Give any country’s citizens one-million dollars each and sixty years later you will have gross inequity. This is how successful monetary systems are designed to work.
Since 1960, our world GDP is fifty-nine-times its original size – and yet it has not even kept up with simple inflation. Laws of compound annual interest guarantee that monetary systems are not sustainable without resets and active management.
Monetary systems, therefore, have a lifespan.
Today’s record number of wars, international debt, populisms, recessions, and extremism are – normal. 68% of economies worldwide are collapse-trending with negative trade balances – indicating that they are not being properly managed by their governments. Again, this is to be expected.
And, this perfectly normal cycle has repeated in dozens of past mature capitalisms back in written record as early as 1763 BCE on the Code of Hammurabi.
Cycles are manageable; Professor Richard Wilkenson’s students from Edinburgh University, composed this TED Talk slide in 2011 comparing thirteen social problems in twenty countries. The ten bottom-left countries not only had the lowest rates of social problems, but they also had advancing economies 92% of the time. 80% of these nations also had some of the highest Export per Capita (ExCap) productivity measures in the world as well.
These frequency distribution charts survey 158 countries to confirm that high social contract nations realize advancing economies progressively – up to 100% of the time in the highest Social Contract nations.
The Social Contract Report measures the most economically beneficial social measures of an economy:
The SCP Report (Social Contract Product), adds the most important financial measures to Social Contract:
Export per Capita
Similar to Professor Wilkenson’s findings, these TE Proof Charts confirm that countries with low social-problems, or high social-contracts, typically have the highest export per capita rates and the most consistently advancing economies too.
Are these truly the best measures of successful economies? In 2020, we’ll know a little more and we will revise the SCP and Social Contract to include the best social and financial measures possible. As it is, 100% of The SCP top-20 countries have advancing economies; that’s a much better indicator of success than the GDP Report can offer.
We have many measures to choose from, as we see here in the World at our Hands Report from End of War.
By comparing the Exports-per-Capita seen in all high-social-contract nations, we found that large democracies lost their social contracts most often. This is likely because these economies are much more diverse.
Consider that economically, or socially, harmful policy in any one industry will be ignored by the votes of the majority in a diverse economy. The impacted minority will either have to suffer financial losses from these uncorrected unsustainable policies – or they will have to change industries, move to new careers, change homes, etc. Over 20-years, all industries are affected by uncorrected, unsustainable policies similarly until the entire country’s productivity is pulled down by unsustainable policies.
When we compare the ExCaps of the highest Social Contract nations, to large democracies – economic costs are to large economies are enormous. If the U.S. ExCap had kept pace with high social-contract nation Netherlands, the American economy would earn another $37 billion dollars every day in exported trade. Canada would earn $4.2 billion new per day, and the U.K. and France would earn $7.5 billion – new dollars – every day.
Social Contract Product – The SCP
End of War – Managing Mature Capitalisms was the book that introduced the SCP to the world in 2018. A strong Social Contract is the common thread of countries that have the strongest and most productive economies today – despite our current global mature capitalism.
Mature Capitalisms, also called Late Capitalisms, are the Great Depressions that recur in monetary systems cyclically. In history, it has taken on average sixty-years as I mentioned above. When economic resets were insufficient, the cycle would take less time to repeat.
Mature Capitalisms harm large democracies most as “freedoms” are replaced by high cost-of-living, high rents, energy, insurance, healthcare, and hard lives – slowly, over years. Large economies offer diverse career options and industries. Democratic voters vote for problems in their own lives, and they can ignore or not recognize the problems affecting other households and industries.
Aristotle called a pure Democracy’s mob rule an evil form of Government, and this is why we have constitutions that guarantee basic rights.
Freedom in a monetary economy is the difference between our incomes and our cost-of-living. When our constitutions fail to protect the rights of food, shelter, income, and basics of life as monetary systems mature, we lose trillions of dollars in trade, economic productivity, freedoms, culture, and our democracies can lose our humanity too.
The Social Contract and GDP in History
British musician and anatomist turned-Economist Sir William Petty suggested the first working concept of a standardized national ledger GDP Report back in 1652; at the dawn of Britain’s Commonwealth. This was a time of great opportunity for Britain, right at the beginning of a strong 30-year economic boom.
This boom followed one of the world’s greatest Great Depressions and mature capitalisms, the General Crisis of 1640. Historians of that period record that at no previous time were so many major wars waged worldwide than during the General Crisis.
1.1. Philosophy and Leadership
When Petty was briefly a member of British Parliament in 1659, he was attributed with establishing the philosophy of Laissez-faire in relation to government activity in the economy.
“Laissez-faire” or “Let it go”, is an economic system where private business parties are freed from government regulation, tariffs, and constraint.
I mention this as evidence that Petty, an anatomy instructor at Oxford and a music professor in London earlier in his career, took an easier hand in governance whenever he got the chance. Laissez-faire policies would be recognized today as “Open for Business”, “Relaxed Banking Regulations”, ”Low‑Tax”, and “Small Government” policies.
