Predistribution of Wealth

= "“Predistribution is the idea of preventing inequality in the first place by enabling equal access to income-generating resources.” [1]

See the main entry: Predistribution

Discussion

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

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/)

John Rawls on Predistribution

By Saffron Huang and Sam Manning:

"The philosopher John Rawls championed a “property-owning democracy,” (a concept borrowed from Nobel Prize-winning economist James Meade) where productive capital — both capital assets and human capital, i.e. skills and education — are widely distributed across society. This is complemented by institutional arrangements that protect basic liberties and fair equality of opportunity. Productive resources can be dispersed through progressive taxation, inheritance reforms that promote greater equality of opportunity, and promoting access to education, healthcare and housing.

Widespread access to resources and property ownership would not only, as Rawls put it, “put all citizens in a position to manage their own affairs” — that is, empower them toward economic independence — but also enable social cooperation and relatively equal political influence. In short, this spreads economic and political power around. Contrast this with welfare-state capitalism, which redistributes income to maintain a minimum standard of living, but often leaves wealth concentration intact, perpetuating dependency and elite influence over political and social life.

Rooted in his principles in “A Theory of Justice,” Rawls concluded that property-owning democracy was superior, not only to welfare-state capitalism, but to every other system he analyzed (e.g. laissez-faire capitalism, various forms of socialism). Society is most just when capital is accessible to all citizens.

For us, predistribution is shorthand for the practical implementation of these Rawlsian ideals — a framework of policies that satisfies both justice and pragmatism. From educational access to capital endowments, predistributive measures champion human agency by enabling economic participation. Beyond ethical appeal, predistribution offers a more efficient mechanism for change. It sidesteps the political resistance that inevitably undermines large-scale redistribution when attempted after wealth has concentrated, and by intervening upstream in the economic process — before inequalities become entrenched — even modest initial investments can shift more power and resources over time than redistribution ever could.

The U.S. has done predistribution before, and it has worked. The GI Bill, also known as the Serviceman’s Readjustment Act of 1944, didn’t just compensate veterans — it provided them with access to education, housing and business loans, helping to create the largest middle class in American history. In the 19th century, the expansion of universal primary education and establishment of land-grant colleges created a skilled workforce that could participate in industrial growth. These initiatives didn’t just redistribute income — they gave people the tools to generate it themselves.

These capital-based approaches dovetail with the idea of universal basic capital (“UBC”), which focuses on distributing wealth-generating assets to all citizens, rather than regular cash payments like UBI. Joseph Stiglitz, Ray Dalio and Nathan Gardels have all previously advocated for UBC in Noema. Wealth transfers (UBC) are better at addressing inequality at its root than income transfers (UBI): Wealth transfers provide assets that can appreciate, generate returns and give recipients ownership stakes in the economy, while regular income transfers maintain dependence. The post-war GI Bill and Federal Housing Administration’s mortgage loans enabled significant homeownership, generating trillions in household wealth that continue to benefit the descendants of these beneficiaries today. One-time capital infusions can have multigenerational effects that monthly income streams cannot match.

We can be creative about it, too; capital can come in many forms. Diverse research from Nobel laureates like Amartya Sen and Elinor Ostrom, as well as studies on various forms of asset-based welfare, underscore the benefits of investing in human capital and ensuring broad-based ownership. Societies with widespread access to education, healthcare and capital generally exhibit higher social mobility and more robust democracies. There are clear political, social and economic benefits of investing in everyone, and of everyone having a stake."

(https://www.noemamag.com/heres-how-to-share-ais-future-wealth/?)