Trust: The Social Virtues and the Creation of Prosperity.

AuthorWolf, Jr., Charles

ONE OF THE standard put-downs of economists maintains that "about half of what economists say is right -- the trouble is they don't know which half." In the same vein, Nobel Laureate Paul Samuelson, with a mixture of derision and contrition, has observed that "economists have correctly predicted seven of the last four economic recessions." In Trust: The Social Virtues and the Creation of Prosperity, Francis Fukuyama is, ostensibly at least, more generous, conceding that neoclassical economics is "80 percent correct." The "missing 20 percent of human behavior" is the concern of his provocative, insightful, and deftly-written book.

The central thesis of Trust can be summarized in the following syllogism:

Premise I: High economic performance -- i.e. the "creation of prosperity" (and sustaining it) -- is substantially helped by large, private economic organizations.

Premise II. The establishment and progress of large economic organizations (e.g., corporate giants such as IBM, AT&T, Toyota, General Motors, Mitsubishi, Siemens, and Daimler-Benz) are substantially helped by what Fukuyama variously refers to as "social capital," "spontaneous sociability," and "trust."

Conclusion: Therefore, high economic performance is substantially advanced by the prevalence of social capital, trust, and cultural values that sustains these qualities. Although the syllogism conveys the essence of Fukuyama's argument, it does so at the cost of neglecting the book's broad sweep, sharp insights, and wide-ranging scholarship. (Reflecting the latter, Trust contains fifty-seven pages of footnotes and a twenty-page bibliography.) The breadth and scope that are missing from the syllogism are conveyed by the book's four-part structure. In Part I, Fukuyama addresses "The Idea of Trust" and the "Power of Culture" in shaping economic performance. (In doing so he makes plainly evident that the explanatory "power" he ascribes to culture is really considerably more than the minimal "20-percent solution" mentioned earlier; hence my use of the word "ostensibly' in the first paragraph.)

In Parts II and HI, which comprise the two-hundred page core of a 362-page text, Fukuyama deals, respectively, with "Low-Trust Societies" and "High-Trust Societies." The low-trust exemplars are China, Italy, France, and Korea, in which "familistic" Confucianism and its cognates ("Italian Confucianism"!) impede rather than propitiate the formation of large, private economic organizations and their attendant contributions to high economic performance. The high-trust societies are japan and Germany, which Fukuyama ranks number one and two, according to his judgment about their respective "degrees of trust."

According to Fukuyama's argument, high-trust societies benefit from their lower transaction costs in forming the large private business organizations on which prosperity and sustained growth depend. By way of contrast, low-trust, familistic societies and cultures are said to confront higher transaction costs that...

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