In Chapters 5 and 6, I showed that in the final quarter of the twentieth century, the decline in support for social democracy in Western Europe, as well as scepticism about the performance of socialism in Eastern Europe, led many commentators to question whether the statist, collectivist, classedbased alternative to capitalism proposed by left-wing parties was any longer practical or desirable. While the conditions in the state socialist societies were very different from those in Western Europe, the outcomes had many similarities. I contend that comparable underlying processes were at work which undermined the socialist perspective. Social democracy, which promised a welfare-related form of capitalism, and state socialism, which succeeded in forming a coherent economic alternative, were renounced by many of their former supporters and both social formations disintegrated and were replaced, to different degrees, by neoliberal regimes. While the underlying social determinants were analogous, the rise of neoliberalism in Western and Eastern Europe occurred in ways that could not have been more different. In this chapter, I consider theorising on the left, which sought a ‘third way’ between capitalism and socialism, placed in a democratic shell. In the next chapter, I turn to parallel developments that occurred under state socialism, in this case the changes were more substantive and involved regime change.

Against the background of electoral defeat and occupational realignment, Labour leaders and supporters considered that significant changes were required to make the Party successful. Such critics called for a profound shift in traditional social democratic ideology as described in Chapter 4. Discussion took place in two domains: in academia and the media where the fundamental causes and remedies were identified, and in the Party which focused on the policies and images which would further victory at the ballot box. In the former I outline a turn to a left neoliberalism, which became the foundation for a significant change in the kind of alternative that social democracy would present in Britain. These discussions framed the policies that would be adopted by reformers in the Labour Party, which was relaunched under Tony Blair under the banner of ‘New Labour’. Unlike its Conservative advocates, neoliberalism was never proposed as a legitimating ideology – quite the contrary.