A renewed focus on predistributive outcomes

Today I read an opinion piece by Tristam Hunt, UK Labour MP, that spoke to my heart. In it he critizises the narrowed down focus of social democracy on redistribution and its relative neglect of predistributive outcomes. As such he scolds Labour for having “neglected our associationalist heritage as a movement of democratic grassroots activists: our history of co-operatives, mutual societies and unions.”

Tristam Hunt, Labour MP

How exactly a Labour government would support such bottom-up initiatives is left open in this short, edited opinion piece. I would be interested to know more about it. For there are many cases in which co-operatives and mutual societies can bust monopolistic structures, contribute to more equal predistributive outcomes and abate principal-agent problems.

Take for example today’s network effects on the internet: How does Ebay make its money? It’s the biggest online market place. Why is it the biggest online market place? Because most market participants know it’s the biggest market place — so it’s the place to go. Once a firm dominates a market place like this, there is no real competition anymore. The prospect of monopoly rents may have given an incentive to set up the website in the beginning — a laudable quality — but after a while remuneration for the service provided is not determined by competitive markets but by possibility for extracting monopoly rents.

Fairnopoly

Recently a very interesting initiative has come up in Berlin, Germany, that seeks to scale up its business model to the global level: Fairnopoly. It’s strives to deliver the functionality of Ebay but with an emphasis on filters for fair and ecological products. Even more: It’s a co-operative. That way a global market place could come into being that is in the hands of its users and that delivers its services without extracting monopoly rents — and even if it did, it would probably use such proceeds in the interest of its users-owners.

Such business models may be seen as an expression of a renewed social democratic movement. However, it would also be interesting to hear how social democrats in government may support such bottom-up initiatives as well.

 

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