EMBARGO: GERMANY
DESPITE SCHROEDER SETBACKS, 'THIRD WAY' MUST REMAIN COURSE FOR EUROPEAN SOCIAL DEMOCRATS

By Anthony Giddens

Anthony Giddens is director of the London School of Economics
and author of the ''Third Way'' (Blackwell, 1998) and the forthcoming ''The Third Way and Its Critics'' (Blackwell, 1999) He is also widely known as one of British Prime Mnister Tony Blair's top intellectual
''gurus.''

LONDON -- The recent string of election defeats for Gerhard Schroeder's Social Democratic Party in Germany has been interpreted by some as a backlash against the idea of a ''third way'' or ''new middle'' for Europe as outlined by Chancellor Schroeder and British Prime Minister Tony Blair in their joint statement during the summer. To my mind, such a view is mistaken.

Surely, it is very difficult to change a conservative system like
Germany with powerful, embedded interest groups and which is divided into powerful ''Laender'' (states) -- each with its own leaders with strong personalities and their own constituencies -- than it is a more unified state structure such as we have in the United Kingdom.

And, no doubt, bickering between Schroeder's new Social Democrats and the ''old left'' of Oskar Lafontaine -- the former party leader and Schroeder's first finance minister -- contributed to the election defeats. In the case of the United Kingdom, the debate between the old left and the modernizers took place and was resolved within the party before the advent of New Labor taking power, not afterward, as we see now in Germany.

Moreover, no other leader in the Western world has the same degree of internal command that Tony Blair has had in the United Kingdom. They are all in coalitions. Even Bill Clinton is hobbled by Republican conservatives that control the U.S. Congress.

But the third-way approach to politics is not losing in Europe; it is
gaining -- albeit in varying manifestations that differ from country to country. Though the means and the labels will differ, the motivation is common. Clearly, the third way is becoming widely recognized as the only way forward for social democracy challenged by the reality of globalization. Free-market fundamentalism is just as dead as the old ways of the welfare state. We can't go back to either because neither addresses the new realities.

The third way is not one model that fits all. It is not just an attempt to import ''Blairism'' into the heart of Rhineland capitalism. It is the attempt of social democracy to modernize itself in relation to the new, dominant influences in our lives -- globalization and the information revolution.

Globalization is not just an intensifying of world economic
competition, but a shift in the way we live. We are all
learning to adapt to a global cosmopolitan society -- a society
producing seismic shocks that disrupt familiar
institutions from marriage and the family to the workplace, the
nation-state and beyond.

This framework applies to Germany as much as anywhere else. The ''third way'' calls for a thorough going modernization of the major institutions of society. That is why, in the joint statement of Blair and Schroeder, the ideas of devolution of power, personal responsibility as well as community spirit, welfare to work programs, investment in education and the stimulation of innovation and venture capital throughm ''reducing the tax burden on hard work and enterprise'' were all emphasized.

In their statement the two leaders declared that, in economic life,
''the state should not row, but steer'' and also emphasized that while decent public services are a vital concern for social democrats, ''social conscience cannot be measured by the level of public expenditure,'' but by the effectiveness of that expenditure.

It is all well and good for ''the heart to beat on the left,'' to
paraphrase the title of Oskar Lafontaine's recent book that lashes out at Schroeder, but if the institutional arteries are clogged and forming blockages that restrict the efficiency of social programs, it is only sensible that they must be cleaned out. Given global competition, there is no room for waste, especially given the fact that, across Europe, the proportion of national income devoted to public expenditure has reached the limits of what the public will bear.

From around continental Europe, a number of streams flow into the ''third way'' effort to adapt to globalization. I think of what has been happening in Denmark with its ''welfare to work'' schemes (which parallel British and American programs) or Holland with its ''spreading of work'' and ''wage restraint for jobs'' policies. Even in
France, Prime Minister Lionel Jospin has embarked on an extensive
privatization program. And the process of implementing the 35-hour work week there has essentially turned into a French version of flexibility: a mechanism for negotiations between employers and workers to create a less rigid labor market.

All center-left governments of Europe have given up their traditional hostility to markets while, at the same time, embracing the idea that there must be new regulations on international currency flows and global companies. All the social democratic leaders of Europe have a similar interest in forging a new model of responsible capitalism because they know there is no alternative to a global market economy.

This is also true at the level of the European Commission. Romano
Prodi, the new EC president, has clearly rejected the idea of a ''Keynesian fortress Europe'' promoted by Oskar Lafontaine and, to some degree, shared by Jacques Delors when he headed the commission. Prodi has pushed in another direction, for a more open, democratized and competitive Europe. On a personal level, Prodi, whose authority comes in part from his success in pruning the Italian state so it could join the European Monetary Union, shares many third-way precepts. His pursuit of a dialogue on
these subjects with the various European governments will have an important impact, including in Germany.

All of these policies contribute to the project of how left-of-center
values -- social justice, solidarity and protecting the vulnerable -- are being made to count under radical new conditions.

Some critics have argued that Anglo-American culture, with its
traditions of individualism and free enterprise, is more amenable to the third-way transition to a more ''high-risk'' society instead of the ''sure thing'' welfare state favored in the past by continental Europe.

Certainly, the individualistic, free enterprise culture reflects the
historical background of the Anglo-Saxon countries and will figure centrally in how the goal of social justice is modernized in those societies. But there are many political paths to the same point.

Third-way changes elsewhere will likewise reflect the national culture. The Danish and Dutch reforms, for example, have been accomplished through intensive negotiations among labor, government and employers rather than through summary deregulation. This more cooperative weaning away from corporatism is a completely legitimate ''third way'' path. Germany is not likely just to move to an Anglo-American model, but take an approach more similar to Holland and Denmark.

The key issue now for the left in Germany is how to develop a more robust account of social justice and equality as part of third way politics. For example, in Germany, as elsewhere, there must be a recognition that the old welfare state mechanisms often stand in the way of greater equality rather than helping to realize it because patterns of inequality are different than in the past, now having more to do with skill and knowledge levels of the work force than ''exploitation by capital.''

Social democratic governments across Europe would also do well to take a leaf from Clinton and Blair on the problem of crime. By and large, they have not done a very good job of multicultural integration and have deferred the crime issue to the future, when inequality would somehow be reduced. The personal safety of citizens thus must be a key issue of the left in the here and now or it will only bolster the fortunes of the new right.

It will be a difficult road, but the project of reconciling the traditional left and the modernizing left is central now all across Europe.

Despite the election setbacks, Chancellor Schroeder needs to press on, confident in the correctness of pursuing a politics of the ''new middle.'' Giving in to the inertia of interest groups who wish globalization and the information technology revolution would just go away will do nothing to prepare Germany or the rest of Europe to live in the times ahead.

(c) European Viewpoint/El Pais. Distributed by the Los Angeles Times Syndicate

For Immediate Release (Dist. 10/13/99)