The Enlightenment concept of the social contract has been the foundation for modern democracy and government for over 250 years. But how might we revisit and reimagine this social contract today?
The social contract was a disruptive idea (to borrow from Silicon Valley) that authority was not derived by divine right (as with European monarchies) but by the people. The social contract was a discussion between the state and the people. But we know that today that discussion is inadequate. Why?
Enter the Multination Corporation.
Global Reach of the Multinational
In 1974, two American scholars cautioned that the old regime between state and the people was being disrupted by what we today call globalization. In their book Global Reach, Richard Barnet and Ronald E. Muller warned that “the power to maintain a stable social equilibrium for the great majority of its population” have shifted from the people and its government to multinational corporations.
Today, these multinational corporations have become “metanationals.” These corporations have become nearly stateless entities with reach and resources beyond countries. As Parag Khanna, an American scholar based in Singapore, have noted, corporations such as Apple Inc. “hold cash that exceeds that GDPs of two-thirds of the world’s countries.”
It has been over 250 years since Jean-Jacques Rousseau wrote The Social Contract. It’s long overdue for an update. But in any new social contract, we must bring these metastates, the multinational corporations to the table.
But what could a new social contract look like?
Reengineering Corporations for People
Thankfully, we already have a model in the social enterprise. The social enterprise repurposes the corporate model, but requires social impact maximization over shareholder value maximization. Already in countries like Thailand, South Korea, and the United States, governments have established regulations to special social enterprise agencies to support and develop social enterprises
In the realm of social enterprises, there are organizations such as B Labs and Sistema B that have certified over 2190 corporations as B Corporations, a type of social enterprise. Today, Ben & Jerry’s, Patagonia and Warby Parker are some of the major brands that are now certified B Corps. Unilever and Danone are two major corporations actively working towards B Corp certification.
But what if social enterprises became, not the exception, but the rule for multinational corporations? Can we imagine a future where the legitimacy of a major corporation, just like a government, would be derived not just by measuring its profitability but by also measuring its social impact?
Bringing Social Responsibility
For developing countries with major conglomerates, such a transformation in legitimacy and corporate focus would revolutionize a nation’s quality of life.
Let’s look at Indonesia, a country with over 250 million people. As the World Bank has noted a large portion of Indonesia’s economy are run by seven families that run various conglomerates like Sinar Mas to Lippo, who own everything from media to banks and hospitals and entire privately-run towns. Their vast resources and power are already factors in the quality of life of millions of Indonesia. It’s time we gave that power a rigid set of expectations and responsibilities.
Imagine if these conglomerates – Sinar Mas owns the largest land bank in Indonesia – were required to become social enterprises? Imagine if high-tech multinational corporations – like Microsoft, Apple, or Amazon – were asked to give back to Indonesia? Start academies to train for high-tech jobs? Ask for Facebook’s drone and Google’s blimps to provide low-cost Internet access throughout Indonesia’s 18,000 islands?
Ultimately, the social contract, of course, is not a literal contract signed by law, by decree or anywhere in any book. But it is a powerful concept that establishes social norms and expectations between the people and the state. It’s time that we acknowledge and embrace that power of multinational corporations by requiring them to be part of the social contract.