A Portrait of the Social Contract

Europe’s balance of ‘social capitalism’ is better suited to today’s challenges

Arrival of Queen Wilhelmina at Frederiksplein in Amsterdam, 5 September 1898, c.1899; a portrait of the Social Contract | Artist: Otto Eerelman

In the Rijksmuseum in Amsterdam, there hangs an obscure painting that speaks volumes about the modern dilemmas of government, about the natural tension between individual freedom and the ties that bind us together. The masterfully rendered work, dating from 1899 by the Dutch painter Otto Eerelman, shows hundreds of soldiers costumed in the dress blues of a military parade in Amsterdam, and mounted on brawny stallions.

Leading the procession are erect, square-shouldered officers in their fine, medal-adorned coats and feathery chapeaux-de-bras, with a palace looming in the background. Banners, pennants, and coats of arms are flapping in the breeze, and a few members of the public are standing at attention as an elegant, cream-colored coach of royal pedigree passes, with the soldiers astride, clutching long swords pointed skyward.

Inside the carriage are the only two females in the entire male military-scape: a young woman of eighteen, named Wilhelmina, who is about to be crowned queen of the Netherlands, and her mother, Emma, who as Queen Regent has been holding the post until her daughter came of age. The sea of soldiers and their long knives are darkly rendered, but the painter’s skill has bathed the two women and their delicate carriage in a glazed light, as if the hope and aspirations of a nation are ensconced in their halo at the heart of the painting.

What initially struck me was the frailty of these two women anchoring this muscular display. Any one of these soldiers could simply canter close to the royal barouche and say, “Good day, Your Majesty,” and with a couple swings of his sword, run them both through. The two women, one young and the other old, would be powerless to defend themselves.

Yet the soldiers don’t do that, quite the contrary. Instead, they all hold the line, at attention while the carriage rolls past, as if hypnotized. I was transfixed by the sheer incongruity of it all, of a delicate woman more powerful than all these armed men.

Here were all the social and political agreements, the invisible threads of connectedness that wrap countless personal lives into a web of officialdom. Every generation, nation and political order makes its agreements, its social contract, that holds it all together and that keeps the human heart of darkness from ripping us apart. While second nature to those living under them, the rules of agreement are rooted in the past, in culture and local color, looking both backward and forward at the same time.

Queen Wilhelmina went on to become a popular monarch who reigned for 50 years, a symbol of national unity who inspired the Dutch people with her staunch resolve during the Second World War. But at the time of this painting, who could have known what the future held for the young queen or her nation?

It made me wonder about the unwritten agreements, compromises, and social contracts we live by today. Every national paradigm, every political economy has its agreements that establish the manners and modes for the inhabitants of that time and place to live by.  These are incorporated into certain fulcrum institutions which, when taken together, form a distinctive American Way, or a European, Japanese, Chinese, or Russian Way. The great historian Arnold Toynbee once wrote, “Countries have characters that are as distinctive as those of human beings.”

And while the American and European way have much in common, their differences have led to frequent clashes even before the U.N. rift over Iraq. It’s as if we are staring at two different paintings, hung side by side, each revealing its intricate web of unwritten rules, agreements, and social contracts. While it is possible to stress what we have in common, it behooves us to recognize the differences as well, and approach this like an art historian might approach a Vermeer alongside a Michelangelo, straining to understand which had been the better harbinger of the future.

The American Way and the European Way have diverged in two crucial ideological areas: first, in the role and size of the military, with militarism central to the American Way. U.S. militarism acts as a projection of international power but also as a stimulus of the economy, a voracious consumer of national wealth, and an indicator of societal values in a classic “guns versus butter” tradeoff. America spends more than twice as much of its gross domestic product on the military as Europe, while Europe spends around 50 percent more of its gross domestic product on social spending.

Second, while the American and European ways are both founded on capitalism, they have diverged in the age-old debates about individual property rights versus the common good, liberty versus equality, and the role of government. These basic differences are manifest in distinct fulcrum institutions incorporating the laws, unwritten rules, and social contracts, and are deeply rooted in old traditions, even in different branches of Christianity, all of which will shape any attempts to forge a new transatlantic understanding.

What the differences boil down to is that Americans prioritize the protection of individual property rights and commercial interests. That is best accomplished, they believe, by limiting the power of government which is viewed as inefficient and inept.

Regulation, as an infringement on property rights, is to be used as little as possible. That ideology triumphed during the “Reagan revolution” and ran rampant over subsequent decades, when Republicans and Democrats alike joined in a bacchanalia of deregulation. But that transmogrified into the toxic Wall Street capitalism that ultimately brought the global economy to its knees.

In Europe, however, the social contract includes the notion that companies and businesses must earn their commercial rights by operating in a socially legitimate fashion. Private property and the exercise of individual and commercial property rights are not seen as absolutes, as they are in the U.S. They are rather a privilege carrying reciprocal social obligations. Article 14 of the post-war German constitution, for example, specifies that “property imposes duties. Its use should also serve the public weal.”

This in turn affects attitudes toward government. Across Europe, there is a widespread commitment to the notion that all residents should have an equal right to participate in economic, political and social life.

And government, more than a safety net of last resort, is the primary vehicle for the delivery of this equality. Yet this has not negatively impacted the economy, as some critics have claimed; in fact, Europe has more Fortune 500 companies that the United States and China combined, and more small businesses, producing two thirds of the jobs, compared to only half in the U.S..

What Europe shows is that, rather than being locked into fundamentalist notions of property and commercial rights, a nation can subject these rights to negotiation and compromise via the political process. A pluralistic, representative democracy then is what allows the economic process to be harnessed for the good of all, subject to ratification by a consensus of all sectors of society.

That’s why the European approach of a society that balances property rights with social obligations – what I have called “social capitalism” – is a better fit for today’s world.

But in the United States our political process is mired in out-dated political practices, which has led to a toxic Wall Street capitalism and a “trickle down” economy of vast inequality. As a result, today, the 400 richest Americans now own $1.4 trillion in wealth, a 10th of U.S. gross domestic product, and more than the entire GDP of India, Canada, Russia, or Australia.

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