For most of the past thirty or so years, since the mid-1990s, Western politicians of the centre-left have been given a remarkably simple instruction manual for winning elections:
Don't frighten the markets.
Don't promise too much.
Don't talk too enthusiastically about redistribution.
Keep organised labour at a respectable distance.
Accept most of the economic settlement you've inherited.
Sprinkle some additional public spending around the edges.
And, above all, occupy the centre.
Bill Clinton called this approach the Third Way. Tony Blair gave it a British accent. And a generation of political strategists subsequently elevated it almost into a law of electoral physics: elections are won by moving towards an imagined median voter somewhere equidistant between socialism and conservatism.
Except that this rather misrepresents what happened.
The centre did not simply appear in the 1990s. Nor was the Third Way an immaculate political conception dreamed up by Clinton, Blair, and assorted policy makers
The revolution had happened earlier.
Thatcher and Reagan did more than win elections. Their neoliberal turn of the 1980s changed the political and economic terrain upon which subsequent elections would be fought – privatisation, deregulation, restrictions upon organised labour, lower taxation of capital and high incomes, liberalised financial markets and an increasing reliance upon markets to provide things previously regarded as collective goods. Together, these changes created what might be called the neoliberal settlement: not simply a collection of economic policies, but a new set of institutions, economic interests and assumptions about the proper limits of government that subsequent administrations would inherit.
Their repeated electoral successes were aided by an expansion of home and asset ownership that gave many low- and middle-income families a tangible stake in the new settlement, even as overall wealth inequality widened. These changes then became embedded and by the time centre-left governments returned to power in Britain and America in the 1990s, they had inherited not merely Conservative and Republican administrations, but an economic settlement, institutions and expectations about what governments could – and could not – reasonably do.
New Labour did not so much dismantle Thatcherism as attempt to civilise it. This was not necessarily the betrayal its critics sometimes suggest. After eighteen years of Conservative government and four consecutive election defeats, Labour faced the world as it actually existed. Clinton’s Democrats faced similar realities after Reagan.
Thatcher’s Conservatives and Reagan’s Republicans eventually became unpopular for different reasons. But by adopting and adapting much of the neoliberal settlement under a banner of greater social justice, Labour and the Democrats offered an accommodation that appeared to be both pragmatic and understandable – and proved spectacularly successful at the ballot box.
But what begins as adaptation can eventually become orthodoxy.
And something rather awkward is now happening to that orthodoxy. From Zohran Mamdani’s victory in New York to Andy Burnham’s return to Westminster, politicians are challenging important assumptions of the centrist settlement and are demonstrating that moving away from the centre need not mean moving away from electoral success. Why that might be happening is the question this two-part article seeks to answer.
The centre was never really the centre.
The first problem with centrism is semantic, how is it defined?
Geometrically, the centre is easy enough to find. Point to the middle of a circle or square and few will disagree. But that assumes the object itself remains fixed; and that its centre is a place we can all see and agree on.
So, what exactly is the political/social centre?
Privatisation can be moderate. Nationalisation seen as radical.
Restraining public investment can be prudent. Borrowing to build infrastructure can be irresponsible.
Allowing rents to increase dramatically according to market conditions is economically orthodox. Preventing them doing so is market interference.
Weakening trade unions can be modernisation. Strengthening collective bargaining risks handing too much power to the workers.
In the post-WWII political settlement, many of these positions would have sat firmly on the economic right rather than at the centre. Today, they illustrate just how far the centre itself has moved.
What happened during the neoliberal revolution was that the boundaries themselves moved. Policies previously associated with the economic right gradually became shared across mainstream politics. Privatised utilities have remained mostly privatised. Financial liberalisation has survived near disaster, repeated market turmoil, and repeated changes of government. Trade union power was never restored to anything approaching its pre-Thatcher position. Markets have been introduced into public services.
Some academic assessments consequently describe the Third Way not as an alternative to neoliberalism at all, but as a centre-left accommodation with it.
That matters, because the centre was not standing still whilst socially democratic parties moved towards it.
The centre itself moved.
And once that movement was forgotten, the historically particular response to Thatcherism and Reaganism began to be treated as political common sense.
The evolving ecosystem of constraint
Why did centre-left parties accept so much of this settlement?
Part of the answer is obvious – because challenging it carried costs.
Financial markets can appear to punish governments quickly. The mid-1990s centre-left transition was shaped in part by the aftermath of Black Wednesday on 16 September 1992. The market’s rapid, aggressive shorting of the British pound forced the Conservative government to exit the European Exchange Rate Mechanism (ERM) in a matter of hours.
