But I suspect that it's not trust that's valuable: it's
trustworthiness. When people are
trustworthy, when cultures and laws make honorable behavior common, when people
so fully take it for granted that promises are kept that they use the passive
voice--because it just doesn't matter who made the promise--that's when trust
Trustworthiness creates its own supply of trust, but there's
little reason for the opposite to hold.
I suspect that Adam Smith's pin
factory prospered because the UK had found ways to create trustworthiness. That's because without trustworthiness it's
difficult to reap most of the rewards of the division of labor: if firms can't rationally
trust each other, if workers and owners are rightly
suspicious of each other's motives, if citizens can't trust the police, then
everyone has to become a generalist. In
this world, everybody makes his own pins.
ome will say this point is trivial, that economists know
that it's trustworthiness that matters, not mere credulity. But the social capital literature mentions "trust"
seven times more often than "trustworthiness";
the economic growth literature mentions trust 13 times more often. If trustworthiness were truly central to our
thinking about the wealth of nations, these ratios would be somewhat more
In other settings--corporate finance and some business cycle
research, for instance--we place trustworthiness at center stage, often under
the label "incentive compatibility." I'll discuss some of those ideas in future
posts. But in the cross-country growth
literature trustworthiness makes only cameos.
It's time to fix that.