TRUSTWORTHINESS AS A MORAL DETERMINANT OF ECONOMIC ACTIVITY: LESSONS FROM THE CLASSICS (original) (raw)
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Moral canals: trust and social capital in the work of Hume, Smith and Genovesi
Economics and Philosophy, 2000
This paper studies trust and social capital through the writings of three eighteenth-century philosophereconomists --Hume, Smith, and Genovesi. It compares their accounts of the sense in which trust can be said to be rational, the conditions under which rational trust is possible, and the economic and social institutions which reproduce those conditions. These accounts are related to the modern literature of philosophy and economics. It is argued that the eighteenth-century writers use conceptions of rationality that are now marginalised. Dispsositions as well as actions are treated as objects of choice. Genovesi, but not Hume or Smith, relates trust to reciprocal friendship in a way that is foreign to modern rational choice theory, but might be represented by a theory of plural agency ('we-rationality'). While Smith sees the commercial virtues as the product of economic development, Genovesi sees trust as an essential precondition for such development.
2009
"In general, in developing countries, unfortunately, markets do not perform well. Hernando de Soto (2003) has pointed out the "hard" conditions such as the absence of property rights and the high cost of obtaining operating permits. Amartya Sen (1999) citing Adam Smith’s Theory of Moral Sentiments (1759) has emphasized the "soft" conditions connected to behavioural and institutional obstacles, in particular the role of trust for a functioning market economy. Sen conceptualizes trust as one of the principal conditions for a functioning market economy, First, we analyzed the concept of trust in Adam Smith’s writings. He places trust as a central element in all human interactions, including production, consumption and trade. In his view, the enforcement of contracts by the state causes trust levels to rise, markets to function, and trustworthy behaviour to increase. Conversely, trust is also a necessary condition for successful functioning of markets. We know from recent advances in complexity economics, that positive feedback loops can have quite substantial effects in complex systems (Beinhocker 2006), and therefore the positive feedback of trusting and trustworthy behaviour could be quite substantial. It seems Smith had an intuitive and quite sophisticated understanding of this. Regarding the role of trust in a market economy the direction of the causality is hard to determine. Do functioning markets develop trust, or does higher trust level cause stronger development of market institutions? In order to investigate this, we carried out a classical trust experiment (Berg, Dickhaut and McCabe 1995)in Costa Rica, comparing trust level and experienced market operators and inexperienced operators, i.e. economics undergraduates (Alpízar 2004). Indeed, relatively low trust levels were found among the students, but experience market operators exhibited high trust levels. There are implications for educational policy in business education. A possible extension of this work is to measure trust levels among inexperienced market operators in developing and developed economies before and after market training. Next, we undertook an analysis of a series of trust experiments in developing countries. From this literature evidence emerges functioning markets create trust, and not the other way around. We would recommend therefore that policy focus primarily on creating the appropriate "hard" conditions for market functioning, rather than attempting to influence trust levels in “soft” ways, by promoting dialogue of business codes of good behaviour. Results from economic experiments therefore show that Amartya Sen, but not Adam Smith seem to have confused too narrowly on trust as a condition, and fails to contemplate the effects of trusting and trustworthy behaviour on the functioning of markets. 2 References Alpízar, F., Till Requate and Albert Schram (2004). "Collective versus Random Fining: An Experimental Study on Controlling Non-Point Pollution." Environmental and Resource Economics 29(2): 231-52. Beinhocker, E. D. (2006). The Origin of Wealth. Evolution, Complexity and the Radical Remaking of Economics. London, Random House. Berg, J., J. Dickhaut, et al. (1995). "Trust, Reciprocity, and Social History." Games and Economic Behavior 10: 122-42. De Soto, H. (2003). The Mystery of Capital Why Capitalism Triumphs in the West and Fails Everywhere Else. New York, Basic Books. Sen, A. (1999). Development as Freedom. New York, Oxford University Press. Smith, A. (1759). The Theory of Moral Sentiments. London, A. Millar."
