The alternative is an ethic of predistributive democratization – we affirm an opening of the exercise of market power to the public, allowing democratic control over the economy – that also solves the case better than the plan

Margaret R. Somers, “Toward a predistributive democracy: Diagnosing oligarchy, dedemocratization, and the deceits of market justice,” in The Condition of Democracy: Neoliberal Politics and Sociological Perspectives, vol. 1, eds. Jürgen Mackert, Hannah Wolf and Bryan S. Turner, Routledge 2021, pp. 72-76, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3888508.

Toward a predistributive democracy

Market justice was born under the false flag of nature and the myth of the stateless market. Based on this fictional naturalism – unencumbered by the biased hands of power and social ideas of morality – political economy then attributed moral privilege to market outcomes. Predistribution – legal/political, social, and dedemocratizing – is a solvent; once it strips away the make-believe symmetry between the laws of nature and those of the market, it exposes market justice as empirically and morally bankrupt – it is neither true nor just. Where then does that leave us? Is there an alternative metric of justice?

Redistributive justice has been the traditional philosophy of compensating for unjust deserts, and redistributive social provisioning continues to be an essential element in a progressive political programme, especially in light of its decommodifying and democratizing effects (O’Neill, 2020; Esping-Andersen, 1990; Piketty, 2014, 2020; Klein, 2020). But by itself, redistribution is insufficient, as it ‘comes too late’ (Vogel, 2019). It primarily focuses on government corrections for market inequalities, while it deflects attention from the maldistributive origins in the market’s asymmetrical powers of domination and dedemocratization. The solution, then, is not merely a redistribution of income, but a redistribution of power and democratization through what I dub as predistributive democratization.

The goal of a predistributive democracy is to hardwire justice and democracy into the structure of the market (Kennedy, 2019) by reappropriating the predistributive powers that currently advantage wealth and capital and reverse engineer them to egalitarian and democratic ends. This would eschew peddling the pretence of achieving a market free of power – or of the legal fiction of equal power, which amounts to the same thing. Once we have established that all markets are structured by power, we can also recognize the politically contingent nature of predistribution: it can either strengthen or weaken the bargaining power of workers, either bolster or tame corporate profits through antitrust and rules of monopoly, be calibrated either to skew income to the 1 per cent or to contribute to a more equitable wage and income structure. Whether predistribution will advantage wealth and capital or distribute income and wages in a more egalitarian direction depends almost entirely on the balance of power between capitalism and democracy.

With this in mind the goal of a predistributive democracy is to laser focus on the very predistributive policies that have been most instrumental in generating four decades of ever-spiking inequality and dedemocratization and to mobilize countervailing predistributive democratically driven powers to undo and transcend them. Jacob Hacker (2011) explains the project clearly: predistribution ‘focus[es] on market reforms that encourage a more equal distribution of economic power and rewards even before government collects taxes or pays out benefits’. Martin O’Neill (O’Neill & Williamson, 2012a), the philosopher who should be credited with most widely and effectively disseminating the concept, elaborates: ‘Instead of equalizing unfair market outcomes through tax-and-spend or tax-and-transfer, we instead engineer markets at their internal structural level to create fairer outcomes from the beginning’ (see also Vogel, 2019). Beyond just ‘fairer outcomes’, however, a predistributive democracy must confront the economic and political oligarchy that, in a vicious circle, is able to continuously reimpose inegalitarian policies and legal coercions to undermine not merely fair earnings but ultimately freedom and democracy itself (Bartels, 2008; Brown, 2019; Gilens & Page, 2014; Reich, 2015; Hacker & Pierson, 2020).

