00148-why has the french socialist party shunned the rhetoric of the third way
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Why Has the French Socialist PartyShunned the Rhetoric of the Third Way?
An Explanatory Model Extended to
Britain, Germany, and Italy
David Leifert
The Lauder Institute, University of Pennsylvania
A THESIS
Presented to the Faculties of the University of Pennsylvania in Partial
Fulfillment of the Requirements for the Degree of Master of Arts
April 2006
Thesis Supervisor: Dr. Julia Lynch
Reginald Jones Thesis Prize Nominee
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Table of Contents
1. European Social Democracy and the French Exception: Introductory Analysis 4
1.1. The Evolution of European Social Democracy 4
1.2. The French Exception 5
1.3. Introduction of the Empirical Question: Why the French Exception? 6
2. The Third Way Analysis of a Political Phenomenon 8
2.1. Reactions to the Emergence of the Third Way 8
2.2. Description of the Third Way The Schrder/Blair Manifesto 9
2.3. Critics of the Third Way and Alternative Interpretations 11
3. Explanatory Model for Socialist Party Adoption of the Third Way 14
3.1. Explanatory 5-Factor Model 14
3.2. Categorization of Policy Factors 16
3.3. Categorization of Political Factors 20
4. Application to the French Case A Missed Opportunity for Change 24
4.1. Assessment of the French Goodness of Fit 25
4.2. Assessment of the French Mediating Factors 29
5. Application to the British Case: Blairs New Labour 33
5.1. Assessment of the British Goodness of Fit 34
5.2. Assessment of the British Mediating Factors 38
6. Application to the German Case Schrders Neue Mitte 41
6.1. Assessment of the German Goodness of Fit 41
6.2. Assessment of the German Mediating Factors 44
7. Application to the Italian Case DAlemas Progressive Initiatives 47
7.1. Assessment of the Italian Goodness of Fit 47
7.2. Assessment of the Italian Mediating Factors 51
8. Conclusion 54
Bibliography
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1. European Social Democracy and the French Exception: Introductory Analysis1.1. The Evolution of European Social Democracy
The political landscape of Western Europe following the end of the Second World War
was characterized by a generalized rise to power of Social Democratic parties and the
emergence of extensive welfare states. By the early 1960s, social democracy had
established itself as the major political force in most West European countries. The social
democratic experiment lasted for two decades, before the political situation was
transformed by the advent of market liberalization and a return of neo-liberalism in the
1980s (Zijderveld 1999, page 3). The drastic changes in the political and economic
landscape driven by conservative doctrines such as Thatcherism and Reaganomics
(Sproule 2005) dealt a major blow to socialists. Whether motivated by electoral
desperation, an authentic shift in government ideology, or both, many social democratic
parties began to reposition themselves towards the political center in the last two decades
of the 20th Century, and endorse a modernized and progressive social democracy
(Teixeira 2000). This phenomenon, dubbed the Third Way movement, was strongly
championed by the social democratic parties of Great Britain and the United States,
namely the New Labour party and the New Democrats. The Third Way was
epitomized during the historic forum entitled "The Third Way: Progressive Governance
for the 21st Century," hosted at the White House in April 1999. The leadership of the
global Third Way movement present at the meeting included United States President Bill
Clinton, British Prime Minister Tony Blair, Netherlands Prime Minister Wim Kok,
German Chancellor Gerhard Schrder, and Italian Prime Minister Massimo D'Alema
(From 1999).
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1.2. The French Exception
Among the four G-7 European countries, the only nation missing was France. Indeed, of
all the socialist and social democratic parties in Western Europe, the Parti Socialiste
Franais appears to be the most strongly committed to a traditional statist policy (Merkel
2001, page 68). The antagonism of the Parti Socialiste Franais (PSF) is fittingly
exemplified by a press account of the social democratic summit hosted by Gerhard
Schrder in June 2000 organized to symbolize the advance of the Third Way. The press
account stated that the gathering was stamped with the handwriting, so to speak, of
French Prime Minister Lionel Jospin, rather than that of Tony Blair. The state was to be
accorded a greater role in relation to the economy (Schwartz 2000).
After five years of cohabitation between conservative President Jacques Chirac and
socialist Prime Minister Lionel Jospin, the 2002 presidential election, which was
expected to be dominated by these two national leaders, bitterly surprised the Prime
Minister and the PSF. The left vote was split among various faction candidates and the
PSF failed to advance to the final round of the elections, placing third behind an ever
stronger extreme-right Front National. The defeat was largely attributed to three
phenomena: record-breaking voter abstention, a fragmented presidential vote due to both
an overstretched coalition of the left and the unusual sequence of elections, and the actual
success of satellite parties from both the left and the right of the political spectrum.
Although a better result emanated from the legislatives, the struggling PSF was once
more confronted with a dilemma worthy of French existentialism: either adopt the legacy
of Mitterrand that the party is won from the left (Bell 2003, page 47) and reinforce
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socialist and statist ideologies, or follow the path paved by sister parties that embraced
the centrist approach to government of the Third Way.
A similar dilemma was faced by large socialist parties of Europe as they struggled with
the choice between left-wing ideology and the principles of the Third Way. Three
successful breaks with the old left following long and powerful conservative
governments occurred in Great Britain, Germany, and Italy. While former German
Chancellor Gerhard Schrder defeated 14-year incumbent conservative Helmut Kohl,
Tony Blair succeeded 18-year conservative incumbents Margaret Thatcher and John
Major, and Romano Prodi of the Democratic Party of the Left (PDS) inherited an Italian
political landscape characterized by over 40 years of Christian Democratic government.
At the upcoming 2007 presidential elections, conservative Jacques Chirac will have
accumulated 12 years of power and, given two consecutive defeats of a weak coalition of
the left, it is arguable that the time may have come for the PSF to follow the footsteps of
its sister parties in the three nations mentioned above. Although this paper will focus on
the 2002 elections, its findings are applicable to the elections of 2007 and beyond.
1.3. Introduction of the Empirical Question: Why the French Exception?
This paper analyzes the reasons why the PSF has not embraced the rhetoric of the Third
Way as of the 2002 presidential elections despite a major political crisis in 1993, and the
factors that would eventually bring it to do so. The term Third Way has been used to
identify a variety of center-left parties, sometimes even including the PSF as one distant
variant that will be further explored in a later section. To avoid fallacious argumentation,
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this paper bases its analysis on the Third Way manifesto co-authored by Britains Tony
Blair and Germanys Gerhard Schrder, which is referred to in the following pages as the
Schrder/Blair manifesto. An analysis of Third Way politics is presented and an
explanatory model is proposed to evaluate the susceptibility of the PSF to a shift in
political direction and adoption of the Third Way rhetoric.
The methodology focuses on a 5-factor model, which is applied to the case of France and
extended to the cases of Britain, Germany, and Italy to gauge its robustness. The periods
chosen for the comparison show the paths taken by the socialist parties of these three
countries immediately preceding general elections that followed significant political
events, as was the case for the PSF in 2002. The 5-factor model argues that a political
crisis of the incumbent right-wing party or of the socialist party of opposition is required
to set in motion the adoption of the Third Way by the socialist party. Once a crisis takes
place, the model proposes an explanation of the degree of adoption of Third Way
rhetoric. It does so by assessing the nature and performance of three policy factors
comprising the building blocks of the Third Way the welfare system, the government
machinery, and the economic system as well as two important political factors
represented by party system type and the potential of party leaders to become successful
champions for change. The composition of each of these factors, and their combined
make-up, will prove to bear great influence on the political choice of socialist parties.
