The Social Contract

Nature, Equality, and Liberty in the Resources Sector
Written by Jessica Ferlaino

The social contract is a topic that compels a deep dive into the past, into the philosophical works of Jean Jacques Rousseau, Thomas Hobbes, and John Locke who pondered this pivotal issue during the age of enlightenment in the seventeenth to nineteenth centuries.

While this may seem dated, there’s a current application of this political theory in the context of resource projects. In fact, many of the ramifications of these ideas are still working their way through our entire society and politics today.

What is the social contract?
Sometimes named social contract theory, it is a value-based approach to moral and political philosophy regarding three primary conditions of man: the state of nature, equality, and liberty. The major theorists in this school of thought had very different views on each of these subjects; on the legitimacy of the state’s authority over individuals; and on their natural or legal rights within these power structures.

For Hobbes, everyone would have unlimited natural freedoms in a state of nature where political order and law is absent, but that would result in lives he characterizes as “solitary, poor, nasty, brutish and short,” due to the propensity for discord in a society where everyone is left to their own devices. This is the reason, he argued, that people originally contracted to establish a political community and civil society where the imposition of structure and order is for their own good.

While law and political society are not natural, they are necessary, and if the government in question is not effective, citizens do not have to submit to its power. In the state of nature, there is no authority to adjudicate disputes. In its absence, justice is impossible to achieve. This is the motivation behind the choice to relinquish rights to the civil authority, or state.

Subjects maintain their freedom to act within the confines of the established laws, but if the power of the authority collapses, the civil society ceases to be, and everyone returns to the state of nature which is characterized by fear, mistrust, and the potential for unrest.

Locke, on the other hand, argues that in a state of nature, humankind is equal and free to do as it pleases. The absence of a higher authority does not mean the absence of mutual obligation, but the motivating factor in establishing a social contract with the state is self-preservation. The right to life, liberty and possessions is protected by the law of nature, which is God-given and precedes civil society.

Under Locke’s social contract, the establishment of a state or authority agreed upon by the people has the power to punish when it serves the benefit of the society. He also believed that when government fail to satisfy the best interests of the people, the government loses its legitimacy. This was the thinking behind the American Revolution which laid the foundation for the U.S. Declaration of Independence.

For Rousseau, the state of nature was a primitive state that preceded socialization. It was morally neutral and peaceful state where solitary individuals satisfied their basic needs and urges in the interest of self-preservation.

Rousseau took a collectivist approach. He believed that individuals voluntarily forfeited their rights for the benefit of the collective, what he referred to as ‘the general will’ and the state served as a form of risk management in this regard. Individuals contract with the state as a form of self-preservation to protect their life, liberty, and property.

The deliberate setting of rules, principles, or institutions as a necessary means to an end, only as far as they are legitimate, serves the general will, or the public interest. This is especially true in the context of resource development.

The social contract in a resource context
Social contract theory received a much-needed update in 1971 when American philosopher John Rawls published A Theory of Justice. His work rejected the concept of a pre-social or pre-political state of nature, but he agreed that a just society is one where rational citizenry voluntarily accept the principles of authority or government. He believed that the best way to assess and appreciate the value of social institutions was to imagine life without them.

Looking at the resource industry and the role of government in its regulation, one can only imagine what it would be like without a civil authority overseeing the management or extraction of resources. Would it be a state like Hobbes imagined, where life was very adversarial and difficult, or would it be a state of peace, where everyone had the same rights and obligations?

In this context, the discussion around the social contract has to do with collective versus individual rights and the role of the state in protecting those rights. This can also be considered in the context of public versus private interests, where communities engage with private corporations which have the means to extract resources and do so based upon an established contract which sets out rights and obligations.

These relationships are governed by the authority of the state because when left to their own devices, private entities will tend towards unfettered growth and development, which is in the best interest of the profit motive and not necessarily in the best interest of the society.

Free-market thinkers would argue that without this development the economy would cease to be competitive, and the true capacity of resource projects could never be fully realized, as there are ways to be competitive and practice corporate social responsibility (CSR).

CSR is a self-regulating business model that helps a company to be socially accountable to all parties to the agreement, including stakeholders and the general public. It is a form of corporate citizenship whereby the private interest can maintain principled social, economic, and environmental actions.

However, it should be noted that even those with the most advanced CSR programs have been the source of gross societal and environmental violations, so trusting that CSR can be self-regulating in practice is not justified. Therefore government regulation of the private sector, and in particular, resource companies, is ever important. So too, is stakeholder engagement.

Stakeholder engagement as the social contract
As there is collective interest in the extraction, use and value of natural resources and environmental sustainability as natural rights, there is the assumption that social contract would also hold true in this regard. Private obligations are dependent on an agreement with stakeholders, the terms of which are established through consultation.

A fitting example is consultation with Indigenous Peoples when it comes to resource development or extraction projects. Indigenous people often live on, or near, resource rich lands and have an intimate connection to these lands as the keepers of the land through their cultural and traditional practices.

Indigenous rights are inherent and inalienable. They include the right to self-government (self-determination), land rights, and the right to practice their own cultures and customs, which are unique depending on the nation in question. In Canada, these rights are protected under Section 25 of the Canadian Charter of Rights and Freedoms.

To uphold these rights requires stakeholder engagement on the basis of clear, consistent communications to establish project objectives, map out the development process, improve knowledge bases, increase mutual understanding, create feedback loops, and establish mutually beneficial terms.

Projects built around engagement take the principles of nature, liberty and equality into consideration and give people who have a stake in the projects a chance to have a voice in the matter and the opportunity to benefit from their extraction, in a social, environmental, and economic way.

For instance, mining projects up north are often accompanied by training agreements, to ensure that local people are trained and employed for the work being done. If, in a less desirable scenario, workers are brought in, not only is the value extracted from the land, but the money made by the labour force also leaves the local communities.

When the money stays local, it can strengthen the local economy and community in several ways from reinvestment to higher standards of living. This is why it is important to consult, to ensure that both the resources and the benefits of their extraction are not external to those who have a stake in their development.

Social contracts and project success
Commonly, individuals and communities lack the financial means to develop resources projects as private interests typically do, which makes these agreements helpful from a market and societal perspective. Agreements like these allow for the reduction of risk and increase the value and competitive advantage of large-scale resource projects.

Stakeholders, when consulted early and often, can help to influence a project’s advancement by providing expertise, identifying challenges or risks to mitigate, increasing project success, and creating a groundswell of general will and acceptance that will help the project benefit all parties to the agreement. However, one could argue this is more Utilitarian in nature, which was a newer school of thought, coming to prominence after social contract theory.

When this consultation does not occur, projects are met with protests and often result in social and environmental harm, the state of nature that the likes of Hobbes hoped to avoid by contracting with authority, such as the state, which is there to protect a person’s life, liberty, and property in exchange for rights.

Perhaps it would be wise to rethink the social contract by adopting alternatives which are not concentrated in the private sector, like community-based resource management, or smaller-scale projects that ensure the benefits are realized by all.

Cooperative models, community-based developments and the like could be an effective way to manage resource projects to ensure mutually beneficial outcomes for those who have an interest in their development, those who stand to benefit from it without doing so at the expense of others and the environment.

The question is, what is the best way to regulate such a relationship? The answer is likely to remain the social contract, regulation by an authority and extensive stakeholder engagement to ensure accountability and optimal outcomes for all.

Without an established authority or agreement, life would be characterized by a lack of social order and certainly no mutual benefit.



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