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Do we need a new Social Contract? 


The existing social contract is an implicit agreement that has been widely accepted, though not often fulfilled, for centuries and among the members of societies to cooperate for social benefits.

The social contract includes the sacrifice of some individual freedoms in exchange for State protection. The agreement entails that all individuals in society are subjects of the State with the sole intention to collectively enforce social arrangements.

Theories of a social contract became popular in the 16th, 17th, and 18th centuries among theorists such as Thomas Hobbes, John Locke, and Jean-Jacques Rousseau, as a means of explaining the origin of government and the obligations of subjects.

Unfortunately, the social contract, from its origin, was doomed to fail. Stanford’s Encyclopedia of Philosophy explains that:

The social contract theories all stressed that the justification of the state depends on showing that everyone would, in some way, consent to it. By relying on consent, social contract theory seemed to suppose a voluntarist conception of political justice and obligation: what counts as “justice” of “obligation” depends on what people agree to—whatever that might be.

But as time passed, the so-called consent was transformed -by the State’ into a duty, an obligation, and so there was where fundamental freedoms perished. Today, we have a duty to agree to act according to the idea of the social contract, and if do not submit to it and the State, we are seen as heretics. Volunteerism became a duty, obligation and then coercion.

But, what would a modern social contract look like?

Today, most people have difficulty imagining what the future of society and labor will be like.

It is estimated that 60% of students who sit today in primary school classrooms will work in professions that do not yet exist.

Education systems are so bad, that there are minors who begin to say that as adults they want to be influencers or youtubers, although there are many resistances to consider it a profession. They do not realize that in order to be an influencer, a person needs to build their career and life first.

What makes a job a job? How do we define a profession and what relationship does it have with a specific, progressive and defined trajectory over time?

Work is not the same for everyone, nor is free time or employment.

In general terms, work means finding solutions to the problems of others. What changes over time is the type of problems to be solved and the way to do it.

The jobs we do, whether for a living, by vocation or both at the same time, occupy a significant proportion of our time, in addition to linking us to the productive system.

If we produce, if you consider us part of the gear, we are also entitled to unemployment, casualty and the fruits of labor. We would say that this is part of the established social contract.

The question is whether the time has come to review that agreement, and some macro trends indicate that we must do do and very quickly.

Why has the social contract expired?

Next we are going to see some of the symptoms that indicate that the social contract we had so far – known as labor, work in exchange for a salary – has been outdated for a long time.

Every pact is based on some premises, and those that were used after World War II are either weak or do not exist anymore.

The world has changed and every time it does it faster, however the role of work in our personal and collective life had stagnated. The only thing that is constant is change, so these trends have come to question it.

If we take the simple version of progress, which is that things are improving every generation, we clearly see how the existing social contract has faded away.

Opportunity Insights data reflect that 90% of those born in 1945 earned a better living than their parents.

More recently, the ravages of the 2008 crisis are noticeable and young people who are 30 years old today live worse than those who were 30 a decade ago.

The data confirm a stalemate never seen before; one that is even worse than the crisis of the 90s.

The model that inspired the American New Deal of the 30s, and that was copied pretty much everywhere, was built on a very specific form of family, where income comes thanks to the husband and the wife is responsible for the household.

Men and women both work today, although the incentive structure continues to penalize women who decide to bet on their professional career.

Gender wage gaps also persist, although they are not purposely legislated or politically created in the private sector. 

According to Oxfam, in order for a woman to earn the same annual salary as a man occupying the same position and exercising the same responsibilities, women need to work 50 more days. There are also gaps in leadership: 86% of companies are led by men. 

I am not suggesting that equality of outcome should be legislated or mandated or that gender should be a factor to be considered when promoting anyone. But perhaps, merit and equality of opportunity, when taken into consideration together, could provide a better outcome for women who have equal or better skills to occupy a certain position.

With the New Deal post World War II, changes in the cost of living were adjusted with national productivity until 1970. From there, Kennedy popularized the aphorism a rising tide lifts all boats.

While productive capacity has increased significantly, wages have stagnated for the most part. In fact, from 1973 until now the distance between the richest and the poorest has only expanded. 

Although productivity has grown by 246% since then, wages will have reached only 114% by 2020.

This dissociation is partly explained because only 51.4% of global income is generated from employment. 

The rest, 48.6% of the wealth produced goes to the owners of the capital which means that the returns come from investments, for example venture capital. And mostly speculation and market manipulation. 