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2. The Third Way Analysis of a Political Phenomenon2.1. Reactions to the Emergence of the Third Way
The Third Way is a term that is filled with meanings and at the same time charged with
having none in the context being analyzed. Among the meanings associated with the
Third Way are the description of a Cold War-era alternative to siding with either the
United States or the Soviet Union and of an alternative to capitalism and socialism in the
form of fascism (Giddens 2000, page 1). The Third Way of relevance to this paper,
however, is the term resurrected by Tony Blair and also referred to as the Radical
Center, which embodies an economic and political ideal positioned between democratic
socialism and laissez-faire capitalism. The Third Way phenomenon has drawn criticism
from politicians on both the left and the right. Oskar Lafontaine, former German finance
minister under Gerhard Schrder, openly condemned the Chancellors manifesto written
in partnership with Tony Blair by declaring that the Third Way is the wrong way Der
dritte Weg ist ein Holzweg (Lafontaine 1999). Lafontaine presented his resignation in
1999 due to irreconcilable differences with the Chancellors political stance. The
magazineDer Spiegel characterized his resignation as another victory of capitalism over
the planned economy, and lobbyists and business associations celebrated his departure
(Hogrefe 1999). Criticism also abounded from right-wing public figures, which portray
the Third Way as either a mishmash of already familiar ideas and policies, or as lacking
any distinguishable content at all (Giddens 2000, page 7).
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2.2. Description of the Third Way The Schrder/Blair Manifesto
What are the characteristics of the Third Way, and how do they differ from the traditional
socio-economic rhetoric of the traditional left? According to the joint manifesto written
by Gerhard Schrder and Tony Blair in 1999, the Third Way proposes a clear break with
the old left and goes as far as abandoning the dogmas of left and right (Blair and
Schrder 1999). Before describing the progressive policies of the Third Way, the
manifesto identifies the main policy areas explicitly rejected by the new movement. The
main policies rebuffed by the Third Way are based on the premise that the government is
all-knowledgeable and should be all-powerful in ensuring the well-being of its flock, the
people. The main policies developed by the traditional left to support this ideology are
the imposition of social equality, incentives for large government spending,
comprehensive administrative and economic intervention, and the undisputable
prevalence of individuals rights over responsibilities. These are identified as policies the
Third Way wishes to disassociate itself from.
The alternative policies proposed by the Schrder/Blair manifesto are based on a
government that is granted the responsibility to not row, but steer (Blair and Schroeder
1999) the economy, with power decentralized towards the local level and freedom of
activity for individual business and enterprise. In addition to decentralization and limited
central economic planning, a modern and efficient public sector is paramount to
restraining overbearing bureaucracies that suffer from internal politicization and
overprotective labor laws. The focus is no longer on the size of government expenditure
but rather on the effectiveness of its initiatives. The proposed platform further decreases
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the role of government by significantly overhauling the welfare state. Instead of a blindly
egalitarian policy, the state is to promote investment in human capital and reward effort
as a means to address poverty and unemployment. Although a social floor should be
provided to all, it should not act as a replacement for productive employment, but rather
as support for reinsertion into the workforce. Education and training become central to
the effort of providing equality of opportunity, and a sense of responsibility and
community spirit is expected from the population. Mutual obligation is encouraged at the
levels of the family, the neighborhood, and the society. The Schrder/Blair manifesto
proposes the championing of a go-ahead mentality, whereby solidarity replaces a
portion of state provisioning and firms negotiate with workers and unions with the benefit
of the whole in mind.
Additional areas addressed by the manifesto, which are related to the main points
described above, are an elaboration of labor market policy with greater flexibility,
promotion of environmental responsibility, the introduction of supply-side economics as
a complement to demand-side economics in order to succeed in the face of globalization,
and a stance on the role of the European Union in national government. The manifesto
states that the Union itself, however, is not to develop into a homogeneous super state but
rather into a facilitator of socio-economic development. It is also noteworthy that the
underlying aspects of the "social market" promoted by the Third Way can also be found
in article I-3 of the Treaty establishing a Constitution for Europe. It states that the Union
shall work forsustainable developmentbased on balanced economic growth and price
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stability, a highly competitive social market economy, aiming at full employment and
social progress.
2.3. Critics of the Third Way and Alternative Interpretations
The Third Way platform described above comprises a general set of political concepts
that has been embraced by different socialist parties to varying degrees. In order to better
understand the concept of the Third Way and design a robust explanatory model for its
adoption, it is imperative to consider the analytical literature that sheds a critical light on
this topic. Much of this literature focuses on the ambiguity of Third Way proposals and
inherent conflicts of interest between policy characteristics.
The critics argue that although a broad framework can be presented, there are
differences of opinion concerning the interpretation of the core values associated with
Third Way thinking and how the state should seek to advance them (White 1998).
Stuart White identifies two main lines of division amongst subscribers to the Third Way
framework. One line of division is between leftists and centrists over the
commitment to real opportunity, where discrepancy of interpretation exists on the
meaning of commitment and real opportunity. Centrists interpret this concept in
meritocratic terms, while leftists interpret it in a more egalitarian light. This discrepancy
impacts the role and methodology of income redistribution. The second line of division
is between liberals and communitarians over the commitment to civic
responsibility. Liberals limit the power of the state to impose legal welfarism, while
communitarians welcome state-led definition and enforcement of good behavior. The
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result of these lines of division is the identification of four types of Third Way
government: leftist liberal, leftist communitarian, centrist liberal and centrist
communitarian. White concludes that such ambiguity can play to the advantage of party
candidates as they reach out to different constituencies (White 1998).
Wolfgang Merkel characterizes the Third Way in a similar manner to Stuart White.
Different types of Third Way governments are also identified, although not along the
same lines of division as presented above. Merkel identifies four types of Third Way
government based on existing European parties (Merkel 2001). The first type is the
market-oriented way of the British New Labour party. It has ample room for
maneuvering given the weakness of interest groups, the absence of coalition constraints,
and the inheritance of a strong-fisted and hierarchical administrative culture established
by outgoing conservatives. The British New Labor party is considered to have the most
radical implementation of Third Way policies. The second type is the market- and
consensus-oriented way of the Dutch polder model, whereby the Partij van der Arbeid
comes closest to the results obtained by New Labour. It does so, however, through
negotiations with political parties and social partners instead of the majoritarian strategic
implementation of New Labour. The third type is the reformed welfare state way of
Sweden, where social democrats have encouraged an open market economy and the use
of supply-side economics. The country has also experienced cut backs on income
redistribution efforts while maintaining the highest level of labor market policy
expenditure of all OECD countries, reaching 2.1% of GDP in 1997 (OECD Database).
Despite a decrease in the reach of its universalistic welfare state, it is still the most
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comprehensive in the Western world. The fourth type is the statist way of the French
PSF, which promotes the state much more than its sister parties dofor
macroeconomic, industry, employment, and social policy (Merkel 2001). Additional
analysis of the PSF platform is provided in a later section.
Unlike Merkel, this paper does not consider the PSF to be a type of Third Way party due
to the partys outright rejection of the concept. As recently as 2005, Lionel Jospin
declared that social-liberalism is unconceivable since socialism is not a liberalism, not
even a social one (Reuters 2005). The explanatory model of socialist party adoption of
the Third Way that follows takes the Schrder/Blair manifesto as its benchmark and
develops a methodology to explain why a socialist party adopts or rejects it. The results
will not yield a binary prediction since the determinant factors of each country will differ,
but will rather provide an assessment of the suitability of each party for the adoption of
the Third Way rhetoric.
