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“Predistribution”: From Miliband to Cunliffe

Written By: - Date published: 10:11 am, September 23rd, 2013 - 41 comments
Categories: benefits, capitalism, david cunliffe, democratic participation, education, housing, infrastructure, labour, minimum wage, poverty, social democracy, wages, workers' rights - Tags: ,

Andrea ‘s latest op ed piece on Cunliffe focuses on his use of the idea of pre-distribution, following it being embraced by UK Labour leader Ed Miliband. I posted a quick analysis on open mike of the ways Vance incorporates a right leaning stance in her piece.  In this post I want to focus more on the idea of pre-distribution, and whether it can under-pin a new direction for the left in NZ: one that will be relevant to the challenges of the 21st century, especially in countering the too wide inequality gap.

“Pre-distribution” offers a way to break with the failure of the soft neoliberalism of Third Way politics.  Third Way politics aimed to let the market work, then tidying up after it with re-distributive policies.  “Pre-distribution aims for more government intervention to prevent the developments of vast inequalities, while proactively providing more opportunities for all, in times when money is tight.

It is a centre left, social democratic position, that does not aim to end capitalism, but to restructure it so that it works better for the many, not the few.  It puts strong emphasis on giving all workers a fair go; on encouragement of employers to provide a living wage;  on promoting educational opportunity form early childhood up to university level; on re-vitalising apprenticeships and training; on promoting research and development; improving housing affordability; on providing access to health care, pensions etc for all.  While moving aware from bennie bahing, it still treats social security as something that does not get a lot of budget funding.

Cunliffe said this about pre-distribution in his Daily Blog interview last week:

I don’t think however that our tax and benefit system is inexhaustible. And there’s a whole bunch of literature around about building into the wage system, better structures and processes, so that we have more social equity.

So stuff like industry standard agreements, which would put unions back at the heart of industrial relations; the idea that we would have a living wage, and that we would highlight that through the government sector; the fact that we would raise the minimum wage; the fact that we would protect vulnerable workers; and the fact that we would get better jobs –  is all part of a package that, rather than redistributes, you might say pre-distributes by hard wiring and better levels social equity right from the start. And we have to change the industrial relations frame work to get there, and we will.

The most significant point in Vance’s article, was this one:

Pre-distribution is an agenda that British Labour leader Ed Miliband is flirting with. Critics believe he is being too cautious.

The downsides are it is a deeply un-sexy thing to sell. Cunliffe is planning a ”major unveiling” of his 2014 election strategy at the Christchurch conference in November. Expect it to contain many of the elements of pre-distribution.

It was Ed Miliband that put pre-distribution on the left wing political agenda as a new big idea.  But the pressures from the right wing elites mean he has promoted it in a very weak and increasingly diluted way.

Miliband took the pre-distribution idea from Yale University Professor Jacob Hacker. As argued by Hacker, in the Guardian, and this interview, the notion of pre-distribution incorporates a reworking of macro-economic policy, while also aiming to provide more educational opportunities and fairer employment practices in times when there are budgetry restraints.   It aims to revamp social policies and public provisions, strengthening the role of governments in relation to markets, at the same time as promoting the importance of “civil society” in a democratic market society.  However, it aims to maintain a market economy, while winding back the role of markets in society.

An article in the New Statesman identifies ways in which UK Labour could flesh out the idea of pre-distribution in its policies.

For one, predistribution will not succeed unless the bargaining position of low-paid workers can be strengthened. This will require a very different balance to be struck between regulation and flexibility in the labour market, including a higher ‘living’ minimum wage with scope for sectoral pay bargaining to prevent under-cutting. It will require stronger collective organisation too, with scope for ‘new unions’ to organise the lowest paid workers.

[…]

Neither will predistribution be credible unless Labour can advance a bold education reform strategy for Britain. In the UK, raising the economy onto a high wage, high skill, high productivity trajectory entails sustained investment in training and human capital.

[…]

Further education colleges need bold reform to raise quality; apprenticeships should be guaranteed for young people who achieve the requisite qualifications in English and Maths; access to university, regardless of social background, must be further expanded.

However, the final recommendation in the New Statesman’s article is a worry, suggesting continued austerity for beneficiaries:

Finally, an effective strategy of predistribution will require Labour to resolve major debates about the balance between targeting and universalism in the welfare state.

