Predistribution and ‘One Nation society’ unions

THIS week has been ‘One Nation week’ on the blog site LabourList and it is just over a month since Ed made that feted conference speech. There can be little doubt now that it galvanised the troops and stimulated thinking. With one little phrase Ed was able to offer a critique of the existing social order under the Tories, whilst simultaneously offering the hope of a better one under Labour.

 

Such duality of purpose is the sweet-spot sought by practically all political neologisms – which probably explains the perennial popularity of a phrase first conjured up by the 19th century Conservative Prime Minister, Benjamin Disraeli. Yet the ‘One Nation’ concept is perhaps best understood as putting into poetry the prose of Ed’s previous three big interventions.

 

The ‘Squeezed Middle’ described the problem; that living standards are in decline and have been for some time. Between 2003 and 2008 disposable income fell in every UK region outside of London as the proceeds of growth simply did not reach the pockets of ordinary working people.

 

‘Responsible Capitalism’ provided the aspiration, outlining a vision of the fairer, more equal society we wish to build.

 

Finally, ‘predistribution’ outlined Ed’s political methodology, his process of creating change in a tough economic climate.

 

Despite the derision with which it was greeted in some quarters of our movement, it is this last point, ‘predistribution’, that is most significant for Trade Unions.

 

Our current society is scarred by inequality, the result of a disconnection between growth and rising living standards. But this is not because New Labour failed to demonstrate sufficient concern about equality – far from it. Indeed, as OECD statistics show, the legacy of the New Labour years is a tax and benefit system that redistributes as much as the famously egalitarian social democracies of Scandinavia. And it redistributes far far more than other ‘Anglo-American’ countries like the US and Australia.

 

Rather, the reason why the UK still has the seventh highest levels of income equality out of 34 OECD countries is that it begins from the fourth most unequal starting point. Its levels of redistribution cannot overcome its predistribution, or the way the market distributes its rewards in the first place. Put crudely, we redistribute more but the underlying structure of our economy is more unequal and unfair.

 

The reason for this is clear. As Jacob S. Hacker, the Yale Professor who first coined the phrase ‘predistribution’ describes it, ‘Policies governing financial markets, the rights of unions and the pay of top executives have all shifted in favour of those at the top.’ In short, Hacker is describing what trade union members have known for years: The broad-based attack on our movement is a direct cause of inequality and a reason why wages as a share of national income have steadily declined over the last few decades.

 

Predistribution presents a challenge to conventional thinking in that it queries the effectiveness of central state spending as a means for making a fairer economy. Such is the history of the Labour Party and its total inability to comprehend other apparatus for creating change, that this question spooks people. In part this is understandable. But the opportunities for the Trade Union movement in this new approach are legion. Predistribution says that wages matter, employee rights matter, and that a strong Trade Union movement has a vital role to play in building any truly ‘One Nation’ society.

 

Crucially, this role is not just about the often trumpeted civil society function of trade unions – although this is important. Tougher times place a greater strain on the welfare state and, as they did in the 19th and early 20th centuries, unions may be called upon to fill up gaps in provision. Of course this is natural terrain for modern unions too, who already offer members a remarkable range of services – from holiday packages, to insurance and even private health care. But bigger social projects, such as the mooted national roll-out of the Unite backed Salford Credit Union, can also play an important role in improving the political profile of the wider movement. Even The Spectator has found it difficult to quibble with such an obviously benevolent initiative.

 

Yet predistribution acknowledges more than this. It also recognises that it is important to empower the primary function of unions: improving terms and conditions. Many members may find it difficult to take this at face value, such is the Labour Party’s current stance on public sector wage restraint. It is not the place to repeat the macroeconomic arguments of that debate here. Besides, no political methodology, least of all predistribution, can remove the imperative for making tough decisions in a difficult economic climate. There is no fiscal silver bullet.

 

Instead of greeting ‘predistribution’ with scepticism or sarcasm, the Trade Union Movement should embrace it. Because if Ed Miliband is sincere, it represents not just an olive branch, but a commitment to put trade unions at the heart of ‘One Nation’ Britain, embedding them in our society, and preserving the future of both our movements.

 

 

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