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Home Opinion Shared sacrifice: Pre-distribution as a new way of doing politics
Pre-distribution • Welfare State • Financial Crisis

Shared sacrifice: Pre-distribution as a new way of doing politics

Patrick Diamond - 17 September 2012

The redistributive model of the state is in crisis. The question now being posed is whether a model of ‘pre-distribution’ can fill the void

The search for social justice, for greater equity and solidarity between citizens, has constituted the central thread running through European social democracy since Bernstein articulated the case for ‘reformist socialism’ at the end of the 19th century. What followed was a century of continuous left of centre reinvention and reform in Europe.

Since the 1990s, however, the world in which social democratic politics must operate has continued to change profoundly. Not only has the West experienced one of the most severe and destabilising financial crises of the modern era. Capitalism itself is undergoing a period of profound change, while the fiscal pressures unleashed by the crisis are putting unprecedented strain on the welfare state. Meanwhile, the international context is undergoing a process of transition given the growing importance of rising economic powers, and the relative decline of the West.

The central problem for social democracy is that while the world has indeed changed, the political agenda of the European centre-left remained trapped in the doctrines and narratives of the post-war age. Statist social democracy is ingrained in the ideological ‘DNA’ of most European Left parties. Yet now is the time, more than ever, to construct new ideas, narratives and interpretations informing the left’s political purpose and strategy.

This is the context from which a lively debate about the notion of ‘pre-distribution’ has recently emerged, particularly in the United States and Britain. The concept is hardly an election-winning crowd-pleaser, but it carries important insights. In the Left’s traditional vision, the good society is founded on the commitment to redistribution. Capitalism inevitably creates inequalities, and the role of social democracy is to ameliorate injustice by redistributing the fruits of growth to those most in need.

This has been the governing strategy of almost all Left parties in Europe since 1945. The goal has been to create a virtuous ‘cycle’ between capitalist production and state-orientated redistribution. Sustained economic growth permits the financing of redistribution, encouraging consumption, and in turn, stimulating faster growth. In much of Europe, this model helped to create significant improvements in life-chances, narrowing the gap between rich and poor by undertaking transfers from the wealthy to the needy; insuring people against social ‘risks’ such as sickness, unemployment, and old age; and providing guaranteed access to high quality public services.

Yet today, that redistributive model of the state is in crisis. The equilibrium between markets and social justice that characterised the post-war era lies in tatters – and the question now being posed is whether a model of ‘pre-distribution’ can plausibly fill the void. A new social and economic framework focused on ‘pre-distribution’ has to address three basic concerns.

First, it has to provide an active state with a clear rationale and purpose in an era where the money has literally run out, where many states are implementing tough fiscal consolidation regimes, and where relative fiscal austerity in the light of wider structural changes has to be assumed as a credible, long-term scenario.

Second, ‘pre-distribution’ has to deal with the fact that the redistributive capacity of the welfare state was diminishing prior to the crisis. In part, this reflects the changes of the 1980s, and the imposition of neo-liberal programmes that weakened many universal welfare states. Also culpable is demography, which raises dependency ratios and puts greater pressure on health and social care spending – reducing the resources available to boost opportunity through pre-school investment, education, training and re-skilling. Unsurprisingly, many European societies have witnessed declining social mobility rates since the 1960s and 1970s.  

Third, markets are producing more inequalities than ever, so ‘pre-distribution’ is not a choice, but a necessity. The combination of austerity programmes and the financial crisis is hitting those most in need hardest, along with the burden of rising unemployment in Europe, especially youth unemployment.

In this context, the emphasis on reducing inequality within the system of capitalist production is necessary, but not sufficient. No doubt tougher regulation of financial markets and limits on executive pay will help; corporate governance giving workers a voice and a role in the firm is vital to achieving a more egalitarian capitalism; and measures to boost the minimum wage and ‘living wage’ across Europe will help the lowest paid.

But it is also vital to intervene early to increase equality of life-chances. Over the last decade, many European countries have sought to shift the focus of the welfare state to correct inequalities a priori, and to invest in the earliest years of citizen’s lives – but much more needs to be done. The risk is that in the light of the crisis and the need for further fiscal adjustment, states focus only on protecting ‘traditional’ welfare transfers and services, rather than ensuring equality-boosting measures such as pre-school programmes, parenting support, high quality childcare from zero to adolescence, extra tutorial provision at school for those from low income households, and additional asset policies (such as New Labour’s Child Trust Fund abolished by the present government), giving the poorest children a real stake.

Equipping an active state for a new era will require a Left prepared to face up to sectional interests, to shift resources not only across the income distribution, but across generations and across regions. A consistent strategy of ‘pre-distribution’ will in turn require a new way of doing politics on the European Left – no longer promising to reward every voter interest group – but instead recognising that only a philosophy of fairness based on ‘shared sacrifice’ will ensure our societies make the transition from the current crisis to a stable social and economic settlement beyond.

Patrick Diamond is senior research fellow at Policy Network, and Nuffield College, Oxford
This is a contribution to Policy Network's work on Globalisation and Governance.

Tags: Patrick Diamond , Opinion , Pre-distribution , Welfare State , Capitalism , Finance , Financial Crisis , Economic Crisis , UK , Labour Party , Social Justice , Redistribution , Fordist , Neo-liberal , Neo-liberalism , Social Mobility ,

Comments

Dane Clouston
12 June 2013 22:53

It is incredible that predistribution can be used as a slogan without any discussion at all of the redistribution of the inheritance of wealth in each new generation. It is high time to replace quasi-feudal Dynastic Capitalism, under which some inherit billions while others inherit no capital at all, by Democratic Capitalism, with a UK Universal Inheritance for all UK-born UK citizens at 25 – a UK citizen’s inheritance. Finance it by reform of Inheritance Tax with abolition of outrageously unlimited personal exemptions and business reliefs. Reform it into a modest flat rate Capital Donor Tax on all giving and bequeathing capital in combination with a progressive rate Accessions Tax on cumulative lifetime receipt of gifted and inherited capital, which would claw back the UK Universal Inheritance in due course from those receiving larger lifetime totals of unearned capital. We need to give greater equality of opportunity in the inheritance of wealth, as well as in health and education.

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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