Predistribution

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A term coined by Yale political scientist Jacob Hacker, pre-distribution focuses on market reforms to stimulate a more democratic distribution of economic power before government enforces redistributional strategies through taxes or benefits. While capitalism takes inequality as the cost of doing business and leaves its mitigation to an inefficient state, a commons approach builds in fairness from the start. The aim is to incorporate distributive actions in the generative enterprises and through their direct relation to the commons.

Description

Martin O'Neill:

"The core meaning of predistribution is simple to grasp. As the term's progenitor, Yale political scientist Jacob Hacker puts it, the aim of predistribution is "to focus on market reforms that encourage a more equal distribution of economic power and rewards even before government collects taxes or pays out benefits". Instead of equalising unfair market outcomes through tax-and-spend or tax-and-transfer, we instead engineer markets to create fairer outcomes from the beginning." (http://www.theguardian.com/commentisfree/2012/sep/12/ed-miliband-predistribution)


Example

Martin O'Neill:

" the best way of significantly flattening pre-tax inequalities is to raise the bargaining power of wage-earners. That means the government strengthening trade unions and collective bargaining arrangements. It's a classic predistributive policy. But it's outside the comfort zone of the more uncontroversial forms of predistribution, and shows that the politics of predistribution cannot be an innocuous or uncontroversial." (http://www.theguardian.com/commentisfree/2012/sep/12/ed-miliband-predistribution)

History

Martin O'Neill:

"There is also an older and more radical approach to predistribution in the history of social democracy, even if it once went by another name. The Nobel prize-winning economist James Meade, in his 1964 book Efficiency, Equality and the Ownership of Property, championed the idea of a systematic regime of predistributive policies, which he called a "property-owning democracy". Despite the term's subsequent associations with the right and in particular with Margaret Thatcher's sell-off of council housing, Meade's version of a property-owning democracy was conceived as a stage in the development of social democracy beyond the welfare state.

Meade's property-owning democracy would go beyond the constraints of redistributive policies by looking fundamentally to change individuals' economic power within markets. It would do this by significant redistribution of control over both human and non-human capital. Meade's approach to predistribution thus involved a society where social justice was promoted not only by raising wages through substantial investment in education and training, but also by giving every citizen a capital stake, along the lines of a supercharged version of the baby bond that George Osborne threw onto the scrapheap.

Meade's idea was later taken up and further developed by the political philosopher John Rawls, in work published during the final period of his career. Rawls argued that predistribution in a property-owning democracy wasn't a second-best strategy for creating social justice, but was in fact far superior to traditional forms of welfare-state redistribution.

Predistribution of human capital, through education and training, fosters self-respect and economic agency, while predistribution of capital stakes gives people the kind of independence that comes with being less in thrall to the vagaries of the labour market. Those with a more secure economic position are free to refuse demeaning or badly paid jobs, and this in turn bids-up wages and reduces inequality.

Meade and Rawls, the two outstanding theorists of predistribution, conjure a vision not just of tinkering at the edges of current market outcomes, but of fundamentally changing the distribution of economic power in society. While both look to reduce the month-to-month taxation and redistribution of incomes, they nevertheless agree that real predistribution involves the aggressive taxation of wealth, through taxes on capital holdings and transfers, and especially on inheritance. Real, radical forms of predistribution do not so much allow governments to tax less in absolute terms; rather, they require a fundamental shift in the focus of taxation from income to wealth." (http://www.theguardian.com/commentisfree/2012/sep/12/ed-miliband-predistribution)