This is the last in a series of three posts about the ‘third way’ strand of progressive thinking in New Zealand. Part one looked at Helen Clark’s perspective, while part two looked at Steve Maharey’s identification with the ‘third way’. An earlier post introduced the ‘third way’, looking at its leading UK theorist, Anthony Giddens.
Although Steve Maharey was the Cabinet minister most identified with the ‘third way’, the most indepth account of what a New Zealand ‘third way’ approach might mean can be found in a book that was published immediately before the 1999 election that brought Helen Clark and the Fifth Labour Government to power.
Entitled The New Politics: a Third Way for New Zealand, it was written by a group of eight academics and trade unionists and produced with the assistance of a progressive thinktank, the Gamma Foundation, that was active at the time (the Public Service Association and FinSec also provided support).
Although the book doesn’t have any identified editors, both the preface and concluding chapters were co-written by Peter Harris and Chris Eichbaum. Harris had been the economist for Council of Trade Unions (and prior to that for the PSA), while Eichbaum was a Massey University academic (who also had credentials with the union movement and as a former Labour staffer). Both would go on to become highly-placed ministerial advisors during the first term of the Fifth Labour Government, Harris for the second-ranked Labour minister Michael Cullen and Eichbaum for the third-ranked Labour minister Steve Maharey. Eichbaum then did a stint in the Prime Minister’s office before returning to academia. Harris later chaired the Ministerial Savings Product Working Group, which formed the basis for the establishment of the KiwiSaver scheme.
Therefore, The New Politics can be seen as reflecting a perspective that was very compatible with that of the Fifth Labour Government itself. In addition to Harris and Eichbaum, its authors included Peter Conway, who replaced Harris as CTU economist and is now their general secretary; Paul Dalziel, Canterbury university (later Lincoln) economist and brother of Cabinet minister Lianne Dalziel (he is currently a member of the Alternative Welfare Working Group); and academics Srikanta Chatterjee (Massey), Bryan Philpott (Victoria, now deceased) and Richard Shaw (Massey).
As it happens, I have worked with both Harris and Eichbaum and know them fairly well now, but I hadn’t met them at all when I read their book in 1999. (And I wouldn’t automatically ascribe exactly the same views to them today.) Going back and re-reading The New Politics, a few themes stood out for me with the benefit of hindsight.
In his chapter, Peter Harris writes:
There is a core idea that marks out the Third Way: people need jobs. It is a core part of their social persona, it contributes to more stable family life and so on. Dependency can never be a satisfactory long-term status and creates intergenerational cycles of dependency and despondence.
. . . A new consensus has to be built around some form of social concordat. In reducing previous protections via deregulation, privatisation and a free flow of finance and trade, the government assumes an obligation to make it easier for the displaced to get other jobs . . . The other side of the deal is that those who are dislocated must be active participants in job readiness and job search programmes.
Harris also sets out ’subsidiarity’ as a defining characteristic of the ‘third way’:
The principle of subsidiarity means that a decision should not be taken at a higher level if it can be more appropriately be taken at a lower level. For example, the state should not make a decison on what a school community can more appropriately make.
. . . There are two dimensions to this. One is that the state should not intrude in some areas. it should not absorb and stifle when there is no need to do so. The other is that the state should not be expected to do everything. There are structural levels of responsibility – individual, family, community, etc. that need to be both respected and expected. Subsidiarity involves the state ‘helping out’ by contributing indirectly to the ability of the social networks to contribute to that notion of public good.
Similarly, Eichbaum in his chapter writes:
The renewal of civil society, through the refurbishments of democratic institutions and the kind of institutional ‘in-building’ suggested by the stakeholder model [advanced by Will Hutton], is central to the new economics as well as to the new politics.
. . . The neo-liberal project is one that denies the legitimacy of interests within the policymaking apparatus on the grounds that credible policy must be manifestly independent of any ‘vested’ interests . . . In seeking a renewal of civil society, the Third Way holds out the prospect of a political economy that provides the kinds of structures capable of sustaining fexibility and commitment.