To dismantle the inequality regime produced by market justice requires an alternative institutionalist and power-centric political economy (Polanyi, 1957; Guinan & O’Neill, 2018; Somers & Block, 2020; Block & Somers, 2014; Fligstein & Vogel, 2020; Britton-Purdy et al., 2020) to that of social naturalism: (1) Market processes do not mimic the self-regulative laws of nature, always moving toward a default state of equilibrium. The currency of markets is power, not nature: all market participants are enmeshed in networks of power, and market outcomes reflect the market’s infrastructural relations of power, specifically those of political/legal, social, and dedemocratizing predistributive power. (2) The stateless market is a myth, the economy is ‘market-crafted’ by the state (Vogel, 1996, 2018), and the market is an allocative institution of power predistributively designed to dedemocratize (Somers, 2020a). (3) Wealth is not produced exclusively by capital accumulation but by the predistributive powers of political power and law, the predistributive powers of capital to extract social and public value from the commons and the public fisc, and by the predistributive powers to structurally dedemocratize and restrict popular sovereignty to its market-conforming limits.

This political economy makes clear the solution to inequality and the moral crimes of market justice requires the countervailing powers of predistributive democratization. At the top of the agenda must be redressing the ‘unjust deserts’ (Alperovitz & Daly, 2008) by which private capital and owners engorge themselves on the social resources and inheritances they had little to do with creating. Recalling Thomas Paine’s ([1795/96] 2015) manifesto, since private property is built on societal wealth, then justice requires returning that social wealth to the commons: ‘[He] owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came’ (Paine, [1795/96] 2015, p. 34). Inspired by Paine, thinkers from Louis Bourgeois to Henry George, through Elizabeth Warren, have worked to elaborate this vision. Alperovitz and Daly (2008) argue that because so much capital accumulation is due not to individual efforts or merit but to exploiting social inheritance and the commons it follows that ‘properly recognizing this gift establishes a social claim to the wealth that it generates, a moral claim that is presently largely unrecognized’ (Alperovitz & Daly, 2008, italics added, p. 156).

Recognizing that so much wealth is a product of the extraction of social value compels us to discard the wrongheaded precepts of desert-based ideas of justice and substitute democratic ones. If market outcomes are shaped not by neutral market processes or merit, but by politics, rules, power, and the extraction of societal value, it is much easier to understand that wealth and property are not individually but collectively produced. Property, from this angle of vision, is a fictive private asset; its privileges must be subject to the democratic deconstruction of their illicit foundations. A citizen dividend, public wealth funds, new public utilities – these are just some of the ways this could happen (Guinan & O’Neill, 2019; O’Neill, 2019; Rahman, 2016b; Alperovitz, 2017; Alperovitz & Daly, 2008; Howard et al., 2020; Poole, 2020).

Perhaps the most important mandate of a predistributive democracy is to unbridle the encaged powers of democratic citizenship beyond the limits of a market-conforming democracy. Working people have been stripped of their full citizenship rights inside the firm under the doctrine of equal bargaining power and consent-based freedom of contract, which ‘undermines freedom, fairness, and democracy’ (Economic Policy Institute, 2020; Bagenstos, 2020). Rather than accept the ruse of an apolitical economy, it is critical to recognize there is a citizenry already inside the economy. A predistributive democracy aims to activate those democratic citizenship rights currently suppressed inside the economy, and for citizens to activate their rights in the polity beyond the emaciated rights of a market-conforming democracy.

Reviving union power is at the heart of a predistributive democracy. No less than Lawrence Summers (2020) now argues that strengthening the countervailing power of unions is the ‘central and urgent priority’ for combating inequality. But at stake in reviving unions is much more than income distribution: union power is democratic power. As Block and Sachs (2020) remind us: ‘[Without] unions … millions of lower-income Americans have lost their most effective voice in our democracy’. Unions are also critical vectors for decommodification, as democratization is the precondition for decommodification, which is itself the precondition for freedom (Polanyi, [1944] 2001; Ferreras, 2020).