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3. Explanatory Model for Socialist Party Adoption of the Third Way3.1. Explanatory 5-Factor Model
Although the Third Way is not the only alternative to an old left rhetoric, it has
certainly taken central stage as the consensus alternative due to its adoption, to a greater
or lesser degree, in various European countries. The explanatory model presented in this
section is tailored specifically to the Third Way but could be calibrated to reflect different
policy factors pertinent to other political rhetoric. The model stipulates that a trigger in
the form of a political crisis from the perspective of the incumbent conservative party, the
socialist party, or both, must exist in order to provoke a shift in political rhetoric. The
trigger itself, however, is not sufficient, as the actual shift will depend on the nature and
success of existing policy and political factors of the model. Accordingly, the model is
based on a 5-factor model that combines three major policy factors proposed by the Third
Way ideology with two decisive political factors. The characteristics of each factor will
impact the direction and strength of the political process set in motion by the triggering
crisis and will significantly influence the success or failure of the process. The three
policy factors that characterize the Third Way ideology as presented in the previous
section are the nature of the welfare state, the degree of state-led economic planning, and
the balance of administrative power between the state and civic society. The two
political factors are party system type and the strength of socialist leadership within the
party and/or the political coalition landscape of the left.
The 5-factor explanatory model draws on the mechanics of the Three-Step approach to
Europeanization proposed by Cowles and Caporoso (Cowles and Caporoso 2001). In
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their approach to analyzing Europeanization, the authors predict the degree of
Europeanization of member countries domestic structures based on two criteria:
Goodness of Fit between existing structures and those proposed by the European Union
and Mediating Factors in the form of facilitating institutions and empowerment of
relevant actors. The Three-Step Model to Europeanization is presented below for
illustrative purposes:
Figure 1: A Three-Step Approach to Europeanization and Structural Change
The 5-factor model proposed herein is constructed based on a similar framework.
Domestic Structural Change is replaced by the adoption of the Third Way rhetoric,
Goodness of Fit is evaluated based on the national characteristics of the three main
policy factors of the Third Way, and Mediating Factors are composed of the political
factors of the model. The resulting model is illustrated by the picture below.
Figure 2: A Three-Step Approach to the Adoption of the Third Way
Europeanization
Process
Goodness of Fit
with domestic
structures =
adaptational
pressures
Mediating
Institutions
Actors Practices
Domestic
Structural
Change
Trigger
- Incumbent Party
Crisis
- Socialist Party
Crisis
Goodness of Fit
1) Welfare State
2) Centralization
3) Economic
Planning
Mediating Factors
1) Party System
Type
2) Leadership
Strength
Rhetorical Shift
1) Full
2) Partial
Triggers Political Factors OutcomePolicy Factors
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The approach above is iterative. As a party adopts a more centrist platform on the broad
policy areas representing Goodness of Fit with the Third Way, the three preceding
processes may be affected by a dampening or reinforcement of the trigger crisis. This, in
turn, may strengthen or weaken Goodness of Fit and possibly change Mediating
Factors as shifts along the left/center spectrum will translate into greater or lower
perceived leadership strength, fragmentation, or both. Every major political decision will
therefore affect this iterative model and push a political platform towards the center or
away from it to different degrees. This push will depend on the Third Ways impact on
characteristics of Goodness of Fit and Mediating Factors. The stronger the mix of 5-
factors, the more likely a party is to adopt the rhetoric of the Third Way. A strong policy
factor occurs either if a factor is successful and consistent with the Third Way, or if it is
unsuccessful and inconsistent with it. As the application of the model will show,
different countries have experienced different degrees of adoption. The application to the
case of the PSF, which rejects the rhetoric of the Third Way, is complemented by the
application of the model to the socialist parties of three major European countries
immediately preceding pivotal elections of national or regional scope. Parallels are
drawn between the countries, and the results are used to evaluate the model. Before
application of the model, further clarification is provided on the categorization of policy
and political factors.
3.2. Categorization of Policy Factors
The model is comprised of three policy factors, namely the welfare state, the economic
system, and the government machinery. The welfare state refers to the nature of the
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social policy regime prevalent in a given country. The models categorization of the
welfare state is based on Esping-Andersens differentiation between three types of social
policy regime. The liberal welfare state is similar to Titmuss residualist regime
(Zidjerveld 1999, page 12) and relies on needs-tested assistance, modest universal
transfers, and modest social insurance (Esping-Andersen 1993, page 26). The
conservative welfare state is shaped by a strong corporatist and statist legacywhere
social rights [are] attached to class and statusin a non-universalistic exclusionary way,
[and where] interference only occurs when the family is not capable of serving the needs
of its members (Zijderveld 1999, page 102). Finally, the social democratic welfare
state is closest to Titmuss institutionalist regime (page 12) and promotes an equality of
the highest standards, not an equality of minimal needs, [where] all strata are
incorporated under one universal social insurance system, yet benefits are graduated
according to accustomed earnings (Esping-Andersen 1993, page 26). The social policy
regime of real opportunity proposed by the Third Way differs from the three types of
welfare state identified by Esping-Andersen. According to the Schrder/Blair manifesto,
the Third Way proposes a regime of equal opportunity that is comprehensive but places
responsibility on recipients to make the most out of the assistance that is largely based on
training and insertion. It is less comprehensive than the social democratic regime, more
extensive than the liberal regime, and less exclusionist than the conservative regime,
hence respectively addressing the problems of excessive taxation, insufficient assistance,
and exclusion. The model does not argue that one type of system is more adaptable to the
Third Way than another: equally strong opposition to change could be expected from
taxpayers in a liberal regime, recipients in a social democratic regime, and the beneficiary
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strata in a conservative regime. Instead, the model argues that the less successfully
established a regime type is, the more susceptible the socialist party will be to the
adoption of the Third Way.
The second policy factor is the degree of state-led economic planning within the realm of
capitalist societies. The 5-factor model categorizes state-led economic policy based on
the classification of economic planning into three types: liberalism, statism, and
corporatism (Katzenstein 1985, page 20). Liberalism relies on macroeconomic policies
and international market competition molded by free enterprise and private ownership. It
further stipulates infrequent state intervention through targeted protectionist measures.
Statism, on the other hand, relies on the ability of the state to plan the course of its
economy. Although statist economies are not isolated, the nature of international
competition is dictated by the state through targeted industrial protectionism, significant
domestic intervention in the form of shielded internal competition or collusion, or
outright ownership of the means of production. While liberal and statist economic
systems are options for those large industrial states whose power is sufficient to [control
parts of] the international environment [or of] their own societies (Katzenstein 1985,
page 23), smaller open economies cannot afford such systems. Economic corporatism
addresses this issue by providing a system where nations accept the changes imposed by
international markets but apply a variety of economic and social policies that prevent the
costs of change from resulting in political eruptions (Katzenstein, 1985, 24). Different
types of corporatism depend on internal negotiations in devising reactionary policies and
can be categorized across two axes: market-driven versus statist-driven policy drivers and
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democratic versus non-democratic decision-making. The Third Way stipulates that the
state should steer, but not row, an economy where the essential function of markets
must be complemented and improved by political action, not [replaced or] hampered by
[government] (Blaire and Schrder 1999). The model argues that the closer an
economic system is to a successful liberal or liberally bent corporatist system, the more
susceptible the socialist party will be to the adoption of the Third Way.
The third policy factor is the extent to which a strong civil society provides a balancing
weight against state preponderance. According to Alexis de Tocqueville, spheres of
organized power outside the state are essential not only to liberty but also to prosperity
(Levy 1999, page 9). The 5-factor model bases its categorization of state preponderance
on the classification proposed by Jonah Levy, who differentiates between dirigisme,
associational liberalism, and neo-liberalism (Levy 1999, page 58). The dirigiste state
centralizes decision-making for social, economic, and administrative policies at both the
national and regional levels. This type of state engenders a strong center-periphery
cleavage and significantly weakens the civil society. Neo-liberalism promotes a
minimalist state and blames flabby institutions such as bloated welfare states,
overzealous regulators, almighty trade unions, and clubby financial establishments
(Levy 1999, page 59) for obstructing the proper functioning of the economy.
