by Daniel Buhr
Introduction
Nowadays the German model of a socially consensual, democratic and socially regulated capitalism finds itself in a position where it is exposed to massive tendencies of erosion. The causes are manifold and diverse: unmastered challenges of a new corporate labour- and rationalisation policy, the breaking open of an all too rigid, outmoded standard wage settlement, the internationalisation of production and capital within a global market, the deregulation, commercelization and privatization of the social and infrastructural sector and last but not least the financial and social challenges of the national unification process.
Against this background the German focus is nowadays directed towards the European foreign countries, for example towards the Netherlands. Since the late 80s the Netherlands pushed through reform ideas based on the Rhenish capitalism concept of collective negotiations, which finally resulted in a even distribution of labor. But also in France and the UK reforms were apparently successful. Promptly a name was assigned to this phenomena: The Third Way.
The concept of the Third Way
Central question of this so called Third Way is how the state will make a social as well as ecological democracy in times of globalization possible. The Third Way means a turning away from laissez-faire capitalism such as ‘Reagonomics’ and ‘Thatcherism’. It means a turning away from an unleashed free market economy that denies its responsibility for democracy and society and only acts upon the principle of profit maximization. In this context Ulrich Beck writes in his essay ‘The Third Way is a goal’:"Simultaneously the social and political explosive effects of global market risks become tangible. Governments tumble and civil wars threaten to break out. This dynamic culminates in a complete reversal of neoliberal politics: not an economization of politics but a politisation of the economy."
Anthony Giddens, one of the pioneers of this new social democratic movement, postulates an economic security council within the United Nations. According to his views, many problems such as the regularization of currency markets or how to deal with ecological risks cannot be coped with without multi-lateral collective action of many groups and countries. As not even the most liberalized national economy functions without macro economical coordination this is also true for the global economy. In this context Giddens expresses his basic conditions for a future change: the social state has to be reformed, economy needs to be called into responsibility, and the civil society of independent, responsible individuals has to come into existence.
While promoters of neoliberal deregularisation always insist on the premise that only growing uncertainties and inequalities would release the energy necessary for a change, the policy of the Third Way insists that only the renewal of social security and justice and a corresponding reform of the social state can create the trust and self-confidence neccessary for the urgent sociopolitical change that is needed for the stabilization brought about by sustained political peace and justice.
The Third Way in the UK
In this sense Tony Blair demanded a change of values by the British entrepreneurs; if the profits become privatized, social and ecological subsequent costs should become privatized as well. In concrete this means, that the (large) corporations (actively) have to participate in solutions of societal problems such as unemployment, ecological crisis or the decline of local life - either voluntarily or on the basis of a social contract.
But after years of ‘Thatcherism’ especially the British entrepreneurs aren’t used to terms like ‘supervision by the state’ or ‘cooperation’. Marketliberalism and individualism are still popular among the public - even if the consequences of laissez-faire-capitalism are so obvious: social exclusion has risen and the polarization of the society has progressed. Thus in recent years the number of British companies investing into education and further vocational training of their employees became less and less. Instead, a mentality of hiring-and-firing has been predominant. Therefore Hilary Steedman of the Centre for Economic Performance of the London School of Economics points out:"We need national assistance and a new culture between unions and management so that companies will train somebody again..." In Germany this trend was also noticed and therefore the ‘Alliance for Labour’ (Bündnis für Arbeit) was provided with the additional suffix ‘and training’ (Bündnis für Arbeit und Ausbildung). Logically consistent, New Labour - true to the motto of a ‘social investment state’ - increased expenditure on education, health and infrastructure significantly; something similar to what the new German government intends to push through.
The employees’ stand was also strenghtened, either by implementation of new employees rights or by initiation of a minimum wage. In this context the dominant keyword is the term ‘social capital’ which was introduced by the French sociologist Pierre Bourdieu. It means that social cohesion and solidarity is also important and beneficial for the economy. Accordingly, companies would be able to economize more efficiently, if people would stick to rules and regulations, would build up mutual trust and would be able to rely on each other.
