Rethinking economic theory, political economy and the new social contract

George Kararach ()

Chapter 13 in Liberating Economics From Ideologies and Dystopia, 2025, pp 164-178 from Edward Elgar Publishing

Abstract: It is generally accepted that politics define the way we relate to the state and any reciprocal expectations including issues of taxation and service delivery, and access to requisite goods and services. These relations in many instances shape the balance of power in society. Authors such as Hobbes, Locke and Rousseau were interested in the question of the origin and legitimacy of states and rulers and how these define our position in society including our economic lives. For them, the social contract – or the agreement whereby individuals consent to lay down their rights and subject themselves to the coercive power of the state, subject to everyone making a similar commitment – defined political as well as economic organisation. For modern social contract theorists, such as Rawls, the existence of the state is often taken as a given and the focus is on identifying the social institutions and policies that reflect justice as a foundational virtue of a society, or that try to optimise some function of the state. Social contract theories can also be seen through the lens of the conditions under which negotiation over the social contract takes place – especially the underlying political economy. We explore the limits driven by the rational pursuit of personal interest over universal principles of justice that are capable of governing society and bringing social cohesion. The new social economy defined by a sense of fairness and justice remains critical in the redefinition of sustainability and of the renewal of the social contract.

Keywords: State legitimacy; Social contract; Service delivery; Power and politics; Social cohesion; Economic theory (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035316175
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