And on macroeconomic policy he takes issues with Giddens, arguing that it must go beyond simply “macro stability” to address “the institutional environment with which policy is developed and implemented” and recognise the importance of the “institutions of macroeconomic management”.
If we add to these prescriptions Maharey’s focus on the ‘knowledge society’, then it is possible to see ‘third way’ ideas as permeating much of the Fifth Labour Government’s activity, even though it was not framed as such at the time.
The focus on employment as the “best social policy”, which was reinforced and validated by historically rates of employment growth, became a lead feature of social development policy, and informed the design of Working for Families, which was at least partly founded on the conception of making work pay.
It also fed into Jim Anderton’s idea of the economic development portfolio as a ‘jobs machine’. But this area also reflected an attempt to answer the question about how to operate the “institutions of macroeconomic management”.
And increasingly it also reflected an effort to conceptualise and achieve a New Zealand ‘knowledge society’. This also inflenced the new institutional framework for tertiary and science policy.
The way the government went about things also reflected the emphasis on stakeholders and the rejection of the neo-liberal delegitimation of ‘vested interested’. Consultation and partnership became watchwords for the public service, and periodic efforts were made to improve the footing of community sector. (It’s worth noting that Harris and Eichbaum’s final chapter includes an admirably clear-eyed and prescient account of the likely challenges that increased reliance on the community and voluntary sector would bring.)
On the other hand, the principle of subsidiarity made only an intermittent appearance. More often, it seems to have been eclipsed by the centralising tendencies of the state in general and Labour instincts in particular.
What is also intriguing is how many specific proposals made in The New Politics seem to only be making it onto the policy agenda now, ten years later, in the post-defeat post-’global financial crisis’ Labour Party:
- Chatterjee, Dalziel and Eichbaum all called for reform of monetary policy;
- Dalziel argued for workers at a particular worksite to be allowed to vote by a suitable majority for compulsory union membership at their site (a ‘closed shop’);
- Philpott argued for tighter controls on the overseas purchase of existing assets including land;
- Dalziel advocated for a greater involvement of the government in capital production; and
- Harris, Eichbaum, Chatterjee and Dalziel all talked about the urgent need to “restore some order to finance markets”.
Perhaps, in fact, the real ‘third way’ is not an historical relic. The name may have been discarded, but it may be that it is only now really beginning to take root.
Another way of looking at it is to identify three different components to ‘third way’ thinking.
Firstly, there is the partial accommodation to the Right’s critique of the capacity and effectiveness of the state. This is where the UK ‘third way’ has drawn most criticism from other progressives. As we have seen, however, ‘third way’ thinking in New Zealand included some rather more extensive revisiting of neo-liberal ‘nostrums’, though much of this wasn’t taken up in government at the time. In this sense, post-Crisis progressive rethinking may involve more continuity with its ‘third way’ tradition in New Zealand than was the case elsewhere.
A second component relates a particular style of government (subsidiarity, partnership, reverence for ‘civil society’). Some aspects of this got more traction than others, and some of it has gone out of fashion, but the appropriation of this approach by the Right in the UK (David Cameron’s ‘Big Society’) suggests that it still has quite a bit of mileage left.
Thirdly, the idea of an ‘investment state’ informed thinking about a ‘knowledge society’, the primacy of employment and the ‘institutions of macroeconomic management’. Some of the language and the framing of ’strategies’ has faded a little, and economic conditions no longer as propitious for a focus on employment growth as a driver. Nevertheless, this was a central and generally still well-regarded aspect of the Fifth Labour Government’s tenure.
In my next series of posts, however, I want to explore some emerging trends in progressive thinking that may amount to a significant move away from the ‘investment state’ approach.
Further Reading:
Srikanta Chatterjee, Peter Conway, Paul Dalziel, Chris Eichbaum, Peter Harris, Bryan Philpott and Richard Shaw, The New Politics: a Third Way for New Zealand (1999) — available online from Wheelers Books.
Brian Easton, The Model Economist: Bryan Philpott (1921-2000) (2000)
Tags: Chris Eichbaum, Fifth Labour Government, Paul Dalziel, Peter Harris, Third Way
A great series so far David.
