We are in a period of human and planetary transition. The techno-capitalist-driven decoupling of economic growth and labour absorption is accelerating, creating insecurity, widening inequality and despair. The planet’s ecological system, which supports all life, is racing faster towards a tipping point of collapse. Species extinction is accelerating, coral reefs are bleaching, temperatures are rising and extreme weather patterns are more common. We are at the mercy of complex and fragile economic, political, social and ecological systems with increasing volatility. The centre may not hold.
“The social contract is the implicit “agreement” between the state, business and us, the people. We give up some individual rights to do as we please to gain other rights and societal benefits in welfare (economic well-being and security); liberty (freedom) and virtue (morality or values).”
In the time of feudalism, the right of human usefulness, or the capacity to be productive, was directly tied to the land. As the transition to industrial techno-capitalism took place, this basic right became tied to the right to work or the right to a stable job. This resulted in various formulations of the modern social contract.
A precept of this social contract is that economic growth and associated paid work binds together the interests of the state, the people and private capital. The planet exists only to serve economic growth. In this arrangement, governments are meant to create the environment for economic growth and job creation; business invests, innovates and continues to hire people; and people work, raise their families and pay their taxes. The state intervenes where necessary to maintain growth, with everyone else being satisfied with playing their part.
However, people are not satisfied. They are angry, alienated and insecure. With nothing to vote for, people are voting against the establishment. This is playing out across the globe, and particularly in the election of Donald Trump and the outcome of the Brexit referendum. It is a flashing red warning of the political and economic alienation citizens are feeling. It is a vote against a failing social contract. If the people do not have a positive reason to vote for something, flawed leaders and perverse power will hijack the anger and frustration of the people for their own agendas.
South Africa is also faced with rising populism and demagoguery, while leaders and their shadow networks loot the state. Other leaders continue to ignore people’s pain. Unemployment is at its worst levels since 2003 and there is no believable plan to fix it. Many South Africans have lost faith in the state to represent their interests and improve their well-being. In this context, there is a need for a radical rethink of the relationship between the state, individuals, capital and the planet: a new social contract.
At the centre of the transition from industrial techno-capitalism are society’s shifting ideas of work to usefulness; disintermediation to connection; top-down hierarchies to decentralised networks; scarcity to abundance; and stability to adaptive fitness. These shifts are the basis for constructing a new social contract.
The age of machines has dawned and more work will be done by fewer people. The World Economic Forum dubbed this the Fourth Industrial Revolution. Labour is being removed from the market. It will not be long before driverless cars render Uber drivers obsolete. The dawn of technologies such as 3-D printing, the Internet of Things, cloud computing, big data analytics, blockchain, robotics and artificial intelligence are accelerating the trend already set by automation: the paths of economic growth and labour absorption have diverged.
This shift away from stable jobs as an organising mechanism is already tangible in the rise of the on-demand or gig-economy. The on-demand economy is one in which platform companies fulfil consumer demand on the basis of real-time access to goods and services. This model has created huge consumer value and helped companies such as Uber thrive. The flip-side of the on-demand economy is the gig economy. The gig economy is the supply side that allows workers and freelancers to have several “gigs” that together make up full-time work. This can be empowering for people with sought-after skills and social capital, but for most people the growth of the on-demand economy means living from gig to gig, and the end of job security. For business, this means the decline of broad consumer spending power.
A new social contract will have to apply itself in fostering a kinder and more equitable gig economy. Human usefulness also has to be reimagined, people’s adaptive fitness enabled, and a universal basic income considered as a citizen dividend. In South Africa, the implementation of a basic income grant might have to be put back on the table for economists, policy makers and technologists to solve.
Regarding decentralisation, there is a counter-trend seen in the growth of centralised platforms such as the Apple app store that allow many actors to operate on them; or the last-gasp efforts by old-order leaders to centralise national power. However, the signal in the noise is that whatever can be decentralised, will be.
The same technologies underlying the shift to a post-work society are already transitioning behemoth industries to human-scale organisations. Even the mighty AB InBev cannot stop the growth of craft micro-brewers. Advanced urban manufacturing clusters in many sectors are moving back into cities. More than 100 US cities were dubbed “Maker Cities” as part of an Obama administration initiative to be a nation of advanced urban micromanufacturers.
In terms of the transition from scarcity to abundance, many technologists and economists have suggested technology is removing labour inputs and its associated costs, and unlocking the benefits of renewable energy and materials, thus driving the marginal cost of production downwards towards zero. They assert there is a move from a dominant economic paradigm of scarcity to one of abundance.
The classical economics pricing mechanism is based on demand and the level of scarcity of supply. Roope Mokka and Katariina Rantanen from the Finnish think-tank Demos Helsinki, assert with the implied movement of real costs towards zero, and the reduction of artificial scarcity constructs such as patents, licence regulations, brands, “walledgarden” ecosystems, and data monopolies, “markets will lose importance as the general-purpose resource allocation system. Markets will no longer be needed to allocate resources efficiently. In fact, efficiency becomes less important in resource allocation, as other values emerge. The focus shifts from efficiency to how to guarantee access to abundant resources.”
In a new social contract, there would be an effort to minimise pseudo-scarcity and ring-fence real scarcity such as the environment. There should be an effort to amplify the abundance economics of renewable energy through incentives, and to enable volunteer networks to “wiki” everything. The planet is at an interregnum where the prevailing social contract is at best ineffectual, and at worst, dangerous. It is up to us to design a new social contract, transform the present and improve our future.
The Field co-founder and director
Adapted from the originally published article in the Business Day