The Predistribution Agenda
A new Policy Network/FEPS book
Policy Network and the Foundation for European Progressive Studies (FEPS) have launched a new book, The Predistribution Agenda: Tackling Inequality and Supporting Sustainable Growth, edited by Patrick Diamond and Claudia Chwalisz (I.B. Tauris 2015).
Inequality has been increasing in most major economies, undermining long-term growth prospects and depressing demand in the short-term. For decades, the typical approach to tackling inequality has been redistributive tax-and-transfer fiscal policies. While this remains important, it does not fully address the socio-economic challenges of contemporary society. Arguably, there is a more ambitious way to tackle inequality and support sustainable growth: combining predistribution with social investment.
The predistribution agenda puts in place reforms that promote strong, inclusive growth, reducing inequality and the need for redistribution in the first place. The key pillars are financial system reform, corporate governance reform, labour market reform, market redesign and tackling inherited concentrations of wealth among the privileged.
The volume brings together a range of policies that can stimulate inclusive growth, the institutional challenges of implementing such an agenda, as well as ideas for building political coalitions of support.
The Predistribution Agenda is published by I.B. Tauris and available here.
Karen Anderson, Lucy Barnes, Rémi Bazillier, Marius Busemeyer, Claudia Chwalisz, Paul de Beer, Patrick Diamond, Ingrid Esser, Andrew Gamble, Paul Gregg, Alfred Gusenbauer, Jacob Hacker, Peter A. Hall, Anke Hassel, Evelyne Huber, Alan Manning, Sophie Moullin, Geoff Mulgan, Ania Skrzypek, John D. Stephens, Ernst Stetter, Dimitris Tsarouhas, Pieter Vanhuysse, Anne Wren
9 December 2015
Brief introduction about the book
Patrick Diamond and Claudia Chwalisz, co-chair of Policy Network and lecturer at Queen Mary University of London and senior researcher, Policy Network and public service fellow at University of Sheffield
Peter A. Hall, Krupp foundation professor, Harvard University
Angela Eagle, Labour MP and shadow secretary of state for business, innovation and skills
Phil Collins, columnist and chief leader writer, The Times
Polly Toynbee, columnist, The Guardian
Gavin Kelly, chief executive, Resolution Trust
Ania Skrzypek, senior research fellow, FEPS
Anthony Painter, director of policy and strategy, RSA
Listen back to the podcast from the launch:
THE FUTURE OF THE
BY PETER A. HALL
One of the messages of this book is that we live in a new world. The world is always in flux, of course, but sometimes it changes so profoundly as to render us 'immigrants in our own land' – in the phrase of Margaret Mead – living in a world our parents never knew. The past four decades have seen the diffusion of radically-new technologies, processes of economic and cultural globalisation, and a shift toward employment in services transformative of people’s lives. In 1975, the personal computer had not yet been invented, developing economies produced less than a third of the world’s output, and more than a third of workers in the OECD were employed in manufacturing. Today, the average American spends 23 hours a week on the internet; developing economies account for more than half of global production; and barely a fifth of the OECD labour force works in manufacturing.
Socio-economic change on this scale has been especially consequential for the social programs of the welfare state. The welfare state was an invention of the post-war years that assumed its current form during the 1960s and 1970s. To its programs, the citizens of the developed democracies owe much of their security from adversity, but the adequacy of existing welfare states has been called into question by several challenges facing them today.
The traditional instruments of the welfare state remain important to social well-being. Two kinds of programs have long supplied the bedrock of the welfare state. Based on contributions from employers or employees, supplemented by general tax revenues, social insurance programs protect people against the loss of income and costs associated with unemployment, retirement, illness and other adverse life events. Alongside them, redistributive programs alleviate the worst effects of poverty and reduce inequalities in disposable household income through the provision of social assistance, tax credits and other types of subsidies.
However, these programs do not fully address the socio-economic challenges of the contemporary era. For that purpose, two other instruments on which this volume focuses have much more potential. One is a set of measures associated with predistribution, so-called because they are designed to address social inequality at its roots, by evening out the distribution of incomes set by market forces, reducing discrimination in the workplace or society, and advancing the life chances of the underprivileged in ways that do not entail fiscal redistribution on the part of governments.[i] Falling under this rubric are steps to enhance the influence of trade unions in wage bargaining, regulations requiring companies to provide more generous pensions, health care or other public goods, and mandates for private-sector organisations that improve access to education, among other measures.
