A new societal contract

Dennis J. Snower

No 2019-35, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: This paper argues that the traditional societal contract that underlies the market economy has run its course and needs to be replaced by a new contract, based on a new conception of the "empowering economy." Whereas different societal contracts are relevant to different societies, there must be some features that all societal contracts will have in common, in order to address some basic human needs that every thriving society must satisfy and to promote popular approval for multilateral agreements to address multilateral problems. The paper proposes a new societal contract that promotes three building blocks of economic policies: (1) automatic stabilizers that reduce inequalities of economic power, (2) policies that focus not just on material prosperity, but also on personal and social empowerment and (3) policies that develop the human capabilities of cooperation and innovation.

Keywords: societal contract; empowerment; social cohesion; inequality; cooperation; innovation; free markets; welfare state; incentives (search for similar items in EconPapers)
JEL-codes: O31 P11 P12 P16 P41 P47 P48 P51 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cta and nep-lam
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http://www.economics-ejournal.org/economics/discussionpapers/2019-35
https://www.econstor.eu/bitstream/10419/197003/1/166637492X.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201935

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