Returning to Democracy-Friendly Capitalism Calls for a New Social Contract
If traditional economic policies can get our economy back to healthy growth that benefits average households (the old normal), then we can be optimistic about the future.
I don’t think, however, that we can return to the old normal. The conditions that made the old normal possible – lots of low-skill/well paying manufacturing jobs, strong labor bargaining power, less mechanization of jobs, less demand for higher education skills, unique global competitiveness – no longer exist. Nor have we developed policies to induce the new form of capitalism to benefit average households.
Kheel Center / Flickr
The perceptive political analyst William Galston reluctantly draws the inevitable inferences in a recent column in the Wall Street Journal. He personally favors old-normal economic policies. But he admits that the facts push him “to a more radical conclusion," namely, that “we need a …revised social contract that links compensation to productivity and…new policies to bring it about.” He realizes that there is no going back to the policies that worked in the past.
In the near future, momentous decisions need to be made. Do we accept as the new normal the reality that large numbers of Americans are no longer needed for the private sector job market of the future? If so, what do we do with all these “redundant” people?
It is unthinkable that these decisions should be left to experts and elites and that the public should have no effective voice in shaping a new social contract that addresses the failure of the economy to provide economic mobility for the majority of Americans.
This challenge cannot be met successfully without the American public becoming fully engaged in the process. A paralyzed national government in Washington, accustomed to kicking the can down the road, is grossly inadequate to the task.
People’s jobs define their standing in our society as well as determine their standard of living. If our new form of capitalism proves unable to support a labor market that provides enough good jobs, We the People need to grasp the issues and understand the far-reaching choices our society will have to confront.
Rebooting Democracy is a blog authored by Public Agenda co-founder Dan Yankelovich. While the views that Dan shares in his blog should not be interpreted as representing official Public Agenda positions, the purpose behind the blog and the spirit in which it is presented resonate powerfully with our values and the work that we do. To receive Rebooting Democracy in your inbox, subscribe here.