Associational liberalism is a compromise between the preponderant dirigiste state and the
minimalist neo-liberal state. This alternative form of government follows the
Tocquevillean political philosophy and encourages intermediary institutions to perform
coordinating functions and provide public goods that are essential to economic
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dynamism (Levy 1999, page 59). In practice, this translates into a delegation of
decision-making and execution to trade unions, employer associations, financial
institutions, and local government authorities. The Third Way promotes both
decentralization and streamlining of government functions. The model argues that the
closer an economic system is to successful associational liberalism, and to a lesser degree
neo-liberalism, the more susceptible the socialist party will be to the adoption of the
Third Way.
The three policy factors described above social, economic, and administrative provide
a simplified but sweeping basis for assessing the overall Goodness of Fit of a country
to the proposed policies of the Third Way. The relevance of each policy should not be
assessed on a stand-alone basis, but rather based on the impact it has on other policies as
well as on the political factors described in the following section.
3.3. Categorization of Political Factors
The model is comprised of two political factors: party system type and leadership of the
socialist party. The model bases its categorization of party systems on the typology
developed by Giovanni Sartori, in which he differentiates between seven classes of party
system. Sartoris typology identifies differences in fragmentation based on the number of
parties, their relative strength, and the ideological nature of party dispersion (Mair 1999,
page 327). Sartori identifies three major types of party systems that are further split into
more granular variants. The single party system is split into the one-party system
(monopoly), the hegemonic party system (satellite parties permitted), and the
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predominant-party system (continued absolute electoral majority). The two-party system
is one of exclusionist competition between two parties and is not split further. Finally,
the multiparty system is split into moderate pluralism (low fragmentation or high non-
ideological segmentation), polarized pluralism (high ideological fragmentation), and
atomization (atomized pre-consolidation stage). The 5-factor model simplifies this
typology by recombining the single party system variants and excluding the atomized
party system, since they are of limited relevance to the Western world. Because the
Third Way disassociates itself from the dogmas of left and right (Blair and Schrder
1999), the model argues that the less polarized a dual or multiparty system is along the
socio-economic axis, the more susceptible the socialist party will be to the adoption of
the Third Way. In addition, a two-party system would pose less coalition constraints to
the adoption of the Third Way than a pluralist party system would.
The political economy of a nation can be defined by the party system type and the policy
factors previously described. When the political economy is favorable to the adoption of
the Third Way, it still needs to be complemented by strong party leadership and coalition
control for actual rhetoric change to occur. The study of political leadership includes, at
the one extreme, great man theoriesfocused upon the role of the individual, and, at
the other, theories emphasizing the structural, institutionalized aspect of leadership [that]
minimize the role played by both individuals and the office or positions they hold
(Gaffney 1996, page 11). While the first set of theories focuses on the impact of political
leadership upon the political environment, the second set focuses on the reverse
relationship. When a coalition exists, assessment of leadership strength should measure
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not only control over the party, but also the degree of consent from, and submission of,
other parties. The 5-factor model takes this concept into account and categorizes political
leadership along two axes: (1) strong party leadership versus weak party leadership and
(2) coalition consent versus coalition dissent. The model argues that the stronger the
party leadership of Third Way advocates and the higher the level of coalition consent,
then the more susceptible the socialist party will be to the adoption of the Third Way. In
addition, leadership and control should be assessed in both absolute and relative terms,
since a clash between very strong leaders of opposite ideology or a moderately strong
leader facing weak opposition would not be expected to be as successful as strong
leadership and coalition control in the face of weak opposition.
The 5-factor model presents a framework for assessment of the susceptibility of socialist
parties to adopt the Third Way ideology in the context of a political crisis given the
existing set of policy and political factors. An additional characteristic of the nations
under study that is implicit in the 5-factors but deserves explicit mention is the degree of
success of each policy and a general desire for change. The evolution and success of
each policy is just as important as the existing policy type. In practice, the model argues
that the less successful a policy that discourages the Third Way, and alternatively the
more successful a policy that endorses the adoption of the Third Way, the brighter the
prospects for adoption. We begin the application of the 5-factor model with the French
case to answer the original empirical question proposed at the outset of this document:
Why has the French Socialist Party shunned the rhetoric of the Third Way? We provide
an analysis of the French situation preceding the 2002 elections, which followed a 5-year
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cohabitation between Jospins left coalition (gauche plurielle) with the conservative right
of incumbent president Jacques Chirac. The explanatory powers of the 5-factor model
are then validated with an application to the cases of the German SPD under Gerhard
Schrder and the British New Labour under Tony Blair shortly before their joint
authoring of the Schrder/Blair manifesto of 1999, as well as to the emergence of the
Third Way rhetoric in Italy after forty years of conservatism.
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4. Application to the French Case A Missed Opportunity for ChangeThe elections of 2002 marked a low point in French democracy, with voter abstention of
30% and a second-round run-off between parties of the right that did not reflect the
original preference of the French electorate, as evidenced by the contrast between the
smashing second-round victory of Jacques Chirac with 82% of the vote and his relatively
weak accumulation of barely 19% of the vote in the first round (Sofres 2002). The
disconnection with voter preference is further illustrated by the fact that almost 45% of
the votes in the first round went to the dispersed presidential candidates of the left,
including the greens. During his time as government leader, Lionel Jospin used his
authority to bring the left back to power, but not to revise the partys doctrine or to
modernize its appeal on a centrist or realist line (Bell 2003, page 2). We use the 5-
factor model to assess the Goodness of Fit and Mediating Factors in France
preceding the 2002 elections. The trigger that set in motion the process that could have
led the PSF to adopt a partial or full version of the Third Way was the near obliteration of
the party in the 1993 elections, in which the PSF amassed only 11% of the vote and won
53 of 577 National Assembly seats. The immediate response of the PSF was to name
Michel Rocard, a moderate socialist with centrist views, as leader of the party. The
policy and political factors that molded the trajectory of the PSF following the 1993
trigger are analyzed in the following sections.
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4.1. Assessment of the French Goodness of Fit
The welfare system in France, as in the majority of continental Europe, was
predominantly conservative. The result of the conservative welfare state had been the
significant exclusion of certain strata of society, particularly the younger working
population and the long-term unemployed. From 1991 to 2002, the unemployment level
of the active population aged between 15 and 24 had hovered around 20%, with a peak of
25% in 1994, the year following the 1993 political trigger. The youth unemployment
level contrasted with a level of 10% for the active population aged between 25 and 50
(LABORSTA database). In response to this appalling situation, the French government
initiated a transformation of its welfare system from an exclusionist corporatist system to
a system of social insertion. In 1998, ten years after the introduction of theRevenu
Minimum dInsertion (RMI) (minimal insertion income), the government launched a new
law dubbed LOLE (Loi dorientation sur la lutte contre les exclusions), consisting of an
ambitious set of policies aimed at combating exclusion (Gilbert and Parent 2004, page
94). Although the system of insertion is a step closer to the Third Way social system of
equal opportunity, it does not reach the level of real opportunity stipulated by the Third
Way. While real opportunity is tied to the custom of deservingness of dependent citizens,
insertion is tied to the custom of solidarity towards the excluded (Gilbert and Parent
2004, page 94). The state of social welfare in France in the years preceding the 2002
elections distinguished itself from the OECD averages with a paradoxical contrast
whereby it provided more generous social benefits through higher out-of-work benefits
(68% versus 40% net replacement rates), higher social spending (29% of GDP versus
21%), and low relative poverty (7% versus 10% below poverty threshold), but suffered
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from lower social success as measured by a high unemployment rate (10% versus 7%),
lower subjective well-being (65% versus 70% life satisfaction), and higher social
isolation (8.1% versus 6.7% feel isolated) (OECD database). In sum, the welfare system
in France during the decade from the 1993 crisis to the 2002 election experienced a very
slight move towards the policies of the Third Way, but fell short of the success of the
average OECD countries. It can therefore be characterized as a positive factor for the
adoption of the Third Way, since it is an unsuccessful, non-Third Way policy.
