The contractual deficit and the future of governance

The relationship between the Federal Government and its citizens will change rapidly over the next five years. Indeed, the consensus-driving relations between the two, which was first given coherence in Thomas Hobbes’s famous phrase that without the state, the life of man is “nasty, brutish and short” has never had less relevance to relations between the state and the individual today.

What Rousseau termed the “social contract” is supposed to be a mutual contract between citizens which is enforced by the state. So just as I am free not to be murdered by a fellow citizen, so I have a duty not to murder. The state's role in this contract is merely one of enforcement. And yet, as I shall argue in this article, we have come to expect the state to bear an unreasonable burden in its enforcement of the social contract, both at a domestic and an international level, while remaining unwilling ourselves to match this contribution. As a result, the government is beginning to abrogate its so-called obligations to citizens too.

People have increasingly come to see the government as having a bargain to keep in the social contract. We expect the government to fulfill more and more duties despite a shift towards a smaller state: indeed, we have recognised that governments are better when they are smaller since the beginning of the Reagan-Thatcher consensus. Yet we are becoming greedier as consumers; just as we expect the market to conform to our wants and desires, so we expect the government to solve our problems: and yet at the same time pensioners are sent to jail for refusing to pay their council tax. Put simply, the government's obligations to us under the social contract far outweigh what we give back to the state.

This has created what I term a “contractual deficit”. Where we expect too much from but give to little to the state, a contractual deficit arises. In response to this pressure, governments across the world are devolving more and more power to the market. They offer more choice and flexibility in local schools - witness Tony Blair’s new white paper on education in Britain - and introduce an internal market to health systems: they privatise energy, water, rail and buses. The market owes us no dues and we have no obligations towards it: we simply take what we need as and when we need it. There is no “contractual deficit” here.

The shift towards market-based reforms in what have traditionally been the state's domains means the government's role over the coming years will change too. The government's duty in the 21st century will focus on playing the role of an older brother: just as an older brother looks after his younger siblings, governments will look after their citizens by working to ensure effective regulation in services. It will be there for us when we need it but it will not be at our beck and call, as it is now. Devolving more power to the markets will balance the current contractual deficit and mean that people's wants and needs will be satisfied by the raw power of consumerism.

Tom Bentley argued in Building Everyday Democracy that we are facing a democratic deficit as local institutions become more and more detached from local people. Yes, we do expect an awful lot from our politicians. But we will not solve this problem by creating more bureaucracy and devolving more power to typically incompetent local councillors; the only solution is to devolve power to the market, which is flexible and responsive to consumers in a way politicians can never be.

The next five years will highlight a trend for the next century. In the 21st century, governments will begin to focus more on international problems which require international solutions. Patrick Diamond, visiting fellow at the London School of Economics, argued recently that politics in the 20th century was concerned with tensions between the market and the government. In the same manner, politics in the 21st century will be concerned with tensions between the market and international states, as governments work together to devolve all international power to the market.

There may not be time for us to experience a contractual deficit at the international level before market reforms kick in. But, in the relatively early stages of a globalised world, we already expect governments to solve all the major global problems; the problems of international development for instance - witness the millions who marched for “Make Poverty History” - and climate change, without being willing ourselves to adjust our daily lives to add to the effort. We preach environmentalism yet take vacations twice a year and drive SUVs, and balk at the idea of paying plastic bag taxes.

As a result, governments will have to devolve power to the market in order to redress this imbalance. Eventually, free trade, unrestricted immigration and carbon trading will all triumph. Because ideas and policies mature much more quickly in a globalised world, I predict that the advent of consumerism at an international level will come about much more quickly than it has done at a national level. We can look forward to its rapid rise over the next five years.

The scales measuring the social contract are tipped towards the government, and the load of the citizens is too light: we expect too much from our government at the moment. In order to address this contractual deficit, the government will continue to devolve power to the market, so that it will one day dominate traditional “public” services: because the market and the consumer do not have any mutual obligations, this is a relationship which does not need to stand the strains of the social contract. As the government stops providing these services, it will seek to address international problems where a contractual deficit is growing, and, over the next five years or so, the free market will dominate international affairs.