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The original sin was a Bill of Rights without a Bill of Duties.
The Statue of Liberty without a Statue of Responsibility.
Rights imply obligations, and the two combined make a social contract.
Unfortunately, I see our social contracts broken on a daily basis. On the train, a homeless man smokes fentanyl, filling the cabin with smoke. In my local CVS, a man comes in and steals a few bags of chips. Not only are both of these acts illegal, but they are breaches of the social contract. Don’t smoke in public. Don’t steal. It’s “not cool.”
You know what else isn’t cool? Decades of disinvestment that puts people in a precarious state. We’re breaking the other side of the social contract:
We let addictification run amok, allowing corporations to pillage our minds & bodies. Fentanyl abuse is the result.
CEOs make 400 times their employees, breaking the contract of “work together and distribute the gains.” Stealing is the result.
I don’t blame those homeless men for breaking the social contract. We broke our end first. Broken people break contracts.
These are just a few examples from a larger trend of “Contract Collapse.” Why have we lost our social contract, and how can we rebuild it? (And no, the answer isn’t “more lawyers to write more contracts.”)
I. What is Contract Collapse?
First, what is the social contract?
The idea began to coalesce during the Age of Enlightenment, starting with Hobbes’ Leviathan in 1651. Hobbes’ core idea was that without a state we would devolve into Mad Max. (Or god forbid Mad Marx.)
We need a state.
So we create a so-called “social contract” between the people and the state: the people pay taxes and in exchange the state enforces the rule of law. It’s not a bad deal. The state has legitimacy through the “consent of the governed.” No Mad Max. No Mad Marx.
The social contract started as an agreement between people and the state but has expanded beyond to include all agreements we owe each other. The social contract is the set of all agreements. It’s the cultural fabric of agreements between individuals and institutions. These agreements can take many forms:
Norms: Don’t litter!
Laws: Don’t litter in Singapore, punishable by death
Financial transactions: $8 for an oat milk latte
Code: 1 ETH to generate 10 JPEGs
In an average day you might complete dozens of these agreements, none of which existed before modern civilization. But Winter is Coming. 50 years ago we had a strong set of collective agreements that drove societal benefit. Now we have a tattered tapestry of agreements and struggle to get anything done. This is Contract Collapse.
Contract Collapse is part of a larger picture detailed in books like The Collapse of Complex Societies. There’s a lot of collapse happening and it’s hard to disentangle them sometimes. ¯\_(ツ)_/¯
Institutional collapse is the decline of public institutions. For example, trust in the US government has decreased from 70% to 20% in the last 50 years.
Context collapse is our loss of shared context on social media. We have an abundance of narratives but no metanarrative.
And of course, the current and future ecosystem collapse from climate change. Bye bye coral reef, sea ice, and forests. It was good knowing ya.
We’re in a vicious cycle. Contracts collapse, which leads to institutional and context collapse, which leads to more contract collapse. And before you know it even the fishies know that mommy and daddy are fighting.
II. History of the social contract
If Hobbes came up with the idea of a social contract, the US Constitution was its first real manifestation.
This piece of paper guaranteed “all people” the right to life, liberty, and the pursuit of happiness. (And the right for a DAO to buy it.) Americans got those rights in exchange for taxes fueled by a Protestant work ethic. Of course by “all people”, the Constitution actually meant white land-owning men. Most people didn’t get any rights. The actual agreement was “rich white men got freedom while the rest got little.” Indigenous folks, slaves, and women mostly put value into the pot without getting anything in return.
This changed a lot in the 1900s:
From 1900-1945, the Progressive Era and the New Deal birthed a fresh social contract. Women received the right to vote in 1920. The 5-day work week was established in 1929. Minimum wage and the modern welfare state were created in the 30s.
After WWII, this social contract was re-codified as the American Dream, but again mostly just for older rich white men. Back when boomers were cool, they pushed back on their Silent Generation parents. In the 60s, the Vietnam anti-war movement and Civil Rights Movement protested against the military draft and a segregated society. “We’ll go to war, but not for that.” “Separate is not equal.”