The second and third policy factors, economic and administrative policy, further
characterize the French Goodness of Fit. Statism has long been a defining
characteristic of France and is reflected in both the role of state-planning in the economy
and a domination of the state over civil society. French statism, already well-established
during the Third Republic, was further reinforced after the liberation from Nazi Germany
by a leadership that extended state control over key sectors of the economy and
established several institutions designed to reinforce the economic will and capacities of
the state (Hall 1986, page 139). Since that time, the government has had to yield to
increased pressures from different interest groups and ease the traditional stance that the
state should remain independent from the pressure of social groups in order to guard the
social interest (Hall 1986, page 176).
In regards to state-led planning of the economy, the average level of economic and
administrative regulation in France was above the average of OECD countries,
particularly in comparison to large advanced economies. According to the OECD
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working paper Product Market Regulations in OECD Countries: 1998-2003, and
excluding the newly accepted or aspiring members of the EU for a remaining total of 25
countries, the French government exerted high regulation and control in both inward- and
outward-oriented policies (Nicoletti et al. 2005). Inward-oriented policies are assessed
based on the level of state control (e.g. scope and size of the public enterprise sector,
control of business enterprises, price controls, and command & control regulation) and
barriers to entrepreneurship (e.g., regulatory and administrative opacity, burdens on
startups, and barriers to competition). France had the fifth-highest level of state control
with particularly high ratings in public ownership regulation and barriers to
entrepreneurship. Outward-oriented policies were assessed based on barriers to trade and
investment (explicit and regulatory), and France ranked relatively badly, with the seventh
highest rating in 1998. As the numbers show, France still exerted strong state-led
economic planning relative to other OECD countries and was classified by the working
paper as a relatively restrictive country, even though the general level of state control
and regulation had decreased in all countries with that classification (Nicoletti et al. 2005,
page 19).
In addition to strong state-led economic planning, French statism also permeated the
administrative sphere. Despite an attempt to decentralize in the early 1980s promoted by
the newly elected socialist administration under Francois Mitterrand and epitomized by
the Deffere Decentralization Laws, the central government still played a large role in the
administration of France. The goals of decentralization were noteconomicbut
administrative and financial in character (Meny 1985, page 188). The objective of the
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socialist decentralization effort was to change France from a system of local
administration to one of local government, where local decision-making, as opposed to
simple execution of central directives, would provide the necessary autonomy for
responsiveness to local needs (Baguenard 2002, page 121). The difficulties encountered
were manifold, and the decentralization effort resulted in a civil society without social
capital (Levy 1999, page 166). The socialist laws emancipated regions by introducing
democratic regional elections and provincial authorities. These authorities were
bestowed with new responsibilities paired with allocation of resources, while general
local autonomy was increased by the lifting of numerous restrictions on local action. The
economic achievements of decentralization were less impressive, however, particularly as
excessive decentralization resulted in a plethora of small localities that were unable to
function independently and therefore did not gain de facto autonomy from the central
government. By 2000, the number of communes in France had grown to 36, 779,
compared to 16,068 in Germany, translating into 1,500 inhabitants per commune versus
5,000, respectively (Baguenard 2002, page 81). In his statist two-step model, Levy
attributes the failure of France to effectively move away from its dirigiste model to a low
degree of societal coordination. As a result, the state was compelled to intervene to
alleviate social dislocation, notably in the labor markets, and to rescue failed attempts at
economic progress (Levy 1999, page 284). The prevalence of the central state is further
illustrated by the high level of central versus periphery public sector employment. In
1997, the central state accounted for 52% of total public sector employment, which in
turn accounted for 22% of total employment (LABORSTA database).
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The policy factors described above portray France as a nation trying to move away from
a heavily conservative welfare state, a system of state-led economic planning, and a
centralized dirigiste government. While the direction of policy change has clearly been
away from the heavy hand of the state, France is still significantly more rigid than other
OECD countries. Because of the positive direction of change and pressures from
globalization and sister socialist parties in Europe and abroad, strongly positive political
factors should lead the PSF to fully or partially adopt the Third Way. The following
section analyzes the Mediating Factors, namely, party system type and leadership
strength that would lead the Third Way to win over, or lose, the PSF.
4.2. Assessment of the French Mediating Factors
The party system type of France has had a long history of polarized pluralism since the
end of the Second World War that is still in existence today. After the liberation, the
political landscape of France was characterized by a clear left-right cleavage fragmented
at first but increasingly consolidated on each side of the political spectrum. The
rationalization of the French party system resulted from increased incentives for coalition
politics as a result of the enhanced prestige of the presidency established by de Gaulle in
the 1960s, the bipolarizing pressures of the direct presidential election after 1962, and the
strengthening of the executive government mandated by the constitution of the Fifth
Republic (Evans 2003, page 12). Following this reform of the party system, three
significant developments shaped the political landscape at the turn of the millennium: the
emergence of a series of minor but relevant parties including the greens and the extreme-
right Front National, the change in strategic dynamics within party factions and within
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coalition members (exemplified by the decline of the communist PCF and the emergence
of the PSF as the main party of the left), and patterns of growing electoral instability in
the form of electoral volatility resulting in six consecutive changes of government since
1978 and disaffection towards traditional politics as demonstrated in higher abstention
rates. The fractioning of the electoral vote is clearly illustrated by the fact that while the
quadrille bipolaire, composed of the PCF and the PS on the left versus the UDF and RPR
on the right, obtained an evenly divided vote exceeding 90% in 1978, this domination
floundered in 1997 and 2002 when these parties obtained around 67% (Evans 2003, page
14). While the 1997 legislatives consecrated the PSF as the governing party, the victory
was largely due to the lack of coordination in the right. The results of the 2002
presidential elections supported the hypothesis presented by Grunberg and Schweisguth
in 1997 that the French political space was no longer simply one-dimensional with Left-
Right polarization but had developed into a two-dimensional space with three poles: the
Left, the Right, and the Far Right. In an updated publication, the authors analyzed the
logic of considering the candidates labeled as extreme left as a fourth pole but hastily
rejected it due to the relative proximity of their ideals to those of the moderate left
(Grunberg and Schweisguth 2003, page 342). In whatever way the French electorate was
partitioned, one thing is clear it was fragmented, polarized, and built on weak
coalitions.