In addition, the traditional industrial working class had declined. Trade unions had weakened. Conservative governments had created large constituencies of homeowners and shareholders. Capital had become dramatically more mobile. Businesses could relocate investment. Wealthy donors could finance opponents. Lobbyists could shape legislation. Newspapers owned by extraordinarily wealthy individuals could, and did, make political life extremely uncomfortable.
This lesson was not lost on incoming New Labour strategists. As Blair and Brown formulated their economic programme, Black Wednesday had demonstrated that financial markets could destroy a government’s reputation for economic competence almost overnight.
None of this required a conspiracy.
There was no secret meeting at which asset owners, newspaper proprietors and investment banks invented Clinton or Blair. Something more subtle happened.
Different actors, each pursuing their own perfectly rational interests, created what might be called an ecosystem of constraint around socially-democratic politics.
Each actor, whether individual or corporate, had rational incentives to resist policies that threatened its economic interests and to support a political settlement that constrained greater economic intervention. Those owning appreciating assets have incentives to oppose policies threatening their value. Businesses resist higher taxation and regulation. Financial institutions favour liberalised markets. Wealthy individuals had greater capacity to finance political campaigns, lobbying organisations and think tanks. Sections of the media relentlessly scrutinised policies threatening established economic interests.
The result was not necessarily direct capture of individual politicians. It was something potentially more powerful: the capture of the boundaries of political possibility.
Research by political scientists Martin Gilens and Benjamin Page illustrates the problem particularly starkly in America. Examining 1,779 policy outcomes, they found economic elites and organised interest groups exerted substantial independent effects upon government policy, while average citizens had little or no independent influence once those preferences were accounted for.
Their findings have subsequently been debated and qualified, and America isn’t Britain. But the underlying question remains uncomfortable.
Who possesses the greatest capacity to define what counts as politically reasonable?
Centre-left politicians who repeatedly encountered this ecosystem made an entirely rational calculation.
Adapt. Don’t unnecessarily threaten asset values. Don’t frighten business. Don’t allow redistribution to be portrayed as confiscation. Demonstrate economic competence. Generate growth and use some of its proceeds to improve schools, hospitals, and household incomes.
New Labour did exactly that – and achieved plenty in the process.
But over time, this survival strategy became the ideology.
The bargain stops working – and there’s always a catch.
The Third Way compromise depended upon the underlying economic settlement producing enough prosperity for centre-left governments to redistribute some of it.
But what happens when that prosperity falters?
Britain has spent much of the past two decades discovering the answer. The Resolution Foundation calculates that incomes among the poorer half of non-pensioner households have risen by an average of only 0.5% annually since the mid-2000s, compared with 1.8% in the preceding four decades (Unsung Britain – A portrait of the country’s poorer half). On current projections, it estimates that it could take 137 years for these families to experience the doubling of living standards that previously occurred roughly every forty.
Meanwhile, labour’s share of national income has declined across advanced economies since the 1980s, with a greater proportion of productivity gains flowing towards capital.
Housing provides perhaps the most visible manifestation of what followed.
Research by the Institute of Financial Studies (IFS) shows that only 39% of 25-to-34-year-olds owned their home in 2022–23, twenty percentage points below the 59% peak recorded in 2000.
The point here isn’t that asset ownership explains everything.
It doesn’t.
It is that increasing numbers of younger people have experienced the economic settlement very differently from generations before them.
If you already owned the house while property values accelerated, rising prices represented increasing wealth.
If you didn’t, they represented an increasingly distant deposit. And eventually this difference has political consequences.
And this is where the bargain begins to unravel.
The problem for centrism was never simply that it accommodated neoliberalism. In the circumstances of the 1990s, there were powerful political and electoral reasons for doing so. The problem was that an accommodation devised for one particular historical moment gradually became a permanent definition of what responsible centre-left politics was allowed to be.
For as long as the economy produced rising living standards and sufficient growth for governments to redistribute some of the proceeds, that compromise could maintain its legitimacy.
But what happens when it doesn’t?
What happens when wages stagnate, housing becomes increasingly unaffordable, public services deteriorate and a generation reaches adulthood with little expectation of acquiring the economic security its parents took for granted?
At that point, the argument ceases to be merely about economics.
It becomes electoral.
Because once the political centre becomes associated not with stability and prosperity but with the defence of a settlement that increasing numbers of voters believe is failing them, the old rules about what is moderate, radical – and above all electable – begin to break down.
And there are now signs, on both sides of the Atlantic, that this is precisely what is happening.
In Part Two: Mamdani, Burnham and the revolt against the centre.
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