individuals and power-centers, and to achieve conservative political goals. In a future diary (this weekend, if I'm lucky, next weekend if not), I will discuss how conservative Republicans, Blue Dogs and New Democrats have all come to support the new conservative welfare state, wittingly or otherwise, by different, but convering pathways. |
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