Technology, capitalism, and the social contract

Abstract

Capitalism is intimately bound up with technology. Societies change through advances in technology, and technology sets the boundaries for what is possible within work organisations and social institutions. Debates about the direction of capitalism emerge periodically following the introduction and uptake of new technologies (Harcourt, 2014). The most recent candidate for generating discussion about the future of capitalism is digital technology, which includes artificial intelligence, machine learning, algorithms, and the internet of things (Brynjolfsson & McAfee, 2014). Digital technology has been placed at the heart of ‘the fourth industrial revolution’ (Schwab, 2017). The capacity for these technologies to alter how organisations and employees work together and with it, capitalism itself, has generated a burgeoning and disparate literature. Two broad competing narratives have emerged. First, some scholars have predicted an intensification and entrenchment of capitalism. Scholars in the labour process tradition (e.g., Kellogg et al., 2020; Thompson & Briken, 2017) have highlighted how key elements of digital technology have shifted far greater control towards the employer in the employment relationship, leading to increasing exploitation of certain groups of workers and less influence and ownership by individuals. For example, digital technology can provide, through the use of monitors or tags or sensors, the ability to track employees and bring heightened predictability and control of employees, bringing about what has been terms variously as “datafication of employment” (O'Neil, 2016), or the “digitalisation of the worker” (Warhurst & Hunt, 2019). The complexity of new technology can also entail that employees become passive users of it, rather than being active in its development and roll out, leading to their deskilling (Bader & Kaiser, 2019; Russell, 2012). A second theme is that digital technology has led to a “tipping point” in capitalism (Thompson, 2019). There are two distinct aspects to this. The first concerns the possibility for new technology to reshape traditional ways of working. For example, research on “cognitive capitalism” (Hardt & Negri, 2001) has argued that technological innovation will dramatically drive down the costs of production, and knowledge will spread widely, to such an extent that capitalism will no longer be an effective economic approach, and a new social order of collaborative networks will develop, which will be characterised by greater democracy and emancipation.

The second tipping point is “post-work”. New technology raises the possibilities of greater automation and with it the likelihood of increasing unemployment. As unemployment increases, this will have a strong negative effect on consumption by individuals. Given the foundational nature of consumption for capitalism, this turn would mark a “crisis” for capitalism (Hughes & Southern, 2019).

Common to both themes is a recognition that the traditional social contract is changing. The social contract is an implicit agreement among the members of a society to cooperate for social benefits, Traditional social contracts have been characterised as a set of relations between the state, capital, and labour (Fisher, 2010). Until now, for most jurisdictions, the social contract has been negotiated to provide a large workforce of full-time employees, relatively secure jobs, wage growth in line with productivity, and shared risk taking between employer and employee, (Manyika et al., 2020). However, the rise of digital technology has gone hand-in-hand with the increasing globalisation of major organisations making for a greater mobility of capital and a lessening of state and labour influence (Weil, 2017).

Recent movements such as “conscious capitalism” (Mackay & Sisodia, 2014), and the “purposeful organisation” (Mayer, 2018) have been influential, and the concept of “inclusive capitalism” has been advocated by the Bank of England (2018). Within these initiatives is an implicit imperative to treat workers as more than economic assets but as social beings. There is a turn towards looking at the future of capitalism not merely from an economic point of view but also an ethical one. The central principle of such approaches in the notion of “reciprocal obligation”, rather than pure economic growth, as the basis for a cooperative world, sustainable society.

In this article, we draw on these ideas and draw out implications for the social contract from the increasing use of digital technology. We look first at the particular consequences of digital technology for the employment relationship. We then turn to the consequences for capitalism and identify three particular narratives: in entrenching of capitalism, amendments to capitalism, and post-capitalism. Our aim is to focus on current uses of digital technology and changes that are already present in the workplace and rely on empirical evidence rather than develop speculative ideas about large-scale economic and social change. We conclude with some reflection on ethics and trust.