I want to comment more (and go and answer Darel’s call for my input in the Defence comment thread) but as you know I’m in the middle of changing jobs – and on this topic in particular I’m interested in where you are headed, so might hold fire.
I’m interested in the commitment (or lack of) to subsidiarity and would be most interested in your thoughts about it given that I the push for subsidiarity coming from the right (in terms of Hayeck) and the late eighties and early nineties, such that by the time we get to 2000, it’s fallen (sadly) from fashion. Or so the story goes…
Except that it didn’t really fall from favour, it just manifested differently and we see subsidiarity emerge bright and shining in pieces of legislation like the Local Government Act 2002 and the Land Transport Managment Act 2003)
I don’t know if subsidiarity was brought into politics by the Third Way; as James notes, many of the New Public Management reforms of the 80s and 90s were explicitly founded on the principle. Similarly, approaches such as regular consultation with ‘peak bodies’ on policy matters were not new – this is how politics worked pre-Fourth Labour Government….probably to our detriment.
Where I think you’ve hit on something is the focus on work, and in particular on the ‘dignity’ of work. All governments say they value work and employment. What I think distinguished the Fifth Labour Government from its predecessors was that it did paid closer attention to the conditions of work (esp. at the more vulnerable ends of the labour market), I think on the grounds that having good workplaces was important for individual and social welfare. It believed that the State (as opposed to unions) could, and should, directly intervene to improve conditions at the bottom – hence changes to the ERA about passing-on conditions, moves to try and build career paths for aged care workers, cleaners, etc. Previous Govts appeared to think that having a job was all that was needed for dignity, regardless of the type of job, conditions etc
Whether or not this was a good idea, or was actually in the long-term interests of vulnerable workers, is another question. But I think it was a distinctly Fifth Labour Govt – and Third Way? – policy.
Good and fair points both of you on subsidiarity. If Wikipedia is to be believed, the terms goes back to the social teaching of Pope Leo XIII in 1891 . . .
Mind you, Peter Harris doesn’t claim to have invented the concept: he just describes as one of two principles (the other being solidarity) that the state would act in accordance with in his philosophical justification of the ‘third way’ approach (p. 26). And in a left/progressive context, with a fair bit of centralist impulse, it did feel at the time like a bit of a novel (and slightly challenging) approach. Whereas in a more laissez-faire context like NPM or Hayel, I wouldn’t have thought it would have stood out so much.
Interestingly, I’m not aware of subsidiarity being explicitly discussed as part of ‘third way’ thinking internationally. Giddens seems to have only mentioned it in the context of EU politics, where it has quite a specific meaning.
Also, at the risk of hair-splitting, I think there’s a distinction (at least in theory) between the ’stakeholder’ approach of the ‘third way’ and old-fashioned pre-1984 pluralism.
Really interesting points about work, NMG – I’d mainly being think in the ‘employment’ portfolio context but you’re right that it extended to ‘labour’ portfolio issues as well. (If that’s not too abstruse a way of expressing it.)
P.S. Steve Maharey on subsidiarity (July 2000):
http://www.beehive.govt.nz/node/8008
[...] « Did the ‘third way’ give New Zealand ‘a new politics’? [...]
One final thought. While I agree that the “knowledge economy/society” was a core motif of the previous Government, didn’t the Shipley administration also start using it? Max Bradford and ‘Five Steps’ etc etc?
Yes I well remember the rather-too-late ‘Bright Future’ attempt-at-reinvention, and in particular Maurice Williamson’s apparent Damascus conversion to strategic intervention (apparently he converted back). In fact, one of my first opportunities to study the ‘knowledge society’ material was as part of a contract for the Ministry of Education on these sort of ideas. If National won, it was going to feed into Max Bradford’s Higher Education Taskforce; if Labour did, it would (did) get sent to Steve Maharey’s TEAC.
So, yes, those ideas and concepts were ‘in the air’ in those days and not exclusively taken up by progressives. Although I expect it was partly their association with the then-very-successful Blair ‘third way’ in Britain that recommended them to Shipley, Bradford et al.