Based on the potentially positive policy factors but clearly negative party system type
described above, party control and coalition leadership would be expected to play a
decisive role in swaying the PSF into, or away from, the camp of the Third Way. In the
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early 1990s the French left was at a major juncture in its political history. As previously
stated, the disastrous 1993 elections dealt a crushing blow to the PSF. Evidently,
although Francois Mitterrand was very successful in promoting himself, he left his party
in dire straits. In distress, however, lies opportunity for change. The PSF was faced with
a dilemma: given the low votes for the left across the board, either consolidate its
leadership on a leftist platform and break with the stigma of a deceivingly centrist
Mitterrand government, or establish itself as a centrist party and target the moderate left
and moderate right electorates with the international support of strong Third Way
proponents including Tony Blair, Gerhard Schrder, and Bill Clinton. The most likely
contender to PSF leadership for the promotion of the Third Way was Michel Rocard, who
had been chosen as Prime Minister by Mitterrand in 1988 in a move which intended to
facilitate the centrist entry into government (Bell 2000, page 179). Rocard, a
modernizer, became head of the PSF after the 1993 defeat and led the centrist faction
of the PSF in the clash of ideals against the left-leaning faction led by J.P. Chevnement,
who eventually left the party in 1994 (Bell 2003, page 55). The Rocardian ideology and
the departure of Chevnement and his followers pointed to a possible move towards the
center (Evans 2003, page 174). However, just as Rocard found little support for his pro-
market speech at the 1977 congress of Nantes, even from his closest followers, his main
supporters once again decided for internal reasons not to make their voice too forceful
(Bell 2003, page 54). Unable to sidestep the left-right ideological cleavage, Rocard
resigned after his Big Bang coalition approach resulted in the worst-ever defeat of the
socialist party in the 1994 European Parliament election (Stevens 2003, page 207). Lionel
Jospin took the leadership of the left coalition with a more pro-left platform and, despite
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losing the 1995 elections, was able to win the legislative elections of 1997. Although
Jospins government actions followed some Rocardian policies, including privatizations,
a decreased role for the state, and social insurance reform, his rhetoric was measured to
avoid alienation of coalition partners (he used, for example, the term private
participation instead of privatization) (Bell 2003, page 47). In fact, leftist rhetoric was
followed by leftist action, most notably with the unlikely implementation of the 35-hour
week, but also the Aubry Law, which aimed to create 700,000 state-sponsored jobs for
the youth (Sferza 2002).
The policy factors described above would have allowed the Third Way rhetoric to
discernibly challenge the status quo. However, economic performance was positive in
the mid-nineties and the center-right was not likely to be easily won over by a fledgling
centrist PSF. Furthermore, the political factors were strongly unfavorable to the adoption
of the Third Way rhetoric, since the leftist faction of the PSF and its leftist coalition
partners were too strong for Michel Rocard, the lead PSF proponent of the Third Way.
The 5-factor model is applied below to three other major socialist parties at conjectural
crossroads, each with its own characteristics and faced with the very different economic,
social, and political landscapes of Britain, Germany, and Italy. The explanatory power of
the model will be tested as it fits the actual rhetoric chosen by these parties.
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5. Application to the British Case: Blairs New LabourWe begin application of the model to socialist parties of other major European countries
with Britain. The British New Labour Party emerged in 1997 as the benchmark for
European socialist parties considering embracing the rhetoric of the Third Way. The
Third Way of the New Labour Party represents today the most radical embodiment of the
concept. Some even argue that New Labour amounts to consolidation of Thatcherism
and that Blair is little more than the son of Margaret (Schmidtke 2002). Application
of the model to the British case investigates the policy and political factors that led the
New Labour Party to adopt the rhetoric of the Third Way as its unconditional political
platform for the 1997 general elections. The triggering crisis was a simultaneous political
crisis of both the incumbent party and the socialist party. After almost two decades of
Conservative government the Labour Party began to seriously reconsider its most basic
social and economic electoral platforms in order to avoid continued obliteration from the
political scene. By the mid-nineties, the conservatives were the ones experiencing a
political crisis. Internal strife over EU issues and the crash of the pound from the
European Exchange Rate Mechanism crushed confidence in the Conservatives long
track of economic successes. In addition, the weaker leadership of John Major, in
comparison to Thatcher, provided a great opportunity for Labour to ride on the
ideological and electoral momentum gained in 1992 and win over the middle class.
In order to take advantage of the situation, the Labour Party had to decide whether or not
to adopt a new electoral platform. This decision depended on the policy and political
factors existing in Britain in the mid 1990s. One option was to develop a customized
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version of the new election platform that democratic leader Bill Clinton proposed as he
won the presidency of the United States in 1992. Clinton faced a very similar situation to
that of Tony Blair, including a long-reigning incumbent Republican government and the
imminent threats of globalization, and adopted a more liberal rhetoric that encouraged
real opportunity, market liberalization, and a small government the main tenets of the
Third Way. According to our model, adoption of a similar rhetoric by the Labour Party
would depend on the policy and political factors in Britain that preceded the 1997
elections, which are discussed in the sections below.
5.1. Assessment of the British Goodness of Fit
In the period leading to the 1997 general election, the British welfare state, unlike that of
France, was based on a combination of minimum universal rights and means-tested
distribution of resources. The system was residualist in that it delivered meager
benefits, on the basis of need, as a last resort for those who are unable to support
themselves through paid work (Levy 1999). The predecessor of the British welfare state
is the set of laws called the Poor Laws, which provided assistance to the very poor and
were amended repeatedly until 1941, when the destructions of war incited a more
equitable treatment of the people. The 1942 Beveridge Report triggered an attempt to
shift towards a universal welfare state that gave security from the cradle to the grave
(Field 1999). Actual implementation of a universal welfare state, however, resulted in
fixed-level benefits below those recommended by Beveridge, which were insufficient to
many and led to the introduction of a means-tested system. Although not comprehensive,
the welfare state did pose a major burden to the government and the economy,
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representing 23% of GDP in 1979 when Margaret Thatcher came to power (Wilding
1997). Interestingly, the expected dismantling of the welfare state by a state-minimizing
liberal government did not occur during the first two terms of the Thatcher
administration, as the percentage of GDP it represented remained unchanged until 1988.
Between 1987 and 1990, however, government took a major offensive against the
bureaucratic structures of welfare provision (Le Grand 1993). Both central and local
authorities saw significant cut-backs in their social services budget, and the system was
replaced by a more pluralist system of provision dominated by quasi or internal markets
[which] radically changed the face of the NHS, Education, Social Care, Local Authority
Housing and the role of the local authority more generally (Wilding 1997). The
Conservative government redirected welfare responsibility both by putting great stress on
the family as the cradle of civic virtue and by privatizing social services operations.
The British economy, one of the most liberal in the world, highly contrasted with that of
dirigiste France. Indeed, the New Right ideologuesrejected indicative planning,
public ownership, incomes policy, exchange controls, and sectoral intervention (Wilks
1997). Britain, whose economy was significantly liberalized by the Thatcher government
following the New Right ideology, was characterized in the OECD study on Product
Market Regulation as a relatively liberal country (Nicoletti et al. 2005, page 19). The
study ranked Britain as having the lowest level of control in outward-oriented policies
and levels well below average in regards to control and regulation in inward-oriented
policies. In the realm of outward-oriented policies, represented by barriers to trade and
investment, Britain ranked highest in all sub-domains, followed closely by its neighbor,
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Ireland. Although it did not achieve such absolute ranking in inward-oriented policies, it
did rank higher than every other European country in both barriers to entrepreneurship,
where it is only outpaced by Canada, and state control, where it ranks 5th. Although
Britain experienced a roller-coaster economic performance under the Conservatives, with
two major recessions in 1983 and 1992 separated by a major boom, as well as a mature
recovery leading to the 1997 elections (Wilks 1997), the legacy of the Thatcher and
Major governments was the establishment of a clearly liberal overall economic policy.
In regards to the government machinery, Britain had adopted an interesting mix of public
and private provision of public services, where public provision was shared by local and
central government. Britain had a long tradition of democratic local self-government in
which there was no regional tier of government imposed between central government and
local authorities. From 1950 to 1994, the number of local authorities in Britain decreased
drastically as a result of the Local Government Act of 1992, which replaced the two-tier
system of local government in certain areas with a single-tier system (OECD, 1997).
