We need a new social contract

What is meant by the term “social contract”?

The concept of a “social contract” dates from the Age of the European Enlightenment in the 17th and 18th centuries. It was meant to enshrine basic human rights and to curb the abuse of political power. The leading thinkers of the time set out to model a just and well-functioning society with clearly defined rights and obligations of citizens and rulers. Citizens would agree to submit to the authority of the state, if the state in turn respected and protected citizens’ rights and maintained the social order.

What is wrong with that?

There is nothing wrong with such an agreement. The problem is that the industrial revolution ushered in a whole new economic model – capitalism – which completely changed the power structure of society. It’s no longer just governments threatening individual freedoms. People running huge corporations and financiers controlling vast fortunes are now just as powerful as governments. Since they essentially control the economy – the liveblood of society – they are arguably the dominant powers in industrialized countries. And economic and financial power corrupt just as much as political power.

What do we need?

The economy is supposed to provide the goods and services society needs, and to fairly distribute the money to pay for these things. Instead, capitalist economies controlled by powerful corporations provide whatever makes a profit, even if their offerings are worthless or even harmful. They control the wealth distribution in society by setting prices and employees’ wages, and by helping themselves to the bulk of the created wealth. They get away with avoiding taxes, money that should be available for financing social programs and infrastructure. Capitalism has even brought life to the brink of extinction by corporations’ contributions to the climate crisis.

Individuals are no match for corporate power. We need governments to protect society against economic abuses. Only governments can pass the necessary laws and regulations, and only governments can enforce them. We cannot allow big business to be above the law. We need to define not only what governments and ordinary citizens can do. We need a new social contract that also defines the rights and obligations of the business world.