It’s time for a new social contract.
And a more conscious capitalism.
Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.
— Milton Friedman
A few months into this global pandemic, we are at an important inflection point. While parts of our economy remain at a standstill, issues bubbling at the surface of societies are erupting, in a number of areas — from inequality, to the “future” of work.
Our current social contract is woefully out of date, not working for the majority of people, and extremely fragile.
We hope to help broaden this conversation to engage a range of citizens, beyond economists, politicians, and policy experts.
First, what is a social contract?
The social contract is an unofficial agreement shared by everyone in a society — we give up certain individual freedoms in exchange for security. We follow laws and norms, we pay taxes; in return we expect protections from our government. The concept has been around for centuries, popularized by philosophers including Rousseau.
In theory, this agreement helps us organize society for mutual benefit.
In the US, the social contract is based on a belief in meritocracy: if you get a decent education, work hard, and pay your taxes, you will earn (financial) success. This simplified logic is at the heart of the old ‘American dream’.
Here in Canada, we accept a bigger government role and higher taxes, in exchange for a broad base of public health care and education, and more social programs than our American neighbours.
Everyone from anxious twitter users to the UN Secretary General have called this pandemic our biggest challenge since World War II.
Crises trigger big shifts. The Great Depression was followed by the New Deal; 9/11 shifted resources towards securitization; the 2008 financial crisis triggered a reversal of deregulation.
In a matter of weeks, we have experienced how vulnerable our global systems are to shocks. A small link in the global chain — the lack of medical equipment and resources — led to a drastic halt of several economies, as pointed out by Malcolm Gladwell.
Economies of the west have been brought to a standstill because we don’t have enough masks and gowns. For the want of a mask, the kingdom is being lost.
— Malcolm Gladwell
Along with the short-sightedness in the global medical supplies market, we have seen plummeting oil prices and a restriction on how cheaply supermarkets can replenish food.
Front line workers and vulnerable populations bear an increased burden, while those with more privilege point to the pandemic as a time for reflection and growth.
There are bright spots: air in Los Angeles hasn’t been this clean since World War II; the Himalayas are visible from afar for the first time in decades. The scale of the shift to remote work is finally addressing needs of underserved segments, including those with disabilities.
Now is the time for big shifts; the real question is which shifts will happen?
Will these ruptures in our “normal” lead to a demand for healthier local and global cultures? Will short term relief packages lead to longer term policy shifts? Will we finally place people and planet at the center of decisions?
Capitalism is the elephant in the room when it comes to the unraveling of our social contract. Our current version was shaped by post WWII agreements and strongly influenced by market-oriented neoliberal policies since the 1980s.
The US is an easy example of gaps in this model, with complex intersectionality amplifying ills (ie. Black communities in the US hit disproportionately, experiencing underlying health conditions, poverty, and systemic inequities). Many western economies face similar concerns.
(Edited June 9th: Most recently, Trevor Noah’s take on a ravaged social contract in the US amidst global protests against anti-Black racism is very powerful. This medium piece by President Barack Obama also reminds organizers of the need for both protest and policy change.)
The pandemic (and all complex problems) help us acknowledge the need to prioritize longer term progress and collaboration over shorter term competitive interests — not typically a capitalist strong suit.
Two imminent concerns with our current model include extreme wealth inequality and the critical role of data use.
The Billionaire problem, and the 20%
Billionaires have more wealth than over half of the world’s population. This is not an exaggeration (it’s actually an understatement; according to Oxfam, the world’s 2,153 billionaires have more wealth than 60% of the global population, or 4.6 billion people).
Should billionaires be taxed more? Absolutely. Is it ridiculous that a handful of American billionaires could solve redistribution issues in that country? Also Yes!
Billionaires themselves acknowledge the problem… sort of. To the surprise of nobody, few of them call for truly radical reforms.
Bill Gates stepping forward in this crisis is an interesting case. On one hand, a billionaire putting billions on the line to speed up the process of finding an effective vaccine — laudable! On the other hand, he is a top donor to the World Health Organization (WHO), raising eyebrows about his influence on global priorities.
The internet’s current favourite billionaire (we know that’s not really a thing!), is Chamath Palihapitiya, who gave us great quotables through this CNBC interview. Palihapitiya expressed disdain for the federal bailout of hedge funds over taking care of “Main street” through higher direct payments.
We’ll leave further arguments about billionaires to people like AOC, who famously said “No one ever makes a billion dollars. You take a billion dollars”.
A more interesting tension may be with the level of wealth the top 20% of households in Canada and the US hold. Here in Canada, the top quartile holds 67% of wealth (in assets), according to the Fraser Institute; estimates are higher for the US. Arguments by the Fraser Institute range on whether wealth is “stolen, inherited or earned”, and there are important factors that may be correlated — including financial literacy and consumption patterns.
Regardless, many of us reading this (and writing it) are part of the 20% who have access to much more wealth than the majority of our world.
The power of information: a new ‘mutant’ capitalism
During this pandemic, we’ve seen countries use contact tracing to ensure physical distancing measures are being followed. Arguably an important use of surveillance for public health. But short term measures for public good and longer-term acceptance of surveillance are very different things.
