Third Way: The Future of Liberalism
Dimitri Otis
In the 1990s, Francis Fukuyama wrote The End of History and the Last Man. In this book, Fukuyama argued that liberal democracy and free-market capitalism would spread throughout the world and that history will “end.” This period was met with the collapse of the Soviet Union and the decline of the communist dictatorships along with the democratization of many various authoritarian governments. Even China was showing signs of accepting liberalism and capitalism. Many traditional socialist and social democratic parties also adopted the “Third Way” which promoted a welfare state alongside a market economy.
Despite this “end of history” envisioned by Fukuyama, it now seems that this future is now a fantasy. Populist parties are on the rise and have overtaken the traditional liberal parties in democratic societies. In other nations, right-wing nationalists have started to gain footholds and have even succeeded in eroding democracy in some countries. China and Russia do not seem to be getting anymore democratic and have actively attempted to disrupt democracy in other nations while the dreams of the Arab Spring are up in smoke as new dictators and conflicts have risen in their place.
In the 1990s, conservative and various left parties primarily came to an ideological agreement called the Washington Consensus. This belief revolved around a set of free market principles that promoted free-trade, the privatization of industries, low government borrowing and economic plans that revolve around long-term economic growth. The IMF touted this as a way for developing economies to prosper and grow. Social liberal parties, like the US Democratic Party and the Canadian Liberal Party, and social democratic and even socialist parties, like the British Labour Party, French Socialist Party, and the Social Democratic Parties of Germany and Scandinavia, came to embrace this consensus despite push back from their more left-wing factions. Many of these parties have been out of power for decades and were eager to embrace more center policies to come back to power.
This was what Fukuyama envisioned in his “End of History.” He believed that eventually the whole world would be swept up by liberal democracy and capitalism. Yet history struck back. In 2003, the US invaded Iraq and attempted to install a democracy after ousting Saddahm Hussein. Fukuyama decried this as “Leninst” as he believed this was an attempt by members of the Bush Administration to force liberal democracy and capitalism on another nation by force instead of letting liberalism take over Iraq “naturally.” Fukuyama would argue that “democracy is not just a small segment of Western experiment, but part of a “progressive and evolutionary move toward human emancipation.” The US and UK invasion of Iraq disillusioned many to the idea of liberalism being the good and triumphant force in the world. The Great Recession was the final straw to many as it reinvigorated criticism of capitalism. Many saw the economic crisis as a result of capitalism going amok.
The promises of a world dominated by liberals did not hold up either. Economic inequality rose and many felt left behind. Many felt that free trade that was facilitated by agreements, like NAFTA and the European Free Trade Association. They felt that these agreements led to the loss of their jobs and the decline of their industry at the hands of cheaper labor from either immigrants or low-skilled workers in other countries. This resulted in backlashes against liberal institutions, like the European Union, which led to the rise of populist parties and factions. The prevailing belief that liberalism would eventually rise up and topple the great dictatorship in China also did not occur. China has found a way to maintain the power of the Chinese Communist Party and integrate market capitalist beliefs. The integration of market capitalism did not lead to the collapse of the CCP as many hoped. The last hope for this was trampled underneath tank treads during the Tiananmen Uprising. Even the successor state to the Soviet Union, the Russian Federation, has evolved back into an authoritarian dictatorship. The rising political power of both these states have even allowed them to threaten the sovereignty and democracy of other nations. Even now, one of the great bastions of liberal democracy in East Asia, Hong Kong, is being eroded under immense Chinese pressure.
It soon became possible to see the decline of the center-consensus. Center-right parties, like the German Christian Democrats and the British Conservative Party, saw increased competition from parties like the Alternative For Germany, or AFD, and the United Kingdom Independence Party, or UKIP. Center-left parties faced resurgent populist Marxist insurrections.
Democratic socialists like Jeremy Corbyn and Bernie Sanders launched insurgent political campaigns in an attempt to do a hostile takeover of their parties. Many of these populist movements rallied against various enemies like immigrants or the “global elite.” Their campaigns and victories resulted in erosion of various political institutions. The most egregious and terrifying examples were in Turkey and Hungary where President Recep Tayyip Erodgan and Prime Minister Viktor Orban effectively transitioned their nations away from democracy and towards something resembling emerging dictatorships.
The fate of liberalism is essential for the free world. The very concept of rights are a part of the liberal tradition. It was John Locke, the scholar who many credit as the father of liberalism, that argued that “life, liberty, and property” were rights that can and should be enjoyed by all men. It was liberal ideals that prompted people to topple the communist dictatorships in the 1990s and the hard right military governments of South Korea and Taiwan in the late 1980s. The new populist movements threaten the liberal and democratic order. Populism would put strains on democratic institutions and parties while also threatening the independence of key institutions that must not be swayed by the democratic masses, like central banks. One way this can be seen is the way the European Union has been weakened by the various populist movements across Europe. The biggest proof is the fact that populist forces on both the left and the right were the driving force for the British electorate’s choice to leave the EU. A decision that will leave both Great Britain economically weaker and politically diminished on the world stage.
Liberal parties are faced with a conundrum. They can stick to their guns and lose or they can eject them and embrace a populist message and win. Despite its tempting promises, the last option may not have a successful electoral outcome. Under Corbyn, Labour has had one of its worst electoral losses in its history and many have attributed this to its overt embrace of socialism and the populist left wing of the party. There is also the fact that parties need to remember that not only do they have to win elections, they also have to effectively govern while in power. By embracing a populist message, parties run the risk of eroding democratic and government institutions. Running on a message of prosperity for the masses will eventually fail if you also erode the independence and abilities of the central bank in the process. There is even the fact that populism can be an electoral miscalculation as well. Sanders’s campaign that revolved around populism lost to Vice President Joe Biden’s more established and moderate run for the leadership of the Democratic Party while Emmanuelle Macron’s liberal and centrist party, En Marche, managed to beat multiple opponents to secure power in both the Elysee Palace and the French Parliament.
What can liberal parties do though? The first thing they should do is re-examine where their failures have resulted from. Some aspects of the neoliberal orthodoxy must be ejected. While some services and industries are better under private ownership and operation, others are not. While economic booms occur, there are large segments of the population that are ignored, Even the great economic growth that occurred in the 1990s left many in poverty. The various welfare reforms passed by the Third Way adhering Clinton Administration did not uplift people from poverty, but may have actually kept people in it. Bill Galston, the Deputy Assistant to President Bill Clinton for Domestic Policy, argued that he and other adherents to the Third Way were too inflexible and failed to adapt to various changes. “Newer circumstances require new policies” Gaston says “to stem rising economic inequality and geographical divergence, we will need more government intervention and regulation than the creators of the Third Way contemplated, along with much greater investment in the fundamentals of equal opportunity. To sustain a rules-based international order, the rules must pay less attention to economic aggregates – and more to sectors, regions, and economic classes – than the proponents of the WTO imagined. To be sustainable, immigration regimes will have to pay more attention to the economic and cultural effects of entrenched practices.” Liberal parties need to be willing to listen to the concerns of those left behind and adapt their policies to match them without sacrificing their core principles. The recent pandemic shows the dangers of populist leaders and their attempts to subvert democratic norms and their appeal to anger and fear. Liberalism is needed as a counterbalance that could put us back on the road to the End of History.
