The National Accord as a Social Contract

Abstract

In September 1979 the Carter administration and the AFL-CIO issued the text of a National Accord, which discussed general principles to be followed in several areas of economic and social policy. In combining discussions of pay-price policy and other economic and social issues, the accord resembles “social contract” arrangements in several Western European countries. This invited paper assesses the viability of the National Accord as a social contract by examining three interrelated issues: the suitability of the accord as an institutional mechanism to secure wage and price restraint, given the characteristics of the underlying wage-determination process in this country; the breadth of institutional representation in the negotiations leading to the accord; and the ability of the negotiators to deliver on their commitments. The author concludes that the accord fails on all those counts to be an effective social contract, but he also argues that any social contract approach to wage and price restraint is unlikely to be successful in this country.