Social Contract theory has existed for several centuries already. Notwithstanding that contracts of the more tribal variant have existed for millennia, early research on the topic was conducted by scientists like David Hume and John Locke, reaching diverging conclusions. Whereas David Hume has become known for his rejection of social contract as a necessity for rightful government (https://doi.org/10.2307/2219359) , John Locke holds an opposing view that Social Contract is a requirement and that individuals have inalienable natural rights to life and property. He defined a social contract as follows in his 1690 treatise: "an agreement among individuals to unite into one community and establish a government." (quoted from polsci.institute). He holds that individuals live in a state of nature, yet have no recourse in themselves to uphold that state, and are better off by forming agreement and thus a State. Other thinkers like Jean-Jacques Rousseau describe Social Contract in terms of a general will directing the people, in which all private interests are ideally abolished, mostly based on liberty and equality.
The concept of Social Contract has also become an issue of relevance in Dutch politics recently. In fact the term New Social Contract was adopted by the political party headed by Former Dutch MP Pieter Omtzigt to signal need for reform of the existing economic and political consensus. Core in this context was to uphold Rule of Law, hence liberalism. He identified recurring problems in liberalism in The Netherlands in his book: New Social Contract. The following has been signalled:
- Religiously motivated terrorism remains a risk factor that is under-emphasised. This includes Jihadi violence and other forms of religious extremism.
- Corruption in the European Union is still a rampant issue. This had become evident from 2017 following investigations into the Council of Europe and findings signs of corruption from countries like Azerbaijan (p. 41). A second case that highlights this problem is the investigation on the murder of investigative journalist Daphne Caruana, in which high-ranking officials have been involved, therefore complicating independent inquiry.
- The events regarding corruption as observed in the Council of Europe and Malta, demonstrated how Rule of Law can be compromised. This made Mr. Omtzigt realise the same thing could happen in the Netherlands. And so it did, resulting in one of the most notorious scandals in the Netherlands: 'Het toegslagenschandaal', in which parents were falsely accused of having received illegitimate financial support so that they could afford care for their children. This was caused due to erroneous administration at the Dutch revenue service/tax authority, yet signals were ignored, allowing the problem to continue for years (p. 64-68).
- The End of History, as coined by Francis Fukuyama, may not be the end of history after all. Instead, liberal democracies have begun to notice their fragilities, with internal risks in declining quality of institutions, and external threats and competition by autocratic and illiberal regimes, such as those of China and Russia.
- The European Central Bank has taken on a role that is doubtful. According to a verdict by the Bundesverfassungsgericht, the ECB was supposed to be a kind of Bundesbank without monetary financing, as per Article 123 of the Treaty on the Functioning of the European Union. This is no longer the case as it has purchased assets worth up to 60% of the Eurozone GDP without an additional mandate (p. 80).
- In The Netherlands, we have three offices for planning and modelling, these are: Centraal Planbureau (CPB), Planbureau voor de Leefomgeving (PBL) and Sociaal-Cultureel Planbureau (SCP) (p. 86). Our economy is dominated by models, these are used for public policy purposes yet the models themselves are not always transparent or publicly available to inquire the used variables (p. 110-114).
- There has been internal criticism within the Dutch tax authority on policies involving parents and their data processing during phone calls. In fact one employee was labeled non-active after having saved the data nevertheless for the purpose of aiding the parents. This was later on reversed, likely as a consequence of new whistleblower policies adopted by the Dutch Parliament. He faced nevertheless ruthless retaliation by the tax authority (p. 129).
Besides academic or political scholars, journalists too have signalled the risks that liberalism faces due to the future threat of illiberalism.
One example that stands out comes from former investigative journalist Daphne Caruana (Galizia), who signalled the following trend as early as 2007, even before the Global Financial Crisis had taken place: "The division between the future is not going to be the old one between Labour and Nationalist, but the new one between the liberal who want to inhabit the contemporary world and the illiberal who want to remain denizens of a non-existent past. You mark my words. It's happening already." (source: The Malta Independent, February 1st 2007). She paid the ultimate price with her life for discovering the illiberal side of Maltese law and its economy, an act of courage that should not be forgotten.
From above findings, we derive that a core task of a Social Contract is to protect liberalism, if not, THE core task. It provides a civilised alternative to Marxism and socialism (slave morality) or stationary bandits of a more master-morality variant (fascism, oligarchy, far right-wing military dictatorships). We therefore conclude that a genuine Social Contract is a Constitution of Liberty based on Rule of Law. Calibrated Capitalism focuses on the economic side of this equation. State Capture is a violation of this Social Contract , with several exempli gratia.
On a final note, though not supported on this page yet by clear econometric output, we assume that whistleblowers and other people who are currently not included in the economic system can contribute to a reduction in (over)regulation and prevent (excessive) state-planning when the economy as a whole follows a more objective human standard. Under a liberal social contract, zero degree of state planning/involvement in the economy is not feasible, rather an optimal level will be achieved: No more than necessary, and no less than reasonable.
In doing so, the constitution, besides upholding Social Contract, acts as an economic 'can-opener' in a legitimate sense, by including findings of individuals to improve objectivity, information-dispersion and economic output.
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