Third-way / market liberalism

Peak influence 1992–2008

Core claim

The ownership argument is settled in the market's favour, so the useful remaining questions are about opportunity, human capital and competent management of a globalised economy.

What it wants the state to do

Wants an active state that works through markets — tax credits rather than transfers, contracted-out public services, independent central banks, targets and audit. Wants trade and capital liberalisation, and treats deficits as a discipline.

Historical success case

The reduction in child and pensioner poverty in Britain between 1997 and 2007, achieved largely through tax credits and minimum wage legislation rather than through ownership or nationalisation.

Historical failure mode

The 2008 financial crisis and the Iraq war, which between them discredited its two signature confidences — that deregulated finance was self-correcting, and that liberal ends justified armed means.

Nearby traditions

Social democracy, from which most of its parties came and with which it is still fighting; classical liberalism, whose economics it substantially readopted.

Common mix-up

Its neoliberal label obscures how much state it actually wanted. Public spending rose under most third-way governments; the change was in the instruments — contracting, targets and tax credits — not in the size of the state.

Coordinates