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>ABSTRACT:
> Why does trust vary so substantially across countries? How does
> trust affect growth? This paper presents a general equilibrium
> growth model in which heterogeneous agents transact and face a
> moral hazard problem. Agents in this world may trust those with
> whom they transact, but they also have the opportunity to invest
> resources in verifying the truthfulness of claims made by
> transactors. We characterize the social, economic and
> institutional environments in which trust will be high and show
> that low trust environments reduce the rate of investment and
> thus the economy's growth rate. Further, we show that very low
> trust societies can be caught in a poverty trap. The predictions
> of the model are examined empirically for a cross-section of
> countries and have substantial support in the data. Trust is
> higher in more ethnically, socially and economically homogeneous
> societies and where legal and social mechanisms for constraining
> opportunism are better developed. High-trust societies, in turn,
> exhibit higher rates of investment and growth.
Interesting how this approaches marxist analysis from the other side.
IMHO the whole capitalist system of production according to Marx depends on the semi-conscious guesswork of sellers of commodities about whether they have judged the value correctly, and can get a small margin of advantage through exchange.
A developed capitalist economy has a network of credit lubricating and facilitating these exchanges which on aggregate have to balance out. Trust. Calculated risk. Assumption for example that a small company selling to a blue chip company will not have to wait 9 months for payment because the finance director of the blue chip company suddenly realises that the global climate for credit has got less hospitable.
When the business cycle starts to bump up against the glass ceiling of the total available social exchange value, such that ever increasing production suddenly starts causing a nose dive in profits instead of onward and upward expansion, a crisis occurs. As with the global crisis of 1998 it is the more speculative elements of the economy that suddenly find themselves exposed, however brave and intelligent they have been praised for being.
Sufficient trust up to February 1999 has been maintained in the imperialist heartlands for circulation to continue. The people of the more marginal areas of the world, including those recently flattered by investors, must scramble for work, for schooling, for accommodation, for health care. Who to trust becomes acute - hence the moment behind the vicious battles over this in a country like Malaysia, even expressed symbolically in terms of sexual untrustworthiness.
The weakness of this article as far as one can see from the abstract above, is that it correctly focusses on a highly relevant part of the capitalist economic system, and may be a stepping stone to further analysis, but as presented it assumes that a psychological feature like trust may be the determining variable, rather than a dependent variable of the economic base. Trust is a function of the mode of production.
The posing of the question this way however, suggests that the global momentum for the centralising of capital in the capitalist heartlands, now abolutely requires global critical scrutiny, independently of the consciousness of any one of us as individuals.
Chris Burford
London