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Forward Together, predistribution and living wages
Predistribution wasn’t a word I knew until fairly recently, yet as I read about it as Ed Miliband's new big idea, it became increasing familiar.as what we call people-centered economic development.
“In its more radical forms, predistribution is a potentially inspiring project for social democrats who have come to see the limitations of the old ways of doing things. It’s a project that promises a strategy to deliver abundantly on values of social justice, economic freedom, and equality of opportunity. But it’s a project that involves going head-to-head with entrenched interests, breaking up existing concentrations of wealth and economic power. The politics of predistribution, if taken seriously, simply cannot be a politics without enemies.”
As I’ve understood it, it’s an inversion of the taxation and benefit approach which will encourage business to take the lead in wealth distribution, by paying a living wage, for example.
In 2003, P-CED founder Terry Hallman began a tent based fast which would lead to the sequence of events which introduced his work on values driven business to the UK. He was calling for the US government to ratify the International Covenant on Economic Social and Cultural Rights. I forwarded progress reports to his senator who would himself become a campaigner: John Edwards would go on to establish the Center on Poverty Work and Opportunity on the campus as UNC in Chapel Hill, where the fast had taken place.
Two Americas
In 2004, when we introduced our social business model to the UK, founder Terry Hallman was interviewed about his wortk in Crimea. He described the impact of a community investment bank in Russia which led to the creation of around 10,000 microenterrpises in Tomsk. The bank became self sustaining in the second year of operation.
"The problem is that profit and money still tend to accumulate in the hands of comparatively few people. Money, symbolically representing wealth and ownership of material assets, is not an infinite resource. When it accumulates in enormous quantities in the hands of a few people, that means other people are going to be denied. If everyone in the world has enough to live a decent life and not in poverty, then there is no great problem with some people having far more than they need. But, that's not the case, and there are no rules in the previous capitalist system to fix that. Profit and numbers have no conscience, and anything done in their name has been accepted as an unavoidable aspect of capitalism."
In the Crimea proposal we'd suggested:
"By combining a community-funding enterprise (CFE) with a micro-credit union, the limitations inherent in each one is greatly diminished. The CFE provides sufficient funding to ensure the operating costs of the credit union, reducing the risk that the credit union will have any need to use its capital to sustain itself. The credit union immediately makes available sufficient loan money to match the needs of the community, thereby eliminating the time needed for the CFE to generate the same amounts of money. Additionally, CFE profits over and above what is needed to help with the operating costs of the credit union can be put directly into the credit union. Over time, the amount of money used to originally fund the creation of the CFE is offset by CFE contributions to the credit union. The credit union is increased so that larger amounts of money become available either to make larger loans or to service more borrowers. Together, the CFE and credit union create an enterprise where the original funding not only remains but also increases with time. They complement and balance each other by addressing the economic goals both have in common and offsetting each other’s limitations."
Our proposal for the UK was to replicate these community banks on a natioal scale with the support of business investing 50% of profit in these CDFIs
In the UK business plan, we argued the strategic case for tackling poverty saying:
"The opportunity for poverty relief was identified not only as a moral imperative, but also as an increasingly pressing strategic imperative. People left to suffer and languish in poverty get one message very clearly: they are not important and do not matter. They are in effect told that they are disposable, expendable. Being left to suffer and die is, for the victim, little different than being done away with by more direct means. Poverty, especially where its harsher forms exist, puts people in self-defence mode, at which point the boundaries of civilization are crossed and we are back to the law of the jungle: kill or be killed. While the vast majority of people in poverty suffer quietly and with little protest, it is not safe to assume that everyone will react the same way. When in defence of family and friends, it is completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world. People with nothing have nothing to lose. Poverty was therefore deemed not only a moral catastrophe but also a time bomb waiting to explode. Poverty reduction and relief became the overriding principle and fundamental social objective in the emerging P-CED model."
“Dealing with poverty is nothing new. The question became ‘how does poverty still exist in a world with sufficient resources for a decent quality of life for everyone?’ The answer was that we have yet to develop any economic system capable redistributing finite resources in a way that everyone has at minimum enough for a decent life: food, decent housing, transportation, clothing, health care, and education. The problem has not been lack of resources, but adequate distribution of resources. Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.
Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.”
“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”
We also describe how this business would distribute its surplus revenue:
” Fifty percent of annual surplus will remain in each local community where income is derived, by way of deposit into a local community development bank serving that location. In that locales are part of EU and therefore subject to well-developed rule of law, corruption issues should not present insurmountable barriers such as in Crimea.
Fifty percent of surplus will be retained by P-CED for growth and expansion. Along the way, all employees of P-CED are to be paid at minimum a wage sufficient to guarantee a decent standard of living in accordance with the International Covenant of Economic, Social and Cultural Rights.
The fundamental policy guide for P-CED is the International Bill of Human Rights. IBHR is comprised of Universal Declaration of Human Rights; International Covenant of Civil and Politial Rights, and International Covenant of Economic, Social and Cultural Rights. P-CED’s main focus falls within sphere the economic, social and cultural rights, ICESCR. In that the United States of America do not recognize those human rights and is the only industrialized country not to ratify ICESCR, P-CED operations are not yet compatible with underlying US policy and human rights commitments. In that sense, the US itself must be recommended as ‘not yet ready’, albeit for reasons quite dissimilar to those in Crimea. Thus the decision to first institute P-CED in Europe rather than the US. However, partnerships with US entities will be undertaken insofar as they advance the fulfilment of human rights where they are recognized across Europe under ICESCR. P-CED will also continue advocacy toward US ratification of ICESCR, and advocacy for economic rights in the US in particular. P-CED’s founder and first director is a member of the newly-formed US Human Rights Network.”
"Each community will then have its own Community Benefit Society (Industrial and Provident Society for the benefit of the community), such as P-CED Southwest Regional CBS, P-CED Midlands Regional CBS, and so on. P-CED will create each CBS as a UK legal entity under provisions of UK law. As the number of cells in each region increases and each regional CBS consequently becomes more complex, P-CED will utilize a portion of its 50% share of surplus to fund small offices for each regional CBS."
The model was applied to our software business which made poverty reduction and childcare reform in Eastern Europe its primary focus.
According to what the papers say. Labour leader Ed Milliband supports this idea, but has no idea of how to implement it.
Listening to Shadow Business Secretary Chuka Umunna describe it on Radio 4 ‘s Today programme, I’m reminded that it was in SW16, on the edge of his own constituency, that this was published in 2004.
“Going head to head with entrenched interests”, might well describe the experience from the beginning leading up to the confrontation with organised crime over childcare in Ukraine, as described in ‘Every Child Deserves a Loving Family Home‘.
As our 1996 white paper concluded:
"It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.”
December 2013. Common Rights UK takes a stand for ICESCR
Returning today to North Carolina, we hear the call of Forward Together
March 2014:From Two Americas to a Tale of Two Britains
A Tale of Two Britains is the title of a report published this week by Oxfam which draws attention to the five wealthiest faimilies in the UK having more than the poorest 20%. It would seem to echo, the Two Americas pitch about "the very rich and everybody else"
December 2014: Food Banks Don't Solve Food Poverty
Graham Riches is emeritus professor and former director of the School of Social Work, University of British Columbia:
"My Canadian hopes for the UK’s all-party parliamentary report, Feeding Britain, quickly faded on reading that charitable food banks and the church, along with supermarkets and food manufacturers, are proposed as core agencies in a new national network to abolish national hunger.
Yes, there’s government representation – but there’s no mention of the right to food contained within the international covenant on economic, social and cultural rights, which was ratified in 1976 by Jim Callaghan’s Labour government, and placed the primary obligation on the state to ensure food access for all.
Given the “urgent issue” of food poverty, this is a glaring omission; a missed opportunity to change the public and political conversation from food charity to the right to food, informed by internationally recognised human rights principles and framework legislation. This would require new ruling that entrenched the covenant language into domestic law, while creating a national, joined-up, food policy action plan based on measurable indicators of food insecurity, benchmarks, targets and timelines."
April 2015: The Green Party campiagn for a #FairEconomy
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