Government in Britain was administered in England through a series of central
departments and subsidiary organizations and through national departments in the
remaining countries. Two legislations of the Thatcher government significantly altered
the make-up of government, with the creation of Executive Agencies in the 1980s that
acted as policy implementation bodies and the merger of four central departments into
Government Offices for the Regions (GOs) in 1994, with the purpose of fostering
efficiency without increasing the power or cost of central government. In addition to
altering the operations of local government through the encouragement of voluntary
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tendering and compulsory for some services the Conservative government increased
the number of special-purpose agencies, the Quangos, which often operated at the local
level and were not subject to local democratic control. In 1992, Quangos spent about
46.65 billion of public money (OECD 1997), or 17% of public expenditures (CIA
World Fact Book 1992), while local government accounted for 25% of the budget
(OECD 1997). The uniqueness of the British administrative organization, which did not
incorporate a regional level interfacing the central and local levels, was well-reflected in
the make-up of public sector employment figures. If regional government is considered
local rather than central, Britains central government 47% of public sector employment
was well above the OECD average, and only slightly below Frances 52% mark. This
paper considers regional governments as central, bringing Britains central government
employment to much lower levels than that of its counterparts whose regional
governments represented a significant portion of public sector employment. Despite the
reliance of social services on private contractors, private sector employment from 1985 to
1997 was in line with that of other OECD countries at about 80% of total employment.
The policy factors presented above characterize Britain as a country with a relatively
unsuccessful liberal welfare state, a successful liberal market economy, and a
decentralized government where both central and local governments inherited many of
the powers normally held in other countries by regional governments. Rhetoric adoption
of the Third Way could therefore be coherently developed to offer an alternative to the
welfare state and bank on recent mishaps of the British economy.
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5.2. Assessment of the British Mediating Factors
The political scene in Britain since the late nineteenth century had been dominated by
alternating periods of two-party and three-party systems. The Liberal and Conservative
parties battled virtually unchallenged until the First World War. Following the war, the
1922 general elections were characterized by the dramatic rise of the Labour party, which
captured 30% of the vote despite having become politically relevant less than two
decades earlier. The period from 1922 to 1929 experienced a three-party system, with the
tightest race taking place in 1923, when the Conservatives won 38% of the vote versus
30% for the Liberals and 31% for Labour. Between 1931 and 1970 the Liberals never
amassed more than 11% and played only a limited role in the duel between Labour and
the Conservatives (Boothroyd). This situation has changed since the 1974 elections,
when the Liberals won 20% of the votes and essentially allowed the Conservatives to stay
in power for 18 years, from the 1979 elections to the 1997 elections. Party coalitions,
although a decisive factor in some election years, played a subdued role in the general
political history of Britain. The 1918 coalition government served as training ground for
future election coalitions. The elections of 1931 marked the most significant coalition
formation in Britains electoral history as Conservatives joined forces with their long-
time opponents, the Liberals, and other minor parties, to defeat the rising Labour party
and its coalition with the Independent and Irish Labour parties (which the conservatives
would have achieved on their own anyway, with 55% of the votes). Between 1935 and
1966, only the Conservatives continued their coalition with other minor parties that
aggregated from a high of 5.5% of the vote in 1935 to a low of 0.6% before the coalition
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was dismantled. In recent electoral history, the Liberals and the Social Democrats joined
forces in 1983, with 26% of the vote placing them less than 1% behind Labour. The two
parties ultimately merged for the 1992 elections and became the Liberal Democrats,
amassing 19% of the vote. Interestingly, following Tony Blair's election as leader of the
Labour Party in 1994, the Liberal Democrats controversially pursued a policy of
cooperation with Labour, which eventually failed over proportional representation issues
and other key Liberal Democrat demands.
The rhetoric of the Labour Party had already moved towards the center during the 1992
elections as Kinnock, leading Labour into his second campaign, was by then at the head
of a disciplined and well marshaled party, with changed policies and little remaining from
the Foot era (BBC 1992). Following the 1992 elections, Labour underwent several
changes, with the replacement of Neil Kinnock by John Smith as leader, who was himself
replaced by shadow home secretary Tony Blair after succumbing to a heart attack. A
public school, Oxford-educated barrister, Blair was no son of the left or the Labour
movement, although he was a onetime supporter of the Campaign for Nuclear
Disarmament (BBC 1997). His tenure as shadow home secretary gave him no direct
experience of government since he entered Parliament in the Thatcher years, but support
of his powerful colleague Gordon Brown helped him win the contest for party leadership
against John Prescott and Margaret Beckett. Blair oversaw dramatic changes that
epitomized him as a powerful and commanding leader. Under his leadership, the
modernization of the party stepped into a much higher gear than under Kinnock. Of
particular relevance were the partys eradication of the commitment to nationalization as
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set out in Clause IV of the party constitution and the adoption of its new name, New
Labour, which Blair came to personify during the election campaign. In contrast to
Conservative opponent John Major, Tony Blair showed true party leadership, as he
himself stated: I lead my party, he follows his (BBC 1997). Besides strong party
leadership, the lack of coalition constraints gave Tony Blair great power to adopt the
rhetoric of the Third Way.
Given the policy and political factors described above, namely, successful economic and
administrative policies in line with the Third Way, unsuccessful social policy misaligned
with the Third Way, a political system characterized by a three-party system free of
coalition constraints, and a strong leadership committed to the Third Way, the 5-factor
model would support adoption of the Third Way rhetoric. New Labour did chose indeed
to base its 1997 election campaign on the rhetoric of the Third Way, pushing its platform
further to the center than had been proposed in 1992. This strategy, running on the back
of a mild crisis in the Conservative party with a weak leadership and economic setbacks,
rewarded New Labour with a landslide victory, stealing 16% of the votes from the
Conservatives but only 2% from the Liberal Democrats. The latter became a new force to
be reckoned with, particularly given their center-left rhetoric relatively similar to that of
the Labour Party and their adopted stance against the war in Iraq.
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6. Application to the German Case Schrders Neue MitteApplication of the 5-factor model to Germany focuses on the period preceding the 1998
elections that consecrated SPD Gerhard Schrder as Chancellor of Germany. Schrders
electoral platform went counter to the traditional socialist platform that heavily promoted
a strong welfare state and socialist economic policies. This change in rhetoric was
triggered by a similar phenomenon as that of Britains described above. Just as Tony
Blair banked on the lethargy created by the long reign of Thatcher and her cronies, so did
Gerhard Schrder rely on 16 years of right-wing reign under Kohl and a burning desire of
the German people for something new following the disappointing impact of
unification on the German economy as a whole. Instead of following the traditional
socialist platform, Schrder aligned himself with concepts of the British Third Way, but
at the same time proposing a milder version of it due to Germanys different social,
economic, and political landscape, as analyzed below.
6.1. Assessment of the German Goodness of Fit
The German welfare state, similar to that of France, was based on Bismarckian
traditions, supported by family values, work position and social entitlements (Zeitlin
and Tubek 2003, page 107). Germany prided itself on its Wohlfahrtstaatstatusand
provided a comprehensive set of social benefits in the forms of social security, social
welfare, and other social programs. Contribution rates to the social security system
increased from 26.5% of gross wage in 1970 to 42.2% in 1998. In the late 1990s it
accounted for approximately 22% of GDP, placing it ahead of France (Siebert 2005, page
128-134). Besides social insurance, social welfare, or Sozialhilfe, represented an
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increasing portion of government expenditure, as it grew from approximately 15% of
expenditures in 1970 to over 25% in 1998 (Siebert 2005, page 134). OECD social
indicators pointed to successful social results across the board in comparison to OEDC
averages, except for the rate of unemployment (9.3% versus 7%) and the old age strain
reinforced by low fertility rates. Germany had indeed a large welfare system with high
net salary replacement rates (67% versus 40%), low income inequality, high social and
health care spending (33% of GDP versus 26% and 10.9% of GDP versus 8.4%,
respectively), and healthier levels of subjective well-being and isolation, particularly in
comparison to France. Finally, youth unemployment hovered around 10% in Germany
versus 20% in France, reflecting lower exclusionist effects.
