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Interpreting the ‘third way’: not one road, but many

Stuart White

 

First published in Renewal volume 6, number 2 (1998), pp. 17-30.

 

The concept of the 'third way' does not describe a single, well-defined project for economic and social governance.

 

In a renewed attempt to explain the distinctiveness of their political project, leading New Labour figures have recently begun to employ the concept of the so-called 'third way'. However, they have thus far left the substance of this proposed third way rather vague, just as they previously left vague the substance of the 'stakeholder society'. We know, of course, what the third way is not: it is not old-fashioned state socialism or statist social democracy, and it is not free market neo-liberalism. We know also that it aims to reconcile a neo-liberal emphasis on economic efficiency and dynamism with a traditional left concern for equity and social cohesion. But the content of the proposed third way approach to economic and social governance has not yet been authoritatively specified except in these very general and rather negative terms.

This essay explores what the substance of the third way might be. It is relatively easy, of course, to say what one personally thinks the proposed third way is — to write a personal manifesto. But that is not how I shall proceed. I shall try to interpret, rather than stipulate or prescribe. There has been a renaissance of creative left and centre-left thinking in recent years, both in the UK and the USA, and we can construct a broad picture of what the third way might involve by drawing together some of the more important and recurring themes of this recent literature.

I shall argue that emergent third way thinking remains a relatively large space, and that there can be (and currently are) important intellectual divisions within this space, which correspond to potentially very different political projects. Some of these projects hold out the prospect of a genuinely modernised and egalitarian social democracy. Others, however, are more accurately seen as modernised versions of a leftish 'one nation' Toryism. Thus, to the extent that we do want to speak of a third way politics, the issue is not simply whether we support 'the' third way, but what kind of third way project we support.

Not that we should uncritically acquiesce in the terminology of the 'third way'; the term has some utility as provisional shorthand for a broad movement of ideas that is currently informing the attempt to revive the fortunes of left/centre-left parties in the advanced capitalist countries — what one might alternatively call the 'new revisionism'. It is in this spirit that I use the term here. But, from a social democratic standpoint, the term also carries considerable dangers. It can all too easily be taken to imply that we need, not to modernise, but to exit the social democratic tradition in pursuit of something wholly new and distinctive (1). Thus, while the language of the third way may carry a stamp of official approval, social democrats should, at the end of the day, give serious thought to alternatives — including, I think, the less fashionable, but more evocative language of stakeholding.

 

Core values: real opportunity and civic responsibility

It is much too early to speak of a distinctive and coherent normative philosophy of the third way. Indeed, I think the terrain of third way/new revisionist thinking is a wide one on which competing philosophical positions — meritocratic and egalitarian, liberal and communitarian — can find room. Proponents of these competing positions can agree on the central importance of certain basic values but disagree over their interpretation. All we can do, I think, is try to identify the basic values over which they will disagree. The risk in such an exercise is that the basic values one identifies as supposedly defining the shared normative framework of third way thinking may sound so general and abstract as to be vacuous or banal. Bearing this danger in mind, I shall therefore try to show how acceptance of these basic values can still mark out a third way thinking which is distinctive from the spaces occupied by the 'new right' and some (though not all) currents within the 'old left'.

When one looks over recent attempts to articulate a left or centre-left philosophy of government (e.g. Commission on Social Justice, 1994; Blair, 1996), two concepts are centre-stage: opportunity and responsibility. Emergent third way thinking is defined at the normative level by a dual commitment to these two values, regarded as mutually supportive. A third value that has featured prominently in recent literature — 'community' — can also be readily fleshed out in terms of these two basic values.

 

Real opportunity

The concept of 'opportunity' can obviously be interpreted in various ways. It is clear, however, that third way thinking involves a commitment to something more than formal opportunity, i.e., to a conservative form of meritocracy of the kind defended by Hayek in The Constitution of Liberty. Rather, it involves a commitment to substantive or real opportunity for basic goods such as education, jobs, income, and wealth. The notion of a 'stakeholder society' can be readily understood as a society which guarantees all citizens at least some minimum level of real opportunity for these basic goods (see Layard, 1997, 5-6, for an example of such usage). And the evil of 'social exclusion' can be understood in terms of patterns of power and distribution that deny people access to minimally decent shares of these goods.

