Guy Lodge: You've described the Third Way variously as 'Beyond left and right', 'the modernising left' and the 'radical centre'. What is it?

Anthony Giddens: The Third Way is essentially an attempt to develop a left of centre political philosophy that responds to the big changes transforming the world. We know what those changes are now - globalisation, the rise of the new knowledge economy and the changes going on in people's personal lives. We also know that the classical forms of centre-left policy and their institutions do not operate effectively in this emerging world. Third Way politics stands in a line of continuity with the long-term development of social democratic thinking, and also with several periods of social democratic revisionism. Today we're trying to construct a decent society around a well-functioning market economy where the market economy itself is being changed by these forces.

GL: To what extent is 'radicalism at the centre' being undermined by New Labour's electoral constraints? Surely it depends on wide but thin coalition support which results in the politics of compromise, regardless of any radical intentions.

AG: All left of centre parties today have to achieve a wide range of support, given the structural change associated with the rise of the knowledge economy. With the radical shrinkage of the working class only about 16 per cent of the population work in blue collar manufacturing in this country. You have to respond to changes like that and create a new coalition of support. But the reason why I sometimes use the term you referred to as 'radical centre' is because I don't think that this necessarily stops you from engaging in radical policies. Contrary to what a lot of people think, the current Labour Government, if it keeps on track, will be more redistributional than any post-war Labour government. According to calculations that have been done at the LSE, the Working Families Tax Credit and other innovations should lift about two million people out of poverty a year from now and a further three million five years further on, which would be a substantial transformation of the economy and the society.

GL: The Third Way's critics suggest that it can only work during times of prosperity. How would it respond to an economic downturn?

AG: That view is quite wrong. If you apply some of the core ideas associated with Third Way thinking, for example investing in the skills of those outside the labour market as well as inside, you give people the chance to develop their potentialities all the way through life. In a recession you're going to need investment in people even more than in times of prosperity so they can adapt to the wider spectrum of changes which technology brings. Third Way thinking applies even more forcefully in these situations than it does now.

GL: But New Labour seems to be uncertain about how to react to political crises in accordance with Third Way principles. Recent events suggest that the government reverts back to policy solutions which are heavily associated with the traditional left, for example in its handling of the manufacturing crisis and cash injections into the ailing NHS.

AG: Every government has an obligation to try to ease people through situations of industrial transition or crisis and in the short term that could sometimes involve cash injections into a given firm so that it could recover a competitor position. More generally, it involves ensuring that people in a given region can cope with the job changes that they might have to undertake if a process of technological change makes a certain industry uncompetitive or wipes it out. However, I think these are relatively short-term responses to crisis situations

GL: The car manufacturing crisis seems to have uncovered a major weakness of the Third Way: there are clear winners and losers in the transition to the new economy. Labour's heartlands feel alienated by the whole process of globalisation and do not feel like members of a new political culture which increasingly seems the preserve of 'Mondeo man' and middle England. Do these groups have anything to gain from Third Way politics, or are they the innocent victims of this period of change?

AG: Many of the changes associated with the knowledge economy have a dislocating influence on people's lives and they produce or are associated with inequalities. The key is how you manage and respond to those inequalities. Countries which were previously prosperous but which haven't reformed their welfare systems or haven't dealt with the pensions issue and so forth, like Germany, are now in a situation of high structural unemployment. That does no good to the so-called heartland. Only a transformed political programme really has a chance of appealing across the different sectors of the economy and the society. You're not going to be able to survive, or be able to get into the mainstream of society unless you're able to produce the kinds of skills and the kinds of social competencies which are necessary, and government has to play a role in helping people to achieve those.

GL: Is the Third Way capable of reducing society's inequalities or is it guilty of remaining silent when it comes to the unequal distribution of wealth and the emerging economic gulf between the north and south?

