Leveraging the price point to inspire Market Pre-distribution.

Abdul Semakula
7 min readOct 15, 2023

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This is the second of four reflections on the course Finance for a Regenerative Economy at Capital Institute. It was prompted by the takeaways below from the lecture on money.

I literally feel the thinking behind the term “Pre-Distributing”. But I love it because It summaries what I’ve thinking about for the last few years. How do we enable/build an economy that pre-distributes abundance across multiple capitals?

Am not sure what John Fullerton’s approach to predistribution is, but I’ve been thinking about pre-distribution at the price level — which doesn’t require state permission. I’ve previously termed it Intentional Distribution, but let’s call it Stateless Pre-distribution or Voluntary Pre-distribution. Even better, Market Predistribution.

I’ll summarise the contents of a draft whitepaper I’ve previously written on this topic — but with new learning from this course and Regenesis.

First pre-distribution is important for one reason, when wealth goes from common to personal property, everyone (including nonhumans) else is excluded from its benefits. Pretty much the situation we are in now, trillions locked in private financial accounts of the 1% are inaccessible to fund climate activities — even when the situation is worsening.

If in doubt that in our current economy, wealth flows from common to private property, read this Peter Barnes article. In it Nobel economist Herbert Simon says;

“If we are very gen­er­­ous with our­selves, we might claim that we ‘earned’ as much as one-fifth of [our present wealth]. The rest [eighty percent] is patrimony asso­ci­a­ted with being a member of an enormously productive social sys­tem, which has accumulated a vast store of physical capital and an even larger store of intellectual capital.”

I think Herb forgot to mention Natural Capital explicitly.

So, the big question is how do we design an economy that balances this flow — so that our commons aren’t extracted but regenerated? Here is a root cause analysis I came up with before I shifted from a problem-solving mindset to Regenesis’s Developing Potential mindset. Less money goes to climate and social solutions!

Why 1: Because money is held up in privately controlled bank accounts.

Why 2: Because people/businesses don’t value common needs as they do personal needs.

Why 3: Because of ingrained/systemic narratives and beliefs of limitless wealth accumulation — even beyond need.

Why 4: Because of the ego-centric bias in which humans tend to exaggerate their role in value/wealth creation and erroneously entitle themselves to more rewards than is actually attributable to their input.

Why 5: Because Nature and society are treated as zero-value externalities, nature/society’s contribution to value/wealth creation (which is needed to regenerate them) is also accumulated in private bank accounts.

Required Change: An eco-centric bias where people and businesses value the role of nature & society in value creation allowing x% of a commercial transaction to be pooled in a common decision financial account designed with distribution in mind. Since money is pooled to be distributed not hoarded, it’s quickly released to the grassroots climate activities that need it the most.

Now with a developing potential mindset, I would say those 4 takeaways can be re-organised to form an essence triangle of direct action.

ABUNDANCE MINDSET.

I see the new unitive gospel of wealth as arising from the awareness that the whole in me requires an abundance mindset. So an entrepreneur with an abundance mindset pre-distributes at the price level the Natural, Social, or other capitals they benefit from. Why? Because these capitals influence the health of his business as much as his business influences their health. So, oneness inspires pre-distribution, not even out of selflessness (although it’s vital) but out of an awareness of this nested interdependence.

But why at the price level? Three Reasons.

- Because this mutual influence happens on an ongoing basis. If I wait 10–25 years to accumulate billions and then plan on giving 10% to social or environmental issues, chance has it that these capitals will have gone into worse states — and this I think is why we have a $4.5T climate finance gap despite $161T being in private accounts of the 1%, and despite the fact that we’re breaking every climate tipping point. Pre-distribution at the price level ensures that other capitals receive the money they need to regenerate and receive it on time to prevent going into worse states.

- The price level inspires Collective Action. Let’s face it. Let’s say you are able to get 20% of the top 1% to let go of 80% of their wealth. There’ll still be a climate and social finance gap. Not to mention that you will have to get a camel to pass through a needle hole before the 1% to forego that wealth. So, the climate and SDG finance gaps need every one of us, every business, every one who participates in the commercial system to contribute. And there’s no better mechanism for all of us to contribute than the price level. It’s open to all of us, while private accounts of m/billionaires aren’t. Also, it’s at the price level that we’ve managed to cause all this harm, and at that same price level, we can redesign our behaviour towards co-evolving with nature.

