Politics with ideals that inspire people;Blair's vision;Opinion

The Third Way is a response to two failed political philosophies that have been dominant in Britain for the past 30 years, says Professor Anthony Giddens, director of the London School of Economics and Political Science.

"On the one hand there is neo-liberalism, the new right or Thatcherism in the vernacular, which essentially is a form of market fundamentalism and argues that markets carry the solution to most social and political problems, on a local as well as a global level.

"I think we know pretty clearly the limits of that kind of philosophy. It produces a society of high inequality, uncertainty and social dislocation and exclusion.

"On the other hand, the traditional philosophy of social democracy, or the old left if you want to call it that, is also out of line with changes happening in the world. It's a philosophy which, like neo-liberalism, belongs to the earlier bipolar period of world society and it represents the particular view that was successful as long as the marriage of Keynesism and the welfare state worked.

"But Keynesism, in its post-war form anyway, is now a dead duck. Socialism as a system of economic management has no resonance any more and the economic theory of social democracy therefore no longer holds water.

"What we have to find is not a philosophy between the two but a philosophy beyond them.

"In recent years the nature of society has changed rapidly and dramatically. We are now living in a new sort of society: the retreat of custom and tradition, combined with a global, more cosmopolitan, weightless, information society has forced everyone to lead more open and reflective lives."

The question now, Anthony Giddens says, is how to retain the traditional values of socialism - inclusiveness, solidarity and norms of social justice - when the economic theory of socialism no longer works.

But this is starting to happen. If you compare neo-liberalism with the old left, he says, you can find a newly emerging position on almost every issue. For example, the new right suggests a minimal state and let the market rule, while the old social democracy says the state should have a dominating position in society because you need to nationalise the means of production and allow the state to regulate the economy.

However, the Third Way suggests - and President Bill Clinton has said this - the problem is not too much or too little government, but how you reconstitute government in a world where the structures of society have changed.

We are in a process of devolution of power upwards and downwards, says Anthony Giddens - downwards towards the regions and upwards to the European Union.

"I think that the centre left is now capturing the intellectual high ground, and this is going to be the trend for the next few years.

"What one needs is definitely not a sort of warmed up version of Thatcherism. This is absolutely what Labour must avoid, I think.

"You need the sort of politics that has some kind of ideals that will inspire people again, and I think you can produce such a politics. We have got a fair way towards it, I feel, but there is still quite a long way to go."

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