Predistribution

Contextual Quote

"“Rawls's predistributive state achieves fairness in economic competition and equality of opportunity by [...] invest[ing] equitably in the human capital of its citizens. [...] It responds to the ideal of non-domination, and helps to realise a republican brand of freedom, by ensuring that all citizens can be active and independent participants in economic life [...]. And it is designed to realise the value of social equality by [...] giv[ing] everyone [...] the means to secure their status and self-respect as participating members of the economic life of that society.”

- Martin O’Neill and Thad Williamson, The Promise of Predistribution [1]

Description

1.

"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."

2. 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)

Discussion

The Predistribution of Wealth

By Kate Raworth and George Monbiot, as interviewed by Thomas de Groot and Sophie Bloemen:

"Raworth’s Doughnut offers another major discursive shift that politicians and economists alike should take heed of. “These days, most progressive economists and politicians talk about redistribution and taxes. What they are really doing is just accepting that the system is the way it is, and that taxes are needed to even it out, from those that have a lot to those that do not have enough. They debate what the top tax rate should be, or what a minimum living wage should be. But we should go beyond redistributing income, to predistributing the sources of wealth creation. Do we agree that fundamentally, wealth lies within the potential of every human being? Then everyone should have a stake in the sources of wealth creation.” Access to knowledge is access to means of wealth creation. We don’t have to own the idea, we collectively add to the idea, we share it, we remix it, and by doing so, we collective create new ideas.

Predistributive measures are those that prevent the rise of economic inequalities before they occur, as opposed to state measures that try to mitigate them after the fact, through taxation and other similar actions. Examples of predistributive design of economic systems, Raworth claims, are abound. “We have just left behind us a century of corporate ownership. The worker used to get a wage and the capitalist would get his dividend. Thanks to the decentralisation of the means of production, we now see the potential for small-scale employee-owned enterprises. There, the return on the business stays with those who did the work.”

Access to knowledge is another good example, Raworth says. “Access to knowledge is access to means of wealth creation. We don’t have to own the idea, we collectively add to the idea, we share it, we remix it, and by doing so, we collectively create new ideas.”

(https://www.commonsnetwork.org/ourcommons/)

Predistributing AI windfall profits ?

By Saffron Huang and Sam Manning:

"We believe that we need to prioritize creating and implementing economic policy proposals for transformative AI (TAI) that predistribute rather than redistribute. The world requires more decentralized and broadly-distributed abilities to contribute to AI value generation along the way. We favor enabling equality of opportunity ex-ante over enforcing equality of outcomes ex-post.

The rationale for prioritizing predistribution and equality of opportunity is part economic, part sociopolitical. For one, if AI progress is to be truly transformational, leading to unprecedented material abundance, then it could be one of our best opportunities to correct – rather than exacerbate – existing economic inequalities in the world. A world where AI’s incredible economic potential is directed toward the benefit of those with the greatest need could level the playing field between the rich and the poor, enabling a broader swath of the world to participate in the economy alongside AI systems that make new production possibilities and human aspirations a reality.

Furthermore, fostering inclusive growth can encourage more robust democratic systems relative to a world with highly concentrated economic influence. Economic growth that triggers a Windfall Clause would likely be driven by significant labor automation, which could increase inequality, particularly between workers and owners of capital. This rising inequality could undermine democracy through several mechanisms. Highly unequal societies tend to see increased elite influence over politics, as the wealthy leverage economic power to shape agendas and policies in their favor. At the same time, if AI drives massive productivity gains through labor automation, elites may find that they no longer need to depend on a large workforce to generate profits. This could make them less inclined to politically compromise with the working class. If AI advancement continues to accelerate, and we don’t set up institutions to proactively nudge progress in a more inclusive direction, we could kick off a vicious cycle in which AI-fueled inequality steadily erodes both the economic and political power of average citizens.

On the other hand, inclusive growth could significantly bolster democracy. Broad-based prosperity reduces economic disparities, leading to a more balanced distribution of political power. This environment discourages elite dominance, as there is less concentrated wealth to manipulate the political landscape. Furthermore, when people feel economically secure, they may be more likely to vote and participate in civic activities. By ensuring that all citizens have a stake in the economy as AI becomes a larger part of it, we can create a virtuous cycle where economic and political inclusion mutually reinforce each other, leading to a more just and democratic society. At a global level, as calls for international governance of AI get louder, it will be critical to ensure that communities around the world have access to use and benefit from AI so that they can play a role in shaping its future."

(https://cip.org/blog/predistribution-over-redistribution-beyond-the-windfall-clause)