The problem with the so-called "Third Way" is that for the government to be an effective partner in the economy and to reduce the corruption and favouritism the government has to be a less corrupt organization than the majority of companies in the economy; and (for the most part) governments tend to be far more corrupt than most companies.
The profit motive tends to keep most companies as efficient as possible because if a company is wasteful another company can emerge, produce the same (basic) product or service at a higher quality and lower cost, and push the inefficient company out of business; and where the profit motive stops being effective, enforced light-weight regulation and over-sight can prevent abuse of the system. In contrast, the only motive members of government have is to get re-elected so they can keep living off of the gravy train; and the government controls the laws and regulations which bind them, and they're kept loose enough that they can get away with (pretty much) whatever they want.
To see what I mean, Canada's government is considered one of the least corrupt governments in the world and in it a (projected) $2 Million gun registry cost $2+ Billion to implement and the books are kept secret so the public can't audit who got the money; and beyond that, the Federal Liberal party stole tens (or potentially) hundreds of millions of dollars from the government because of lack of oversite, and no one went to jail.
