The forgotten project

Re-examining ‘predistribution’ could kick off Labour’s intellectual renewal, writes Tristram Hunt

Unimaginative. Uninspiring. Weak. Just a few of the more printable pejoratives which greeted the England team’s desperate performances at the recent Rugby World Cup. What is worse, just six months previous, during the annual Six Nations Championship, England seemed to be a team bursting with creativity and invention. Their play fizzed with a sense of positivity and new ideas. But at the crucial juncture, with the pressure cranked up, England went into their shell. The spring promise evaporated as they returned to a traditional, safe and stolid comfort zone. Failing to spot how much the game had moved on, what ensued was an all too familiar defeat.

For the England rugby team, perhaps we can read Ed Miliband’s Labour party. Throughout the election our message was technocratic and wholly unromantic. Instead of clear political argument, we delivered a dizzying array of targeted policy solutions. And, while many of these were individually appealing, the overall effect was a sense of incoherence about who and what we stood for. In short, intellectually we lost our nerve. Where boldness and radicalism were required, we came across as timid, cautious and defensive. By the end it looked to too many people – rightly or wrongly – as though we were pursuing a 35 per cent strategy.

This was a fatal mistake because history shows that when Labour wins from opposition it does so by offering a big and hopeful vision for change. Far more than the Tories, our success depends upon articulating a brighter future and then cultivating a public impatience to embrace it. When we pitch ourselves merely as better managers of the ship of state, we struggle to connect. This need for a deeper emotional link to the social zeitgeist makes our task more challenging, even without the traditional Tory advantages. But it is clear from our biggest victories – in 1945, 1964, and 1997 – that this rare and precious moment only comes when we express a wider ambition to reshape the country’s entire political economy.

Yet what is so disappointing is that this was Miliband’s explicit goal. More than that, in the early ‘let a thousand flowers bloom’ days a great deal of exciting work was discussed, not least in Progress’ excellent Purple Book. However, somewhere along the way we narrowed our scope. Like the England rugby team, we simply stopped challenging ourselves. The comfort zone made a comeback.

Success in 2020 depends upon reinvigorating this forgotten project. And it is no exaggeration to say it could require the biggest period of intellectual renewal in the party’s history. It is not just that modern challenges – of globalisation, climate change, mass migration, capital mobility, asset inflation, technological automation – seem to constrain nation state power like never before. It is also that the 2008 financial crash severely exposed the limitations of our party’s hitherto dominant political economy. This ‘Croslandite’ model – developed by Anthony Crosland in his 1956 masterpiece The Future of Socialism – maintained that the best way to advance social justice is to redistribute the proceeds of a dynamic and perpetually growing free market capitalism. But 2008 showed its central assertion – that proper economic management could eradicate capitalism’s cyclical fluctuations – was hopelessly flawed. Moreover, the New Labour recipe for spreading equal opportunity through massive redistribution and education investment failed to completely stem the rising tide of inequality that has so characterised the early part of this century. What we need now is a political project which can comprehensively reverse it.

Yet, as we begin this search again, we could do a lot worse than rediscover the insights of Ed Miliband’s halcyon period. Because one of our discarded ideas – predistribution – is making a big contribution not just to the debate about the future of the centre-left, but also to the economic arguments at the heart of the Democratic presidential nomination race. As such, the whole world – let alone social democrats – should probably pay attention.

Since it appeared in The Purple Book in 2011, predistribution has steadily collected the approval of numerous centre-left galácticos. First came Miliband himself in September 2012, exploring its potential for rebooting the welfare state. Then in December 2014 Manuel Valls, the French prime minister, announced it as the ideological underpinning for his plan to tackle inequality. Finally, Joseph Stiglitz, economic adviser to Hillary Clinton, suggested it had the potential to ‘rewrite’ decades of American economic policy.

In truth, these diverse concerns reflect the fact that predistribution is more political methodology than grand vision; a way to approach policy in the 21^st century rather than a fully formed ideological programme. And it is in contrast to traditional, redistributive approaches that it is perhaps best understood. For it was not a lack of redistribution that stopped New Labour from reversing inequality, far from it. Indeed, as Organisation for Economic Cooperation and Development statistics show, the legacy of those years was a tax and benefit system which compares favourably to the Nordic states and redistributes far more than other European countries, let alone our ‘Anglo-American’ counterparts. What makes Scandinavian countries so much more equal is their strong predistribution; that the economic distribution is fairer before fiscal transfers. In contrast, here in the United Kingdom the market rewards are more unequal and the gap is simply too big to make up.

As Jacob Hacker, the Yale professor of political science who first coined the phrase ‘predistribution’, explains in his foreword for important new Policy Network book The Predistribution Agenda, this shows how the old redistributive model is ‘caught in a box built for past political battles’. To respond we need to expand our horizons; to find a toolkit that – as Hacker puts it – ‘can do more with more’. This could include reforms to corporate governance and employment legislation that encourage more responsible company behaviour. But on a larger scale it could mean preventative social investment, the rediscovery of the ‘public option’ for institution building (for example, a national investment bank), more active state intervention in the labour market (for example, job guarantees) and even, conceivably, nationalisation. Crucially, however, these could only qualify as predistribution policies if the end pursued was a fairer distribution of market power and opportunity. This is investment and intervention as a means, very much not as an end in itself.

Nevertheless, some scepticism is helpful. First, as the tax credits row shows, predistribution can never completely replace redistribution. A living wage shorn of tax credits (already factored in to the current rate) would almost certainly undermine one of predistribution’s other big aspirations: full employment. True, none of the theory’s architects would ever argue against complementary redistribution. But it is still helpful to understand the fiscal and political limits.

Second, while it is clear to see why the idea carries particular resonance in the United States, we need to remember that many of these initiatives are not as new here. For example, social investment in education is perhaps the most universally espoused predistribution idea – and the arguments are clearly incontestable. But this was a key plank of New Labour’s strategy and on both inequality and educational achievement we did not always see the returns we would want. Our new toolkit must not forget the important lessons of public service reform.

That said, there is little doubt predistribution is an idea which can help us cast off our intellectual shackles. The central argument of Hacker, Stiglitz and others is impossible to refute. Policy choices, such as financial deregulation and the emasculation of trade unions, have shifted the market rewards decisively towards those at the top. And, while the challenge of globalisation cannot be airily dismissed, too often it has been used as an excuse for weak political will. Across time and place, capitalism takes on multiple shapes, and Labour must now think radically about what forms of corporate governance, finance and ownership are fit for the digital age. History shows that, without it, we can expect a long period of opposition.

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Tristram Hunt MP is a former shadow secretary of state for education

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Photo: victoria peckham