The Deal, It Is A-Changin'

Social contracts made between entities of unequal power are always tricky, and they become even more so when the terms of the agreement don’t really have a one-to-one mapping with the interests (or worse, perhaps, the requirements) of one or both parties.

The social contract that “working class/blue collar/low skilled” workers of the Baby Boom generation thought that they were entering into seems to have gone something like this: “In return for labor, and loyalty to the company’s interests, the company will in turn take care of the workforce by paying workable wages and providing for those who have completed their working lives.” And on a greater level, another agreement could be characterized as: “Work hard, play by the rules, and everything will be okay going forward.” This arrangement worked well for some time. It should be pointed out, however, that it was not universal. Social convention decreed that men, as the breadwinners for families, should have greater access, and that non-Whites could be relegated to work that was not valued enough to qualify.

But as society changed, the companies (or rather, the people running them) found that their interests were no longer being served by that arrangement. There is always a danger, when one makes a commitment, that future circumstances will conspire to render either party unable or unwilling to live up to that commitment. The primary interest of any for-profit enterprise is not profit for its own sake. Rather, profits are there to be doled out to the primary owners of the enterprise as income. As the opportunity to increase profits by moving jobs outside the company and/or outside the country presented itself, there was pressure from those people who stood to gain the most from increased profitability to take advantage of those opportunities. At the same time, many of those people were insulated, often entirely, from the day-to-day impacts of those changes; when a business replaces, say, the night cleaning staff with contracted (and perhaps ineligible) immigrant labor, the difference in dividends may be minuscule, but to a shareholder who doesn’t work in the building, any other changes are invisible.

A company here or a factory there doesn’t make a national crisis. But when the greater society decided wholesale that the old agreement wasn’t cutting it anymore, people started running into trouble in large numbers. Lacking any real leverage other than the social contract itself, they had no way of punishing organizations that reneged on the agreed-upon terms. Meanwhile, those above them on the social ladder, the college-educated professional class and knowledge workers, were too busy pressing for more cost cutting (in the name of making it easier for them to purchase their way into the appearance of affluence) or (although quite often, and) sneering unsympathetically at people who they chose to characterize as lazy and/or stupid; in any event, not as worthy as themselves. This is a common factor when a society labors under the perception of scarcity (real or imagined); adoption of the “just world” hypothesis, especially its focus on the idea that people bring their misfortunes on themselves, is ego-syntonic, implying, as it does, that the world actively responds to individual virtue.

The sending of jobs outside of borders can be a boon to a society, so long as the driving force is to shed those jobs that are “wasting” a portion of the workforce that would otherwise be available for “bigger and better” things. We saw this with the tech boom. As the burgeoning technology sector scoured the landscape for warm bodies, many jobs at the low end of the wage and status scale were offshored or opened to migrants; there was no one else to do them. But often, the idea is to simply find poorer people to do the work, relying on more abject poverty, a relative difference in standards of living or both to lower expenses, while at the same time capturing the difference, rather than passing it on to customers.

The Paradox of Thrift can be summed up quite simply; an economy that depends on a certain velocity of money suffers when enough people begin to hoard wealth, and even though individuals help themselves through such hoarding, the reduction or even cessation of income (due to others’ hoarding) means that all but the independently wealthy eventually starve, if they live long enough. And because so much of the modern economy depends on discretionary spending, it’s easier to trigger a vicious cycle than may be appreciated. And this is likely how capitalism ends; without some shock to the system or external source of resources, it succumbs to a sort of entropy and begins to grind to a halt. Transfer payments from sympathetic (or captured) governments can keep the machine going for a while, but since that doesn’t create new resources, it’s only a temporary solution.

Of course, in the grand scheme of things, all solutions are temporary; the Universe itself only has a finite amount of time. So the more pertinent question becomes what do people want things to look like, and what trade-offs are they willing to make. No only to implement their chosen solutions, but to purchase support for them.