Calling for a New Socioeconomic Contract in the Wake of COVID-19

Introduction: Understanding the Idea of the Social Contract

The question of how to reconcile individual freedoms with political sovereignty has plagued humankind for centuries. Throughout the Enlightenment period, which spanned the seventeenth through nineteenth centuries, political and moral thinkers strove to address this very question. Ideas emerging throughout the Protestant Reformation of the sixteenth century, led by Martin Luther, helped cultivate the notion of innate equality and freedom amongst all individuals, problematizing prevailing beliefs in intrinsic inequality.

Practitioners and scholars of Islam are also concerned about individual freedom and authority. Scholar Elizabeth Urban explores the meaning of the Qur’anic term mawlā (Arabic: مَوْلَى‎, plural mawālī (مَوَالِي)), a polysemous word which has several implications in Arabic language depending on its position within a semantic field, use, purpose, time and context. It has loose meanings and translations, including “friend,” “ally,” and “Freedman.” She argues that this term is repeatedly used to concretize a specific vision of society and the bonds between individuals. Over time, the term has evolved and has come to refer to people outside of the Muslim community, implicitly questioning the balance between those within and outside of a social-religious context. In addition, Shahrough Akhavi, Professor of Political Science at the University of South Carolina, Columbia, studies the role of the social contract in Sunnism, drawing upon many references to contract in the Qur’an, and commenting upon this theory’s role in shaping modern Egypt’s culture and politics.

To better negotiate the role of an individual in a constructed social order, philosophers first conceptualized individuals situated outside such an order — the so-called “state of nature.” This state, first characterized by seventeenth-century political philosopher Thomas Hobbes, was a state of lawlessness, which could lead to violence and disorder. Sovereign authority was, therefore, a necessity.

As defined in the Internet Encyclopedia of Philosophy, “social contract theory is the view that persons’ moral and/or political obligations depend on a contract or agreement among them to form the society in which they live.” Alongside Hobbes, philosophers John Locke, and Jean-Jacques Rousseau expounded upon the theory, although it may date all the way back to the Greek philosopher Epicurus, who lived in the third century BC Social contract theories must work to show that social, moral, political, legal, governance, etc., rules can be rationally justified. In essence, the theory says that states have authority over individuals; in turn, they serve the needs of these individuals.

Questions of individual freedom versus state power hold weight in the present day, especially in negotiating the role of the state in mandating and enforcing Covid-19 restrictions, and the fraught role of policing in the wake of George Floyd’s murder and the ensuing civil unrest. This article, which will explore the social contract in the coronavirus-era, builds upon our previous installments discussing the pandemic and how it is connected to systemic racism, political and economic systems, and climate change.

Newer Interpretations and the Problematization of the Social Contract

Unsurprisingly, modern interpretations and implementation of the social contract have destabilized and expanded its meaning beyond its original context. Modern philosophical approaches to social contract theory include feminist critiques — is the social contract patriarchal? Does it take women seriously as equal citizens? Can the social contract unite religiously and ethnically diverse communities?

In a 2018 study, Dutch philosopher Margaretha van Es argues that many Muslim immigrants to The Netherlands must publicly show their peacefulness and loyalty to their new nation, to temper widespread xenophobia and fears of terrorism. Her research addresses a prescient issue in increasingly diverse Western countries: the marginalization of many Muslims based on the extremist actions of a small minority. Van Es critiques the ideal of the social contract — the idea that immigrants who accept Dutch norms and values will be deemed equal citizens. In fact, waves of immigration can lead to upticks in nativism, and the scapegoating or demonization of immigrants, rather than their integration into the socioeconomic fabric of a nation.

Other theorists believe that social contract theory may not consider systems of oppression and inequality based on race or socioeconomic status. Jamaican philosopher Charles Mills first critiques the foundational idea of a “state of nature,” claiming instead that humans have always been social beings. He claims that the Enlightenment-era social contract emphasizes individual free will but does not address resultant social structures that oppress large groups of people. It was designed to describe relationships between white individuals, at the exclusion of everyone else, Mills says.

How does the social contract theory hold up in a globalized, technologically advanced, rapidly changing world? The toll of Covid-19, particularly in socioeconomically disadvantaged communities and communities of color, and broken systems of policing and the prison-industrial complex evidence the breaching of trust between the state and the citizens it is meant to protect. These coincide with a larger-scale embrace of nationalism and populist ideology, and an ideological preoccupation with preserving traditional, conservative values in many countries. The US 2016 election outcome confirmed that the political rationale that drives Brexit was a global phenomenon. Since then, many other right-wing nationalists in countries such as India, Brazil, Italy, and Hungary have taken or strengthened their power.

