How America Got the Social Contract Upside Down

For a number of years I have held that the world needs a new social contract.  However, I had a hard time articulating the nature of that contract. I only knew that the current contract wasn’t working.

I read a short essay a couple of days ago by Umair Haque which held that we already have that contract; it’s just that America isn’t even aware of it, and the rest of the world hasn’t yet become aware of this historical lesson.

The manifestations of that contract are present throughout Europe and Canada, but not in the U.S.

After a long preamble in which the author denies being a political being he does admit to being keenly interested in economics, and the ways in which societies gain and distribute their wealth.

Although widely decried on social media as a socialist, Umair Haque admits to being a Social Democrat.  The difference is important. 

Under Social Democracy, according to Haque, necessities are provided by society at large to everyone; things like healthcare, shelter, food and education.  Luxuries are provided by capitalism.

In the American system the model is inverted.  Necessities are provided by capitalism and luxuries are provided through socialism, but it is a weird kind of socialism called crony capitalism.  Luxuries like yachts and mansions are afforded by a sort of welfare-for-the-rich.  This system cannot work for society at-large, because there is no incentive for capitalism to provide the basic needs for everyone.  In fact, it is designed to do just the opposite.  In the American model wealth is now, and has been, gained through exploitation; first slavery and then dispossession of Native Americans, then segregation and finally by capitalism run amok.  The way to wealth is by taking things from others.

The way to know that his system doesn’t and can’t work is that it has done nothing for ordinary Americans.  For the last half century wages have remained flat while the expenses of the basics continued to climb.  Educational costs have more than doubled in that time.  Life expectancy has not gone up at the rate of other societies.  The various markers of a healthy economy and society show stagnation or recession in measurable indices. 

Infant mortality, for example, is less than in the Central African Republic, but it is higher than in other  Western nations.  Defenders of the status quo will argue that it is the lack of compliance by low income individuals that causes those groups to have a high rate of infant mortality, but the real reason is rooted in lack of access to affordable prenatal care.

Haque portrays capitalism as the successor to slavery and segregation.  It is not.  Capitalism has existed for millennia.  However, capitalism as it is practiced today where the poor lack any path to wealth, and where the wealthy enjoy a sort of socialism of wealth is the successor.

In addition to the points Haque made, it might be pointed out that the things we buy in America that are necessities (healthcare, food, housing) are largely produced here and are the least affordable.  Some necessities like clothing are affordable only because they are produced through the exploitation of workers in poor countries.  Also, some of the affordable things that are considered necessities, like smart phones, are actually luxuries affordable only because they are being produced by children working 16 hour days in China.

The same people who claim that blacks were happier when they were slaves argue that the Chinese children have a job that they wouldn’t have had before.  It sounds wrong, but  there is some truth to that claim.  In a 2005 documentary that won numerous awards at the Sundance Film Festival,  film maker, David Redman,  interviewed teenage girls working at a factory that makes the plastic beads used at Mardi Gras.  The girls are from the countryside, poor, their parents have nothing, and the girls are given a bed (that is shared by workers on other shifts)and food and about 2,000 yuan and hour.  (In 2005 the exchange rate was 13,333 yuan to the U.S. dollar. Two thousand yuan would be less than 20 cents.) This amounts to about $1,000.00 per year. The girls work 16 hours a day, have Sunday off and have a 2 week vacation at New Year when they are allowed to go home to their families.  Although they make a $1,000 a year, while the factory manager makes about $1.5 million a year, the family is glad to get the money.  The girls have given up and education and any dreams for a career, even if fanciful, for their families.

Documentary on the manufacture of Mardi Gras beads in Fuchou Province, China.


The “inverse” social contract of America, in which exploitation of others theoretically provides for both the necessities and the luxuries of individuals, wealth has a sinister secondary effect.  The system excuses past exploitation based on slavery and land theft and perpetuates hatred and bias against blacks and American Indians who were the subjects of previous institutionalized exploitation.

Accepting the notion that we – all of us – should share in order to ensure the necessities of the rest of us would imply that the groups who were previously exploited are our equals as human beings and unjustifiably wronged.  Capitalism - as it is practiced in the U.S. - bolsters racism.

Views: 278

Comment by koshersalaami on November 21, 2018 at 5:37pm

As practiced here, yes, it does. I like the idea of the Social Democrat. I wouldn’t have years ago but as automation replaces employment it’s going to become the only model that keeps millions from starving and being homeless. 

Comment by Rodney Roe on November 21, 2018 at 8:15pm

@ kosh:I've evolved in much the same way. 

Comment by Ron Powell on November 21, 2018 at 11:17pm

"The way to wealth is by taking things from others."

How many times have you read the following in my comments and posts:

"There are two things the wealthy know how to do extremely well:

1. They know how to stay wealthy.


2. They know how to keep the next person from becoming wealthy."

The Tax Code reflects this"inversion of the social contract" as you discuss it here.

However, I would submit that the "social contract" as we teach the concept, is not about economics at all....

A full and comprehensive reading of the Constitution of the United States of America should reveal a simple fact.

The Constitution is NOT a reflection of any particular economic paradigm or construct.

It is the 'contract' between the government and the governed in a free and open "democratic" society.

It is the delineation of the nature of the relationship between the government as a democracy and the citizens thereof and the relationship between citizens as equals...

The distinction between a "social contract" and a "commercial contract" should be utmost in the mind of those who wish to analyze and articulate the nature of who and what we are as a nation of free and equal people...

