Trust: The Social Virtues and the Creation of Prosperity

In "The End of History, " Francis Fukuyama showed that the human historical process had culminated in a universal capitalist and democratic order. The end of the Cold War thus marked the end of ideological politics and the beginning of a struggle for position in the rapidly emerging order of 21st century capitalism. Yet despite the historic convergence of economic and political institutions throughout the world, we still see a great deal of social and cultural turbulence, not only in the West but in the emerging liberal states of Asia and Latin America. Now that Marxist economics and social engineering both have been discredited, Fukuyama asks, what principles should guide us in making our own society more productive and secure? In "Trust, " a sweeping assessment of the emerging global economic order "after History, " Fukuyama examines a wide range of national cultures in order to divine the hidden principles that make a good and prosperous society, and his findings strongly challenge the orthodoxies of both left and right. Conservative economists believe that only free markets can liberate individual initiative and thereby foster greater prosperity, an assumption that dovetails with the popular myth that America was built by rugged individualists making unfettered "rational" choices. If Marxist economics undervalued the role of individual choice in a market economy, neoclassical goes too far in the other direction, promoting a radical individualism that neglects the moral basis of community and ignores the many "irrational" factors that influence economic behavior. In fact, economic life is pervaded by culture and depends, Fukuyama maintains, on moral bonds of "social trust."This is the unspoken, unwritten bond between fellow citizens that facilitates transactions, empowers individual creativity, and justifies collective action. In the global struggle for economic predominance that is now upon us – a struggle in which cultural differences will become the chief determinant of national success – the social capital represented by trust will be as important as physical capital. But trust varies greatly from one society to another, and a map of how social capital is distributed around the world yields many surprises. For instance, contrary to the assumptions of the "competitiveness" school, the United States has historically been quite similar to Japan in levels of social trust; and both differ greatly from low-trust Chinese Confucian societies on the one hand, or Latin Catholic societies like France and Italy on the other. Fukuyama argues that only those societies with a high degree of social trust will be able to create the kind of flexible, large-scale business organizations that are needed for successful competition in the emerging global economy. The greatness of this country, he maintains, was built not on its imagined ethos of individualism but on the cohesiveness of its civil associations and the strength of its communities. But Fukuyama warns that our drift into a more and more extreme rights-centered individualism – a radical departure from our past communitarian tradition – holds more peril for the future of America than any competition from abroad.