The third way: Europe's future.

A characteristic of politics in most of the well-off democracies is that we know far better what we don't want than what we do.

The trends in most democratic countries are toward moderate governments and away from pure free-market parties. Electorates don't fully trust the global economy and want protection from its fluctuations. But the view from Europe is that to win elections, parties of the left promising those protections have to prove they're comfortable with the market and accept its disciplines.

France's Socialist Prime Minister Lionel Jospin caught the mood when he declared that he favored a "market economy" but opposed a "market society." We want capitalism, but want it tempered by other values - equity, community and compassion, for starters. If you want to know how much has changed, consider these comments from Robert Hue, the national secretary of the once hard-line French Communist party. "The Communists are not adversaries of the market," he declared last week. "The Communists have broken with the statist vision of things." Imagine: Karl Marx dining with Milton Friedman.

The social philosopher Anthony Giddens explains this transformation in The Third Way, his important recent book. "No one any longer has any alternatives to capitalism - the arguments that remain concern how far, and in what ways, capitalism should be governed and regulated.

"These arguments are certainly significant," he continues, "but they fall short of the more fundamental disagreements of the past." That may explain some of the listlessness of contemporary politics. Utopias and searing critiques of the status quo are exciting. But why should progressive parties pretend to have answers they don't, or attempt to build systems that can't work?

The third way idea is seductive because it seems to represent realism with a heart. But Giddens - the director of the London School of Economics who is thought of as British Prime Minister Tony Blair's favorite social philosopher - tries to show that the third way is more than a marketing slogan.

The core problem with contemporary conservatism, Giddens says, is an inconsistency at the heart of its creed. Its "devotion to the free market on the one hand, and to the traditional family and nation on the other, is self-contradictory." Why? "Individualism and choice are supposed to stop abruptly at the boundaries of the family and national identity, where tradition must stand intact. But nothing is more dissolving of tradition than the 'permanent revolution' of market forces."

Giddens is perceptive on the thorny question of risk versus security. The standard account is that if government provides too much security, no one will want to take risks. But Giddens is alive to the need for certain social protections if what you desire is a risk-taking society. To encourage citizens to be "responsible risk-takers," he writes, "people need protections when things go wrong" and "also the material and moral capabilities to move through major periods of transition in their lives." That's the reason every party in every country is talking about education.

The upshot is we shouldn't dismantle the welfare state, but rather reconstruct it into a "social investment state" to provide "resources for risk-taking." Giddens's welfare state would also cooperate extensively with community institutions that are independent of government.

As for the global economy, Giddens sees its expansion as removing more and more activity from the regulatory reach of individual nations. In what he calls "depoliticized global space," there are no rules establishing "rights and obligations." Figuring out what those are and whether they can be enforced across national boundaries is one of the central political problems of our time.

The strongest critique of the third way is that its careful balancing act sounds too good to be true. Center-left parties trying to calibrate market efficiencies against concerns for social justice are not working in some sanitized laboratory. In the politics of democracies, interests and passions intervene.

That was brought home in the recent battle between Germany's Social Democratic chancellor, the centrist Gerhard Schroeder, and his left-wing finance minister, Oskar Lafontaine. Lafontaine resigned, protesting that "the heart isn't traded on the stock market yet." But where Lafontaine saw a socially minded heart beating, German business saw a statist cancer growing.

The Paris daily, Le Monde, noted archly that it was pure "coincidence" that at the moment Lafontaine quit, Anthony Giddens was visiting Bonn to unveil the German edition of The Third Way - of which Schroeder is a public fan.

The "third way" is worth finding, and Giddens makes an honorable effort to draw us a map. But as the struggles of the new German government show, the road there is still under construction.