What We Owe Each Other

A New Social Contract for a Better Society

Minouche Shafik

• Publisher: Princeton University Press
• Year: 2021
• ISBN:
  9780691220277
• Topic: Economia
• Subtopic: Teoria economica

From one of the leading policy experts of our time, an urgent rethinking of how we can better support each other to thrive Whether we realize it or not, all of us participate in the social contract every day through mutual obligations among our family, community, place of work, and fellow citizens. Caring for others, paying taxes, and benefiting from public services define the social contract that supports and binds us together as a society. Today, however, our social contract has been broken by changing gender roles, technology, new models of work, aging, and the perils of climate change.Minouche Shafik takes us through stages of life we all experience—raising children, getting educated, falling ill, working, growing old—and shows how a reordering of our societies is possible. Drawing on evidence and examples from around the world, she shows how every country can provide citizens with the basics to have a decent life and be able to contribute to society. But we owe each other more than this. A more generous and inclusive society would also share more risks collectively and ask everyone to contribute for as long as they can so that everyone can fulfill their potential. What We Owe Each Other identifies the key elements of a better social contract that recognizes our interdependencies, supports and invests more in each other, and expects more of individuals in return.Powerful, hopeful, and thought-provoking, What We Owe Each Other provides practical solutions to current challenges and demonstrates how we can build a better society—together.

1

What Is the Social Contract?

Society is everything. Many of us go through life thinking we are self-made and self-sufficient. Some may credit (or blame) their families for their lot in life, but rarely do we think about the bigger forces that determine our destinies – the country we happen to be born in, the social attitudes prevalent at a particular moment in history, the institutions that govern our economy and politics, and the randomness of just plain luck. These wider factors determine the kind of society in which we live and are the most important determinants of our human experience.

Consider an example of a life in which society plays a very small role. In 2004 I spent time with a family in the Ecuadorian Amazon. Antonia, my host, had twelve children, and her oldest daughter was about to give birth to her first grandchild. They lived on the edge of the rainforest with no road, electricity, running water or sanitation. There was a school, but a considerable distance away, so the children’s attendance was patchy. However, Antonia was a community health worker and had access via radio to a doctor in a nearby town who could provide advice to her and others. Apart from this service (arranged by a charity), she and her husband had to be completely self-reliant, gathering food from the forest, educating their children on how to survive in their environment. On the rare occasions when they needed something they could not find or make themselves (like a cooking pot), they panned for flecks of gold in the Amazon, which they could exchange for goods in a market at the end of a long journey by canoe.

This may seem like a very extreme and distant example, but it serves to remind us how accustomed we are to the things that living collectively in a society gives us – infrastructure, accessible education and health care, laws that enable markets in which we can earn incomes and access goods and services. Antonia and her daughter promised to name the baby they were expecting Minouche, which was a great honour. I often wonder what kind of life that other Minouche will be having as a result of being born in a very different society.

The way a society is structured has profound consequences for the lives of those living in it and the architecture of opportunity they face. It determines not just their material conditions but also their well-being, relationships and life prospects. The structure of society is determined by institutions such as its political and legal systems, the economy, the way in which family and community life are organised.¹ All societies choose to have some things left to individuals and others determined collectively. The norms and rules governing how those collective institutions operate is what I will call the social contract, which I believe is the most important determinant of the kinds of lives we lead. Because it is so important and because most people cannot easily leave their societies, the social contract requires the consent of the majority and periodic renegotiation as circumstances change.

We are living at a time when, in many societies, people feel disappointed by the social contract and the life it offers them. This is despite the huge gains in material progress the world has seen over the last 50 years.² Surveys find that four out of every five people believe ‘the system’ is not working for them in the United States, Europe, China, India and various developing countries.³ In many advanced countries the majority no longer believe their children will be better off than they are. In the developing world, aspirations for education, health care and jobs are often well ahead of a society’s ability to deliver them. And across the world workers worry about losing their livelihoods because of a lack of skills or the prospect of automation.

