Yesterday I had a very nice chat with a friend and colleague, and as part of this chat, a theme that I had thought about before came back to my mind: whenever people interact with one another, this usually implies some sort of contract. And I want to start by giving my own, personal definition of what I understand when I use the term contract…

Naturally, there are written contracts, many of them being pre-printed forms where people simply fill in some blanks and, by signing it, indicate they are willing and accept to be bound by the terms stated therein. But I would argue that most contracts that people enter into are unwritten contracts. In that sense, for me a contract is indeed just that, the willingness and acceptance to display a certain type of behavior in the future, sometimes based on conditional contingencies, sometimes regardless of other future events. And quite a few contracts also contain some sort of provision of what will happen if the contract is not fulfilled. In some contracts this part is left out, which then means that the person misbehaving might be dragged in front of a judge, given that there was a contract to begin with, objectively speaking.

Put differently, whenever I have a (hopefully reasonable) expectation about someone else’s behavior–or more precisely for that behavior to be within certain limits–and this person implicitly or explicitly agrees to my expectation–and of course at the same time has expectations about my behavior in the very same situation–there is some kind of contract at work. And whenever such a contract is violated by straying from the agreed-upon path, there is a conflict that needs resolution.

Now, what are unwritten contracts? For one, as far as I can tell, being in any kind of relationship, including an intimate relationship, can be seen as agreeing to a contract, most of which are never written down but actually only inferred by habitual and customary behavior. To give a practical example: whenever I go shopping for groceries and I put my items on the conveyor belt at the register, I enter into a (sort of business) relationship with the person on the other side of the register, and I have a certain expectation of what is going to happen next. Unless there are circumstances at play that I didn’t notice or I have made some kind of error–for instance, I might have put too many items out for the express check-out line–I would assume that the associate of the store will start scanning or manually processing my grocery items and, once done with this task, ask me to pay for my shopping. In turn, the expectation is then that I will pay and take the items with me when I leave. Obviously, nothing of that is written down or agreed upon on an individual basis, but rather the idea of entering a groceries (or other) store, collecting, and finally presenting the merchandise at the register is seen as my entering into this unwritten contract.

When it comes to personal, intimate, relationships, the contract between the two partners might be much, much more complicated: it contains clauses covering behavior in many, many more domains and regarding many, many more possible situations. But, apart from its complexity, the contract is probably equally unwritten, and entered into–at least in the beginning–implicitly. In fact, even a first date, when two people have little to no knowledge about one another, still comes with a contract: for one, you expect the other person to behave with at least a minimal amount of dignity and respect towards you, and if that part is broken, the date usually ends prematurely.

One of the big differences, comparing such a contract to the one at the groceries store, is that people don’t always agree on what exactly that contract says, which leaves (a lot of) room for conflict. In fact, my take on relationship conflicts in general is that, other than bad intentions, ignorance, and negligence, disagreements in relationships are almost exclusively caused by two people applying different versions of the same contract to one and the same relationship.

Imagine going to the bank and signing two copies of a loan agreement, and the two versions differ in, say, the interest rate and the payment terms. I think, unless your copy has the higher rate and more frequent payments, the bank will be quite dissatisfied and upset if you don’t make your interest payments on time, in the expected amount…

The same is true in an intimate relationship, with the difference being that there is no written contract. In that sense, a relationship without a written contract requires that, whenever a conflict occurs, the people in the relationship must be willing to “spell it out” and renegotiate: what are my expectations? Why were they not met? Are my expectations unreasonable or even unrealistic? Can we find a middle ground?

For that to be successful, however, it is important that both parties in the relationship understand that the terms must be negotiable to begin with. As soon or as long as one party insists that their terms are “right” or that their views on things are “the only way to see it”, negotiation becomes impossible–something that reminds me strongly of the current political situation, both here in the U.S., but also abroad. And it is somewhat unfortunate that in quite a few situations, one of the parties in a relationship either subjectively or, even worse, objectively is in a position of power to almost dictate the terms of the contract, which, if abused, in the long run can lead to an undermining of trust, the basis for any future success of the relationship…

And speaking of relationships, here’s another idea (I know, coming back to the economy…): naturally, people who work their entire life have the expectation that their retirement will be a reasonably comfortable one, although they no longer put their work force into the generation of wealth and produce. To a certain extent–wherever financial assets and investments exist–this expectation might even be backed up by a written contract. But this obviously doesn’t change the premise of what is supposed to happen: those people have worked for most of their adult life and simply expect that they don’t have to keep working until they are on their deathbed. Society, on the other hand, makes the promise that the elderly as well as those unable to provide for their livelihood by means of work will be taken care of reasonably well.

This social contract between the older and younger generation as well as between working and non-working members of society is now threatened. Why? Over the past 40 or so years, the percentage of generated wealth, as measured by the gross domestic, attributed to the production factor of labor paid in wages has declined slowly but irresistibly–put differently, prices for every good and service used by an actual end consumer are no longer, in the main, determined by the cost of labor, but by the cost of capital and corporate profit margins. On the other hand, more and more–though still select and elite–people are able to afford living without working at all, throughout their entire life, not just retirement, simply by paying for their consumption out of some capital gains. If this trend continues, those who actually have to generate the wealth through labor will no longer be able to provide for everyone… And as much as I believe in free markets and capitalism, I think it’s high time to start re-distributing wealth to those who actually provide for it: the working class!