The Commonwealth; and Britain’s Government and Monarchy, would grow to rule over 25% of the world’s population by 1925 – propelled by the great boom in growth and opportunity that followed the world’s greatest Great Depression – ever – in 1640.
More interesting than this discussion of Petty, was his employer Thomas Hobbes’ contribution. Thomas Hobbes was an economist and political philosopher at the University of Edinborough – whose 1651 book “Leviathan” established the Social Contract Theory.
In her 1945 Universal Rights document, Eleanor Roosevelt recreated that figurative Leviathan at the United Nations. Rights of Food, Shelter, Security, Healthcare, etc. – were mandated to every nation, but few countries amended their constitutions to include these rights – and to their detriment as it turns out.
Hobbes had lived through a terrible global Great Depression – The General Crisis of 1640, as had Mrs. Roosevelt in the Great Depression of the 1930s. From this experience, Hobbes came to see clearly that economics should describe the requirements of “peace and material plenty”.
Other authors, statesmen, and philosophers saw this as well; notables included Lord Byron and Jean-Jacques Rousseau. Charles Dickens books and characters eloquently corrected the failings of capitalist open markets; Mankind was my business.
One look at the difference between the GDPs of the first (1750s) and second industrial revolutions (1880s) – clearly shows the difference that Henry Ford’s revolutionary high-wage, high social contract approach to capitalism positively impacted every nation’s prosperity.
The Social Contract Theory suggested that Government by the People wasn’t enough; and that Government for the People was essential.
Social Contract is not Socialism by the way – socialism is ownership of production by the state. Social Contract is different; Social Contract is our basic rights and freedoms. High Social Contract nations report very low social problems because people have the things they need to be productive, to contribute to the economy, and this permits them to contribute to the well-being of their communities as well.
Norway, for example, is not socialist. The state owns a small percent of its production – as does Germany and most other countries. Norway is a small population of five‑million who established a strong social contract in law, in response to terrible suicide rates and hardship during recessions there in the 1980s.
Norway was interventionist with businesses that detracted from their social contract and today Norwegians, and business, live the American Dream in an economy that is as productive as was America’s in the 1950s and 1960s. 6% of nations internationally live the American Dream still today; look for these in the top-20 positions of the SCP Report.
Low Social Contracts cost large economies trillions of dollars in productivity and trade annually. The United States loses $37 billion dollars a day to its Social Contract failings. Who are the biggest losers – is explained in this chart.
Governments for the people create strong Social Contracts. A strong social contract builds a prosperous economy – verifiably (just look at the top-20 SCP country ExCaps to see this). Social Contract works because citizens can only be productive when they have the things they need – like shelter, food, education, access to incomes, and costs-of-living that afford freedom to live comfortably.
Americans achieved a strong social contract in the 1950s and then lost it; they voted it away to one empty promise after another. Today’s economic leaders are Norway, Ireland, the Netherlands, Czech Republic, Norway, Denmark, Slovakia, Switzerland, Slovenia, Austria, Sweden, Belgium, Finland, Germany, and Hungary – just to name a few of the SCP leaders below.
1.3 The Golden Rule
The Bible, the Torah, and the Code of Hammurabi each described this monetary system phenomenon – and also explain pre-emptive fifty-year resets for the problem. See Leviticus 25-26…
“25:10 Consecrate the fiftieth Jubilee Year and proclaim liberty throughout the land… 35. If any of your fellows become poor and are unable to support themselves among you, help them as you would a foreigner and stranger, so they can continue to live among you. 36 Do not take interest or any profit from them … so that they may continue to live among you. 37 You must not lend them money at interest or sell them food at a profit.”
Abridged, Leviticus 25 – 26
Bibles are books that explain a sustainable society; as an author of research and books that define sustainable societies, I can relate to the challenges that these great authors faced. The Muslim Quran does the same, as does the Hindu Vedas, Buddhist Tripitaka, and so on. Every religion in history, even Pagan religions that are no longer practiced, explained the Golden Rule and Ten Commandments; these are sustainability models for any society.
Why haven’t these books created a sustainable society yet? I talk about this in “End of War – Managing Mature Capitalisms“.
When we secularized our schools because we didn’t understand a contemporary context for 2000-year-old tutorials, we stopped teaching basic rules of leadership and philosophy to our young. It’s not surprising that we cannot understand why we stand again at the precipice of yet a fourth unnecessary World War (yes, the Seven-Year War of 1754 was the first World War).
The Bible repeats 20-times that God is Good; “Good” is absolutely essential to a sustainable society – it’s not a “nice to have” in fact. This also probably explains the importance of a single, wrathful God figure who added “teeth” whenever we found it convenient to not be good. In 1820, the global literacy rate was still just 12% so we humans needed incredibly “basic” lessons when these books were written.