Instead of marketliberal doctrines, values like justice, equal opportunities and fairness have to dominate the arena; social peace is a a positive competivity- and locational factor. The discussion over how to achieve these goals appears somewhat fuzzy to me. Demands for a class- and boundless public education system were mentioned as one premise as well as the reinforcement of infrastructure or public safety. Nevertheless the most urgent task is to reconstruct the British welfare state; the details of which are still subject of discussion even among the Labor government.
For countries like France and Germany, however, with their extensive welfare programs and unemployment as the most tragic form of social exclusion, Blair's plans such as the 'Welfare to work' program meets a lot of interest. Here, on the one hand the state helps with the job search and pays subsidies to people receiving low wages, while on the other hand it cuts welfare payments for people who refuse to work.
The Third Way - old hat under a new name?
Against this background the British discussion on the Third Way doesn’t appear as something spectacular new. The pioneers of the social market economy in Germany (as for instance Walter Eucken and Ludwig Erhard) were also afraid of social polarization and instability, and therefore let the state provide public goods (such as infrastructure, education, law security and enforcement and the transferability of goods, money and human capital) and installed a social rescue net. Over the years the German ‘corporatism’ developed with its strong financial interconnection between large corporations and banks, its organized striving for societal consenst, collective negotiations (of unions and associations) and last but not least its round tables with the government participation - an idea that was also pushed by the new German government under Chancellor Schröder. Even more astonishing is the fact that nowadays especially the British academic and scientific community is focusing on German corporatism - and calling this The Third Way - for the Federal Republic of Germany has faced severe system problems for quite some time now. The main causes are rigid rules and regulations that proved to hinder change, a crumbleing corporatism on both sides, and an asset market that is separated from the labor market which makes corporations strive more and more for shareholder value. In this situation we Germans look up to those (labor) wonderlands like the Netherlands and Great Britain.
‘The Alliance for Labor’ as one Parameter of the Third Way in Germany
Although a deeply grounded tradition of social partnership does exist in Germany, there has been a lack of positive examples in regard to trilateral agreements that led to a solution of the problem. The ‘Alliance for Labor’ could become the central institutional arrangement for negotiating a new social contract by the most important social and political actors. Josef Esser and Wolfgang Schroeder perceive different goals for a ‘Alliance for Labor’, such as:
The state, by pursueing the ‘Alliance for Labor’, not only aims to improve the societal capacity to solve problems, but, at the same time, tries to relieve the financial pressures and to reduce its legitimacy problem. During the ‘concerted action’ of the 70s the main issue was to include the unions, in order to positively influence inflation through their good conduct, the neuralgic point of the ‘Alliance for Labor’ is located on the employers’ side. The question is, whether or not it can be acccomplished to activate the employers in a way that more people have a chance to participate in labor market. The ‘Alliance for Labor’ could offer the chance to rethink the (neo)corporatism, to open it for the whole society and thereby inducing fundamental policy changes by initially framing the required circumstances. Short-term goals of the ‘Alliance for Labor’ could be the lowering of youth unemployment or the smoother transition to retirement, while long-term goals could consist of improved competitiveness and the evolution of the social state. These developments could provide an impulse for a socially regulated Europe. This is of great importance in order to offset the danger of short-term and competitiveness oriented wage dumping, and, at the same time, this allows for a Europe wide employment stimulating coordination of monetary-, fiscal- and tax-policy.
Conclusion
The state finds itself in a new position: it turns into a negotiator and arbitrator. The ‘Alliance for Labor’ could serve as an example. It is incapable of enforcing changes by law, but it is capable of generating consensual agreements. In this context, Ulrich Beck observes:"Without social obligation of the economy and without self responsibility and self determination of the civil society, social security cannot be achieved in the future." The ‘Alliance for Labor’, as an integral component of the Third Way, could speed up the process of establishing an industrial service oriented society, in order to remodel the changing world economical, demographical and social conditions. Most importantly, the gap of justice has to be closed, the associations’, unions’ and the states’ ability to act needs to be restored, and a social state needs to be developped in a European context. An other aspect that needs to be stressed is the simultaneous improval of the integration- and innovation potential by redistributing labor, by increasing overall employment, and by reforming the social insurance system. Again, sole efforts by an individual country seem unrealistic, more likely is a European solution. The current European power constellation gives reason for hope.