I think one problem with analysis like this is that people have attempted to shift the meaning of the word socialism. Socialism is supposed to be a system in which the government owns the “major means of production” - airlines, railways, factories, banks, etc. However, some people have begun to use the word to describe systems in which the government does anything as minor as operating public sewers. The fact that a society has a program like social security does not make it a socialist society under the traditional meaning of the term socialist.
A little leaven leavens the whole lump, as the saying goes.
A system where the government “owns” the “means of production” is one that is imbued with too much power and micromanages by default.
Put at its most basic the Third Way is something different and distinct from liberal capitalism with its unswerving belief in the merits of the free market and democratic socialism with its demand management and obsession with the state. The Third Way is in favour of growth, entrepeneurship, enterprise and wealth creation but it is also in favour of greater social justice and it sees the state playing a major role in bringing this about. So in the words of one of its gurus Anthony Giddens of the LSE the Third Way rejects top down socialism as it rejects traditional neo liberalism.
UK Politics
What is the Third Way?
Tony Blair has committed his government to treading the Third Way. Both US President Bill Clinton and German Chancellor Gerhard Schröder espouse the same doctrine. But what does it really mean? BBC Social Affairs Editor Niall Dickson digs behind the rhetoric.
http://news.bbc.co.uk/2/hi/458626.stm