Present

Many of the policies espoused by social democrats in the first half of the 20th century have since been put into practice by social democratic governments throughout the industrialized world. Industries have been nationalized, public spending has seen a large long-term rise, and the role of the state in providing free-to-user or subsidized health care and education has increased greatly. Many of the reforms made by social democrats in Europe, such as the establishment of national health care services, have been embraced by liberals and conservatives, and there is no support outside of a radical fringe for a return to 19th-century levels of public spending and economic regulation. Even in the United States, where no major social democratic party exists, there are regulatory programmes (such as public health and environmental protection) and welfare programmes (such as Medicare^[5] and Medicaid^[6]) which enjoy bipartisan support.

However, since the 1980s, there has been a perception that social democracy has been on the retreat in the Western world, particularly in English-speaking countries, where social democratic values are arguably not as firmly rooted in local law and culture as elsewhere. In recent years, a number of historically social democratic parties and governments have moved away from some traditional elements of social democracy by endorsing Third Way ideals and thus supporting both the privatization of certain state-controlled industries and services and the reduction of certain forms of regulation of the market.

The adoption of Third Way ideology by many social democrats has proved divisive within the broader social democratic community. Traditional social democrats argue that Third Way ideology has caused the movement to become too centrist, and even that the movement may be becoming centre-right. In general, apparent reversals in policy have encountered significant opposition among party members and core voters; many of the latter have claimed that their leaders have betrayed the principles of social democracy.^[7]

Supporters of Third Way ideals argue that they merely represent a necessary or pragmatic adaptation of social democracy to the realities of the modern world: traditional social democracy thrived during the prevailing international climate of the post-war Bretton Woods consensus, which collapsed in the 1970s. It has, moreover, become difficult for political parties in the developed world to win elections on a distinctively left-wingplatform now that electorates are increasingly middle-class, aspirational and consumeristic.

In Britain, where such an electorate rejected the Labour Party four times consecutively between 1979 and 1997, Third Way politician Tony Blairand his colleagues in the New Labour movement took the strategic decision to overtly disassociate themselves from the previous, strongly democratic socialist incarnations of their party. The Labour Government that came to power in 1997 continued the tradition that Margaret Thatcher started in the 1980s of selling out nationalized industries, and the income gap between the rich and the poor grew. This challenge to traditional social democractic ideals alienated many backbenchers, including some who advocated a less militant ideology of social democracy.^[8]

The development of new social democratic policies in this environment is the subject of wide-ranging debate within the left and centre-left. A number of political think-tanks, such as Policy Network and Wiardi Beckman Stichting, have been active in facilitating and promoting this debate.