[…]

Many of the benefit cuts introduced by the coalition cannot be reversed by an incoming Labour government: the price of the contributory principle will be declining benefits for the workless poor.

However, in the above linked interview with Hacker, he does indicate that “pre-distribution” could mean more investment by the state in state and/or social housing.

I would say that one way to make this agenda broader than just Keynesianism is to say that it is about encouraging macroeconomic stability overall, which is something that needs to be figured out now, before the next asset bubble. It is really important to make both the housing and financial markets more resilient.

With housing, I think this could come primarily from the public sector writing better sets of rules, and getting involved through investment. In fact I would argue that the most straightforward way in which you could tackle both the housing and the macroeconomic problems simultaneously would be to undertake significant public investment in housing in the short-term

So, while policies on social security remain a worry, there is much to be excited about in the Cunliffe focus on pre-distribution: moving towards  a living wage for all, a fair go and financial security for all workers, access to higher education across all socio-economic classes, and more affordable housing for all – and all provided within a responsible and manageable budget.

It is a move towards the most successful examples of Nordic social democracy, and not towards ending capitalism.

41 comments on ““Predistribution”: From Miliband to Cunliffe”

  1. The good thing about ‘pre-distribution’ is that it will show that the capitalist state exists to defend capitalist property and that it cannot ‘predistribute’ what really counts, the ownership of the means of production.
    Cunliffe explicitly says he is against the state owning the means of production.
    This is the fundamental limitation of social democracy – that private property in the MP should be retained and with it the fundamental reasons for capitalist inequality.
    So now we have this question out in the open again after half a century.
    No accident since the crisis has forced much ‘rethinking’, even if much of this is recycling the old ‘Clause 4′ type debates of the 1930s and 1940s, and Keynes vs Marx.
    But the crisis this time, the worst since the 1930s because it fuses economic decline with global warming, and the rise of the left that has resulted, will not only pose all the right questions about going beyond capitalism, it will make it necessary for our survival.

    • Colonial Viper 1.1

      Cunliffe explicitly says he is against the state owning ALL the means of production.

      fify

      Cunliffe has no problem with the state owning the country’s main power generators, for instance. Or of the state’s Landcorp owning tens of thousands of hectares of productive farm land.

      • Ennui 1.1.1

        The real argument here is to bring back into the equation the very concept that Friedmanite Chicago schoolers managed to leave out: RENT. Their true genius was to dump this from the economic conversation. Prior to this, since Adam Smith there has been a realisation that capital left unregulated has a tendency toward monopolistic / cartel practices.

        Owning utilities is what governments do to be able to supply the rest of the “market” with something they need at a price that cuts out “rent” seeking behaviors: so I dont think Cunliffe would be opposed to state ownership of all utilities and regulation of all monopolies / cartels.

        So how far do you go toward state ownership of the means of production? The state based Red model has failed where it has been tried along with the inhumanity of the gulag. The capitalist unregulated model has also failed and left human detritus scattered to the winds. maybe the question should be “where is the balancing point?”

        • Colonial Viper 1.1.1.1

          All core strategic economic infrastructure with monopoly characteristics should be publicly owned for the public good.

          You identify such infrastructure by, amongst other things, the consequences which would arise if that infrastructure were to financially fail, and also the leeway for rentier/parasitic behaviour arising from control of that infrastructure.

      • Peter 1.1.2

        Without the State we would never have built the power generators and a good deal else besides.

  2. just saying 2

    How was the “third way” described by Cunliffe?

    Oh that’s right – thinkering around the edges.

    And this is?

    Seems to me to be a rear guard action to protect the elites, the very comfortable and capitalism itself, with the veneer of “doing something”.

    • Alanz 2.1

      Is ‘thinkering’ like a good combo (portmanteau?) of thinking and tinkering??

    • Colonial Viper 2.2

      You can easily take the view that putting more time and energy into mainstream parties is a waste of both your time and energy.

      I have some sympathy for that view: mainstream political parties hardly ever do anything particularly useful unless there is pressure from a mass movement of people outside of formal power making them do it.

      Or perhaps you are looking for a political party which aims to do away with capitalism altogether. Corporate systems of capitalism being systems of environmental and community destruction.

      • Ad 2.2.1

        Not sure about your second paragraph there. Muldoon, Lange, Bolger et al spring to mind.

        The tough thing about running central government is there’s only a few areas where you can make large scale change that is also irreversible.

