So this is David Brooks argument. I've always been skeptical of both the Weber thesis (The Protestant Work Ethic and the Spirit of Capitalism) which is mostly disregarded in scholarly circles, and David Brooks' thesis about religion having, until recently, provided a break (one among several) on unadulterated greed.
But here goes...
>>Was it before Gadsby? Published 1925.
Mmm... that's not a great starting point for discussion. Remember, Jay Gatsby was a bootlegger and somewhat of mobster who didn't care about money at all. He simply wanted to throw lavish parties to seduce the woman who lived across the way and everything he did from the bootlegging, the big house, the fancy car, the lavish parties were all to get the girl. So that doesn't speak to the question of income inequality very well. Better would be Veblen's Theory of the Leisure Class from the 1890s, but we don't need to go back that far.
>>When was the contract broken? Or was it general timing.
Brooks is referring primarily to the post-war contract. One of the key events in the breaking of the contract was a shift that people see in the 1960s and 1970s in the language of corporate earnings reports and prospectuses and so forth. Prior to that, there was a fairly common refrain that a corporation has a responsibility to its employees and customers. The cynic might say that was just talk, but there is a noticeable shift as people start adopting the Milton Friedman framework and saying that a corporation's only responsibility is to the shareholders.
If you look at trends after that you see a sharp inflection point. Up until 1970 in the US, wages tracked with productivity. Rising tides raised many boats. Also, the share of wealth of the bottom was staying steady or increasing. After 1970, you see those trends change sharply. Productivity increases become decoupled from wages and working class wealth falls dramatically as a share of total wealth.
That's the breaking of the contract. I don't think there's much argument there. It's not a particularly liberal argument anymore. Even people like Marco Rubio (Republican legislator who jumped on the "election has been stolen" train) has lately been writing op-eds about this. And, of course, so has David Brooks.
The thornier question is whether the breaking of the contract has anything to do with the decline of religiosity. That's a much harder argument. Kick it off with a quote from a Brooks op-ed:
The frequency of the word “I” in American books, according to Putnam and Garrett, doubled between 1965 and 2008. The authors are careful not to put it into moralistic terms, but I’d say that, starting in the late 1960s, there was left-wing self-centeredness in the social and lifestyle sphere and right-wing self-centeredness in the economic sphere, with a lack of support for common-good public policies. But it was socially celebrated self-centeredness all the way across. It was based on a fallacy: If we all do our own thing, everything will work out well for everybody.
https://www.palmbeachpost.com/story/opinion/columns/more-voices/2020/10/17/david-brooks-says-we-need-big-cultural-shift-america/3680525001/Brooks isn't making a straight one-to-one argument: less religion equals less social contract. Rather, he's saying that it coincides with a shift into extreme individualism and, on the right, that means hardcore individualism in the economic sphere, which decouples any sense of social responsibility from one's personal economic activity. That is the breaking of the social contract.
Not everyone is a fan of Brooks' cultural-religious decline thesis for income inequality, of course. To wit, liberal economist Robert Reich:
Occasionally David Brooks, who personifies the oxymoron “conservative thinker” better than anyone I know, displays such profound ignorance that a rejoinder is necessary lest his illogic permanently pollute public debate.
https://robertreich.org/post/73764746576