The moral economy and operationalising trust
The objective of this paper is to make a conceptual contribution to the analysis of projects through an exploration of the moral economy and trust. The moral economy is defined and trust is then explored in relation to the moral concepts of dignity and respect. An evaluation is made of the importance of understanding the moral economy as an additional means to operationalise trust.
Trustworthiness and Moral Character
Ethical Theory and Moral Practice, 2012
Why are people trustworthy? I argue for two theses. First, we cannot explain many socially important forms of trustworthiness solely in terms of the instrumentally rational seeking of one's interests, in response to external sanctions or rewards. A richer psychology is required. So, second, possession of moral character is a plausible explanation of some socially important instances when people are trustworthy. I defend this conclusion against the influential account of trust as 'encapsulated interest', given by Russell Hardin, on which most trustworthiness is explained by the interest of continuing relationship.
Journal of Global Ethics, 2015
This article traces the moral economy of provincial elites who contributed to economic societies that were active in eighteenth- and early nineteenth-century Northern Europe. Such societies aimed at improving economic conditions in their respective cities, regions, or countries by advocating progressive methods of agriculture, manufacturing, and commerce. The commitment of members of these societies was not explicitly motivated by economic gains, but by a more complex system of beliefs fueled by the love of their country and the promotion of the common good. The unselfish exploration of new means of production and commercial activity was at the heart of forming a moral economy of trust that guided cooperation within the societies. This moral economy was not subordinate to market rationality, but served as a foundation upon which trust between members was based. Especially in times of crises, as illustrated by the case of Carl Christian Böcker, secretary of the Finnish Economic Society, members could fall back on this moral economy of trust in order to convince others of their unselfish actions.
Title : Ideas in Economics in Ancient , Medieval and Modern Times : Ethical Issues *
2018
Economics was traditionally viewed as part of a wider study of human things, including ethics. Ethics studies values and virtues. The objective of this study to discuss ideas in economics in ancient, medieval and modern times context ethical issues. The first attempts to analyze economic problems appear in the writings of the ancient Greeks. Plato recognized the economic basis of social life. Aristotle attributed great importance to economic security as the basis for social and political health. Roman writers such as Cicero, Vergil and Varro gave significant advice about the economic agriculture. The medieval period was marked by the disruption of the flourishing commerce of the ancient world, and its economic life was dominated by feudalism. Mercantilism economic system of the major trading nations based on the premise that national wealth and power were the best served by increasing exports and collecting precious metals in return. Physiocrats regarded agriculture as the sole prod...
Trustworthiness and Economic Performance
SSRN Electronic Journal, 2010
Intrinsically trustworthy agents never cheat. A society's willingness to trust and the quality of its institutions have their origins in the intrinsic trustworthiness of its citizens. Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. We measure intrinsic trustworthiness with a question from the World Values Survey and estimate its effect using a sample of 60 countries. We find that trustworthiness is important for output per capita and that the effect of trust is likely to come from trustworthiness. * We would like to thank participants of the Conference of the International Society for New Institutional Economics in Toronto, and the Economics Workshop at the University of South Carolina for helpful comments.
The Conceptualization of 'Trust' in Economic Thought
1996
Attempts to conceptualise trust has led to a confusing array of definitions across the social sciences. This paper focuses on the emergence of trust in economic thought and clarifies its conceptualisation as a term used to identify a purely calculative theory of behaviour in which agents form subjective probabilities regarding the future action of others. This conceptualisation of trust is distinguished by two assumptions: (i) boundedly rational agents seek to minimise the costs of acquiring information; and (ii) agents’ subjective probabilities regarding the future action of others are ‘Bayesian’ in that they can be attached to any future event and every belief relevant for decision-making is captured therein. Alternatively, if it is assumed that boundedly rational agents find some calculations too difficult to perform even if the information is available, trust is better conceptualised as a complexityreducing social norm. This alternative conceptualisation of trust is grounded in ...