THE CONTEXT: Advancement in many aspects of life is creating new opportunities, but in times of transition, the balance between the rights and obligations of citizenship is also changing. In this context, it is imperative to investigate changing nature of the social contract.
WHAT IS NEW SOCIAL CONTRACT?
A new social contract is not about higher taxes, more redistribution, and a bigger welfare state. It is about fundamentally reordering and equalizing how opportunity and security are distributed across society. This would increase productivity and more efficiently share risks around childcare, health, work, and old age that cause so much anxiety.
WHAT IS SOCIAL CONTRACT THEORY?
A social contract is a real or hypothetical agreement between a government and its people, setting out the rights and duties of each. The social contracts on which society is currently based largely emerged in the post-war era and are no longer fit for purpose. As we consider the impact and lessons from COVID, new social contracts could help bring about more equitable prosperity.
A social contract refers to an actual or hypothetical agreement between the ruled or between the ruled and the ruler, defining the rights and duties of each. Individuals being born into a state of nature, by exercising their reason and collective will agreed to form a society and a government. A social contract can also be viewed as to escape from the State of nature. Thus, a social contract can be of two forms:
- Firstly, a contract that led to the origin of the State: This contract simply spells out the willingness of the people to establish the State as the sovereign.
- A contract of government or a contract of submission: This contract deals with the course after the establishment of a State or society. It spells out the terms and conditions of governance and involves reciprocal obligations and promises on part of the ruler and the ruled. The most important of them is the promise of obedience made by citizens and the reciprocal promise of protection of citizens and good governance made by the King/Ruler/State.
The social contract is based on the express or implied consent of the people to give up some of the freedoms that they enjoyed in the State of nature in exchange for the protection of their remaining rights and the maintenance of social order.
Typical features
- Social contract theories often deal with the relationship between natural and legal rights.
- The theory explains why rational individuals would agree to give up their natural rights in favour of political order.
- The social contract theory maintains that the law and political order are human creations.
WHY IS THE NATURE OF SOCIAL CONTRACT CHANGING?
- Erstwhile responsibilities of the State are now an obligation of, and business case for, the private sector.
o The needs of individuals today are disparate and heterogeneous and may no longer be met just through large investments in physical or social infrastructure, and are increasingly being addressed through niche solutions best offered by private enterprises.
- Atomization of work has constrained the extent to which individuals can organize and make demands.
o The collectives and unions that traditionally acted as arbiters for the interests of a substantial stakeholder group are increasingly ineffective.
- Therefore, there is an additional need for a new guarantor of the relationship between individuals and the private sector that provides for purpose, paychecks, and protection
Mediating this new dimension of the relationship between individuals and the private sector will require a clear delineation and devolution of responsibilities and recourse.
New type of social security
FROM THE JOB SECURITY TO ECONOMIC SECURITY: A NEW ‘FORMALITY’
- Digitization is enabling unpredictable transformations in work across G20 countries and beyond.
o One result of this is that the relationship between employers and employees has fundamentally changed, and so too have the responsibilities borne by employers.
- While a future social contract may not be able to credibly promise job security, it should be able to guarantee social and economic security. That is, the financial security (paychecks), and social security (protections) that were previously provided by full-time jobs, must now be provided through alternative means.
- The experiences of emerging G20 economies in contending with informality and constructing approximate securities for the informal workforce should inform such transformations in more advanced G20 economies.
FROM THE FACTORY TO THE CLOUD: A NEW POINT OF PROVISION
- Welfare systems based on a job/no-job binary and the workplace as the point of provision are too restrictive to account for the variation and variability in employment that are characteristics of work today.
o Social benefits should no longer be linked to a specific job but available to individuals regardless of their employment status.
- In countries such as India, this has long been the subject of government plans – see for example the 2006 Report on Social Security for Unorganized Workers. There was an initial attempt to turn these recommendations into law in 2008.These endeavors essentially follow the trail blazed by South Africa, which wrote rights-based social protection for all workers into its constitution in the 1990s.
FROM ATOMIZATION TO SOLIDARITY: CONSTRUCTING CO-OPERATIVE NETWORKS
- Employment status shapes the extent to which labour laws are applicable, the access that workers have to labour unions and to each other. The individualization of labour therefore affects the power of workers, by constraining their ability to connect and organize.
o State policy and private sector choices should actively aid in the construction of cooperative networks rather than hoping that new technology lets individuals-as-workers create them for themselves.
o The private sector will have to accept that, while an organized workforce is one better able to bargain, an atomized potential workforce is one that will not be able to innovate or increase productivity through learning by doing.
- From Regulation to Devolution: A New Role for the Local
- Increasingly, the private sector is charged with activities in the provision of public goods and services that were previously the domain of the State – especially as the notion of “public good” expands.
o Simultaneously, the collective organizing potential of an atomized workforce is being constrained, requiring a new guarantor of the relationship between individuals and the private sector.
o Individuals themselves will participate in the new economy under many different guises – as entrepreneurs, savers, investors and workers – rendering the management of these economic interactions complex and difficult to manage by detached national regulators working in silos.
- At the most basic level, greater responsibility in governing this relationship, which is underwritten by a new dynamic should be given to local government, which is best positioned to arbitrate the above relationships.
o Within the confines of a national policy framework, local government can ensure compliance, audit, provide licensing and address grievances inherent in the new relations outlined above.
TYPES OF NEW SOCIAL CONTRACT
STAKEHOLDER CAPITALISM
- Market rules are badly in need of reform. The old rules have promoted short-term thinking that has allowed inequality to proliferate, and incentivized rampant consumption of natural resources. We must build on the momentum in reforming reporting and disclosure rules, including the establishment of the International Sustainability
SKILL DEVELOPMENT AND CAREER PATHWAYS
- The new contract defining the world of work should allow companies the flexibility to reshape their workforces to enable innovation and new hybrid ways of working and enable workers the flexibility to access career breaks and training that will help them thrive in a changing world.
RESPONSIBLE USE OF TECHNOLOGY
- The rise of disinformation threatens individual privacy and democratic processes on which functioning societies depend. A recent study found that roughly half of US adults (48%) now say the government should take steps to restrict false information, even if it means losing some freedom to access and publish content.
- There is considerable evidence that the flaws in the information ecosystem disproportionately impact the most vulnerable, especially the young and the economically dispossessed. Governments have struggled to move as quickly as the pace of innovation and would do well to expand their expertise and create special-purpose entities to find policy solutions.
THE CONCLUSION: Modern social contracts can facilitate economic opportunities and mobility for all; secure the societal consensus needed for a decisive approach to the climate crisis; enable technological innovation in service of social progress and foster more inclusive societies.
Questions
1. The creative gale of destruction demands a new social contract. Discuss.
2. The fundamental of the labour-capital is changing: such change demands new rights and duties. Elaborate.