Neo-liberalism, the ‘third way’ or what? Recent social democratic welfare policies in Denmark and the Netherlands

Abstract:

After the wave of conservative or neo-liberal governments in Europe in the 1980s, social democratic parties are back in government in most European countries. At the same time, with the 'third way' as its catch phrase, European social democracy seems to have regained the ideological upper hand. The questions posed in this article are, first, whether and to what extent European social democracy has, in fact, changed course and, second, what the policy content of the new course is. The article focuses on welfare state policies and offers an analysis of social democratic policies in the Netherlands and Denmark. Our main argument is that the 'third way' is more than a new slogan. A fairly coherent set of supply-side policy intentions can be identified, the core of which is found in job creation, active labor market policies, the promotion of high rates of labor market participation, macro-economic stability and wage moderation. The 'third way', understood in this sense, must be seen as a social democratic response to the economic conditions in which Keynesian demand management through fiscal stimulation is no longer possible. It is, however, more a break with the policies pursued in the 1970s than a break with basic social democratic principles of social justice.