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Trust: The Social Virtues and the Creation of Prosperity

Whole Earth, Fall, 1998 by Peter Warshall

It is odd. Only the business community is actively brainstorming about trust, reliability, integrity, and their outcomes. I could find no voices or books exploring the nature of organizational trust within the sustainability, radical right, or liberal-leaning communities. They mention trust as if it is self-evident and then move on.

Fukuyama has penned the best of the corporate trust tomes. He never mentions the commons, but he is deeply involved with collective solidarity. He never mentions natural resources, but brilliantly dissects how trust influences the economic well-being of nation-states, migrants, American slaves, the Mafia, and transnationals. He never explores the psychology of trust, but sees trust as an essential expectation within a community -- an expectation that individuals will act in regular, honest, and cooperative ways.

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Fukuyama believes that high-trust economies do better than low-trust economies. They suffer fewer "transaction" costs like lawyers and overly detailed contracting. They enjoy greater tolerance of experimentation. In high-trust economies, shared confidence replaces the extremes of nepotism (too much family trust) and state tyranny (no trust).

The quicker and more intimately we confront trust and its dark twin -- fear of being played for a sucker -- the more rapidly a positive accommodation of the local and the global will emerge. Trust me, you'll need to start here.

"Trust does not reside in integrated circuits or fiber optic cables. Although it involves exchanges in information, trust is not reducible to information....A high-trust society like Japan created networks well before the information revolution got into high gear....

"If people who have to work together in an enterprise trust one another because they are operating according to a common set of ethical norms, doing business costs less. Such a society will be better able to innovate organizationally, since the high degree of trust will permit a wide variety of social relationships to emerge. Hence highly sociable Americans pioneered the development of the modern corporation.

"Americans were asked whether they felt "most people" could be trusted. The number answering affirmatively fell from fifty-eight percent in 1960 to only thirty-seven percent in 1993.

"Besides the direct costs of lawyers, the decline in trust imposes substantial indirect costs on the society as well. In recent years, for instance, many American businesses have stopped writing recommendations for employees wanting to move to different jobs.... because employers had been successfully sued by employees unhappy with the quality of the recommendations....

"In the absence of a wide radius of trust and an inclination for spontaneous association, a society has two options for building large-scale economic organizations....use of the state as a promoter of economic development...[or] foreign direct investment or joint ventures with large foreign partners.

Health Care Industry

Trust: The Social Virtues and the Creation of Prosperity

Whole Earth, Fall, 1998 by Peter Warshall

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