This chapter develops the theoretical framework for the analysis of the electoral consequences of Third Way welfare state reforms. It begins with an outline of social democracy's transformation under the Third Way, and the background to this transformation. Then, it theorises the role of social policy in the formation of the social democratic core constituency's partisan alignment; delineates the potential dealignment that is risked by social democracy if it engages in policy change that goes against the core constituency's political preferences; and conceptualises the social democratic core constituency in terms of a class framework. It continues with a discussion of the effect of electoral systems and the role of particular competitor parties for the electoral fortunes of Third Way social democrats. The chapter concludes with a discussion on the suspected decline of class voting as the most obvious rival to the explanation presented in this book.

The political-economic and societal background to Third Way policies

Against a background of poor election results and a wave of centreright governments in the Western world in the 1980s, a time when social democrats were out of office for long periods in countries such as Denmark, Germany, the Netherlands, Portugal, the United Kingdom and the United States, social democracy had to reconcile its electoral appeal with changed circumstances (Kitschelt 1994; Giddens 1998; Cuperus et al. 2001). The economic and demographic changes that had been occurring since the 1970s forced social democratic parties to transform their electoral programmes and to develop new electoral winning formulas (Przeworski 1985; Kitschelt 1994, 1999; Pontusson 1995). If they failed to do so, social democracy's future vote-and office-winning chances were thought to be slim.

As for the economic challenges for social democracy, the two oil crises in 1973 and 1981-82, high inflation rates and the emergence of structural unemployment stripped social democrats of their traditional Keynesian macro-economic toolkit and left the provision of largely passive social security benefits no longer practicable (Pontusson 1995; Huber & Stephens 1998; Huo 2009; Lindvall 2010).