 

Civic responsibility

Real opportunity is a traditional value of the left (though, when disconnected from a robust ideal of equality, not only of the left). Emergent third way thinking is distinguished, however, by the way this commitment to real opportunity is conjoined with a new — or renewed — emphasis on civic responsibility. Once again, the concept of 'civic responsibility' can obviously be elaborated in various ways. But perhaps one way of articulating the idea in play here is as follows: individuals must take responsibility for life-style choices and not seek to displace the costs of these choices onto others (Halpern and White, 1997). More abstractly: individuals have a responsibility not to act in ways that harm the shared, public interests of others when this can reasonably be avoided (Mill, 1985 [1859]). This entails, for example, that they should not try to free-ride on the productive efforts of their fellow citizens; that they take a primary responsibility for nurturing and providing for their children; that they bear a fair share of taxes so as to ensure adequate opportunities and public goods for all; and that they recognise and act on their responsibilities to the natural environment. Those who ignore these civic responsibilities offload certain costs of a civilised, common life onto others and thereby live at the latter's expense. As a matter of justice, the state should clearly define and, where necessary, enforce the obligations which derive from these basic responsibilities.

This emphasis on civic responsibility and its enforcement arguably marks a difference at the normative level between emergent third way thinking and what David Piachaud has termed 'mid-century Fabianism', perhaps the dominant ideology of social democratic reformists in Britain for much of the late twentieth century (Piachaud, 1993). Mid-century Fabianism, most clearly expressed in the writings of welfare thinkers like R.M. Titmuss, saw the state as having all sorts of enforceable responsibilities towards its individual citizens, but, as Piachaud argues, tended to downplay the idea that the individual citizen also has enforceable responsibilities towards the wider community. While this aversion to the politics of civic responsibility was in part an understandable response to fears about 'blaming the victim', it was nevertheless a lop-sided and ultimately incoherent position. It also represented a break with the broader tradition of civic liberalism in Britain. As articulated in the work of Hobhouse, Tawney, Marshall, and Beveridge, civic liberalism affirms the state's role in defining and enforcing responsible behaviour on the part of the individual citizen even as, at the very same time, it seeks to secure real opportunity for all (see especially Hobhouse, 1994 [1911], chs. 7, 8).

This ethic of civic responsibility also needs to be clearly distinguished, however, from the new right's ethic of `self-reliance'. Certainly, when people discharge responsibilities of the kind described above — e.g., to work, to nurture and provide for their children — many of them will thereby attain a state of economic self-reliance. By the same token, a failure of self-reliance will sometimes be symptomatic of a failure to carry out these basic responsibilities. But it does not follow that the ethic of civic responsibility equates with universal self-reliance. For people can obviously suffer great misfortunes — unemployment, ill-health, etc. — through no fault of their own, and they will then have a legitimate claim to assistance which in no way impugns their status as responsible individuals or citizens (see Halpern and White, 1997; also Hutton, 1995, 1997). To deny this and to insist that people always 'stand on their own two feet' would be to renege on the commitment to guarantee real opportunity for all.

 

Community

To secure real opportunity for all, individuals must not stand alone, but in relationships of responsible, reciprocal support to each other. As Labour Party politicians have recently put it, they must stand in a relationship of 'community' (Blair, 1994, 1996; Brown, 1994). One might say that a society exhibits the good of community when, and only when, it secures real opportunity for all on the basis of shared, equitably enforced, civic responsibilities. There is no genuine community without real opportunity for all, for without this some will suffer exclusion and second-class membership. But there is also no genuine community without a general acceptance of civic responsibilities, otherwise some will live 'aristocratically', at the expense of others.

 

Summary

To sum up, I therefore think that emergent third way/new revisionist thinking is characterised at the normative level by a dual commitment to the values of real opportunity and civic responsibilty (and, derivatively, to the value of community understood by reference to these first two values). This cluster of commitments distinguishes the space of third way thinking at the normative level from that of the new right and from that of at least some currents on the 'old left'.

However, and to repeat, it does not add up to anything like a complete political philosophy by itself. It describes a relatively general normative framework which can be rendered more determinate and concrete in a number of ways. As I shall argue later, different elaborations of the core values of real opportunity and civic responsibility can issue from very different political projects.

