Healing Our Political Divisions - Nine Dimensions of Social Contract Fairness

In new research published in The Nature and Dynamics of Collaboration (MIT Press), INET Oxford Executive Director, Eric D. Beinhocker, provides a general theory for the social contracts that underpin societal collaboration.

Drawing on a large body of behavioural research, Beinhocker identifies nine key dimensions of social contract fairness and uses his theory to explain the breakdown in political collaboration in the United States. Beinhocker argues that for large segments of the U.S population, all nine dimensions of social contract fairness were broken during the mid 1970s-2010s, setting off the current wave of political populism.

Beinhocker's Nine Universal Dimensions of Social Contract Fairness

The table below describes how fair social contracts look when met...and when broken.

The social psychologist Jonathan Haidt likens human moral preferences to taste buds, and just as every human has the same five taste receptors (sweet, sour, salty, bitter, and umami), but individuals and cultures vary in their preferences as to how these universal tastes are combined in specific foods, so too Haidt identifies a set of universal moral preferences that individuals and cultures combine in different ways. The nine dimensions of social contract fairness are closely related to moral preferences and Beinhocker propose that they are likewise highly universal and applicable across cultures, but individuals and cultures will vary in how they are interpreted, weighted, and traded off in specific social contracts.

Social Contract Violation and Political Populism in the US and beyond

Over the past decades, the United States and various other countries have witnessed a breakdown in political collaboration, increased polarization, a loss of faith in democracy, a loss of trust in key institutions, and a rise of populist and authoritarian political figures.

While the politics and policies of the right-wing and left-wing populists differ starkly, the emotional structure of popular support has been similar on both sides, founded on feelings of moral outrage over a broken social contract. Beinhocker contends that these feelings of a broken contract among large segments of voters are in many cases justified.

A shift toward more so-called “neoliberal” economic policies, both in right-wing (e.g., Reagan, Thatcher) and left-wing (e.g., Clinton, Blair) governments, resulted in:

• shifting the tax burden away from the wealthiest individuals and corporations to middle- and lower-income workers,
• relative reductions in public investment (e.g., education, infrastructure),
• weakening of the social safety net,
• changes to labour market regulations that reduced union and worker power,
• central bank policies that prioritized low inflation over employment
  and wage growth, and
• trade policies that favoured corporate over worker interests.

At the same time, changes in corporate practices (e.g., moving from balanced stakeholder to shareholder value-maximizing governance, outsourcing, off-shoring, reductions in pension and health benefits, less secure employment) shifted gains in productivity away from workers and toward shareholders, while reducing worker power and security.

How to Restore the Social Contract and Tackle Populism

This leads to Beinhocker's key conclusion: “the United States and other similarly affected countries cannot heal political divisions, renew faith in democracy, and reinvigorate collaboration at a national scale, unless the social contract is restored.”

A key aspect of the psychology of broken contracts is that feelings of contract violation must first be acknowledged and empathized with before people are willing to listen and engage in contract reconstruction.

If this hypothesis is correct—that the attributes of fair social contracts have high universality—then those nine attributes can provide a template for reducing social divisions and increasing collaboration by pointing to areas of broad agreement on goals while allowing debate on specific policies. For example, restoring perceptions of reciprocity could be aided by both increased tax fairness (a traditional cause of the left)
and welfare system reform (a traditional cause of the right). Increasing agency could be helped both by increasing worker power (a traditional cause of the left) and devolving central political power (a traditional cause of the right).

Greater agreement on ends (a fairer social contract) and more constructive debates on means (specific policies) could help facilitate the return of a more functional politics.

Read the full chapter 'Fair Social Contracts and the Foundations of Large-Scale Collaboration', in The Nature and Dynamics of Collaboration (MIT Press).