Predistributive democracy thus aims to constrain the powers of economic and political domination by enlarging democratic citizenship at the structural level (Mackert, 2017; Rahman, 2018; Rahman & Russon, 2019; Somers, 2008; Somers & Roberts, 2008). Fourcade and Gordon (2020) argue for ‘seeing like a citizen’, while Forbath and Fishkin (2014, 2016) articulate a new political economy based on an ‘anti-oligarchic constitution’. They argue that when the courts have disallowed on the grounds of contractual consent efforts to redress workplace imbalance of power, it is not enough to respond that the Constitution does not disallow these ameliorative acts. Because they read the Constitution as an ‘equality of opportunity’ and ‘anti-oligarchy’ document, the issue is not about what the Constitution ‘allows’ but what it demands and requires the legislature to do if it is to meet its primary goal of constructing an anti-oligarchic democratic republic with equal citizenship rights (Forbath, 2019; see also Sitaraman, 2016, 2017). To combat the hegemony of the neoliberal ‘One Percent Constitution’, McCluskey (2016, 2020) argues for a progressive ‘structural constitutionalism’ that aims to ‘re-order the distribution of power’ away from a market-conforming democracy toward generating ‘collective political economic power for an inclusive and democratic vision of “we the people”’. Rahman (2016b, d) also argues for a new ‘constitutional political economy’, but with less of an emphasis on the formal Constitution and more on the democratic moralities and structures that are necessary to ‘constitute’ a democratic egalitarian society.

Monopolization increasingly enriches the financial oligarchy and bolsters its ability to suppress the voices – and the wages – of an independent democratic citizenry. The ‘New Brandeisians’ and others (Lynn, 2010; Khan, 2018; Khan & Vaheesan, 2017; Teachout, 2020, Teachout & Khan, 2014; Rahman, 2016c; Reich, 2015; Steinbaum, 2019; Vaheesan, 2020; Schneider & Vaheesan, 2019) focus on combating the law and economics doctrine of anti-anti-trust that predistributively coddles monopolies in the name of greater ‘consumer welfare’, efficiency, and growth, while prohibiting any consideration of democratically deliberated distributive equity.37 While it was Lynn (2010) who first brought back to public attention the predatory politics of monopolization, the movement has quickly grown with Rahman (2016b) arguing that to oppose monopoly is to support an independent democratic citizenry against a financial autocracy, and Khan (2018, p. 131) writing: ‘antimonopoly is a key tool and philosophical underpinning for structuring society on a democratic foundation’. In the same vein, Baker (2016) and Kapcynski (2014) challenge the system of patents and copyrights as a primary predistributive driver of inequality, while Reich (2015), Stiglitz (2015, 2019, 2020), Baker (2016), and Sitaraman (2019) all have developed extensive programmes for combating the government’s multiple methods of predistributive market ‘rigging’ that drive wealth and income upwards to an ever more financially bloated plutocracy (Guinan & O’Neill, 2019; Rahman, 2017–2018).

A different angle of vision focuses on the structure of property itself. Ciepley (2020) focuses on the public and socialized nature of the corporation, reminding us that the corporation is not a private entity but constituted by a charter, granted by the state (see also Crouch, 2011). Even in a corporate-dominated economy not stockholders but the ‘sovereignty of public authority’ is the ultimate owner, which includes workers, consumers, the community, and the environment. Forcing the public nature of the corporation into the open has clear implications for democratizing the economy. Under the moniker of ‘capital predistribution’, from a different angle of vision Martin O’Neill (2017) argues that we should be ‘worrying less about marginal tax rates and more about ownership and control of capital’. More important than the flow of income streams are ‘the sources of wealth from which they came’ – from ownership patterns increasingly structured to support a plutocracy. Capital predistribution would aim to ‘change the nature of property rights such that wealth … would be dispersed across the population, with individual capital holdings for all viewed as an entitlement of citizenship’. Restructuring ownership toward a ‘property-owning democracy’ (O’Neill, 2017, pp. 363, 369) captures the essence of predistributive democracy, which recognizes the social foundations of wealth and property, and aims to redemocratize the value of that which has been privatized by the enclosure of the commons (see also O’Neill, 2020, 2021; Guinan & O’Neill, 2019; Alperovitz, 2017).