National Post
Tuesday, 15 December 1998


Chretien's Third Way? Not quite


Once upon a time, the "Third Way" was the term for a much-sought mythical beast, said to exist somewhere between capitalism and communism, before the collapse of communism made the hunt obsolete: capitalist countries showed no sign of abandoning the "first way," while the newly freed peoples of Eastern Europe were tired of being experimented upon.

Of late, however, the term has resurfaced as a way of describing the philosophy of certain left-of-centre parties and politicians, who have come to power promising an unflinching embrace of the market economy in all its rigours, yet without abandoning the traditional left-wing emphasis on equality and social solidarity. Where the old Third Way was neither capitalist nor socialist, the new Third Way seems to be both.

Most closely associated with the governments of Tony Blair and Bill Clinton, it is at first glance an improbable combination, much derided by critics on both the left and right. To the left, the Third Way is a sellout, the end of any serious attempt to envisage a more humane alternative to capitalism. To the right, it is mere packaging, a deceptive cover for a more full-blooded left-wing agenda.

To its enthusiasts, however, it offers the intoxicating possibility of reinventing the political spectrum. Certainly it has the virtue of novelty: imagine, left-of-centre governments that are committed to balanced budgets, low inflation, free trade, deregulation, privatization -- yet are also ready to use the redistributive power of the state to ensure everyone has a decent standard of living, including access to schools, health care, and other essential services.

But wait a minute. Haven't we heard all this before? Isn't that more or less exactly the agenda that has been pursued since 1993 by the nominally left-of-centre Chretien government? Should we then class Jean Chretien with Messrs. Clinton and Blair? Is the Liberal government he leads part of this Third Way, vanguard of a revolutionary new philosophy of government?

The parallels are problematic. Apart from their obvious generational discrepancy, Mr. Chretien differs markedly from his younger counterparts in style, temperament and approach. Mr. Clinton and Mr. Blair are both notably fluent expositors of their policies, whose slickness of presentation is matched only by their wonkish grasp of detail. Mr. Chretien is none of these things: fluent, slick, or wonkish.

Mr. Blair and Mr. Clinton, moreover, triumphed only after much effort at persuading their own parties to moderate their doctrinaire -- and unelectable -- attachment to the state. As this ran contrary to the long-held and deeply-felt convictions of many in either party, they had further to overcome abundant public skepticism that the conversion was genuine, or that their own philosophies amounted to anything more than pure expediency.

Mr. Chretien, on the other hand, inherited a party whose utter lack of convictions is perfectly matched by his own. "That is one of the great things about being a Liberal," Mr. Chretien boasted in his autobiography. "You can base your decisions on the circumstances, without having to worry about your established public image." Whatever left-wing tendencies, doctrinaire or otherwise, the party may have acquired in the 1970s, they were largely an aberration, and easily set aside in favour of the pragmatic "business liberalism" that has been the party's tradition for most of this century.

There is no denying that, under Mr. Chretien, or more particularly since taking power, the party has undergone a remarkable about-face: from opposing free trade to supporting it, from scrapping the GST to extending it, from denouncing the "obsession" with price stability to entrenching it, from attaching privatization to defending it, from decrying any and all spending cuts to enacting the steepest reduction in the federal budget since the Second World War. But no one expected them to do otherwise.

Indeed, a good many Canadians voted for the Liberals in 1993 precisely because they trusted the party to abandon its platform the minute it was in office: I remember a conservatively-minded observer of Canadian politics describing the Liberal program, with some contentment, as "responsibly dishonest."

If Mr. Chretien has arrived at much the same destination as Mr. Clinton and Mr. Blair, then, it has not been by quite the same route. That doesn't mean his government is driven entirely by expediency: the 1995 budget would not have been possible, if that were true. Neither are the Chretienites to be dismissed as right-wingers in disguise: whether you regard the prospect of a new national home care program with pleasure or horror, it is hardly the work of a conservative government.

Indeed, it is hard to take seriously the notion that it is guided by any coherent philosophy, let alone one that deserves its own label. For all their notorious tacking about, Messrs. Clinton and Blair give evidence of steering by a fixed compass, a consistent set of political principles that, if they do not entirely give substance to the Third Way designation, at least allow us to speak of Blairism or Clintonism. Mr. Chretien, on the other hand, seems merely to have picked up the prevailing political wind.

In its way, though, his may be a more accurate reflection of the Third Way's true significance. Far from something genuinely new or radical, the Third Way is mostly a measure of an emerging consensus around the world on the role of government. It has been in the works for 30 or 40 years, and it is one to which left and right have contributed in like measure. For as much as the left has embraced the policies of the right in recent years, it is also true that the right has adopted much of the program of the left.

Consumed as they were with brooding over the electoral defeats of recent years, many on the left have ignored the larger victory they have won. While there is no prospect of the western world turning against, say, free trade, there is equally zero constituency for abandoning the basic redistributive functions of the welfare state. We may no longer want the government to own an airline, but we do want it to help poor families feed their children, and many other things besides.

What underpins this consensus, then, is not a generalized hostility to government, but rather a more refined understanding of its role, and of the complementary role that can be played by the market. It assigns primarily to private markets the task of allocation, that is of ensuring the most efficient use of productive resources: little remains of the once-claimed superiority of "planning" or state ownership in this regard. But it gives the state responsibility for questions of distribution, that is of ensuring the fruits of production are shared equitably.

It is this restatement of government's mission -- to redistribute market results, not to distort market processes -- that best expresses the Third Way. Unlike traditional conservatism or liberalism, it considers each goal, efficiency and equity, to be as important as the other. More heretically, it suggests that there is no inevitable conflict between the two. Indeed, they are more often in consonance: policies that are inequitable usually turn out also to be inefficient, and vice versa.

The critical thing is to keep these assignments clear: markets for allocation, governments for distribution. It would be as foolish to entrust markets with the task of distributing income fairly as it would be to look to government for efficient allocation -- though policy makers, of all political stripes, have all too often been guilty of both. That is what comes of falling into the too-simple dichotomy of right or left, market or government, laissez-faire or socialism.

I don't say for a moment that the Chretien government subscribes to any of this. But if it behaves as if it does, that is close enough.