 

Methods and instruments: rethinking collective action

The new revisionism which provides the backdrop to discussions of a possible third way is defined not only by commitment to certain basic values, but by various new ideas about how to organise collective action to secure these values. There is almost certainly no single 'big idea' here, but rather, a steady accumulation of small to medium-sized ideas which together may add up to something big. Here I shall simply list and describe, in no particular order, what I take to be the most important ideas or sets of ideas:

  1. The state should be seen as the guarantor, but not necessarily as the direct provider, of opportunity goods.
  2. A receptivity to forms of mutualism as a way of achieving distributive and regulatory goals.
  3. New thinking about public finance in connection with the state's role as guarantor of opportunity goods.
  4. Asset-based egalitarianism (one aspect of which is employment-centred social policy).

 

The state as guarantor, not necessarily provider

Traditional social democratic thinking held that the state is obliged to guarantee citizens access to certain opportunity goods (such as health-care and education) and that in general it ought therefore to provide these goods. According to third way policy thinking, the state has the responsibility of guaranteeing access to such goods but need not directly provide these goods itself.

Firstly, the state might continue to finance provision of certain opportunity goods while at the same time leaving actual production of the goods to other agencies. For example, the state might grant each citizen funds to acquire some high minimum of education and training (through such things as 'individual learning accounts'), but it does not necessarily have to provide that education and training itself. Or, in securing the citizen's 'right to work', the state does not necessarily have to employ the long-term unemployed itself, but might to some extent secure this right by offering them subsidies to attract private employers. Another application of this general idea of separating finance and production roles is the use of 'quasi-markets' in organising the provision of goods such as health-care and personal social services (Le Grand, 1989, 1997). A third way policy thinker will, I think, be open-minded and pragmatic about the potential of quasi-markets in the public sector.

Secondly, the state need not necessarily be the primary financier of provision, but may confine itself to erecting a regulatory framework within which citizens are guaranteed access to opportunity goods. A pertinent example here would be recent proposals for a system of universal compulsory second pensions (Field, 1996; Layard, 1997). These proposals call on the state to require individuals to save some proportion of their income in funded pensions schemes, perhaps topping up the contributions of low earners from public funds. In this way the state can allegedly guarantee an adequate second pension for all in the long-term, without itself being the primary financier of these pensions. This is an example of what Julian Le Grand (1997) has termed 'legal welfarism' in contrast with conventional 'fiscal welfarism'. Under legal welfarism, the state simply requires the individual, or more usually third parties, to undertake actions which ensure that he/she subsequently has access to important goods. Other examples of legal welfarism include: minimum wage legislation (requiring employers to pay their workers at least some prescribed amount); child support legislation (requiring absent parents to contribute to the upkeep of their children); and school-parent contracts (which might, for example, require parents to prevent their children playing truant). Legal welfarism clearly coheres with the normative emphasis on civic responsibility in third way thinking. There is (or ought to be) no dogmatic aversion to direct state provision of opportunity goods. The state should discharge its responsibility to secure specific opportunity goods pragmatically in terms of what, on balance, will give the best results (2).

 

Receptivity to forms of mutualism

Intersecting with this concern to rethink how the state might secure access to opportunity goods, on equitable terms, without necessarily providing them itself is a renewal of interest in various forms of `mutualism'.

One set of proposals, for example, is that the state should encourage Friendly Societies and other secondary associations to play a greater role in the organisation and administration of welfare provision (Field, 1996; Hirst, 1994). Similarly, it has been argued that the state should encourage the formation of local credit unions to provide financial services to vulnerable, low income families (Toynbee, 1998). Tim Bentley and Geoff Mulgan have argued for a new form of association, the 'employee mutual', to provide protection for individuals in the labour market. Owned by their members, employee mutuals would organise training for their members and would negotiate the sale of their members' services to employers (Bentley and Mulgan, 1996). In addition, Peter Kenway and Guy Palmer have argued that public utilities and other service industries should be reorganised as customer mutuals as an alternative both to conventional nationalisation and privatised industry (Kenway and Palmer, 1997).