Within capitalist society, technology is a mechanism intended to increase the generation of capital primarily through increasing automation and more rapid execution and delivery of products and services (Smith, 2019; Thompson & O'Doherty, 2013).

For Marx, technology and society are the two forces of social production, with technology providing the force of production and society providing social relations (Marx, 1847/1955; 1978). This perspective highlights the embedded nature of technology within the capitalist process, rather than technology being a neutral, rational mechanism that is somehow apolitical. (Fisher, 2010). Schumpeter (1942) identified technology as a principal means of creative destruction. Creative destruction, which Schumpeter (1942) considered ‘the essential fact about capitalism’, refers to the waves of innovation on both products and processes that disrupt and replace existing practices.

Both Marx and Schumpeter believed that capitalism could not be sustained. For Marx, capitalism will reach a crisis brought about by overaccumulation, a crisis characterised by intensified exploitation of workers, a large increase in routine work, and the dramatic fall in the costs of production. A new social order, based on collaborative social principles, would be the inevitable result. For Schumpeter, there is a limit ultimately to total output and creative destruction will be unable to break through this. This will lead to a stagnation of the market and the end of capitalism (Yun, 2015).

Both Marx and Schumpeter argue for the emancipatory significance of the dissolution of capitalism and the promise of a new social order (Adler, 1990, 2001).

More recently, other economists have highlighted the transformational capacities of new technology. For example, Rifkin (2011) and Piketty (2014) both predicted the decline of the labour force, rising inequalities between elite skilled workers and the vast majority who will be unemployed, and a completely changed working week. Their solution is a newsocial contract, with the development of a networked society based on mutual cooperation and not run-on capitalist lines.

Calls for the social contract to be recalibrated have emerged in response to the increasing pervasiveness of digital technology. The notion of the social contract has a long history, rooted in classic liberal philosophical tradition, including notably Hobbes (2012/1651), Kant (1999/1797), Locke (1987/1689), and Rousseau (1973/1762), and more recently in the work of contractarians such as Nozick (1974), Rawls (1971), and Scanlon (1998). Thought there is significant variation between forms of social contract in the literature, a common thread is that the social contract is viewed as a necessary mechanism to establish fairness of outcomes and social cohesion within a population. In economic versions of social contracts, the nation state is at the heart of any social contract (McCandless et al., 2018). Social contracts establish the set of reciprocal obligations between the state and other key constituencies (Muggah et al., 2012), primary among them are capital and labour.

It is important to recognise that, for many scholars, the delineation of sharp boundaries between industrial or innovation eras is crude and unreflective of widespread variations between countries, industries and fails to account for strong continuities across eras (Thompson, 2019). Nevertheless, there does seem to be truth in the perspective that there was cohesiveness between key economic actors within national or regional boundaries in the post WW2 era (Thompson, 2003).

The effect of digital technology on the social contract has been a major shift in risk taking away from capital towards labour. For example, the McKinsey Global Institute states that: “individuals have had to assume greater responsibility for their economic outcomes. While many have benefited from this evolution, for a significant number of individuals the changes are spurring uncertainty, pessimism, and a general loss of trust in institutions” (Manyika et al., 2020: 1).

A number of suggestions has been put forward to restructure the social contract. Most focus on the need to induce greater reciprocity and social collaborations, and not simply economic growth and prosperity. They also include methods to reduce growing inequalities of economic and social power. In the next section, we outline some of the core consequences of digital technology for the employment relationship.

In this section, we examine certain emergent aspects of digital technology which make them highly consequential for the social contract. More specifically, we distinguish four aspects: flexibility and precarity, work intensification, autonomy, and human values.

We examine certain consequences of digital technology for the employment relationship and how this may influence the nature of capitalism. More specifically, we distinguish three consequential aspects: the entrenchment of capitalism, the amendment of capitalism, and alternatives to capitalism.

