The Global Future Of Contract And Trust

IF a global society forms during the twenty-first century, will it necessarily be a contract society, built upon reciprocal trade and agreement, as many people think? Or could it be constructed upon other principles, for instance the left’s dream of universal nonviolence, peace, and justice, or the Isalmists’ dream of the world converted to Islam by the will of God and His holy warriors? Or will it be a global bureaucracy, a United Nations writ large, the centralized rule of the international experts?

When Sir Henry Maine wrote his famous dictum in Ancient Law that the movement of progressive societies was from “status to contract,” he was merely stating what seemed, to the Victorians, to be obvious. A stagnant and traditional society may base itself on status and hierarchy, but a dynamic and changing society must move to contract.

Why must it? Contract is so ubiquitous in the United States that we forget how advanced and radical it is. In the past men have rarely thought that they could make up the rules for their interactions themselves. Most communities have instead lived The Way, the unreflective way handed down from the ancestors, and they have believed that to violate that sacred Way would bring disaster. In the pre-industrial age, it usually did.

But the day comes when some young men begin to ask: “What’s in it for me?” The self-conscious ego is born and initially experiences life as a contest of power between the Big Me and the rest of the world. Although the conquering ego brought change and dynamism to a sleeping world, he became something of a problem too, as the Chinese were to discover in their Warring States period. It was the genius of Confucius, according to Huston Smith in The World’s Religions, to tame the Warring States’ conquering egos by transforming the unreflective Way of the ancestors into the rules of the self-conscious Five Relationships. This radical idea of explicit fixed rules transformed the citified world in the years between 500 BCE and 700 CE in several apparently separate outbursts: the Eightfold Way of the Buddha, the Ten Commandments of Judaism, and the Five Pillars of Islam.

Today most people in the world believe in fixed rules, like the billion Muslims who believe in the divine Word of God revealed to His prophet Mohammed in the Koran, or like the half billion Pentecostals (0.8 billion by 2025 according to missions expert David Barrett) who believe in the divine Word of God revealed in the Scriptures, or like the 300 million Europeans who believe in the rational rule of the experts.

Among the great mass that believes in fixed rules there emerge from time to time some who believe that the rules are not necessarily fixed. These creative egos—merchants, businessmen, scientists, and artists—think that they can change the rules and the world will not come to an end.

But what is the difference between a creative ego and a conquering ego? To most people, not much. To them, men like Rockefeller and Carnegie were robber barons trying to take over the world, not creative geniuses that had found a way to slash the price of oil and steel. To prove their good faith, these great business innovators submitted their vast empires to the rule of the political class, agreeing to be governed by contract and law. Just to be sure, the political class put Rockefeller to the test by breaking up Standard Oil in pieces.

Yet contract and law are not enough, as Frederick Turner demonstrated in Shakespeare’s Twenty-first Century Economics. The best contract in the world cannot anticipate all the possible scenarios that may occur in a business relationship. Therefore something more than the dry words of a contract is needed. It was the amateur lawyer Portia in The Merchant of Venice who taught us what this something more must be. It is mercy, that falleth like the gentle rain from heaven.

Can this be true? Can hard-nosed businessmen be angels of mercy? Not exactly. When things go wrong, it’s just cheaper to say “Joe, you owe me one” than to go for a lawyer. That is why, when he journeyed to Capitol Hill to kiss the ring of Congress in 1913, J. Pierpont Morgan testified to an incredulous Pujo committee that the most important personal quality in a financier was “character.” Morgan would not do a deal with a man he could not trust.

We can now come to a startling understanding. Contract and law are the pledge by which the creative ego renounces conquest and submits its creative destruction to the rule of society. Trust is the lubricant that unseats the gears of commerce and frees them from the costly friction of suits at law and government regulation.

Those who yearn to supplant the emerging global contract society with something higher and nobler need to come up with something that’s higher and nobler than this great covenant offered to the world by the creative egos of business. What am I bid?

Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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