        I hope Cunliffe and coalition get into power, and when they do, they choose a few large and pretty much irreversible things that both generate huge opportunities for great careers, and also greatly decrease inequality.

        The available speeches and quotes from David certainly shows that he’s ready for the second part of that. But I don’t just want people to be more equal; I want people to be more equal, and a whole lot richer.

        • Colonial Viper 2.2.1.1

          Growing real wealth in the last 100 years has been founded on ever increasing access to and use of concentrated energy.

          That era is now drawing to a close. We are all going to have to question what “wealth” means to us in such an environment. Electronically recorded financial and paper assets which can be wiped out in a single server farm fire may not be it.

    • karol 2.3

      Well, Cunliffe is certainly moderate left, and not the “hard” left that Key tries to smear him with.

      The changes under Cunliffe would be step-by-step and not radical. Hence I will still be giving my party vote to the Greens (or Mana).

      However, I am interested to examine this “pre-distribution” idea. More importantly for me, will it provide a narrative break from “neoliberalism” and result in a new direction for society and politics?

      The resulting policies may be very moderate, but it does look like a new structural approach underpinning such policies.

      I agree with CV below, real change will come from mass pressure from below. We can’t rely on the good will of those in parliamentary politics.

      • Ad 2.3.1

        Not sure what you mean by “not radical”. Why don’t you give the guy a moment to find out what the extent of Labour’s colletive policies area? He’s making the moves as fast as he can.

        • karol 2.3.1.1

          Ad, that’s based pretty much on Cunliffe’s own statements. he is presenting himself as centre left, as with Nordic forms of social democracy.

          • Colonial Viper 2.3.1.1.1

            Most NZers know that the country is on the wrong track and that significant change (of some sort) is required. However, I don’t think that what most people want to see is a “radical” up-ending of things leading to a lot of uncertainty. So I think that Cunliffe is on the right track politically with his messaging.

            Having said that, there are also many “radical” ideas which can be implemented in the macroeconomy eg. around the RBA, around currency speculation, etc which most people probably wouldn’t even notice. But TPTB will.

      • Sosoo 2.3.2

        I thought Cunliffe already stated that he was a New Keynesian and was prepared to alter macroeconomic policy away from a sole focus on inflation.

        If he did that, it would be a very big win, even though it would not appear so.

        I happen to think that David Graeber is right about neoliberalism. By all economic measures and even on its own terms, it is a failure. All its energies are spent on preserving the idea that it is the only conceivable system. If you introduce doubt into the mix, you win.

        That’s what Cunliffe appears to be doing. Left wing politicians being apologetic about economic policy is just enabling the right.

        The left don’t need radical economics. We win with the orthodox kind once the limitations of the market mechanism are evident.

        Predistribution is a politically convenient way of dealing with the limitations of market. It’s not the only way, but it is worth a try.

    • miravox 2.4

      “Seems to me to be a rear guard action to protect the elites”

      I think predistribution is is a cool, hip and trendy concept for English-speaking nations that has been, to a degree, part of social democratic economic policy for years – at least the labour market bit. Strong labour market planning and protection, which Cunliffe has already been talking about, and added wealth taxes, rather than protecting the elite improves the education, employment, bargaining and pay of employees. If it works properly, it should also mean there is more of everything to redistribute to those who cannot work in paid employment.

      A universal basic income and financial transaction tax along with social democratic labour market and works council laws, still appeals to me, but I do think ‘predistribution’ could be a fundamental shift to increase social and economic equality, if the pollies take it seriously rather than just as a slogan.

  3. tracey 3

    Frankly most strides for the poir and poirly paid were through concessions to green and alliance policy…

    insulating homes
    paternity leave
    4 week hols

    anyone else remember how 4 weeks leave was going to cripple nz? Turned out it was financial institutions we needed to be wary of.

  4. Colonial Viper 4

    Unlike the rest of us, the NZ Government is not simply a user of NZD. It is an issuer of NZD. Therefore the NZ Government has chosen to artificially constrain it’s fiscal policies by only using debt and taxes to fund it’s spending.

    The Government could easily choose to part provision itself through the issuance of new debt free money into the real economy, instead of relying on interest bearing bank debt to issue new money (credit) into the real economy.

    And another point: the main reason that we have so many unemployed in this country, is not that we have a shortage of work which needs to be done in our society. It is that we have decided that we will not spend the required money to employ them and create formal jobs.

