Breach of Contract

Today, I will be discussing how the severe decay of a foundational principle upon which America was formed threatens to topple this once great nation.

The founding fathers searched among the best ideas when trying to form the United States of America. Among the philosophers that they studied was Thomas Hobbes.

Thomas Hobbes was an English philosopher, who is best known for his writings about political philosophy. Concepts in his book, the Leviathan, were used by the founding fathers when forming this nation. One of the main concepts of the Leviathan is that of social contract theory.  

Social contract theory recognizes that when individuals are left to themselves every person seeks only what is best for himself or herself.  Thomas Hobbes said of such a “society” that,  “...every man is enemy to every man, … wherein men live without other security than what their own strength [can provide] …. In such condition there is no place for industry, because the fruit thereof is uncertain [for example, a person will not plant a crop if there is no certainty that he will get to keep the harvest]: and consequently … [people live in] continual fear, and danger of violent death; and the life of man [is] solitary, poor, nasty, brutish, and short.” Thomas Hobbes realized that for individuals to prosper and be happy, they needed to form an agreement, a social contract, in which laws would be set and followed.  By providing social structure and certainty, people, as individuals, and as a whole

could prosper. 

Central to the success of the social contract, or to any contract, is that all parties uphold their side of the agreement.  Social contracts are like the prisoner’s dilemma.  In short, the prison’s dilemma states that if two groups agree and both stick the agreement, the group as a whole receives the best outcome. However, if one persons doesn’t follow the agreement and the other party does, the one that defects from the agreement gains more than she would have had she cooperated but the group as a whole gets less.

With this background, let us return to the forming of this nation.  This nation was born of a strong social contract that we, as a society, should put the society before self-interest.  Consider the final lines of the Declaration of Independence in which our founding father “mutually pledge[d] to each other [their] Lives, [their] Fortunes and [their] sacred Honor.” It was the group first.  This theme continued when forming the legal and political structures of this nation.  In fact, it is on the very doorstep of the Constitution, in which it reads “We, the people…”.

Fastforward over two centuries to today, and we see the cooperation pillar of America decaying:

“Greed, for lack of a better word, is good! Greed is right, greed works. Greed clarifies, cuts through, and capture the essence of an evolutionary spirit.”

So says, Gordon Gekko, in the 1987 film “Wall Street.”  While some may say that the film depicted an exaggeration of the Wall Street culture, we know now that it didn’t go far enough. 

In 2008, the US saw what happens when critical financial institutions focus on self before citizens.  While the average citizen followed the social contract, big financial groups defected to get massive gains.  The motto at that time was “IBG – YBG,” which stood for “I’ll be gone, you’ll be gone!” – meaning that these financial groups could do deals that they knew were clear defections from the social contract; but once they got huge gain, they would take the money and run.  This unfettered self-interest almost toppled the US. Sadly, politicians also are defecting -- more concerned about getting campaign funds than from doing what was necessary for society, no real punishments have been levied and no real changes are being made.

We are now “engaged in a great […] war, testing whether [this] nation,” “conceived in Liberty, and dedicated to the proposition that” a government could be formed “of the people, by the people, for the people,” “can long endure.”  Unless we, as a society, demand and get better adherence to the social contract upon which this nation was founded from those in financial and political power, this nation may “perish from the earth.”