Magazine article Renewal

Property-Owning Democracy and Pre-Distribution

Magazine article Renewal

Property-Owning Democracy and Pre-Distribution

Article excerpt

Property-Owning Democracy: Rawls and Beyond

Edited by Martin O'Neill and Thad Williamson

WILEY-BLACKWELL, 2012

In the aftermath of the financial crisis, a wave of social democratic parties across Europe suffered heavy election defeats. What is more, social democrats have very few means by which to defend the political economy they oversaw during their time in office. This was particularly pronounced in the UK. A result of this is that it is now accepted wisdom that the Labour Party was responsible for the biggest public financial crisis in a generation. Had the political economy of New Labour been grounded in a coherent sense of justice, the task of defending its record would have been much easier. Indeed, the task may arguably have been avoided.

The opportunity for a genuine paradigm shift in political economy has opened up for the first time in a generation. The vast inequalities, particularly pronounced in the runaway wealth enjoyed by the super rich, have opened up the political space to talk about the nature of capitalism and the limits of markets. This is evidenced by the traction that Ed Miliband's 'responsible capitalism' agenda has enjoyed in the last 12 months. But to really drive this paradigm shift, the left must return to power. To return to power, it is essential that the story of how politics can once again deliver a better society be underpinned by a strong sense of why it should in the first place. After 15 years of withdrawing from an articulation of the good society, it is necessary now for social democracy to draw on notions of justice in making the case to govern again.

In such a context, Property-Owning Democracy: Rawls and Beyond is an important contribution to the debate. The editors take as their starting position the work of American philosopher John Rawls. Rawls is most famed for his theory of justice as fairness. This theory is arrived at by a hypothetical contract between persons who know nothing of their identity in designing principles of justice, thereby arriving at principles that all could accept as fair. Drawing on Rawls's later work, O'Neill and Williamson explore the kind of political economy that would be favoured under Rawlsian principles of justice. In doing so, they take on the assumption that Rawls was merely a defender of 'welfare state capitalism' (WSC) (the name given to the current economic settlement in the UK and the United States) and argue that he favoured a system termed 'property owning democracy' (POD). This term is derived from the work of Nobel Prize winning British economist James Meade.

POD is outlined as a socioeconomic system with three central aims:

1) The wide dispersal of capital

2) Blocking the intergenerational transmission of advantage

3) Safeguarding against the corruption of democratic politics

The idea of POD is that these aims are not primarily achieved by redistributing the proceeds of growth at the end of each period through taxing income, but rather by stopping concentrations of wealth building up in the first place. In this sense, POD can be thought of as the inspiration for the 'pre-distribution' buzzword currently doing the rounds in Westminster (see also O'Neill and Williamson, 2012). This book therefore represents the most detailed exploration of the philosophical, institutional and political implications of pre-distribution to date.

So what does pre-distribution entail according to this collection? Well, it depends on which chapter you go by, but it broadly consists of increasing rates of taxation on inherited and unearned wealth to fund a much larger version of the child trust fund brought in under New Labour. Williamson's chapter on a 20-year strategy for creating a POD suggests a figure of $50,000 for each child made up of a mix of money, shares and access to funds for property acquisition. These assets would not be available all in one go but would instead be available to adults at different stages of their lives. …

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