Despite all the recent talk of “grand bargains,” little attention has been paid to the unraveling of a truly grand bargain that has been at the center of public policy in the United States for more than a century.Go read the whole article. It has more detail about the origins of the social contract and more details on how Republicans have shredded it over the last 30 years.
That bargain — which emerged in stages between the 1890s and 1930s — established an institutional framework to balance the needs of the American people with the vast inequalities of wealth and power wrought by the triumph of industrial capitalism. It originated in the widespread apprehension that the rapidly growing power of robber barons, national corporations and banks (like J.P. Morgan’s) was undermining fundamental American values and threatening democracy.
... First came the regulation of business and banking to protect consumers, limit the power of individual corporations and prevent anti-competitive practices. The principle underlying measures such as the Sherman Antitrust Act (1890), the Pure Food and Drug Act (1906) and the Glass-Steagall Act (1933) — which insured bank deposits and separated investment from commercial banking — was that government was responsible for protecting society against the shortcomings of a market economy. The profit motive could not always be counted on to serve the public’s welfare.
The second prong of reform was guaranteeing workers’ right to form unions and engage in collective bargaining. The core premise of the 1914 Clayton Act and the National Labor Relations Act of 1935 — born of decades of experience — was that individual workers lacked the power to protect their interests when dealing with large employers. For the most poorly paid, the federal government mandated a minimum wage and maximum hours.
The third ingredient was social insurance. Unemployment insurance (1935), Social Security (1935), and, later, Medicaid and Medicare (1965) were grounded in the recognition that citizens could not always be self-sufficient and that it was the role of government to aid those unable to fend for themselves. The unemployment-insurance program left unrestrained employers’ ability to lay off workers but recognized that those who were jobless through no fault of their own (a common occurrence in a market economy) ought to receive public support.
These measures shaped the contours of U.S. political and economic life between 1940 and 2000: They amounted to a social contract that, however imperfect, preserved the dynamism of capitalism while guarding citizens against the power imbalances and uncertainties that a competitive economy produces. Yet that bargain — with its vision of balance between private interests and public welfare, workers and employers, the wealthy and the poor — has been under attack by conservatives for decades. And the attacks have been escalating.
Unless the bottom 90% can wrest power away from the radical right, the social contract will be completely dismantled and life in the US will either become one of a bleak future of serfdom or a blood series of impotent rebellions trying to break the shackles imposed by plutocracy. Nothing looks good because it isn't clear how the democratic left can wrest control back from the ideologues and fanatics on the right.