Despite its flaws, globalization played a role in reducing the knowledge gaps in many sectors. It created a value-added proposition for many raw materials producing countries, and competitive edge depending on their low-cost production, manufacturing, and direct export opportunities. On the other hand, it increases the blue color’s vulnerability in the North and sometimes took them out of the economy. The failure of the globalization advocate in addressing these grievances and elevate the materialized harm resulted in a resurgence of nationalism. The right-wing proponent was able to weaponise the grievances into a pragmatic nationalist movement comprising natural antagonistic forces: cultural, economic, ethnic, racial, and muscular nationalism. These forces are in “Mut’a” marriage.

“Such nationalisms’ adversaries alliance looks like an ancient Arabic marriage “Mut’a” that unites men and women for mutual pleasure with an agreed term, and for a short period, creating a family is not one of its aims.”

The Modern “Socioeconomic Contract”

According to research by McKinsey Global Institute, throughout advanced economies in Europe, North America, and Asia, the costs of necessities like education, health care, and housing are absorbing increasingly large portions of their incomes, despite diminishing costs of discretionary goods. Additionally, public pensions are continuously being scaled back. People in affluent countries are working hard, but not achieving comparable levels of prosperity or even the essential means for a decent living.

In the US, poverty is only one issue for 37 million Americans facing hunger. Even in the world’s largest food-producing country, children, and adults face hunger in every county across America. Over 54 million people, including 18 million children, may experience food insecurity in 2020 because of carnivorous pandemic (Feeding America, 2020).

Figure 1. The food insecurity projection in 2020 due to COVID-19 impact for the general population and children by the state, county, and congressional district.

Source: Freeman, Amirio. “The Impact of the Coronavirus on Food Insecurity.” Feeding America Action (blog). Accessed August 3, 2020. https://www.feedingamericaaction.org/the-impact-of-coronavirus-on-food-insecurity/.

Around 22.5% of African American households and 18.5 percent of Hispanic households are food poverty. Both are above the national average of 12.3 percent. These figures are not for the Central African Republic, or Yemen, or Chad. They are for the nation that its net wealth is $98 trillion of households and nonprofit organizations (US Federal Reserve, 2018). At $171,000, the average white family is almost ten times higher than that of the Black family (Shambaugh, et al., 2020). Gaps in income between Black and White families show the consequences of structural inequity and exclusion. The disparities of wealth creation can be dated back to the founding of this country.

Figure 2. Income variation across racial and ethnic groups in the United States, 2018.

Source: Peter G. Peterson Foundation. “Income and Wealth in the United States: An Overview of the Latest Data,” October 4, 2019. https://www.pgpf.org/blog/2019/10/income-and-wealth-in-the-united-states-an-overview-of-data.

Note: Wealth, or net worth, is defined as total assets minus total liabilities. Assets are resources with economic value; debt is the opposite.

“These shifts point to an evolution in the ‘social contract:’ the arrangements and expectations, often implicit, that govern the exchanges between individuals and institutions… For a significant number of individuals, the changes are spurring uncertainty, pessimism, and a general loss of trust in institutions.”McKinsey argues that.

Integrating economics into the social contract’s enduring theoretical framework sheds light on the dynamic interplay between businesses, international economies, individuals, and social systems in the wake of the COVID-19 pandemic. This pandemic will lead to a global reconsideration of how to negotiate better relationships between individuals from different races and systems of authority and governance, as well as how these relationships can be improved once the pandemic subsides.

COVID-19 and a transition toward a new socioeconomic contract

The novel coronavirus has, and undoubtedly continues, to affect economies across the globe. The US economy shrank at a dizzying 32.9 percent annual pace in the April-June quarter (Bureau of Economic Analysis). It is by far the most significant quarterly downturn ever. The highest quarterly decline in GDP before this report dropped by 10% in 1958. The stock market has become increasingly volatile and unpredictable, affecting pensions and individual savings. Despite the several Federal Reserve bank macroeconomic interventions, the improvement in stock markets is mostly not organic. The only organic performance is medical, health, FinTech space, utilities, consumer staples, and technology sectors; as known, the staples goods market is made up of companies whose operations are less prone to economic cycles. At the same time, the other industries are the biggest winner of the current crisis. The life changes resulting from COVID-19 have increased the demands for these product lines and services. Simultaneously, other sectors are either dead or hooked up to the Federal Reserve Bank’s life-support machine.

