Designing a Better Social Contract in 2021

Before COVID-19 laid waste to 2020, escalating anxiety about climate change, inequality, intergenerational tension and other social ills gave rise to calls for ‘a new social contract’. When UN Secretary-General António Guterres raised the need for a new social contract in his Mandela lecture last year, it set the agenda for many more international and national conversations about this concept. Social contracts — and preferably new social contracts — are now called for by politicians, academics and global leaders alike. It has become a buzz word, presented as a silver bullet that will somehow heal societal divisions, knit together a frayed social fabric and rebuild nations after the pandemic. So, what exactly is a ‘social contract’? It depends on who you ask.

Some simply want a return to their old “normality”. Others are looking for improvement rather than a return to the fractured, polarized, unequal world we had. Most calls for social contracts focus on the content and substance of such contracts: social security systems, health systems, or the distribution of economic and social resources.

The Secretary-General’s plan for social contracts focuses on the national level, with investments in social cohesion, a new generation of social policies, and reduced inequality and exclusion. And whilst the goals are highly welcomed and echo demands on the ground, much needs to be done in terms of processes, organization and the identification of deliverables in order to ensure that the call becomes something more than a wish list. Right now, there is a great danger that these concepts and goals will be conflated, resulting in something with very little value or that the calls will be used to defuse legitimate social demands in order to promote growth for the few, rather than serving the whole of society that they should be intended for.

Relatively few of the calls for social contracts focus on their structure and architecture — the formation of relationships between different parties in society that makes social contracts successful. It is only through a contractual relationship with organized parties that outlines deliverables, timetables and evaluations that societies will achieve what calls for social contracts expect: collective rebuilding, trust-building and actual recovery. In other words, social contracts need to have parties, or they are not contracts.

Social contracts do not refer simply to there being a relationship between states and citizens. Nor only to better governance or government delivery. They are agreements between parties, such as states, organized civil society and the corporate sector. They refer to relationships with commitments, deliverables and responsibilities on all sides. For example, social contracts could ensure wage moderation for a limited period in exchange for sweeping job creation programs; a halt to demonstrations for massive education investment; a limit to protests for affirmative action programs; or a commitment to grow productivity in exchange for marginal taxation. Moreover, for contracts to be social contracts, they have to include the goals of social reform and improvement: such as ensuring justice, reducing violence and bridging the inequality the gap.

The concept of social contracts is not new. Modern Scandinavian societies and welfare states were built on them. Before the Second World War, Norway was among the poorest countries in Europe with the highest level of industrial conflict. Today, it is one of the richest countries in the world, and is one of the few countries that has managed to navigate the financial crisis and the pandemic relatively safely. Oil and gas helps explain Norway’s success, but its policies, institution-building and tripartite agreements between trade unions, employers and the State are owed a lot of the credit. An active citizenry who believe in both solidarity and building institutions is also key to this model.

Social contracts are often called for when crises hit and have been found to have particular value in recovery processes. Yet in between crises, organized tripartite negotiations and institutionalized consultations with broader groups also help stabilize developments, set a course, and build trust and resilience. South Africa built one of the world’s most corporatist social contract systems after the first democratic election in the post-apartheid period. The National Economic Development and Labour Council was set up to structure negotiations around economic policies and social developments between the State and organized groups, like employers and trade unions, and organized groups representing youth, the informal sector and others. Last year, the Republic of Korea negotiated a “New Deal” with organized groups to kick start a ‘green shift’, digitalization of the workforce and job creation. While these examples indicate the need for organized groups to be represented around the table, consultation with representative groups around needs and commitments is also possible in countries where groups are not yet organized in formalized groupings. Experiences from several peace accords negotiated over the past decades indicate the same need for representation of and consultations with broad groups to inform a search for common social purposes.

Now, the call for social contracts is back with vigor, and is echoing around the world. But with increased use comes a risk of inflation. Actual social contracts can have huge benefits. They may contribute to growth, redistribution and global emancipation from the inequities of the post-World War II global hierarchy of nations, and the damage wrought by the Washington Consensus. They will not do enough to ensure a leveling of the global playing field between rich and poor countries. Nor will they make them immune from global crises that ignore national boundaries like climate change or pandemics. So, we also need a global deal that recognizes human solidarity and the need for global equity. Yet, social contracts — if designed well — can build and provide recovery strategies, rebuild trust and kickstart a new kind of development that ensures justice. These contracts have to be based on broad consultation, and on confronting violence, patriarchy and racism. Unless they deal with these underlying problems, they are merely a band-aid. Moreover, they have to be both “social” and an actual “contract” between parties to be worthy of the term. The urgency of this crisis gives us no time for empty words.