    • Ad 4.1

      Is there a policy stream leading up to Labour Conference that you need to get into? This feels like the right time to get minds like yours in there, testing the propositions with experts. Refreshing the RBA is a big DC plank. Get in there.

    • just saying 4.2

      And another point: the main reason that we have so many unemployed in this country, is not that we have a shortage of work which needs to be done in our society. It is that we have decided that we will not spend the required money to employ them and create formal jobs.

      I find it very worrying that there is still no committment to full employment. What we need is to get the work done – in conservation, in cleaning up our cities, in planting forests, in planting urban fruit and nut trees, and community vege gardens, in providing quality care for the sick, disabled and aged, in extra help for disadvantaged kids in education, in ……… hell I’ve got the flu, I can’t be bothered listing all the avenues, but you get the idea. The thing is, pay anyone willing to work a minimum of $18.50 an hour to do these things. Enough taskforce green, enough exploiting dirt poor volunteers. A. Job. For. Everyone. Who. Wants. One. For a living wage dammit. Then we’ll see if the problem with unemployment is “lifestyle choices”

      There would be no need to raise the minimum wage, just make private enterprise compete with the state. Same with a massive state housing programme.

      • aerobubble 4.2.1

        Society, as stipulated by MSM, is about profit, if citizens cannot provide opportunities to the market to make profit the government should not waste its legislative time. What is the TPP but essentially allowing the private sector to sue government when it ‘allows’ citizens to engage in free non-profitable or non-fiscalized activities. When citizens are on the benefit, or in jail, they have a financial presence. The TPP will allow security companies to sue government that bring down the crime rate, that will cut welfare numbers and so undermine private welfare companies that have taken government contracts. How is this any different from the blank labeling of tobacco products, no government could engage in full employment or do away with the crime by targeting the causes unde a TPP.

      • Colonial Viper 4.2.2

        just saying: yes.

      • Sosoo 4.2.3

        Cunliffe has already committed to full employment in the sense that everyone seeking a job should be able to find one. That’s not full employment in the literal sense, but it is a lot better than what the pig party is offering.

        • Colonial Viper 4.2.3.1

          The classical definition of full employment is that there are more full time positions available than persons looking for full time work.

          • Sosoo 4.2.3.1.1

            If you want to know what Cunliffe meant, why not send him an email or ask him on Twitter. He seems OK with queries.

      • miravox 4.2.4

        “I find it very worrying that there is still no committment to full employment. “

        Harping on about social democratic policies again – In this graph Guess which EU country has a legislated commitment to full employment?

        In the Labour Market Service Act, labour market policy is allocated the task of :

        – Contributing towards the avoidance and elimination of unemployment
        – while preserving social and economic principles
        – and thus working towards balancing the supply and demand for workers to as great an extent as possible and in an economically meaningful and sustainable way

        The goals of labour market policy are:

        – Achieving and maintaining full employment
        – Keeping older employees in work for longer
        – Taking active measures to raise the level of qualifications and of equal opportunities
        – Increasing transparency in the labour market
        – Developing human resources
        – Re-activating the unemployed
        – and combating long-term unemployment……

        … to a greater degree than other areas of the economy and society, the labour market cannot function without intervention on the part of the state

        4.8% unemployment is the highest rate of unemployment here (up from 4.5%) in the GFC era. A commitment to full employment and a functioning economy are not mutually exclusive.

  5. blue leopard (Get Lost GCSB Bill) 5

    How is this ‘predistribution’ any different to what we had prior to neo-liberalism taking over?

    • Colonial Viper 5.1

      Many of the concepts will be the same or similar, but rejigged for a new environment with new goals.

      • blue leopard (Get Lost GCSB Bill) 5.1.1

        Thanks Viper,

        Guess I will have to read up on it. Can’t see the difference at present.

    • Lefty 5.2

      The idea of predistribution disregards those living in poverty. Indeed, like neo liberalism and thirdwayism it is obsessed with making people work, regardless of whether that is the best thing for them or the country.

      The middle class will do better, as will already unionised workers but the unemployed, the precariat, the ill etc will continued to be punished for having no value to the capitalists who devise these clever catch phrases.

      I was worried Cunliffe might come up with something different and breathe new live into the hapless social democrats, giving them some credibility among the 30% who have been betrayed too often and ceased engaging with mainstream politics.