- Prevents further limitless wealth accumulation. It doesn’t make sense to spend money on re-distribution efforts on one hand while letting limitless accumulation thrive on the other. Whether that is by the state planning, enforcing redistribution policies or philanthropic foundations spending on administration and fund managers. Re-distribution is costly, ineffective, and slow. If well implemented, pre-distributing at the price level enables us to prevent accumulation in the first place.

- As Kate Raworth says, “And anything that falls outside that price contract is called an “externality.” So pre-distributing at the price level internalises other capitals, Natural, Social, Cultural, etc.

- Pre-distributing at the price level creates a vital distributive feedback loop that enables customers to participate in distributing the economic cake with daily decisions. This paves the way for the market to self-regulate wealth accumulation. If a community of customers is sending more money into shareholder accounts than it’s sending to regeneration, it can collectively influence a considered increase toward regeneration.

But won’t pre-distribution at the price level increase product prices? I’m no economist, someone help argue out this one. My lay thinking is that maybe, maybe not. It doesn’t have to. It only does if a business wants more profit. And by the way, pre-distributing at the price level doesn’t mean treating Natural/Social capital as costs to be added along with other costs to the price, it means sharing with nature/society the profit that nature/society contributed to — like you share profit with a co-founder or shareholder. If anything nature/society are the first co-founders. I mean, is there an entrepreneurial idea that doesn’t use natural resources and climate, or doesn’t use social value generated from social cooperation including a goldmine of knowledge generated over millennia? It’s safe to say that many businesses are making enough, or decent profit that pre-distributing 0.5, 1,2,3,4 …10% wouldn’t necessitate increasing the price.

So that is this Abundance Mindset is at the base of the triangle.

DISTRIBUTIVE CHECKOUT & COMMUNITY FINANCIAL ACCOUNT.

On the other two sides of the triangle, questions arise, will businesses even consider pre-distribution at the price level, where does this Money go? Who governs this money that the many businesses with an abundance mindset have decided to pre-distribute at the price level? Does it go to the business’s account? Is it a corporate board that decides what it funds? Or the entrepreneur himself?

I suggest another important entity that has the potential to add vitality to a commercial system that fosters regeneration. The Customer. Giving this power to customers inspires them to choose pre-distributing businesses. Why? Because a conscious customer has an interest in the health of the whole as does the business. So this builds a reciprocal relationship expanding both business/customer’s valued and value-adding roles from self-interest to common-interest.

And if we get more customers to support pre-distributing businesses, more businesses adopt this mindset and pre-distribute at the price-level. So, this creates another independent, powerful, participatory institution that inspires both businesses and customers to contribute to and govern finance as a commons. An incorruptible institution driven by reciprocity that self-organises us to dynamically regulate money concentration while auto-deploying it to regenerate nature and society and all the while building our capacity to co-evolve as a whole.

Kevin Owocki beautifully said that web3 enables us to program our values into money. Here’s a brief of the technology infrastructure that would make all this work in a real-life situation. And this is something we can prototypable in less than 3 months. We can blend Fintech + Web3 + Social Tech to streamline this whole process, from pre-distributing to governance, and promotion. Three key tools are needed to;

Self-Organising Platform: Citizens bonded by a common force of belonging, (e.g. place, cause, faith, etc.) create/join a Community Financial Account and invite businesses onto the platform to pre-distribute.

A Distributive Counter: businesses that accept install a distributive counter and pre-distribute at the price level. i.e. set x% as funds Natural/Social Capital. Then as customers checkout, they automatically divert that to (not the business’s account) but to a community financial account. So, I pay Capital Institute for this course, and they have pre-distributed 5% of profit, this 5% doesn’t go to CI’s account but direct to a community financial account that am part of.

Community Financial Account: then community members vote on pre-vetted social/climate activities on the platform to receive funds.

As wealth is recycled, communities grow and gain power, and they can use this PEOPLE POWER to dynamically regulate wealth accumulation, since most of the info they need to shift the rules is inbuilt into the platform.

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Abdul Semakula

Systems Innovator co-creating bottom-up a distributive & regenerative future at https://opencollective.com/nvc