An emphasis on the good of mutuality can also be discerned in recent 'stakeholder' theorising about business strategy and organisation (see especially Kay, 1996). Stakeholder theorists argue that enterprises should not be seen as necessarily hierarchical entities which exist solely for the good of shareholders, but as sites of long-term, mutually advantageous co-operation between capital-holders and employees. Institutionally, such enterprises will be characterised by the use of various forms of revenue/profit-sharing and employee involvement in decision-making (see Meade, 1991). It is argued that such 'mutual gains' enterprises are likely to be more efficient, especially in pursuing quality-centred product market strategies (Fernie and Metcalf, 1995; Levine, 1995; Layard, 1997). There is an important difference, however, between those who think the state should confine itself to exhorting businesses to adopt such strategies and practices, and those who think the state also needs to take regulatory action to promote them, e.g., to mandate works councils, or to legislate to make hostile takeovers more difficult so as to discourage 'short-termism' (Hutton, 1995; Layard, 1997).

The appreciation of the potential of mutualism is also related to a growing interest amongst social scientists in the effects and construction of so-called 'social capital' (see especially Putnam, 1993) — roughly speaking, social capital can be defined as stable interactive relationships that help bind people to co-operative norms and which thereby help to promote desirable social outcomes (economic, social, and political). Mutualist initiatives, such as the establishment of new Credit Unions in low-income communities, may provide a way of rebuilding social capital where it is currently lacking, with, it is argued, a wide range of positive externalities for these communities and the wider society (Commission on Social Justice, 1994; King, 1997).

 

New thinking about public finance

While many left and centre-left thinkers have argued in recent years that the state should recast its role in securing citizen access to opportunity goods, they have not in general denied that the state will continue to have a significant role in providing and financing the provision of such goods. The third way is not about a general 'rolling back' of the state, but there has been some interesting new thinking about how the state should go about raising the revenue necessary for its activities. I list just a few of the more notable ideas here.

  1. Increased use of environmental taxes This is now a familiar idea. Such taxes, and related ideas (e.g., for road pricing), make clear sense in terms of the commitment to civic responsibility described above (they seem to follow from the obligation to make responsible use of the environment, paying the community for the extra costs one inflicts upon it). But some also argue that increased use of green taxes will allow for a reduction in taxes on earnings, so boosting employment (Robertson, 1996; Holtham and Tindale, 1996). Thus there may be a link between this policy proposal and the idea of an employment-centred social policy which I shall describe below.
  2. Hypothecation at the margin Some argue that voter resistance to new taxes can be reduced if the link between new taxes and benefits is made clearer. Hypothecation of new taxes to specific goods, e.g. education or health-care, is thought to offer one way of doing this (Mulgan and Murray, 1994).
  3. New consultative procedures on tax It has also been argued that governments need to connect with citizens on tax issues more directly through new consultative procedures akin to 'deliberative opinion polls' (Halpern, 1997).
  4. Community Fund ('topsy turvy nationalisation') This proposal has recently been made by Gerald Holtham (Holtham, 1995; see also James Meade, 1991). Under this proposal, the state gradually acquires a share of the nation's productive assets and places these assets in a special fund (private sector institutions may be contracted to manage the fund). The returns on the assets can then be used to finance provision of goods like education and health-care. Initial capital for the fund could come from a revitalised inheritance tax or even, more radically, a one-off capital levy.

 

Asset-based egalitarianism

The left's traditional distributive objectives should not only be pursued through income redistribution, or solidaristic wage policy, but by more concerted action to change the initial distribution of assets and productive endowments: wealth, skills, and jobs (Rogers and Streeck, 1994; Commission on Social Justice, 1994; Freeman and Rogers, 1997).

This general idea is reflected, firstly, in the emphasis which much recent policy thinking has placed on employment-centred social policy (a term I borrow from Haveman, 1997): the central aim of social policy must be to enable citizens to achieve a decent standard of living through employment, and, since employment is becoming increasingly knowledge-based, this must be based on encouraging the ongoing acquisition of skills (Rogers and Streeck, 1994; Commission on Social Justice, 1994; Brown, 1994; Layard, 1997). Consequent policy proposals focus on (a) enhancing the capabilities of disadvantaged workers through increased access to education and training and child care, and (b) increasing the work incentives of disadvantaged workers through some combination of a minimum wage and new or reformed 'in-work benefits' (Ellwood, 1988). Since it will take a long time for new educational initiatives to feed through, it is sometimes argued that other complementary measures are necessary in the meantime to increase the demand for unskilled workers and/or to prevent entry into long-term unemployment (Phelps, 1997; Haveman, 1997; Layard, 1997).

