Trust

Gert Tinggaard Svendsen

• Publisher: Aarhus University Press
• Year: 2014
• eBook ISBN: 9788771244038
• Topic: Psychology
• Subtopic: History & Theory in Psychology
• Index: Psychology

Do you know the author of this book? Maybe not. But you probably trust him anyway. Most Danes do: as many as 78%. Even people who do not know him at all trust him. He is in fact not just anyone; he has solved the riddle of Denmark's success - until now an inexplicable mystery. The answer is simple. It is the Danes' trust in him and everyone else they do not know which is Denmark's most important raw material. It makes the country one of the richest in the world. - his name? Gert Thinggard Svendsen, trust expert at the University of Aarhus, and he says: Control is good, but trust is cheaper.

THE ROOTS OF TRUST

Trust does not appear out of the blue; nor does the idea of trust as an important piece in the puzzle of economic development. Since economic growth theory was founded after World War II, the social sciences have gradually accepted the importance of informal institutions to economic growth – and one of them is trust.

The period consists of three main stages. During the first stage, approx. 1945-1980, the state was seen as ‘good’. State institutions were perceived as competent and effective, and they spent the citizens’ money optimally by delivering a variety of so-called collective goods (roads, hospitals, legal system, etc.). These early authors therefore saw extensive state interventions in the market economy and the production processes as positive in terms of economic growth. At the same time, the bitter economic crisis in the interwar years had given rise to widespread pessimism regarding the market’s ability to create economic growth.

The whole EU system is based on this line of thought with its legislative roots in the Commission. EU’s architect, the French bureaucrat Jean Monnet, suggested giving the Commission (i.e. the bureaucracy) rather than a parliament the right to initiate legislation. Enlightened and benevolent bureaucrats would ensure a peaceful and wealthy Europe. Since then, the Parliament has gradually increased its power, but the Commission is still the centre of power and decides on legislation.

The second stage, approx. 1980-1990, was a reaction against left-wing intellectuals from the 1970s, and the state was now seen as ‘evil’. State institutions are perceived as a ball and chain on the market, because they favour narrow interests, politicians, and bureaucrats. The attitude was that state institutions base their actions on narrow self-interest and spend the money instead of advancing collective goods that benefit society as a whole. Politicians and bureaucrats only think of themselves and forget to earn money for society at large. When the state becomes too big and the money ends up in the wrong pockets, economic growth slows down.

The trends in this ‘neoclassic counterrevolution’ were privatization and a minimal state. Especially the conservative governments in the US (Ronald Reagan) and the UK (Margaret Thatcher) advocated the market forces as a solution. President Reagan said that the state is not the solution to the problem, it is the problem. Successful examples of this strategy are New Zealand and the three Asian tigers, South Korea, Taiwan, and Singapore. So we cannot say that the philosophy is wrong; it was simply unable to explain certain developments – among them the Scandinavian economic success.

During the third stage of modern growth theory, i.e. since approx. 1990, institutions have come into focus. Many authors have attempted to compare the quality of the institutions by examining the state’s ability to provide collective goods. The question is not whether the public sector per definition is evil or good; but rather whether state institutions in different countries have been able to introduce and implement ‘good’ policies that increase the economic growth regardless of special interests and corruption.

President Barack Obama gave a crystal clear explanation of the new perspective in January 2009: The question we ask today is not whether the state is too big or too small, but whether it works. The American economist Mancur Olson, who inspired me to study trust, also concludes that the main explanation of why some countries are rich and others are poor is variation in the countries’ institutions and the resulting economic policies.

The latest trend in growth theory is the turn away from formal towards informal institutions – i.e. values, norms and human relations.

Social trust may be ‘the missing link’ in economic growth theory. We therefore assume that social trust may be a new production factor to be added to the two conventional production factors in economic growth theory, namely human and physical capital. We may, in other words, talk about institutional competitiveness based on informal rules.

I recently lost my wallet in a local Danish airport, but it was not stolen. The wallet and contents (approx. 3000 DKK, passport, visa, etc.) were handed in to the airport personnel, and I was called via the PA system. When I got my wallet back, the anonymous finder had already disappeared. It made me think about the legend about King Frode Fredegod. More than 1500 years ago he left his gold ring on the road, trusting that no one would steal it. Long after, he returned, and the gold ring was still there.

This story is a legend, and my experience in the airport is unique. Still, the stories are not accidental. In several international experiments, wallets with content were left on main streets around the world, and most wallets with content were handed in in Scandinavia – and most in Denmark and Norway. The experiments show that you can actually trust people in Scandinavia, but also that people trust the authorities. If the police pocketed the money and threw the wallets in the trash, there would be no point handing them in.

Another example of exceptional trust is the so-called self-service huts in Norway. The Norwegian Tourist Association runs a trust-based system without staff in the huts. There is plenty of food in the huts, and anyone with a key has access. There are currently around 220,000 members. When you leave the hut, you write down how much food you have consumed and which account number the money can be drawn from. That system would be unthinkable in most of the world.

Sale of vegetables and other agricultural products along the Danish roads is another good example. Most goods are out in the open all day, and passers-by put their money in a cigar box or suchlike. There is no salesperson and the system is extremely efficient – when it works. Anybody can steal both goods and money, and a Brazilian or a South African would probably think that the farmers/gardeners are showing an unusual, perhaps even foolish, degree of trust in his fellow human beings.

Trust is also a factor when you ask for directions – in Denmark you naturally assume that you get a correct answer and not, as in some countries, a deliberately wrong answer.

The individual citizen is probably rewarded for this trusting behaviour with more happiness. It makes you feel good! Showing and receiving trust is pleasant, just as it is unpleasant to be accused of cheating. And

co-operating makes you a little high. In fact the brain releases oxytocin, a hormone, when we co-operate and do voluntary work, and it gives you a feeling of well-being. These neurobiological findings are still in their infancy and highly contested, however. Besides being world champions in trust, the Danes are also world champions in happiness. But that is a different story – for another moment of reflection.

We still do not know enough about how trust is generated in a society. Trust as a research field is still very new, and we have probably only seen the tip of the iceberg. It is, however, an important topic.

If social trust is really the key to the Scandinavian puzzle, it is important to find out where the raw material comes from. The next step is therefore to initiate an extensive gathering of historical data that can pave the way for comparisons of social trust within Scandinavia and between other countries. New insights can optimize the quantity of trust in society to prevent erosion of social trust over time and instead reinforce it.

An important step is to uncover the roots of the Danish gold, i.e. our unique reserve of social trust, which probably makes society and the economy run in smoother ways than in other countries, and thus makes Denmark a better place to live.

There are many the...

Table of contents

• In the same series
• Title
• Colophon
• KNIFE AND FORK
• FROM ICE AGE TO WELFARE
• THE BUMBLEBEE
• THE ROOTS OF TRUST
• TRUST OR CONTROL