Figure 3. Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update

Source: Bureau of Economic Analysis. “Gross Domestic Product | US Bureau of Economic Analysis (BEA),” July 30, 2020. https://www.bea.gov/news/2020/gross-domestic-product-2nd-quarter-2020-advance-estimate-and-annual-update

Note: Real Gross Domestic Product (GDP) fell at an annual rate of 32.9% in the second quarter of 2020, according to the “advance” forecast released by the Bureau of Economic Analysis. Total GDP fell by 5.0 percent in the first quarter.

Unemployment in the United States has skyrocketed — some approximations have this number hovering around 15–20 percent of Americans. Twenty-two million Americans have filed for unemployment during the four weeks after coronavirus was declared a national emergency. Also, over 100 countries have implemented travel restrictions in the pandemic’s wake, which have drastic economic tolls.

The deep-rooted systemic and institutional inequities, communities of color have disproportionately endured these issues. Many of these communities may lack access to healthcare resources and may work low-wage jobs that cannot enforce social distancing measures. We discuss these issues in greater detail in our previous article on systemic racism and the Covid-19 pandemic. These are a few of the many financial and economic ramifications of the pandemic.

This article from The New York Times describes how poverty and inequality can exacerbate the spread of the virus while heightening mortality rates. The virus could easily increase socioeconomic divides that are already feeding destructive phenomena like racial animosity, so-called “deaths of despair” (deaths from substance misuse and suicide), while also fueling populist political movements.

Increasingly high socioeconomic inequality inflicts direct harm on the brains and bodies of people with lesser means. An article in Scientific American delves into the influence of inequality on human biology and physiology — how poverty is tied to chronic stress and inflammation, premature DNA aging, and psychiatric problems. Alongside old age and immunocompromisation, socioeconomic status is a marker of vulnerability to COVID-19. Individuals who already have low-wage jobs are less likely to receive paid health leave; besides, poor working conditions could exacerbate the disease’s spread.

“Black Americans suffer early degradation of their wellbeing, as determined by biological markers of prolonged exposure and tolerance to psychological stresses. The phenomenon is known as weathering and scientifically documented, thorough evidence-based research.” Forrester, et al., 2019.

According to an April 2020 study, COVID-19 is disproportionately affecting communities of color. The authors report: “In the District of Columbia, Blacks make up 45% of the total population, but accounted for 29% of confirmed coronavirus cases and 59% of deaths as of April 6, 2020. In Louisiana, Blacks make up 32% of the total state population but accounted for over 70% of COVID-19 deaths as of April 6, 2020.” According to a blog post from the Urban Institute, residents of majority-Black counties have three times the rate of infection and almost six times the rate of deaths as residents of majority-white counties.

Figure 4. Cumulative actual COVID-19 mortality rates per 100,000, by race and ethnicity, April 13-July 21, 2020

It’s also worth noting that individuals with higher socioeconomic status have a greater chance of maintaining employment and teleworking throughout the pandemic. In contrast, lower-wage workers have a higher likelihood of being furloughed. Interestingly, however, the pandemic has taken a more significant emotional toll on the upper, middle, and upper classes compared to the lower class.

The disproportionate toll of the pandemic on populations with lower socioeconomic status breeds a cycle of increased poverty. Grave disparities call for a widespread reconsideration and an overhaul of the interconnected systems that influence global public health.

Globalized approaches to a new socioeconomic contract

“This is much more than a health crisis. It is a human crisis. COVID-19 is attacking societies at their core” (From the March 2020 UN report)

In March 2020, The United Nations issued a report detailing the necessary and urgent steps that all nations must take to remedy the pandemic’s dire socioeconomic consequences. The UN International Labor Organization estimates that five to 25 million jobs will be eradicated, and the world will lose $860 billion to $3.4 trillion in labor income. Some of these remedies could help us envision a new socioeconomic contract.

Figure 5. Effect of slowing global growth on unemployment based on three scenarios: world and income classes (millions)

Source: ILO Monitor: COVID-19 and the world of work. 1st Edition

Note: The figure shows the projected effect of unemployment based on three scenarios of GDP growth simulated by McKibbin and Fernando (2020). The error bounds reflect the spectrum of uncertainties arising from the Unemployment prediction model, thus taking into account the GDP growth scenario.

“Given the world’s extensive economic and social interrelationships and trade — we are only as strong as the weakest health system,” the report claims.