A more radical proposal calls for the establishment of a system of basic capital grants. Under this system each individual would receive, on maturity, a grant which he/she would be free to use for approved activities such as education and training or setting up a new business (Haveman, 1988; White, 1991; see also Le Grand, 1989, on the idea of 'poll grants'). The 'individual learning accounts' which featured in the final report of the Commission on Social Justice can be seen as a variant on this capital grant proposal. In the long-run, a Community Fund of the kind described above might offer one way of financing a generous system of capital grants.

 

Not one third way, but many

Drawing together various important and recurring themes of recent left and centre-left literature, I have tried above to describe the broad framework of third way thinking. Within this broad framework, however, there can also be (and currently are) important differences of opinion concerning the interpretation of the core (but rather general) values associated with third way thinking and how the state should seek to advance them. And these differences ultimately suggest very different, potentially opposing, political projects.

In particular, I would argue that there are at least two important lines of division amongst those who subscribe to the broad framework of third way thinking as described above. There is, firstly, an important and potentially fractious division between 'leftists' and 'centrists' over the commitment to real opportunity: a philosophical division over exactly what this is a commitment to, and, derivatively, a division over exactly what policies are needed to satisfy it.

Secondly, there is a no less important and potentially fractious division between 'liberals' and `communitarians' over the commitment to civic responsibility — more specifically, over the precise range of behaviours for which individuals are appropriately seen as responsible to the community and which the state may therefore legitimately seek to regulate.

 

Leftists v centrists: the ambiguity of real opportunity

The people whom I am here terming centrists understand the commitment to real opportunity in meritocratic terms. The people I am terming leftists, on the other hand, interpret the commitment to opportunity in more egalitarian terms. Perhaps influenced by contemporary egalitarian political philosophy (see especially Rawls, 1972; Dworkin, 1981; and Cohen, 1989), the leftists argue that meritocracy allows for unjust inequalities in real opportunity grounded in morally arbitrary ('brute luck') differences in natural ability. They believe that, in principle, policy ought to seek to mitigate for these undeserved brute luck inequalities (see especially Halpern and White, 1997).

From this philosophical difference, certain policy differences can of course follow. In particular, while accepting the need for a general reorientation towards asset-based egalitarianism, third way leftists will accord a larger continuing role to income redistribution in promoting genuine equality of real opportunity. Centrists will be more likely to downplay the importance of income redistribution. They will think it unjust to tax away the 'rent of ability' beyond a certain moderate point.

Some might argue that a repudiation of leftism, as I have here defined it, is in fact a defining feature of third way thinking (see Gray, 1997). But this is to be merely dogmatic. There is absolutely no reason why those who are committed to a form of equal opportunity that goes beyond meritocracy cannot try to rethink their 'strategy of equality' by reference to certain of the policy ideas described above. It is possible to be an egalitarian of a Rawlsian or near-Rawlsian variety at the philosophical level, and at the same time an open-minded moderniser at the level of policy (see Freeman and Rogers, 1997).

 

Liberals v communitarians: the ambiguity of civic responsibility

All those sympathetic to the broad framework of third way thinking acknowledge that individuals have important civic responsibilities and that the state may and often should act to enforce the obligations which derive from these responsibilities. Indeed, there is a plausible range of consensus on what these responsibilities include: the responsibility to work (in return for a share of the social product) and to make an effort to acquire relevant skills for work; the responsibility to be a good parent (if one chooses to be a parent); the responsibility to pay a fair share of taxes; the responsibility to respect the environment. Nevertheless, there can be (and currently are) important disagreements about the precise range of behaviours for which people can reasonably be held responsible to the community and which the state may therefore legitimately regulate. The people I am here calling communitarians interpret this range of behaviours quite broadly, while those I am calling liberals interpret it more narrowly.