This disaffection takes many different forms. Some in rural areas and small towns argue that disproportionate attention and resources go to cities at their expense. Native populations in some countries feel that immigrants are changing their societies and receiving benefits before they have paid their dues. Some members of once-dominant races resent other ethnicities demanding equal treatment. Some men feel threatened by newly empowered women and policies such as quotas and targets that disadvantage them. A proportion of the young are increasingly vocal about the elderly, who they believe consume a growing share of resources in health care and pensions while leaving them with a legacy of debt and environmental destruction. Some older people feel the young are not sufficiently grateful for past sacrifices made on their behalf.

This book tries to get at the root causes of this disappointment through the lens of the social contract: an approach that recognises the primacy of expectations and mutuality, the efficiency and value in collective provision and sharing risks, the importance in adapting to a changed world if we are not to witness a destructive fracturing of the mutual trust on which citizenship and society is based. How much does society owe an individual and what does an individual owe in return? And in this time of great change, how might those mutual obligations need to adapt? The answers to these questions would appear to be at the heart of solving many of the political, economic and social challenges facing the world today.

Expectations and the Social Contract

Who is ‘we’ in the question ‘What do we owe each other?’ To whom do we feel mutual obligations? This is a complex question that has personal, cultural and historical dimensions. I like to think of mutual obligations as concentric circles. At the core, most of us feel the greatest obligations to our immediate family and friends. Parents will make huge sacrifices for their children; friends will go to great lengths to support each other. In the next ring of the circle is the community in which we live. This is often the domain of voluntary groups, religious associations, neighbourhood and local government structures. In the next ring is the nation state, in which we owe each other the duties of citizenship – paying taxes, obeying the laws, voting, engaging in public life. In a regional integration project such as the European Union, there has been an attempt to foster a sense of ‘we’ in another ring consisting of citizens of the nation states that are members of the union. The final circle is the world, where the obligations may be weaker but become more apparent when there is a humanitarian crisis or a global challenge like climate change, when international solidarity becomes important.

Every day we navigate mutual obligations and take care of others, not just within our families, but within communities and nation states, far in excess of our narrow self-interest. Most obviously we pay taxes that will benefit people in other parts of the country (and sometimes other parts of the world) who we will never meet. We do this because we believe that living in a fair, well managed society helps us to live a better life and we are willing to contribute our share to achieving that for our own interest and because of solidarity with our fellow citizens. Employers in many countries are required to offer benefits to their employees, such as parental leave and pensions, and many add voluntary benefits on top of those. For the provision of fuel and water, transport and sanitation, we rely on publicly provided infrastructure, which we expect to be universally available. We expect decent schools and health care and safety on our streets in return for which we obey the law. All of these are ways in which we balance our individual desires and the need to live collectively with other people. This collective solidarity extends across generations when we make long-term investments and conversely when we consume resources that take possibilities away from future generations.

Throughout history, people have pooled their resources to varying degrees in order to enjoy the benefits and manage the risks that come from living in large groups. These benefits include specialisation of labour, mutual defence and shared infrastructure. As groups get larger – from family to village to major cities and nation states – the mutual obligations become more abstract and are often mediated through institutions and the political process. Rather than ‘owe’ something to our family or community, our obligations morph into solidarity with fellow citizens or duty to our country. In the past, for example, families educated their children, cared for the sick and unemployed at home; today most rely on schools, medical facilities and (in some countries) unemployment benefits paid by the state. That is why today people are expected to contribute to the common good when they are productive adults and, in exchange, get an education when they are young and support when they are sick, unemployed or old. The exact nature of these expectations varies according to the cultural norms, institutions, policies and laws that define the rights and obligations of individuals relative to those of the wider society, but the existence of such expectations is universal.

While these expectations have existed for as long as human society, they have changed considerably over time. For example, for much of history in virtually every society caring for the young and the old has been the responsibility of women, while the education, health care and employment of the next generation has tended to be a collective responsibility, as it is today. In most countries, there has also been some expectation that wealthier citizens would provide some protection or support to the poor in their communities. Historically, this voluntary approach to charity, often enabled by religious institutions, proved inadequate and had very uneven outcomes. As countries have become richer, citizens have increasingly expected the state to take responsibility for providing services on a more consistent and equitable basis and to raise the required revenues through taxation.⁴

Philosophers have long debated how free individuals might be persuaded to live together in a society and what a reasonable set of expectations should be.⁵ It was during the Enlightenment though that this concept – of voluntary mutual dependence in return for otherwise unattainable benefits – became known as the social contract. Different thinkers argued for different kinds of social contract, but all initially framed it in the prevailing terms of the day: the rights of individuals in a monarchy.

