Social Contract

What is a social contract?

Sometimes I mention "social contract," without elaborating. What do I mean by a social contract? Without codifying it, I mean an informal agreement that binds people together in a common purpose.

I don't mean a covenant, in which "if this, then that." It is not a do this for me and I will do this for you arrangement. Nor do I mean something like subdivision covenant agreements. It is not a legal contract, although people might be sued for "breach of promise," as have those who entered into and then broke marital engagements.

It is based on the uniting of the ideas that a person is only as good as their word, and their word is their bond; plus the idea of responsibility, plus the idea of an agreement.

Many people today, especially in the business world, don't take their word seriously. Dealing honestly with people is not part of their business vocabulary. They create a product, and then refuse to support it. They advertise functions that the product won't do. They hint at a price for the product, and then find various ways to jack up the price. Examples, selling unneeded options, various fees, and you may have a warranty, but without a service agreement you won't get necessary service for the product. Consumers play the same games: they take things from stores, use them, and then bring them back; they agree to purchase something, and then refuse to pay for it when they find a better price elsewhere.

Dealing honestly with people means full disclosure. You will deliver what you promise, and won't back out of the deal.

It is wonderful today to find people who are responsible. Too many don't have the word "responsibility" in their vocabulary. Consequences of their actions are irrelevant as long as they accomplish their objectives without consequences to themselves. If they have your money, then whatever happens is not their concern. If the product fails, "buy another one." If the environment is damaged, "It isn't their fault." Responsibility means that you acknowledge that long term and short term there are consequences if you act or don't act, and you are the person or company that is held accountable for your actions or inaction.

When you find people who won't acknowledge a social contract, or fail to fulfill the agreement, you cease doing business with them. They don't have your best interests at heart, so buyer beware.

Examples of social contracts:

1. Marriage and family. Marriage automatically invokes serious long term commitments for most people. Families, including children, need emotional and financial support. Children need nurture and in general "to be raised." By default, children are also responsible to the agreement, and the state has to respect the authority of the family. You typically shouldn't marry a person who won't agree to a commitment to these responsibilities. Things often go wrong. One partner or a child gets a serious disease or has a serious debilitating accident. The other partner has to carry a greater load because of it. People can't just walk away because the going gets tough, or because their parents don't have enough money or follow certain practices.

The "starter marriages" of today indicate that we have a serious problem with the social contract. We also need fail-safes in society for when either the marriage partners, parents, or children can't or don't take the social contract seriously. Abuse, substance abuse, infidelity, and unreliability, may be reasons for intervention to either reestablish the contract or invalidate the marriage agreement.

Interestingly today, in the face of gay unions or marriage, people are clamoring to define marriage, keeping in mind that it is a basic part of civilization. I can't help but wonder what impact this will have on those for whom marriage is not a serious institution, but a convenience for a few years until someone else comes along - the starter marriages, and the very common "Hollywood" and "playboy" marriages. Perhaps we need a category called "temporary unions."

2. Companies and communities. Companies employ people in communities to make products that they can sell for "business interests." By coming into a community, they often become major employers, and can affect the environment. If they pay substandard wages, work their people to death, leave the community, or harm the environment, they can leave a trail of destruction in their wake. Too often, companies feel no responsibility for these things. Everything is a resource for their taking, and they can do anything that they can get away with. I believe that companies do have a long term responsibility to the people, families, communities, and environment that they impact, as well as to customers and investors, and when they refuse to agree to these responsibilities, then they are undesirable.

Businesses use social contracts between each other and individuals. Those companies and individuals who have proved reliable and useful are the first to get new contracts or purchases. Vertical channels develop into tight circles of providers who know the products and market well. Those who are unproven have more difficulty getting in to these circles, or getting established. Businesses won't rely on unreliable businesses who misrepresent their products and who won't support them. The same should be expected of them.

3. As a society, we rely on social contracts. We expect reliability. Social contracts change over time as expectations change, so they aren't things that should be immortalized by law. For example, things like beating children are no longer accepted or tolerated; and with the advent of easy divorce, such things as "breach of promise," are rarely cited. But social contracts should be recognized and enforced, and used to screen out undesirable parties.

4. Morphs. Social contracts morph into different forms as society and business change. For example, on eBay ® and other Internet auction sites, both buyer and seller provide feedback on each other's performance, that is available to the public. There is no law enforcing this. Buyers and sellers who get a significant number of bad feedbacks, are less likely to get business. Similarly there are Internet sites that permit feedback for public viewing on university professors and on businesses. Those who get a significant number of complaints become undesirable.

Other forms of social contracts are the Best Practice forums of trade organizations and ISO standards that provide agreements on high standards. This is accomplished by bringing together input from manufacturers, businesses, the public, and other vested interest parties.

We need more social contracts, and more venues (like more international Web sites for specialized targets) for providing notice to the public on the accepted standards, the ability of parties to enter an agreement and assume the responsibilities expected.

Social contracts and the law

Social contracts are likely to be more effective than laws in getting compliance. Laws are slow to respond, become endlessly complex, and become outdated. Enforcement is difficult because of the burden of proof required, the lack of monitoring and enforcement capacity, the propensity for getting around the law, and the ability of big money to bulldoze through the courts. Social contracts may eventually apply even to government. The effectiveness of social contracts is their affinity for the spirit of the agreement, the immediate feedback available, and the immediate and direct impact on the business (or individual or community) to engage profitably in business.

Social contracts, by depending on standards setting bodies and review boards, would be likely to reduce the need for rapidly proliferating civil litigation.

On the other hand, even if social contracts would become phenomenally successful, there will remain a need for civil law, monitoring, and enforcement. You always have to have safeguards. For example, there are always those who simply rename their business to shake off bad publicity. There is always collusion, and always the power struggle involved when a dependent organization is unwilling to go against interests that are mutually beneficial.

Is a social contract legally valid? When companies endorse the Best Practices of their trade organization, or people enter into marriage vows, they create an agreement with expectations that must be lived up to. Breach of marriage vows is typically taken to civil court and used as a basis for legal consequences. This is a last resort. Lawyers and courts are the final authorities on legality.

- Scott

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