In comparison to France, the German social market economy imposed fewer constraints
on free enterprise and open markets. The OECD study on Product Market Regulation
categorized Germany as a middle of the road country (Nicoletti et al. 2005, page 22).
According to the study, the German government exerted above-average state control and
regulation in inward-oriented policies but significantly below-average control in outward-
oriented policies. In regards to inward-oriented policies, Germany had the 10th and 9th
highest levels of public ownership and involvement in business operations, respectively,
placing it slightly above the average OECD country in terms of state control. In terms of
barriers to entry, Germany fared slightly better. Although it had a similar ranking as state
control for administrative burdens on startups and regulatory and administrative
opacity, the ranking was much better regarding barriers to competition, where it had
the 3rd
lowest level of constraint, bringing the aggregate barriers to entry category
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closer to, although slightly above, the OECD mean. In regard to outward-oriented
policies, Germany fared very well. This category is based on the degree of barriers to
trade and investment, and Germany ranked 20th in 1998.
The level ofdirigisme in Germany was low in comparison to France, particularly due to
its federalist form of government. Federalism is rooted in German history, where for
centuries people lived in a number of independent municipalities. Although unification
occurred in 1871, the regional states continued to be relatively independent (Siebert 2005,
page 278). Despite the traumatic transformation of the previously centrally planned
economy of eastern Germany into a market economy, by 1998 the reunified Germany
was running an enlarged federal system where administrative and financial responsibility
was largely bestowed on the states. Besides strong decentralization, Germany relied on a
system of governance that combined market forces with non-market mechanisms that
were controlled by different levels of government as well as social groups, including
trade unions, employers associations, and workers councils (Siebert 2005, page 325).
Levy characterizes the German model of government as one of high social coordination
and a tendency for a market economy opposed to statism (Levy 1999, page 285). In
terms of public sector employment, the central government accounted for only 15% of
the total public sector in 1997 (less than a third of the French percentage), which in turn
accounted for 18% of total employment in Germany.
The main policy factors countering the Third Way were the comprehensive welfare state
and a relatively constrained internal market. Differentiation from the existing right-wing
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government could therefore be based on these points, should the socialist party decide to
adopt the rhetoric of the Third Way.
6.2. Assessment of the German Mediating Factors
The recent party system type in Germany can be qualified as a moderate pluralism. After
the First World War, a democratic republic replaced the monarchy. However, the
strength and mutual antipathy of the Communist and National Socialist parties, reflecting
an extremely polarized party system, precluded the formation of strong majority
governments. The virtual obliteration of both Nazi and Communist ideological parties
after the Second World War and the collapse of the Soviet Union resulted in a party
system of moderate pluralism. German politics became dominated by the reformist
Social Democratic Party (SPD) on the left and the two-party conservative alliance of the
Christian-Democratic Union (CDU) and its Bavarian ally, the Christian Social Union
(CSU). The SPD formally abandoned Marxism in 1957, and the CDU-CSU replaced the
old collaboration parties of the right. Between 1949 and 1998, the SPD held office only
between 1969 and 1982, while the remaining periods were under CDU-CSU leadership
(Carr). The 1994 Bundestag election results, immediately preceding the 1998 elections,
were 41.5% for the CDU-CSU and 36.4% for the SPD, with the remaining votes closely
split between the minority parties, including the liberal Free Democratic Party (6.9%), the
environmentalist Green Party (7.3%), and the left-wing Party of Democratic Socialism
(4.4%). Interestingly, the coalition of the right had obtained 54%, 55%, and 57% in
1983, 1987, 1990 respectively, but only around 50% in 1994 (CDU/CSU, FDP) as the
Greens and PDS gathered more power and set the stage for a potential coalition of
opposition in 1998. This repartition of votes characterized the German party type as a
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was the main focus of the chancellor. This corroborates the explanatory results of the
model, which pointed to a rhetoric based on reduction of the welfare state and of
unemployment through a real opportunity approach to workforce reinsertion. Indeed,
proposal of both the Hartz 4 program and decreased unemployment through internal labor
market reform comprised the heart of the new socialist platform. The shift towards the
center, however, did not occur without opposition. In March of 1999, the head of the
SPD and finance minister, Oskar Lafontaine, presented his resignation in response to
divergence with the ideologies of the newly elected Chancellor. In opposition to the
business wing of the SPD, Lafontaine advocated a program of state measures to counter
the negative social effects of globalization and an unrestrained market[and] advocated
increasing incomes in order to increase domestic demand so flying in the face of the
dominant supply-side orientated policies ( Schwarz 1999). Schrder handled the notable
Lafontaine with authority and further reinforced his leadership of the party and internal
support of the policies of the Third Way.
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7. Application to the Italian Case DAlemas Progressive InitiativesThe last application of the 5-factor model in this paper is to the main Italian socialist
party of the mid 1990s, the Partito della Sinistra (PDS). The case of Italy provides a
clearly different economic, social, and political landscape than that of the previously
analyzed countries, as further described in the following sections. As in France, the
Communist party, Partito ComunistadItalia (PCI), drew a very large percentage of
votes during the countrys First Republic, with a peak above 34% in 1976 that gradually
decreased thereafter (Schmidtke 2002) but never amassed enough votes to come to
power. The fall of worldwide Communism and the general consent for the EMU
objective in the early 1990s, however, allowed for the waning of a First Republic that
condemned the left, and the PCI in particular, to eternal opposition. The trigger for a
potential adoption of the Third Way by the PDS in 1996 was the build-up of legitimacy
since spinning off from the PCI in 1991, the dismantling of the Christian Democratic
Party, and the major blow to the center-right government by the departure of the Northern
League from the Forza Italia alliance of the North. We now analyze the policy and
political factors of 1996 Italy in order to predict whether the PDS would have been likely
to embrace the rhetoric of the Third Way.
7.1. Assessment of the Italian Goodness of Fit
The Italian welfare state belongs to the Christian Democratic welfare system, which is
characterized by the polarization of social benefits where privileged insiders enjoy
disproportionate protection at the expense of the mass of citizens, who receive little or no
coverage. The case of Italy, however, represents an extreme version of this system
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whose problems are aggravated by large state administration and the operation of
patronage politics (Levy 1999). During the Christian Democratic hegemony throughout
the First Republic until the 1980s, partisan politics took central stage through corruption,
inflated benefits, and conscious oversight of tax evasion by the critical political
constituency. As the supremacy of the Christian Democrats (DC) faded, the government
in the 1980s was led by a five-party coalition, thepentapartito, whose members instead
of eradicating corruption and partisan politics became part of it. As a result, by the early
1990s Italy found itself in dire straits with a budget deficit and public debt reaching 10%
and 100% of GDP, respectively (Levy 1999), as well as a welfare state increasingly
polarized. One example reflecting the level of fiscal burden and polarization is that of the
pension system, which provided a basic pension in manufacturing of 89% of average net
earnings of current workers, [while] the minimum social pension for those who did not
accrue was 19% of average earnings, barely one half of the European Union level (Levy
1999). It was only in 1992, with the advent of application to the EMU, that a mani pulite
investigation destabilized the parties of thepentapartito, most notably the Christian
Democrats and the Socialist Party of Italy (PSI), and permitted three governments of
technicians, led by Amato, Ciampi, and Dini between 1992 and 1996, to redress the
spiraling budgetary and social crisis. Progress was made in the period leading to the
1996 elections, and the operations of the technicians was supported by a PDS eager to
establish its governing credentials (Levy 1999).
On the economic planning front, Italy placed amongst the most interventionist OECD
countries. Despite a high savings rate, funds were directed to government debt rather
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than to commercial banks that could help spur the postwar boom. The equity markets
were v