These last two enterprises entail the highest risk, but for people who have several million or billion in currency and / or property, it is a risk they are willing to take and that almost always pays off, as they themselves are able to effect change.

So only half of the wealth comes from salaries, and these are distributed in what many consider an unbalanced way.

The truth is that better compensation in the form of salaries, pluses and prizes should go to those who produce the best and the most, in the cleanest way possible. 

The wage gap between the maximum and minimum wage has gone from a 30 to 1 ratio in 1978 to 300 to 1 in 2017. If we take all the wealth and inheritance of the top 10 billionaire men in the world, they add up to the annual GDP of many countries, according to a 2018 Forbes ranking.

How did they amass such an amount of wealth? Did they produce that much? Are their products so good? 

To this we must add that precariousness has become the new normal, especially since the 2008 crisis.

Thus, new phenomena appear as the precarious, understood as the new low social class forged by bad working conditions and austerity, promoted by governments, are left farther behind. Are people in this new social class, members of what has been already identified as the ‘useless class’?

The displacement of people with lower or useless qualifications is caused by the outdated educational system and for decades has failed to prepare people for the future that was staring them in the face. No, artificial intelligence and automation are not responsible for ‘useless workers’, their governments are.

There are numerous studies that attempt to quantify how many millions of jobs will be lost due to digital disruption, although it is worth noting that the adoption of technology depends on many factors.

It is not so simple that technology exists: significant investments are needed to acquire it, talent capable of using and maintaining it, in addition to needing social acceptability.

It is also not true that jobs are replaced in block, but that tasks will be automated -the most mechanical, routine and predictable first-, with which jobs that are more based on this type of tasks will be more affected than the most creative.

Until generation X, people born in the 60s, the dominant vision is a concrete professional career, based on a single job for the company of life. 

The millennials, people born in the 80s, continue to envision a certain professional career, concatenating diverse jobs in different companies or employer organizations.

The Z generation, people born in the 21st century, see the professional career as something that consists of a sum of different jobs in different organizations, with different contractual links.

This shift towards a pixelated conception of work is based on platforms that connect freelancers with tasks to be performed.

We also live the rise of skills and abilities, where the title or job category to which you belong is no longer important, but what you can do.

LinkedIn in China is testing the Skills Genome, to develop more dynamic and accurate metrics, based on skills rather than positions. Some experts even predict that in 2050 the bosses will have died, in the conception we have today.

The tension about their responsibility towards the collaborators on the platforms, regardless of whether they actively collaborate on a regular or occasional basis, is that the entire social protection system is blurred, based on the productive logic of the contribution to the system via labor contracts.

Thus, it is questioned to what extent it makes sense that the set of benefits associated with producing should be associated to existing structures, which forces us to rethink the fundamentals of the welfare state that we know today.

What will happen to the pension system with an increasingly aging population? 

On the platforms collaboration isolated people, who work remotely and who only have the platform as a point of contact.

Work for platforms loses the collective notion, both in terms of the ability to negotiate and the feeling of belonging to a community.

It is an interesting moment, full of challenges and opportunities for both traditional unions and for neo-unions arising from the need to organize.

Are we are facing a return to (neo) guilds, in the sense of creating work tribes to help, share and mutualize?

It is clear that for what is coming and what will come we need to update the expired version of the social contract.

There are numerous changes that affect not only the forms of production and redistribution of capital, but the digital revolution also poses many challenges in the social fabric.

Not only is that road to new work necessary, but it is also the time to ask how a good job should be in the future. What makes it good, for whom and under what conditions.

The best way to reach this new social contract to change the rules of the global economy is to generate spaces for debate that house many different voices, which is the opposite of what has happened for the last century, when only a few people have sat at the table.

It has been shown that consensus is broader and more stable as diversity increases in the process. 

The ultimate goal, of course, cannot have hesitation. What has been missing from the social contract of 400 years ago is freedom, mainly economic, which together with consensus and open debate will bring the kind of society that the new millennium may face.

We do not need political or corporate leaders to decide for us.

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About the author: Luis R. Miranda

Luis Miranda is an award-winning journalist and the Founder and Editor of The Real Agenda News. His career spans over 20 years and almost every form of news media. He writes about environmentalism, geopolitics, globalisation, health, corporate control of government, immigration and banking cartels. Luis has worked as a news reporter, On-air personality for Live news programs, script writer, producer and co-producer on broadcast news.

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