The Origins of Social Contract Theory

Introduction

Our social contract reflects our purpose to have a positive impact for society in what we do, building trust beyond the delivery of pure and reliable water supplies.  But what does a ‘social contract’ mean? Where did it come from?

The term ‘social contract’ may be fairly new to those of us in the water sector, but it is a term that is nearly as old as philosophy itself – its origins can be found in the writings of Socrates and Plato!

Modern Social Contract Theorists

Social contracts have traditionally been used by modern political theorists to justify the environment that we consent to living in. To do so, these thinkers would create an imaginary ‘state of nature’; a concept used to represent human existence prior to the existence of society as understood in a more contemporary sense. Let’s look at a few, to see how parallels can be drawn between their insights and our social contract (this is by no mean an exhaustive list!):

For Thomas Hobbes the state of nature was a negative conception. In his view, it represents a state of permanent war, a permanent threat to the continued existence of the individual. In 1651, he wrote a famous book titled Leviathan, in which he expressed these views. Life outside society would be “solitary, poor, nasty, brutish, and short”. The solution to this threat, Hobbes argued, was to put some powerful individual or parliament in charge, but whoever wielded power must be able to “reduce all wills, by majority rule in a single will” (and the challenges of this approach can be seen in parliament at present). This tends to mean Hobbes is associated with rule being dictated by a single individual (perhaps reflecting a rule by monarchy as we would understand it today).

For John Locke, the state of nature reflected an arena characterised by rational choice, undertaken out of reason, not fear. In 1689 he published Two Treatises of Government. He argued that people have rights, such as the right to life, liberty, and property, that exist no matter what society we live in. Locke claimed that men are naturally free and equal as part of the justification for understanding legitimate political government.  The commitment to a social contract then is undertaken by rational people in the state of nature; they conditionally transfer some of their rights to a parliament or government, in order to better ensure the stable, comfortable enjoyment of their lives, liberty, and property. Since governments exist by the consent of the people in order to protect their rights and promote the public good, governments that fail to do so should be replaced with new governments.

Today we may think of our legal and political system of a liberal representative democracy as a social contract; I promise not to break any laws set by Parliament, a body that I consent to making laws for me by voting for representatives every few years, and as a result I am free to live my life as I please.

Social Contract Principles

“So why then is a social contract needed for a water company?” I hear you ask. The water sector’s public reputation has taken something of a battering over the past few years. Fundamental questions have been raised by politicians, academics and journalists about who should own our water services, how they are run and whose interests they serve. Likewise, society’s attitude towards the water sector is shifting. It is quite obviously the case that it is no longer enough for a water company just to provide a reliable supply of safe drinking water at a reasonable price. Even where these basics are achieved, customers are taking an ever greater interest in where their money is going. For example, they care about the dividend payments, executive pay and the tax affairs of their company.

“Okay, so what can we really learn from these social contract theorists?” I hear you say. There are three broad principles that can be derived from their writings and which we can apply to our position in society as a private company that provides an essential public service.

Let’s look at these in a bit more detail…

Consent

To continue to provide our essential services, and for our customers to give up certain freedoms (in this case the freedom not to pay for water) we must demonstrate explicit consent.  However, as a regional monopoly, our customers have never actually chosen Bristol Water to provide their services for them (assuming that one’s ability to move to another area of the country is not a realistic possibility). Achieving consent is therefore acquired through proxy; it is achieved by measuring our customers’ satisfaction with the services we provide (customer trust is actually higher in water than in other utility provides, such as electricity, gas or telecoms).

Accountability

Our customers have the power to withdraw their consent. We know that this has happened if they are no longer satisfied with the extra services we have selected to focus on. They are able to express satisfaction or dissatisfaction because we have developed a transparent framework for monitoring our performance in providing these additional services.

Legitimacy

In terms of legitimacy, social contracts are ultimately a way for regulated companies to demonstrate that we care about our customers and stakeholders and are committed to acting in the wider interests of society. By doing so, we legitimise our role in providing our services that we charge for.  By continuing to be held to account by for the extra services we provide that go beyond the essential services of water, and which have been prioritised by our customers, we further strengthen our legitimacy.

Conclusion

This is all very interesting, you might say, but what has all this got to do with Bristol Water’s social contract? Taking into account these three concepts, our social contract means our customers can input into what we do, track what we do, and hold us to account for what we do, and how we deliver it. As a result, we derive legitimacy as a private company, even though our source of profit derives from providing a public service, because our customers accept (they have given consent) that our goals are shared by the society that we are a part of. It’s all about being trustworthy (another one of our company values).  Rather than simply being driven by profit, we have been established to offer services (which have been identified as those which our customers value the most) that go beyond the essential services our customers expect of a water company.  If our customers think that we have broken or are not acting according to any one of these three principles, then the contract is broken and we will have lost the trust of our customers.

 

Alex Smethurst

Alex Smethurst is a Regulatory Policy Advisor at Bristol Water. He joined the company in November 2016, having previously worked as a policy advisor at Bristol City Council and as a parliamentary assistant for an MP in Bristol. Alex has an MSc in Political Theory from the London School of Economics; his dissertation focused on the failure of liberal democracies to formalise ‘utopian’ visions of society and the implications this has on their longevity. In his spare time (for his sins) he follows Chelsea Football Club and regularly swims at the Bristol South Swimming Pool in Bedminster (where the BBC filmed a scene from Sherlock at the end of the first series).