Conservatives in the U.S. often say “helping people” equates to socialism – which is a bad thing, but this amounts to one of the greatest lies of any time in history. Evil – is the systemic failure of Empathy in society (The Nuremberg Diaries, 1946).
Helping people – and Good – is critical to any country’s economy, it is critical to sustaining a civilization (remember that every other civilization has fallen before ours), and it’s as American as its Mayflower Compact too.
Also, see End of War for my explanation of the phases leading up to war within these cycles; currency wars, trade wars, etc…
Education – unites us. In Wikipedia’s list of socialist states, only four of 225 countries in the world aspire to socialism:
- i) China – ranks 40th in Social Contract – by comparison Canada is #37, U.K. is #24, and the U.S. is #57
- ii) Laos is #129
- iii) Vietnam is #32
- iv) Cuba – is #20 in Social Contract, a U.N. High Development nation, and #4 of 104 in developing Latin nations – despite fifty-years of American blockade.
The eight countries in the world that reference the word Socialism in their Constitution, use it in a context which excludes exploitation, injustice, and to ensure a strong Social Contract.
Mature Capitalisms (Great Depressions) are cyclic in successful capitalisms and occur when imbalance impacts our social contracts.
Oligarchies, a government not for the people and another of Aristotle’s evil forms of government, can deny this vote to citizens by “training” them to vote for unsustainable policies. As an example, do you remember “Low-Tax”? It created today’s inequity, stalled growth, and high-debt. How about “Death Tax”? This was a message crafted by Republican Think-tanks in the 1980s to help abolish the unsustainable policy of eliminating inheritance taxes for the rich.
When we don’t know what to stand for, we can fall for anything – and fallen we certainly have.
Giving people what they need to be productive, makes every citizen a profit‑center. Leaving them to just “get by”, means that they only have the opportunity to be a cost center for an economy.
Hobbes realized this, and more – he saw that Government had to play a role in maintaining a balance between capitalistic prosperity and the well‑being of citizens; one that ensured protection in policy and law for a civil and productive society and body politic.
So what is wrong with the GDP?
The GDP hides big problems. It reports none of the trade revenues lost to unproductive economies, none of the poverty created by housing bubbles, and it always reports a gain – even if that gain is just inflation. GDP is boosted by social problems in fact – because housing and energy bubbles (mortgage, rental, and energy poverty) artificially increase a country’s GDP. Squandered pensions? There’s another GDP report benefit.
The SCP Report captures the losses caused by Social Contract, where in the past 60 years the World GDP has reported only one -1% year. 2008 was as severe a financial year as we have seen since 1929 – and yet GDP recorded -1%.
The first step in solving a problem is recognizing that you have a problem. But, the GDP insists that you never have a problem.
Record-high debt loads, record inequity, record homelessness, record world wars, conflicts and extremism, yellow jackets in Paris. These are not normal times – but what does the GDP say?
The GDP says we are just fine.
The GDP says your government is doing a great job.
The GDP explains that big businesses are not pushing billions of dollars daily out of your economy through their externalizing of social costs.
The GDP says your politicians are competent and managing your best interests. As an incompetent politician, I would want to report with GDP as well.
Things are not normal; your economy is losing trillions of dollars in revenue to GDP reports, misinformed leadership, and your grossly misled votes.
When we don’t know what to stand for, we’ll fall for anything…
Economies are large remember; Canada’s export is $510 billion dollars a year which means that they lose a staggering $4.2 billion dollars a day – every day that they ignore the problem of their crumbling social contract. The U.S. loses $37 billion daily; the U.K. $7.6 billion daily, and France losses $7.5 billion. See Social Contract Loss in billions per year in the SCP Report below.
There is a very large problem, one that needs your vote to change it – and millions are suffering in your community every day because of it. That is the reality of a failed social contract and it is a compelling reason for large democracies to reinforce their constitutions to safeguard rights of food, housing, healthcare, security, incomes, and freedoms.
Do you think $13 trillion would afford the cost of a social contract in the U.S.? Studies show we earn $4 for every $1 invested in Social Contract; and this also means we lose $4 for every $1 that we don’t invest.
The Gross National Product “does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile”
John F Kennedy
The SCP Report for 2019
Social Contract Product is the most economically beneficial report on the planet today. This can be verified by viewing Transition Economics Proofs (TEP Charts) for the U.N.’s HDI, IHDI, Happiness Report, and other surveys including OECD and Happy Planet Indexes.
A legend is at the end of the chart …
SCP – is the weighted scoring of each nation’s economic and social rankings to the right
Social Contract – is the unweighted scoring of social measures only
Social Contract (SC) Loss – these are the dollars that this economy loses annually to its present Social Contract; compared to a strong SC nation like the Netherland’s ExCap.
SC Loss is a simple calculation: ExCap / ExCap (preferred) x Export
SC Loss per Day is SC Loss / 365
HDI – is the United Nations parallel score and ranking
Specific citations for each data point as explained in End of War. Click here to get your own copy.