You have seen me ask on more than one occasion whether democracy and capitalism are mutually exclusive. The danger in treating the two as symbiotic as we tend to teach, is the perpetuation of the idea that "taking things from others" is a conditionally protected right as long as it is done in the name of capitalism...

The idea that each of us has a constitutionally protected right to pursue that "taking from others" runs contrary to the ethical and moral imperatives articulated in the democratic notion that as citizens of a democracy we are equals.

The Constitution charges the government with the political and legal obligation and responsibility to treat it citizens as equals.

This charge is predicated on the presumption that inasmuch as "all men are created equal", as citizens we are charged with the moral and social obligation and responsibility to treat one another as equals.

Unless you believe that equality and diversity are contrary to basic and fundamental human nature, you can readily see that the egalitarian impulse that is ensconced in the Constitution stands in direct opposition to the competitive, "taking things from others" aka free market, urges of capitalism.

When the government seeks to regulate capitalsm it stops being capitalism....

When the government favors capitalism at the expense of its citizenry it stops being a democracy...

Comment by koshersalaami on November 22, 2018 at 5:56am

Capitalism isn’t predicated on taking things from others. It can evolve that way, particularly if the participants don’t behave ethically, but fundamentally what capitalism is about is exchanges. One party offers a good or service for sale and another party buys it. The biggest problems happen where what is being offered is labor on a consistent basis. How we get participants to behave ethically for the public good is through regulation. “When the government seeks to regulate capitalism it stops being capitalism....” would lead us to the conclusion that the United States has rarely if ever experienced capitalism, at least for the last century, because at no point during the past century has capitalism been unregulated. 

Actually, the biggest problems happening where what is being offered is labor on a consistent basis is at this point half true. Where the biggest problems happen now is where stockholders demand immediate money at the expense of everyone else in the chain, but that translates into a labor problem because it’s labor that pays the majority of that expense. 

Your second statement: “When the government favors capitalism at the expense of its citizenry it stops being a democracy...” is, as far as I’m concerned, a great observation and an extremely concise description of where we are now. And, in reality, this is America’s biggest political issue. 

Ron, something occurs to me, a potential legal issue I haven’t previously considered. We know about predatory capitalism, the sort of thing Mitt Romney did for a living, where a company was bought, saddled with debt, and basically killed off for the benefit of the new owners who sold off its parts. But we’ve had a new legal development concerning corporations: they’ve been given the legal status of personhood. When dealing with people, murder is illegal. So is theft. Would that lead to a possibility of civil or even criminal actions by employees against the company’s purchaser? 

Comment by Rodney Roe on November 22, 2018 at 6:11am

First let me say that on the 22nd day of November I am both happy and sad.  I am happy because we have friends coming over for Thanksgiving dinner, and we have a home and the resources to have a good meal together.

I am both happy and sad because this is also my birthday and the years are flying by now in a blur.  It's just one day out of the year, I know, and I am happy to still be around, but still...

To get back to the subject: the social contract in America.

@Ron, I'm sure you have said that about the wealthy.  What it took me some time to understand is the twofold nature you mention to institutionalized inequality.  It is not enough to "have" for the wealthy, it is important that you "not have".  Only through that inequality can they gloat.  The relative affluence of the mid 20th century was a thorn in the side to the wealthy in America.  That explains why they have steadily worked to rig the system so that the great majority become poorer and they, the wealthy elite and their offspring, gain an ever increasingly large piece of the treasure and block the rest from ever getting any of it.

The battle that has been waged in the past couple of decades has been fought over locking in inequality.  They are almost there.  By getting laws enacted that protect their wealth, getting judges elected who decide in their favor, and controlling elections through various means they can be comfortable in the knowledge that it won't matter how brown or black the population is.  They will be in control.

The constitution is a great document touting lofty ideals, but it ignored inconsistencies that already existed in the way business was run and the ethical and moral standards it claims, and made no effort to address them directly.  Slavery was the most glaring inconsistency.

The phrase in the declaration of independence, that life, liberty and the pursuit of happiness were three examples of "unalienable rights" of all men already skirted the issue that the French motto, Liberté, Equalité, Fraternité embraced.  Even then the author avoided equality and brotherhood, and substituted the seemingly innocuous phrase "pursuit of happiness".  Many think that that happiness was wealth.

While that is not part of the constitution, that mind set was present in the authors of the constitution.

I admit to never having read the constitution through, beginning to end, and parsed each sentence. It is a great document, but we wouldn't have as many amendments to that document if it had been perfect from the beginning.  We know that the authors knew it wasn't perfect and worried about abuses of power, and that the ways in which to create a balance of powers was written and rewritten as ways were envisioned in which one branch might gain control over the others.  We are seeing that balance tested at present.  The degree to which it is being tested is clear from the almost unprecedented message from Chief Justice Roberts to the president over the president's attempts to undermine confidence in the courts and create an imperial presidency.

Comment by koshersalaami on November 22, 2018 at 6:31am

Yeah, having Roberts rebuke Trump was one of the more promising things I’ve seen in a while. 

Comment by koshersalaami on November 22, 2018 at 6:31am

Oh, and Happy Birthday

Comment by Ron Powell on November 22, 2018 at 7:17am

"By getting laws enacted that protect their wealth, getting judges elected who decide in their favor, and controlling elections through various means they can be comfortable in the knowledge that it won't matter how brown or black the population is.  They will be in control."


Comment by Ron Powell on November 22, 2018 at 7:17am

Happy Birthday!

Comment by Jonathan Wolfman on November 22, 2018 at 7:22am

I want to air this in January, Rodney.

The answer to AM I MY BROTHER'S KEEPER? is supposed to be YES.


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