      This would have been a disaster as they would only be sold out once more and their hard won resilience to the never ending bullshit of our capitalist politicians would be diminished.

      If predistribution is the best Cunliffe can come up with, this is clearly not going to happen.

      The middle class and the aristocracy of labour will be pleased though, and even some low paid workers may benefit if they are in secure employment.

      Indeed Cunliffes commitment to predistribution gives everyone except the poor a good reason to vote for him in the short term – an improvement on the Nats I guess, if these things matter in the larger scheme of things.

      • just saying 5.2.1

        Pretty much my reading of the situation.
        Good to get the total fucking betrayal out of the way earlier rather than later.

        Loving the way Labour stripped out working class communties in the first place and now, this new, alleged move to the left, abandons the human destruction they created yet again, with the promise of a few more apprenticeships for some kids, and early childhood education, which also, handily, will make a few more hard pressed solo parents available to sit by the phone waiting for a few hours of shit work for shit pay.

        More perks for the middle class more kicks in the teeth for the dirt poor. Still at least those in poverty who do make it to retirement age might have a couple of easier years, before the damage done by decades of poverty finishes them off prematurely.

        Rearranging deckchairs anyone?

        • blue leopard (Get Lost GCSB Bill) 5.2.1.1

          Thanks Lefty and Just Saying,

          Have to say I’m not altogether liking the sound of this….however will have to find out more. Am certainly not impressed with Miliband being linked to Cunliffe in this post after Miliband’s foolish performance last night seemingly endorsing Mr Key, what a tosser-endorsing a right wing leader and the worse, most corrupt clown-of-a-PM we’ve had, NZ is small but I betcha ‘they’ know the score about us over there in those circles. Fuckers.

          Hopefully something that actually works and is not a proven failure will be applied…for a change.

      • McFlock 5.2.2

        Doesn’t that mean that “middle class” is synonymous with “almost everybody”? Well, that might be the case for your social group. Thanks for the press release from Planet Key.

        There is no depression in New Zealand.

      • Colonial Viper 5.2.3

        The ‘middle class’ is nothing more than a pseudonym for those between the very rich and the very poor. There are very few very rich in NZ, and almost no very poor.

        Apart from the fact that you have no idea of anything, what makes you think that you can now start acting as a source reference for the English language?

  6. Rogue Trooper 6

    Thanks for the introductory summary, karol.

  7. Sable 7

    Personally I have no issue with ending capitalism, its a philosophical plague. As to Andrea Vance well really, who cares, she’s just another die hard mainstream journo spouting the same tired rhetoric as the rest….

  8. tricledrown 8

    Sable what’s your alternative.
    Capitalism will never disappear
    Even Lenin wasn’t completely against it.
    Hey paid the ultimate price,
    Then it was back to totalitarianism in another guise.
    Utopic ideas are all very well but you will get less than 1% support for any party with your ideology.
    So the next best option is democracy incremental change is better than no change!

  9. vto 9

    To put in place an alternative wealth distribution model the current existing model must first be solidly described as a wealth distribution model itself.

    Many people see the current wealth distribution model as some sort of natural order. This is because many people have limited vision and cannot see how their current wealth is to do with anything but themselves and their great works and enormous goodness. When suggestions are made for alternative arrangements these people see this as going against the natural way of things.

    This is a great hurdle which must be overcome before describing an alternative.

    Something like “… we of the left see the current wealth distribution model in NZ as seriously flawed as can be seen by the fact some get paid a wage less than what is needed to live on and some get paid so much they cannot spend it in a lifetime. We of the left want to change the current distribution model with a new and fairer model…

    … These models comprise such things as tax rates, minimum wage settings, business and employer subsidies, etc etc.” on it goes…

    This perception that the current model is some kind of natural order must be heavily attacked. It will be a long job and a hard slog and many people will get upset that some do not see their great works or enormous goodness. It must be bold, strong and courageous this attack. It must not flinch.

    Some 2c

  10. Venezia 10

    Cunliffe shows he is in touch with progressive thinking on “pre-distribution”. Professor Robert Wade promoted this idea on his lecture tour. We have had it in the past and we can do it again.

  11. Dean Reynolds 11

    For Social Democracy to work, the State needs to control the commanding heights of the economy, (finance, energy, transport, communications, education, superannuation, workers’ compo, social security, health, housing) so that they work for everyone’s benefit. Private enterprise can do evertything else, from the second tier downwards.

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