Thomas Hobbes argued that self-interested but rational individuals should voluntarily submit to the authority of an absolute sovereign as the only sure way to avoid the brutish state of nature.⁶ John Locke’s view was that the purpose of the social contract was to preserve the lives, freedoms and well-being of citizens: thus, if the sovereign failed to protect those rights, it was legitimate for citizens to revolt and create a new political society.⁷ Jean-Jacques Rousseau was concerned with preserving freedom while recognising that because humans were increasingly interdependent, compromises were required in order to live together in a good society. According to him, the social contract required political institutions – such as a representative parliament – that allowed citizens to make the laws to which they would therefore voluntarily subject themselves, thereby providing the justification for the authority of the state.⁸ For all three philosophers, expectations of the individual and of the state were minimal by comparison with our own: the social contract was merely the precondition for living in a society free from exploitation.

But as monarchies increasingly had to cede power to citizens, debate about the social contract shifted to the obligations of citizenship and what we owed each other. In The Theory of Moral Sentiments Adam Smith, whose thinking laid the foundations for modern economics, talked about the need for ‘circles of sympathy’ whereby self-interested individuals also cared about the well-being of others.⁹ According to Smith, the social solidarity that empathy fostered had moral, political and economic rationales.¹⁰ The moral rationale is that in every society, individuals have basic needs – such as access to basic health care and safety, enough income to avoid being excluded from society, enough education to find work and act as informed citizens – that it would be morally wrong not to provide. The political rationale for social solidarity is that, for democracies to function, citizens have to share enough common experience to feel they have a common purpose.¹¹ Finally, the economic rationale is that pooling risks for things like sickness, unemployment and pensions across a large number of citizens is more efficient than individuals trying to insure themselves.

In Smith’s vision there are also limits to sympathy, to what the individual can expect, and an unwillingness to share risks when individuals behave ‘badly’. And so it is today. Risks that are not the fault of the individual – disability or a job loss resulting from an accident or sudden economic shock – are the ones that most people are willing to share. However, if losses result from smoking or drunk driving or poor performance at work, many believe that individuals should suffer the consequences of their actions. At the same time, others argue that bad behaviour is most often the product of upbringing, deprivation or even mental illness. Moral judgements about individual behaviour and responsibility are often central to questions about how generous the social contract should be.

The most influential twentieth-century philosopher to discuss the social contract as the basis for creating a just society was John Rawls.¹² He argued that we should design our social contract behind a ‘veil of ignorance’ – meaning without prior knowledge as to what our own status in that society would be. Because we did not know if we would start life privileged or a pauper, we would create a social contract that was just. His principle of equal opportunity states that ‘those who are at the same level of talent and ability, and have the same willingness to use them, should have the same prospects of success regardless of their initial place in the social system’.¹³ Today, the notion of equality of opportunity lies at the heart of many citizens’ expectations the world over, and the perception of its absence is an important source of anxiety and disaffection.

In modern societies there is an expectation that those who try hard will improve their lot. This was not always the case, and in many traditional societies there was an almost fatalistic acceptance of the prevailing hierarchy, with some arguing it was essential for social order. But today most countries include enabling social mobility as part of the social contract because it seems more fair, binds society together and enables collective action. The poor need to have the expectation that they or their children will be better off. The rich need to fear their children may be poorer to foster concern about the less well off and create a sense of common interest.

In practice, countries vary enormously in the architecture of opportunity that they offer their citizens. For example, in Denmark it takes on average about two generations for someone to go from being lower income to middle income; in the UK it is five, and in highly unequal countries like Brazil, South Africa and Colombia it takes more than nine generations. These differences in social mobility (Figure 1) are part of the reason we see most frustration with the social contract in precisely those countries where the prospects of improving your lot over time are low or have fallen in the recent period. There is also much evidence that disadvantage, both within families and geographically, is highly persistent across many generations.¹⁴

The Social Contract, the State and the Private Sector

Many people think the social contract is the same as the welfare state, but the concepts are not synonymous. The social contract determines what is to be provided collectively and by whom; the welfare state is one of several possible means of provision. In fact, in every society a huge amount of what falls within the bounds of the social contr...