On average, developing countries spend only about 2 percent of GDP on health, compared to the global average of 4.7 percent. Therefore, comprehensive, globalized responses to the pandemic must consider the needs of vulnerable populations globally, including women, the elderly, and the disabled. Over 50 percent of the world’s rural population and over 20 percent of the urban population lack legal healthcare coverage. 2.2 billion lack access to water and 4.2 billion to basic sanitation, making disease prevention incredibly tricky.

According to the report, we must consider the educational needs of over 1.52 billion children and youth who are out of school or university, representing 87 percent of the world enrolled school and university student population. Responses must include individuals in mental institutions, migrant detention centers, incarcerated people who cannot adhere to social distancing requirements, and those who may not have access to healthcare resources.

The pandemic has a detrimental impact on local and global economies; quarantines and lockdowns are reducing supply and demand; compromised the supply chain systems. The report calls for the first global fiscal stimulus package to protect suppliers, businesses, and individual workers. Debts must be reduced or maybe even eliminated in the poorest, most conflict-stricken countries. We must remove regulatory hurdles to speed up vaccine development, to promote global collaboration on therapies. Scientific research must be transparent and democratized. Countries must stay connected, rather than resorting to protectionist measures and only fending for themselves, and certain ethnic groups cannot be stigmatized for “causing or spreading” the virus. And we cannot let the virus foment further distrust in institutions and further forays into populism and nativism.

The ideas in the report must serve as a blueprint toward socioeconomic reform on an unprecedented scale. These reforms must be transformational and move beyond the present schools of capitalism, socialism, etc. so, they can operate on a global scale and serve all global citizens. We must also revisit the relationship between the consent of the governed, governments, governors, national governance, global governance, governmentalization, and extent of governmentalism.

Our increasing knowledge gaps, inequity in technological infrastructure — artificial intelligence, telemedicine, teleconferencing — is buoying us through the coronavirus pandemic’s uncharted waters.

Contact tracing and sophisticated epidemiological predictions allow us to monitor the virus’s transmission, while nanotechnology and 3D printing are helping with rapid diagnostics and the creation of medical supplies, respectively. However, as an article from the Brookings Institute mentions, these technologies are not evenly distributed across countries. The democratization of these tools will require “global cooperation and solidarity among nations to ensure broader access, usage, quality, and effectiveness of the disruptive technologies for a healthier and more prosperous world,” the article says. The digitization of money, medicine, communication, and other foundations of our societies will require new types of global leadership and regulation that will underpin this paradigmatic shift and coincide with the 4th Industrial Revolution.

The havoc wreaked by the virus is, in part, due to globalization failure to address the long-standing issues of inequity, grievances, and governance at local, national, and global levels. For the first time in the history of humanity, we have been taking millions of international flights and doing more and more business overseas. Now, our solutions must be equally globalized and address the broader ecosystem issues that led to the current situation. They must consider the interconnectedness of global public health, inequity, prosperity, governance, socioeconomic systems, ecosystem while also reforming institutions on a more local level and ensuring that vulnerable and marginalized communities can recover and ultimately prosper. The SDGs are an excellent foundation, yet there are new dynamics that require revisiting them. The current systems dynamics are fluid, and so should our thinking, strategies, and goals. Now, more than ever, we need to revisit the existing social contract, national and global governance.

I believe in American exceptionalism, and nevertheless, we should purify it from its inherited sin, Americans need to have an open and transparent dialogue about systemic racism and discrimination. The reparations for slavery legacy and uprooting white supremacist doctrine, are conditional precedent to sustain the American exceptionalism. The positive changes in the US have a trickle impact globally. As President Abraham Lincoln stated in the Gettysburg address (1863):

“Americans have a duty to ensure, government of the people, by the people, for the people, shall not perish from the earth.”

I realize this is a conundrum, and I do not claim I know or have all the answers, yet we should find a way together. Let us begin a nationwide dialogue, work collaboratively to establish a new social contract that will ensure equity and prosperity for all.

Written By

Asaad Taha, Ph.D., PRINCE2®, MSP®

Senior Managing Partner @S4F.Solutions™, S4F.Solutions™ empowers organizations to bridge the gap “Black-Box” between their invested resources and envisioned results.”

Asaad Taha is a leading Social Impact Entrepreneur, Futurist and Senior Principal Adviser with multi-sectoral expertise on the continuum of social impact programs — from the strategic level to frontline delivery

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A Social Entrepreneur | Futurist|Principal Advisor @ S4F™ Solutions™

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