Um, are closed shops really back on the policy agenda in the ‘post-GFC’ Labour Party?
There isn’t always a direct correspondence between my 1999 examples and what’s under consideration now. But it does seem like Labour is contemplating further change to try to assist those workers who the ERA hasn’t really reached: http://podcast.radionz.co.nz/mnr/mnr-20101018-0815-Major_re-write_of_industrial_laws_or_return_to_national_awards_-048.mp3
Sorry I have come a little late to this particular discussion, being preoccupied with writing elsewhere which in fact overlaps with a lot of what you all have been discussing.
On the other hand, I was also writing about the Third way a while back, in the early 2000s, and had a critical piece called The Third Way in the Third World published in Review of International Political Economy in 2005/5. There, using the NZ example and even quoting Maharey as my point of departure for comparing the World Banks’ Poverty Reduction approach and Thirdwayism, I characterised the Third Way as a brand of ‘Inclusive’ liberalism, and was especially scathing about the naïve version of decentralization it proposed.
The paper, as these things go, was fairly successful in attracting international citations: but I always wondered what Heather et al would have made of it. At the time, I was certainly not flavor of the month in those circles!! I can make the paper available in PDF if that would help.
Now, hindsight (another 7 years thinking about decentralization, neoliberalism etc) and necessary attempts at ‘new politics’ foresight mean we need to have another think about the whole thing, and see what is worth learning from this project. There will be a three part piece coming up soon in which I will spend Part 2 revisiting the Third Way: hopefully this and David’s pieces can dialogue a bit more, and figure what’s crucial in all this.
The third way as an intellectual political project was the an early (perhaps the first) crystallization of centre-left reaction into an apparently coherent alternative pathway. By reaction I mean a Polanyian or ‘enlightened’ reaction; it drew on and attempted to frame up popular/ populist reaction, and as a political project in its own right, used widely appealing (if sometimes analytically undercooked) terms. As such we should respect what it tried to do, revisit and reconsider its basic analysis, and look closely at what in practice it was able to achieve.
In general now with experience and hindsight I think we know a little more about some core areas of Third Way concern, and we might be able to see a little more clearly these will need to inform a new politics. As I will outline in the longer piece, I think the experience of actually trying to govern in a ‘third way way’ has shown us some things about the the practical limits of both bottom up communitarian and ‘social capital-based’ institutional reformism in dealing with social issues.
I think/ will argue that we have more insights now into how tough it is to turn neoliberal reforms around. We can see even more starkly the outcomes of earlier neoliberal reform in terms of economic geography (hollowing out of territorial/ class ownership/ stakeholding, and increasing returns to scale/ concentration of ownership in regional centres like Sydney/ Melbourne) and the kinds of inequality that emerge (income, asset, neighbourhood, health), and the deep and dark effects of these. In the labour market, we know a bit more about how similar economic geography outcomes are generated (low wages here, higher there) where institutional defences of labour are weak, and about some of the limits of narrow, state-fiscally based responses to the outcomes (subsidizing low wages, rents, training, etc). Thus we have I think seen some of the limits of the kinds of mild activationist workfare and supplyside investment in the labour market through skills, at least in terms of generating better paid, more productive jobs, getting people off benefits. I think too we can see how much thirdwayism was the captive of a wider international neoliberal regulatory regime whose basic parameters it dared not depart from: but that we might now, after the crisis, be a little bolder around questioning. But we still don’t know what new regulatory framings are possible and plausible in the current context: politically, fiscally possible; plausible and defensible in the face of the still potent ability of ratings agencies to discipline departures from basic neoliberal economic orthodoxy. And we don’t know if stronger, more regulatory (as opposed to fiscally) based attempts to turn things around will actually work (to fix hollowings out) or not.
All of which means we have a lot of work and discussion to do. Thanks to David again for presciently starting this debate rolling: he is as usual at least three steps ahead! But I urge all of us to catch up and be a part of this discussion: lots to learn and reframe here.
Thanks, David — thoughtful, authoritative and gracious as always!
(I’ve seen a draft of David’s upcoming series, and I think Policy Progress readers are in for a treat!)