Technology tends to be conceptualised as either good vs bad, leading to the development of either a utopian or a dystopian future. The problematic assumptions underlying both these perspectives—technological determinism on the one hand, and technology as a mechanism in class struggle on the other—have produced a polarised picture of technology's role in capitalism. Such perspectives do not take into account the tensions inherent with technology and some of the contradictions that introducing technology can have both within organisations and society as a whole.

Technological innovation is made possible by the numerous decisions by a wide variety of actors, from developers and engineers to investors and managers, and through the buying choices of customers. These in turn affect, and are affected by prevailing economic and social considerations. There are human choices being made in this process about how organisations will respond to technology-related opportunities and risks.

It is clear that digital technology, together with globalisation, is changing the social contract to enable capital to move beyond the nation state, and a decline in cohesiveness with the key economic actors of society has resulted. On some views this is leading to an intensification of the pressures facing the current social contract, and a strengthening of capital with regard to labour and to the state. A different set of views call for amendments to the social contract, to counter the effects of increasing informality and non-standard forms of employment, A third perspective highlights the need for a radical social contract based on post-work scenarios, which predict ever-greater reliance on communal and cooperative activity, a much more interventionist state, and a renegotiation of social life after capitalism.

Much of the discussion about the entrenching of the capitalist model has focused on developing an increasing range of flexible (and precarious) work arrangements, rising work intensity and reducing autonomy and the ramping up of monitoring and control of workers. These practices are often situated in cost-reducing approaches and are characteristic of “finance-drive business models” (Thompson 2020). But of course, much of firms' concerns is to develop a highly talented innovative group of workers and to allow them to flourish. Again, controls can be put in place here, particularly through behavioural and affective control and the management of emotions. But as digital technology increases its reach within society, and knowledge becomes ever more significant (Adler, 2001), the need to open up trust-based approaches rather than control-based, to the social contract, becomes more important (Glikson & Wooley, 2020). As Adler states (Adler, 2001: 220).

“Building on many decades of research on the critical role of informal organization in innovation, community—particularly in the form of “communities of practice”—is increasingly recognized as the organizational principle most effective in generating and sharing new knowledge.”

Though this concept has a long tradition, the emphasis on “progressive” capitalism seen recently has emphasised the need to extend trust. The focus on ensuring long-term investment in human capital and increasing stakeholder power through the greater involvement of employees and customers in the running of companies would be steps forward in ensuring grater sharing of risk and reward in organisations. To reduce inequalities, government, whether national or local, would be required to intervene more to secure fair outcomes and to invest in both training and also social protections.

The emphasis on trust chimes strongly with ideas of “reciprocal obligation” (Collier, 2018). Digital technology may be eroding the sense of mutual obligation, on which fruitful social arrangements depend. The ethical remedy is to emphasise mutual obligation and norms of reciprocity. This call also has a long history, and indeed Adam Smith's The Moral Corporation. More recently instances (Collier, the Moral Philosophers etc) have called for a move away from utilitarianism and Rawlsian conceptions of the social contract, which “individualise and reduce social obligation” towards more communitarian and socially based forms of social contract.

The so-called crisis of capitalism highlights that fact that individuals are not only workers but are also consumers, and citizens. Reflecting the new dynamic that digital technology has infused into these roles, a new social contract is necessary. There is unlikely to be a quick fix and the possibility of a radical break with the current social contract is unlikely to be sharp or decisive. Elements of the three possibilities we have discussed will likely evolve piecemeal. There will continue to be elements of competition and collaboration that are facilitated by digital technology (Fuchs, 2008, 2014). While technology is still often regarded in a deterministic way, and while capitalist realism seems hegemonic (Fisher, 2010), nonetheless, other emerging possibilities are gaining ground. Determining the kind of society, we would find desirable is not solely a technological nor an economic question, but a political and an ethical one.

We confirm that there were no conflicts of interest in the writing of this article.