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Social Contract 2.0 (15 February 2010) - DRAFT
Social Contract 2.0 (15 February 2010) - DRAFT
Social Contract 2.0 (15 February 2010) - DRAFT
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legitimate to the extent that they democratically maintained the consent of
the governed. This fundamental idea thrived in different countries and at
different times, with variations involving the church, business, and political
parties.
Beneath Social Contract 1.0 was a simple bargain: citizens give up some
rights to a large institution in exchange for security and stability; with John
Locke’s “right to revolt” offering an escape in the case of fundamental
dissatisfaction.
This bargain will stay with us, but it is no longer enough to explain a complex
world. It assumes a top-down, hierarchical society with relatively few
centers of power. In the era of Social Contract 1.0, almost all communication
was one-to-many: first pamphlets and newspapers, then radio, then
television. Politicians, businesses, and clergy spent much more time selling
and telling than they did listening. Citizens voted with their feet or their
money; they either bought or did not buy products or ideologies. These were
blunt instruments of feedback, well-suited to a world of relatively few
powerful institutions.
But the last few decades have seen sea change upon sea change: rapid
technology growth and shifting demographics have transformed the world,
creating many interdependent nodes of power. This polynodal world is the
shifting ground beneath our feet. This grand change has brought an old
question into stark relief: which institution is responsible for what? It seems
clear that we cannot rely on banks to maintain economic stability or
newspapers to provide political accountability. But who will? To answer
such immense questions, we first must understand the forces that affect all
institutions.
Low cost of information. Every day it gets cheaper to gather, copy, share,
and access information. People can be more informed with less effort.
Consumers have instant access to everything from comparative user reviews
to supply chain data. Citizens compare voting records or corporate pollution
levels. Political leaders can honestly speak of Gross National Happiness
instead of Gross National Product. The click of a button reveals a country’s
or company’s carbon emissions, employment numbers, or health impact.
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SIDEBAR
context of information never before
available. Potential manifestations
Low cost of collaboration. Search of a social contract in
engines make it possible to find like-minded flux
people almost instantly. Social networking
tools allow connection to turn into • Google’s famously
community. Mobile phones allow that simple guiding moral
community to mobilize in real time. Such principle, “Don’t be evil”,
drops in cost qualitatively shift the character will collide with the
and potential of community—as seen from sheer scale its famously
Wikipedia to the 2008 Iranian election
simple mission: to
protests. While this new collaboration is
built upon technological change, such tools organize all of the
do not get socially interesting, as Clay Shirky world’s information.
has said, until they get technologically
boring. • Education will
increasingly move
Collaboration is rising not just among online. How many
individuals, it is also rising among colleges and universities
institutions. An entire infrastructure of
can charge $30,000 a
associations binds together the interests of
organizations in the political sphere, and year in tuition when
now more than ever, individual association most of MIT’s curriculum
members have more power to shape and is now available for free
engage the association, rather than through its
responding to top-down directives. Cross- OpenCourseWare
institutional collaboration is expanding not
program?
just within individual categories of
institutions, but also across categories—for • Other powerful but
example, in the World Economic Forum.
poorly-understood
Low barriers to entry. A.J. Leibling said institutions like hedge
“Freedom of the press is guaranteed only to funds and private
those who own one.” There is no need to foundations will be
explain how that is no longer true. (What dragged from the
better sign that things are changing than
shadows by new forms
the fact that truisms are no longer true?)
Nowadays, anyone can put up a website and of transparency and face
enter the going-viral sweepstakes. Barriers inevitable scrutiny,
to entry are also dropping for non-virtual criticism, and regulation.
enterprises as well. An ever-stronger
infrastructure for outsourcing leads to modular supply chains. There’s no
need to build the factory when you can find a Chinese production facility for
your product on www.alibaba.com within a few minutes.
New institutions not only can enter easily—they can quickly rise to compete
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with existing organizations in both the physical and virtual worlds: in politics,
business, and culture. Michael Porter has outlined in detail how the
competitive dynamics of an industry are fundamentally determined by its
barriers to entry. As those barrier fade, industries—and communities, and
political discourse—can and will be re-imagined. But low barriers to entry
and the ease of collaboration also create a tragedy of the attention
commons. With every new entrant it gets harder to rise above the ever-
increasing din.
While many members of new accountability class are activists with social
and environmental goals, the category is far wider and more complex.
Private equity firms and hedge funds engage in “activist” interventions with
no goal but profit. Politics has long had opposition research, but it has
become its own industry, one enabled and accelerated by easy access to
information. User reviews have decentralized the critic and made everyone
a member of the consumer accountability class.
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These new structural forces both concentrate and devolve power. They
accelerate change and multiply both threats and opportunities. In the face
of this change, all institutions will remain subject to organizational inertia. At
heart, institutions are little more than bundles of routines and rules, and
routines and rules are sticky. They get codified by habit and language. But
occasionally—like right now—the ground shifts so much that old ways of
doing business (and politics and culture) face a fundamental challenge.
Top-down global institutions like the United Nations, the World Bank, and the
International Monetary Fund wield great power, but too often find their
operations clogged and inflexible. They are often limited by the difficulty that
their national representatives have in reaching consensus. In their place,
more adaptable and diffuse global networks that bring together much
more diverse stakeholders are filling the gap. The World Economic Forum
has become a critical locus of power and decision-making—and draws its
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strength from the fact that its participants come from all sectors. While UN-
sponsored multinational climate talks stall, the $8 trillion Investors Network
on Climate Risk organizes massive flows of capital to tackle climate change
and the $1.1 billion ClimateWorks Foundation facilitates carbon-reduction
efforts around the world. The list goes on: the $3 billion Global Fund for
AIDS, Malaria, and Tuberculosis is the dominant player in confronting
infectious disease; Transparency International has become a key platform in
the battle to improve governance; the Forest Stewardship Council has works
across business, government, and civil society to transform the market for
forest products.
What is a leader to do? Ever-more power centers, new entrants, and the
growing accountability class all complicate governance and strategy. We
cannot predict the consequences of such a shift in the world order. But, we
can posit the behaviors that are more likely to succeed in this wild and
dynamic polynodal world. These behaviors increase the likelihood of success
for two reasons. First, these behaviors help maintain legitimacy. With the
rise of the accountability class and multi-dimensional accountability,
institutions will face attacks on their very right to exist without these
behaviors. Second, these behaviors enhance flexibility, adaptability and thus
organizational resilience. In a complex and changing context,
organizations’ very structure must facilitate constant interface with the
outside world.
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This is the implicit, emerging bargain of Social Contract 2.0: institutions will
survive and thrive if and only if they engage in the above four behaviors.
Those that do will have the legitimacy, flexibility, and resilience. Those that
do not will burn out or fade away.
The great issues of the 21st century demand humanity’s full attention and
effort. While the transition to Social Contract 2.0 is and will continue to be
painful, these four behaviors offer us a shared path forward.
Things may fall apart, but Social Contract 2.0 is no widening gyre. Our social
order rises to match the challenges of our time.