We left Vietnam and integrated society. But these wins did not come without cost, which bore out in the 70s, 80s, and 90s. As Heather McGhee has expertly detailed in The Sum of Us, white folks did not want black folks as part of their social contract agreements. White communities filled their public pools with concrete and voted for the destruction of social programs. WTF Happened in 1971? Partially getting off the gold standard, but mostly white pushback on integration.
III. Contract collapse in the 2020s
Here are some examples of modern Contract Collapse:
Inequality: The old agreement was that CEOs and employees would work together and equitably distribute the gains. Now, CEOs make 400x a typical worker. No wonder we’ve seen the rise of populism. Break the agreement and reap what you sow.
Debt: The old agreement was to pay into Medicare and Social Security and then receive it when you retire. But with an aging population and deficit spending, this agreement will break. We’re going to double the percentage of GDP spent on seniors. Inflows won’t be able to keep up with spending.
What will happen? Greece cut pensions 10 times after the financial crisis, totaling 70%. We might need to do the same.
Polarization & Immigration: We used to have the old agreement of the melting pot: America was a land of opportunity where all were welcome and could achieve the American Dream. Sure, we disagreed on some things, but in the end we were all American.
Now, almost half of us have very unfavorable views of the other party and states ship their immigrants to other states in a game of hot potato.
Workers: As Stratechery notes here, the shift in value creation from industry to digital technology will require a shift in our social contract.
Industrial Era contracts looked something like this: labor works for corporations, both of which are taxed by the government in exchange for protection.
But the Information Era will look something like this: gig labor works for tech both of which are taxed by the government in exchange for less regulation & UBI.
Too Many Agreements: The examples above show how we are breaking existing contracts. But there’s another form of Contract Collapse: the overloading of ineffective agreements.
500 years ago, we only had a few contracts that just applied to a few nobles. But now, everyone has a right to everything! This is net good, but we’ve gone too far. Ezra Klein calls this Everything-Bagel Liberalism: we try to put everything (ESG, DEI) into every policy, which makes the policies less effective.
The old agreement was basic rights for basic taxes.
The new agreement is just larping: say we’re providing all rights for all people while actually driving no outcomes for anyone.
All problems today can be reframed as a breach of the social contract. Show me a problem and I’ll show you a broken agreement. Show me late-stage capitalism and I’ll show you Contract Collapse.
IV. Rebuilding the social contract
When the social contract is working well, no one defects. There’s a sense of social cohesion and direction. Everyone is bought in, like a championship sports team. Jonathan Haidt calls this moral capital: the set of agreements that enable a community to suppress selfishness and make cooperation possible.
Modern China has lots of moral capital. They get shit done. But moral capital is not always good. Nazi Germany also got a lot done.
Societies with a strong social contract and lots of moral capital are like a well-functioning organism. My body’s cells are in symbiosis with each other, all doing their job in service of the whole. But with cancer, the cell defects. It extracts from the whole and says, “I’m going to get mine.”
That’s what we have today. Adversarialism and defection. No tit, no tat.
How do we rebuild our social contract? Some ideas:
Play tit for tat. Approach every situation with openness, trying to do what’s right both for you and the other party. But if they defect, leave. Play long-term games with long-term people. Build networks of positive-sum games. Trust others and earn others’ trust.
Turn agreements (where you expect a return) into pledges (where you expect nothing). State your pronouns, pledge to give 10% of your income, and become vegetarian. Do these things just because they are good. Engage in pro-social behavior and the world will shift.
Build new agreements from code. Law was the old way to crystallize IRL social contracts. Smart contracts are the new way to crystallize social contracts. It’s in the name! smart contracts 🤝 social contracts.
Re-commit institutions to a renewed social contract for the 21st century. We did this during the Progressive Era when elites sacrificed near-term self-interest for long-term collective interests. We need to do this again. Return capital gains tax from 15% to 40%. Use the Green New Deal to decarbonize the economy while providing good jobs. Make sure the gains from AI are distributed through UBI.
Not sure what will work, but hoping for an agreement to create new shared agreements.
This week on the Rhys Show:
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