The second set of instruments serving such purposes are those associated with social investment.[ii] The defining feature of such policies is their emphasis on improving the skills of the workforce, broadly construed to encompass people's capacities to contribute to society as well as the economy. These programs often do involve the expenditure of public resources and may target the least advantaged; but, unlike traditional redistributive policies, they are designed to enhance the productive capacities of the nation rather than only to relieve poverty. Such programs include efforts to improve the educational level of the population, steps to facilitate re-entry of the unemployed into jobs, and measures focused on early childhood development to ensure all children realise their inherent potential.
Of course, the boundaries between these four types of instruments are porous. Predistributive measures can promote social investment, and effective social investment often entails some redistribution, as Huber and Stephens observe in this volume. However, policies oriented to predistribution and social investment speak more directly to the socio-economic dilemmas of the contemporary era than traditional programs of social insurance and redistribution do. As such, they deserve a prominent place on the platforms of progressive political parties.
In recent years, disillusionment with what states can accomplish has led thoughtful analysts across the political spectrum to turn away from public action and look for solutions to contemporary social problems in a revived civil society, more socially-conscious enterprises, and new forms of co-operation at the local level.[iii] They are not wrong to do so. As I have noted, social well-being cannot depend entirely on the state. Concerted action from the bottom-up can address many kinds of social problems. [i] Cf. Kayte Lawton, Graeme Cooke and Nick Pearce, The Condition of Britain: Strategies for Renewal. (London, Institute for Public Policy Research, 2014); Rebecca Henderson, 'Business Beyond the Public Sphere.' Presentation, Harvard Business School, January 30, 2014.
However, states and societies stand in a symbiotic relationship with each other. In some cases, effective social cooperation is easier to secure if public regulations guarantee the commitments social actors make to each other; and addressing some kinds of socio-economic problems requires resources on a scale that can only be assembled by the state. Before giving up on the welfare state as an outmoded structure of ossified social programs administered by purely opportunistic politicians, then, we should think seriously about how those programs can be reshaped to meet the distinctive challenges of our age. And, as the essays in this book suggest, inventive schemes of social investment and predistribution have the potential to speak directly to those challenges.
Of course, they are not a magic bullet capable of curing all the ills of our era, and there are many open questions about how they should be designed and funded. We know more about the desirability of improving the skills of the workforce, for instance, than about just how to do that. Programs oriented toward early childhood development vary in quality and need to be carefully designed if they are to be effective. Regulations designed to encourage high value-added production can have adverse side-effects that must be addressed if they are to accomplish their objectives. In many instances, such programs must be tailored to the distinctive needs of a particular nation.
Nevertheless, there is real promise in the kind of creative rethinking of the welfare state that the essays in this volume represent. After several decades in which many countries have seen median incomes stagnate and employment become more precarious, neo-liberalism has lost much of its luster, and programs of social investment and predistribution look like viable alternatives that can work. In tandem with other social innovations, they surely have a role to play in the future of the welfare state.
[i] Anton Hemerijck, Changing Welfare States (Oxford: Oxford University Press, 2013); Natalie Morel, Bruno Palier and Joakim Palme, eds., Towards a Social Investment Welfare State? (Bristol: Policy Press, 2012).
[ii] Jacob S. Hacker. 'The Foundations of Middle Class Democracy,' In Priorities for a New Political Economy: Memos to the Left (London: Policy Network, 2011), pp. 33-38; Peter A. Hall and Rosemary CR Taylor, 'Health, Social Relations and Public Policy', In Successful Societies, ed. by Peter A. Hall and Michèle Lamont (New York: Cambridge University Press, 2009), pp. 82-103.
[iii] Cf. Kayte Lawton, Graeme Cooke and Nick Pearce, The Condition of Britain: Strategies for Renewal. (London, Institute for Public Policy Research, 2014); Rebecca Henderson, 'Business Beyond the Public Sphere.' Presentation, Harvard Business School, January 30, 2014.
Read Peter A. Hall's full chapter here.
The book's introduction, by Claudia Chwalisz and Patrick Diamond, is also available as a preview here.
'The market economy as it is organised today is leading to ever-greater polarisation of people's economic fortunes, and straining the post-war welfare state to breaking point. This important and wide-ranging collection of essays addresses how to change the framework within which markets operate in order to bring about a less unequal and therefore more sustainable economy.'
- Diane Coyle, Professor of Economics, University of Manchester and Founder, Enlightenment Economics
Find out more about The Predistribution Agenda: Tackling Inequality and Supporting Sustainable Growth.