Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/197003 
Year of Publication: 
2019
Series/Report no.: 
Economics Discussion Papers No. 2019-35
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This paper argues that the traditional societal contract that underlies the market economy has run its course and needs to be replaced by a new contract, based on a new conception of the "empowering economy." Whereas different societal contracts are relevant to different societies, there must be some features that all societal contracts will have in common, in order to address some basic human needs that every thriving society must satisfy and to promote popular approval for multilateral agreements to address multilateral problems. The paper proposes a new societal contract that promotes three building blocks of economic policies: (1) automatic stabilizers that reduce inequalities of economic power, (2) policies that focus not just on material prosperity, but also on personal and social empowerment and (3) policies that develop the human capabilities of cooperation and innovation.
Subjects: 
societal contract
empowerment
social cohesion
inequality
cooperation
innovation
free markets
welfare state
incentives
JEL: 
O31
P11
P12
P16
P41
P47
P48
P51
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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