AG: The reduction of inequality has to be a fundamental theme of centre-left politics. Whether you use the term 'Third Way' or not, this still has to depend upon redistribution through the fiscal and welfare systems. However, what should concern left of centre politicians isn't just the formal rates of taxation but the actual tax take you get. The tax take is not just determined by the rates at which you tax people, it's determined by how much people pay and by the connection between fiscal systems and economic prosperity. The big change from the old left to the new left is that there's much more sensitivity now to the connections between social and economic policy. Sometimes it's better to bring taxes down in order to stimulate economic development and allow business enterprise to flourish - you might get a higher tax take from that than having an insistence on a rigidly demarcated progressive tax system. If you can do that and get a lot of people into work, you can generate enough money both to spend on public institutions and to spend where it's needed in terms of redistribution through income and resource transfers. That's essentially the philosophy of New Labour. In the UK we now have an employment ratio of over 75 per cent. When you've got that you can free up a lot of money, assuming you get all the other macro-economic conditions right.

GL: What's the future of the Third Way? What should Labour put in its next manifesto to carry it forward in a second term?

AG: I should stress that the Third Way is just a label for how you continue the revival of social democratic politics. The European democrats found themselves back in power without a coherent philosophy and the Third Way is simply a label for what that philosophy might involve - and it's only some way along in its evolution.

The Labour Party needs to develop a new emotion, as well as rational appeal to the electorate. It should do so around the twin themes of reviving public institutions and producing a more egalitarian society, emphasising that to do it you don't need simply to bump up everybody's taxes. You construct a framework which allows you to build a social contract around the theme of opportunity. Such a powerful position would assist not only the Labour Party but other centre-left parties in Europe and the global community to remain in power for an extended period, allowing them to make some real changes.

GL: You're a keen supporter of the new economy and the internet. Do these new technologies not bring with them significant social costs and problems?

AG: Yes, they will do. The advent of the knowledge economy has resulted in the marginalisation of a substantial proportion of unskilled workers who no longer have an active economic role. It is possible that new divides between the 'information haves' and the 'information have-nots' will develop. Access to higher education is a new and growing source of economic division: in most countries if you get a degree, your chance of getting a decent income are several times higher than if you don't. You need new policies to try to cope with these new divisions.

But in truth it's very much an open technological future which no-one can predict with certainty. You can see from the turmoil on the stock market that no-one really knows what even the medium term impact of internet technologies will be. So it's not surprising that in politics you have a fair degree of trial and error still about how to respond.

GL: You've always taken environmental degradation seriously in your work. Do you think it is insufficiently appreciated in mainstream politics?

AG: It depends where. In Germany there's a more solid history of integrating ecological concerns with left of centre politics than in this country and consequently Germany does a lot better on quite a few indices of pollution than the UK does, which illustrates that an orientation towards ecological issues does make a difference. I don't think that New Labour has as yet managed effectively to integrate an ecological outlook and I think it's got to follow some of the prescriptions that Michael Jacobs indicated in his Fabian pamphlet Environmental Modernisation, since he provided one of the best discussions of this subject.

GL: The Third Way is about taking ideas from new non-traditional sources and encouraging a bottom-up structure for policy-making, yet you, an LSE professor, are its chief exponent, along with the No. 10 Policy Unit and the Prime Minister. Is this not a philosophy created by elites?

AG: You need good intellectual input into political thinking, and you need some appreciation of what's happening in a society and what the potentialities are. Marx wasn't a person of the people. Marx was a person who analysed what was going on in the 19th century and produced the political response to it. We have to do the same today. That demands the involvement of intellectuals and other kinds of thinkers - it's just what the connection between intellectual life and politics is. I don't think there's any point in waiting around for ideas to well up from the masses.

GL: The LSE and the Fabian Society have always had a close relationship since their foundation by the Webbs. How is the role of a think tank distinct from that of the university research department?

AG: There is an interesting tension between universities and think tanks. Universities depend on longer term research on the whole and they're the places where longer term research is done. Think tanks tend to be parasitic on university-based research without always recognising that, and think tanks often have better access to the media than universities do, so to some extent this can put universities in the shade unjustly. I think the two need to work together in quite an open dialogue.

Guy Lodge was co-editor of Radicals and Reformers: A Century of Fabian Thought

TOMADO DE:  Fabian Review