Author Shoshana Zuboff raises clear concerns about a ‘mutant’ form of capitalism that has emerged, which she terms “surveillance capitalism”. In this variant, Zuboff emphasizes surveillance as the business model of the internet; companies including Google and Facebook provide free services to billions, while monitoring behaviour to surprising levels of detail without explicit consent.
Democracy has slept, while surveillance capitalists amassed unprecedented concentrations of knowledge and power.
— Shoshana Zuboff
That companies have our data is not news. But the extent of this data and the impacts run deep, affecting our social contracts. The divide between what writer John Naughton calls the “watchers” and the “watched” is creating an asymmetry of knowledge and power — concentrated in the hands of a small number of companies. At what point do we draw clear ethical and legal lines?
As we rethink the version of capitalism we have implicitly accepted, there is a need for companies to be held accountable, in order to prevent information asymmetries from deepening further.
We are facing a concerning new form of inequality.
Tales of the automation threat have been shared many times before.
Today’s future of work transition is a different beast though, for one reason: beyond manual labour, automation is permeating cognitive work. Cashiers and lawyers are both at risk. Tasks and outputs may be completely different, but jobs with a degree of repetition are ones machines excel at.
Computing has finally made the leap to being smarter than us at analysing. AI, advanced robotics, the Internet of Things. This knack for intelligently consuming huge amounts of data has many experts ringing alarm bells.
The World Bank estimates 57% of jobs across the OECD are at risk of becoming obsolete from automation in two decades. Current welfare systems are clearly not equipped for this scale of unemployment. (For perspective, 10% of workers applying for unemployment insurance in the past month helped trigger a $2 trillion stimulus package in the US.)
Barack Obama expressed a critical AI- related concern in conversation with MIT’s Joi Ito: how we will value roles that are not adequately valued in the market.
How do we make sure that folks have a living income? And what does this mean in terms of us supporting things like the arts or culture or making sure our veterans are getting cared for? The social compact has to accommodate these new technologies, and our economic models have to accommodate them.
— Barack Obama
Though it’s understandable to be an alarmist about the fourth industrial revolution, there are positive benefits. It has always been human nature to innovate; in the words of Daft Punk, to go harder, better, faster, stronger.
Smart factories will increase productivity. Smaller, everyday tasks will become less cumbersome (driverless cars, robotic cleaners, 3D-printed customisable parts), ideally improving quality of life.
So where do we go from here? How do we avoid obsolescence in an automated future?
The answer lies in skills.
Humans remain better than machines in one crucial area: our ability to break repetition. Machines are most productive in well-defined work. But they struggle with tasks which require active decision making, planning, people management and creativity. Human intuition is required to make a series of judgement calls, and create things that motivate and inspire us to act. This type of work is subjective and contextual by design.
The widely-cited 21st century skills by the World Economic Forum, are designed to help us remain useful and resilient as industries shift toward smart systems. These skills are innate to humans to a degree; still, we need more focus on developing critical thinkers, strong communicators and creative problem solvers.
Certain industries are evolving to benefit from automation, such as healthcare, education and a range of creative industries, including gaming and Alternate Reality.
AI and machine learning are enabling new models and efficiencies. While models shift, the value of humans is undeniable for connection, depth, and critical decision making.
Informed takes are starting to take shape on where we are headed, including this compilation of ‘big thinkers’ by Politico, this Munk debate podcast featuring Malcolm Gladwell, and this deck of possible futures by Deloitte and Salesforce.
Moving forward, we hope policy makers and leaders anchor the economy within a framework of conscious capitalism, one that puts sustainable futures at its very core, for humans and our planet.
Given the need to address millions of jobs lost in Canada and the US, and lingering income disparity, now may be an opportune time for Universal Basic Income (UBI) to be (back) on the table.
Recently, Spain announced it has decided to adopt UBI as a long-term policy. In the US, Andrew Yang and his #YangGang deserve credit for bringing UBI to the mainstream through his presidential campaign. It’s a concept that appeals to both the left and right now for different reasons, as this Stuff You Should Know podcast explains.
In re-negotiating a more relevant social contract, we need to acknowledge and understand vast inequalities in wealth and information in our current system, and work to rectify them. We also need to promote more 21st century skill development to address challenges with AI and automation.
Most importantly, the table needs to be extended to a range of voices, to consciously decide what we value and how we take care of people at the core.
We believe this is necessary in order for all of us to thrive on the other side of this pandemic.
Roopa Reddy is a Lecturer in Social Entrepreneurship at the University of Waterloo, in Canada. This piece was written in collaboration with Rayson Ho, Principal, Xynteo, Norway, a company oriented towards Sustainable Futures. Both are currently fascinated by the (positive) shifts that may come out of this pandemic.
This is the second in a series of posts considering post pandemic shifts, in areas of: education; social and economic policy; and the environment. Access the shifts in education piece here.
*Note: In light of recent events and emerging conversations on systemic racism, anti-Black racism and social contracts, this piece was edited on June 9th to include a link to Trevor Noah’s insightful take on the ravaged social contract in the US.
