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Social contract

There are many theories about the origin of the state and its role in the life of its citizens. One view is that the state is inherently an oppressive institution, built upon the capitalist mode of production and thus meant to protect the property, rights and interests of capitalists.

Another view is that the state is only a vehicle to organise society and there exists a social contract between the state and citizens, where citizens give up some of their natural freedom in exchange for provision of some basic human needs like food, education, healthcare, shelter, and jobs, and security of life and property.

Regardless of the theory, the reality is that at present the state does exist and therefore it has to be held responsible for fulfilling its end of the bargain. Unfortunately, the Pakistani state has not come through on this promise for a majority of its citizens as evidenced from the following statistics.

Almost 60 percent of the population lives on $2 or less a day; a quarter of the population is malnourished; about one in ten people are unemployed; the major causes of death are preventable; almost 5.5 million children are out of school; 26.6 million people live in slums; thousands of people have died due to terrorism as well as target killings and street crimes, in addition to the much higher number of premature deaths caused by hunger, malnutrition and disease. Women are not safe even within their homes due to domestic violence.

The state has been very effective in not only protecting the property of the rich but facilitating its increments by exempting it from taxes, promoting interest and rent-based activities, and ignoring corruption and nepotism. However, the majority of Pakistanis don’t own much property and thus do not need the state’s services in this regard.

One may argue that Pakistan is a developing country in a difficult geopolitical situation, burdened with debt and on the whims and wishes of international financial institutions. However, if we look at the bigger picture, we notice that even many developed countries are falling behind in this respect.

The Oxfam report – ‘A Cautionary Tale’ – published in 2013, says, “Europe has often seen itself as a place where the social contract balances growth with development. A place where public services aim to ensure everyone has access to a high quality education and no one need live in fear of falling ill. A place where rights of workers, and particularly women, are respected and supported, and where societies care for the weakest and the poorest; where the market has been harnessed to benefit society, rather than the other way around.”

However, the report goes on to say that since the financial crisis of 2007-08, the situation is reversing. Bailouts of big banks have transferred the private debt to the poor of these countries. To counter this, governments are implementing austerity measures, which are equated to the ‘structural adjustment programmes’ imposed by the IMF on South East Asian, Latin American and Sub Saharan African countries. It basically translates into “public spending cuts, reduction in wages and a debt management model in which repayments to creditors of commercial banks takes precedence over measure to ensure social and economic recovery.

“There is privatisation of public services; deregulation of labour markets, relaxing employment regulations, and reducing collective bargaining power thus attacking workers’ rights. There is selling off states owned energy, water and public transport companies, as well as health care institution.”

As a result of these austerity measures, the report says, “Across Europe, rates of unemployment, long term unemployment, and youth unemployment are all at their highest level since 2000; in both Spain and Greece, unemployment rates almost tripled between 2007 and 2012, from 8.3 percent before the crisis to over 24 percent; in Ireland, Greece and Spain, the long term unemployment rate quadrupled between 2008 and 2012; in UK 1.1 million public sector jobs are planned to be cut over the period of 2010-2018; almost one in 10 working households in Europe now lives in poverty; for those in work, the real value of wages is falling fastest in countries implementing aggressive spending cuts, making it more difficult for people to cope with rising prices.”

The Institute for Fiscal Studies predicts that poverty rates in the UK will have increased by between 2.5 and 5 percentage points by 2020 if austerity measures continue.

So, we can see that even the countries that prided themselves on their social contract are failing. The report traces the cause of the problem to the flaws in the financial system, “Inadequate regulation, insufficient taxes, the dangerous size of financial institutions, and the capacity of financial industry to influence power, all of which continue to contribute to the ongoing economic turmoil.”

The report prescribes some solutions to address this problem – investing in people and economic growth, investing in public services, strengthening institutional democracy, fair tax system etc. But frankly, while making these recommendations, it ignores its own statement, “Those with greater income often exert greater influence upon decision makers, who, in turn, enact policies that further enable unequal distribution. Moreover, those with the highest income are most likely to have the means to increase their income through, for example, financial investment and assets. Inequality can therefore become entrenched and perpetuate increases in poverty.”

We can safely conclude that the root cause of the inability of states to fulfil the social contract lies in the current financial system which is managed and controlled by a global network of the world’s elites. Its impact is worse on developing countries. It has led to the concentration of wealth and power in a few hands.

Social contract, in its true spirit, can only be implemented when those in charge of implementing it are genuine representatives of the people rather than representatives of the top few. For this to happen, the current economic structure has to be completely dismantled and rebuild from scratch on the principles of equitable wealth distribution, prevention of accumulated wealth, end of predatory wealth generating practices.

It is unlikely that those who control the system now will willingly give up their privileges. So, the only way to change the situation is to build pressure from below through worldwide mass movements. Otherwise wealth inequality will continue to increase within nations as well as between nations and our future generations will be living in a divided world – with social unrest, conflicts and impending wars.

Email: shahnazk@gmail.com

Dr. Shahnaz Khan, "Social contract," The News. 2014-07-02.
Keywords: Social sciences , Social issues , Social aspects , Socioeconomic issues , Social needs , Target killing , Decision making , Unemployment , Corruption , Poverty , Violence , Terrorism , Taxes , Pakistan , IMF