To take the case of family policy, the typical communitarian, as I am here using the term, will argue that the state has a legitimate interest in encouraging married two-parent families and that public policy ought to reflect this interest, e.g., by favourable tax treatment, tougher divorce laws, etc. Through such policies, the state encourages or requires individuals to act on their responsibilities as spouses and parents with positive repercussions for the community as a whole. The typical liberal, on the other hand, will see such policies as unfairly restricting or infringing personal freedom. Or take the case of drugs policy. The typical communitarian will see drug use as paradigmatically irresponsible behaviour which ought to be prohibited and punished. The typical liberal, on the other hand, will make the basic Millian distinction (Mill, 1985 [1859]) between punishing someone for harmful behaviour which results from use of a given substance (which punishment is legitimate), and punishing someone for mere use of the substance regardless of how the person then behaves (which punishment is illegitimate). Relatedly, the liberal will in general be more hesitant about recourse to 'legal welfarism' (Le Grand, 1997).

In short, the liberal will want to identify a limited number of very specific civic obligations and will acknowledge the legitimate role of the state in enforcing these (witness, for example, John Stuart Mill's trenchant defence of the state's right to force parents to support and educate their children). But what the liberal will reject is the idea that the state may and should enforce 'good behaviour' in any very general sense. The liberal will see this as dangerously moralistic, i.e., as providing an alarming opportunity for elites or majorities to attack deviancy and non-conformity for its own sake. On the other side, the communitarian, following such thinkers as Galston (1991) and Etzioni (1993), will argue that the liberal has an impoverished view of the rich social capital which undergirds civilised life, and of what is necessary to protect such capital from erosion.

 

A plurality of third ways?

These two lines of division — leftist v centrist, liberal v communitarian — cut across the political space within which discussion and speculation about the so-called 'third way' is currently taking place. Thus, within the broad frame-work of third way thinking, significant differences of opinion on values and public policy are possible and these differences in turn define distinct, potentially opposing, political projects. On the one hand, for example, it is possible to speak of a 'leftist liberal' conception of the third way. This would combine a relatively egalitarian understanding of real opportunity with a relatively narrow conception of the types of behaviour which the state may seek to regulate in the name of civic responsibility. On the other hand, it is also possible to discern a possible 'centrist communitarian' third way which would reverse these directions of emphasis.

The former political project, I would argue, is genuinely social democratic (as well as liberal), whereas the latter project could conceivably end up having as much or more in common with a leftish one nation Toryism of the Macmillan variety or leftish variant of continental Christian Democracy (3). Nor do these two positions exhaust the possibilities. It is perfectly possible to conceive of a 'centrist liberal' conception of the third way (the current position of John Gray perhaps), or, indeed, a 'leftist communitarian' conception of the third way.

 

Conclusion

The concept of the 'third way' does not describe a single, well-defined project for economic and social governance. It is possible to identify certain basic values and policy ideas at the centre of the new revisionist thinking which is informing discussion of what a third way might look like. But these values and policy ideas together define a pretty broad framework within which there remains considerable room for disagreement.

Thus, appeals to the third way in political argument are likely to remain ambiguous and question-begging. Such ambiguity is perhaps an advantage insofar as it facilitates the construction of a broad political coalition that marginalises the free-market right. But we should not make the mistake of thinking that all those in the resultant third way coalition will be working for the same things.

In the meantime, for those, like myself, who are liberal-minded social democrats sympathetic to many aspects of the new revisionism, I draw two conclusions. Firstly, if we do accept the third way terminology, then it is essential that we clarify the particular kind of third way we support (leftist and liberal) and defend our corner against those who will try to decontest the idea of the third way in a less egalitarian and/or more socially conservative direction. Secondly, as I suggested in the introduction, we should also ask ourselves whether a concept as ambiguous and potentially conservative in its implications as the 'third way' is indeed the one we wish to pin our colours and our hopes on. Is there really no better way of expressing what we want?

 

Notes

  1. This point was made independently and very forcibly by David Marquand and Frank Vandenbroucke in a recent on-line debate on the third way organised by Nexus.
  2. The Labour Party's proposal to replace compulsory competitive tendering in local government with a requirement to secure best value services exemplifies this open-minded, pragmatic approach. Local governments ought not to presume that they always serve local citizens best by directly providing goods and services themselves, but nor should they be under pressure always to contract provision out to whomever is the lowest bidder.
  3. Interestingly, Harold Macmillan was of course the author of a book called The Middle Way.

 

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