Select Page

The Elusive Third Way

by Norman G. Kurland

(Reprinted from The Washington Post, “Letters to the Editor,” 9/22/98, A16)

The Post’s Aug. 30 editorial “As Russia Abandons Reform” asserts that “there is in fact no ‘third way to prosperity.’ ” Let’s examine this point.

On the one hand there is capitalism, an economic system governed by market forces but where economic power is concentrated in the hands of a few who own or control productive capital. On the other hand, socialism, in its many forms, is an economic system governed centrally by a political elite, with even more highly concentrated ownership and economic power. Logically, a “third way” would be a free-market system that economically empowers all individuals and families through direct and effective ownership of the means of production — the best check against the potential for corruption and abuse.

A mistake in the editorial, and one made by many academics and economists today, is to equate democracy and the market system with the top-down, Wall Street capitalist model, with its growing gap of wealth and power between the rich and the poor. That there is excessive corruption under capitalism and socialism, even where governments are democratically elected, should come as no surprise. Lord Acton warned us years ago about systems that concentrate power.

Capitalist theorists such as Milton Friedman pay no attention to concentrated ownership of labor-displacing technology. Marxist theorists do, but conclude that the state should own and regulate all means of production. Keynesians offer a feeble synthesis between these two models of development based on the premise that maldistribution of ownership is acceptable.

The so-called “third way” of Bill Clinton and Tony Blair follows the Keynesian model. As recognized by Bill Greider in Chapter 18 of One World, Ready or Not: The Manic Logic of Global Capitalism, Louis Kelso in 1958 fathered a real “third way,” a comprehensive systems approach to solving the structural problems of Russia and other economies impacted by centralized control over global money and credit.

As Daniel Webster maintained, “power necessarily and inevitably follows property.” If Russia still is hoping that the West will offer a true “third way” to help save the Russian economy, it should turn to Louis Kelso, not Bill Clinton or Tony Blair or others unwilling to address the root problem of concentrated ownership in a globalized economy.

President, Center for Economic and Social Justice