Social capital is a major factor in economic prosperity, democracy, and a strong civil society. It contributes to a society’s resistance to extremism, populism, the call of authoritarianism. One of its elements is trust.
There is one aspect of trust that is often neglected but plays a crucial role nonetheless as one of the “soft” aspects of prosperity: the trust in (and the perception of) other people’s competence.
It is an important distinction when trying to build social capital and induce trust.
There is ample research on the subject of trust within societies and how social capital (and trust in particular) relates to economic growth and prosperity (Putnam, 1993). There are generalised and institutional trust questions in international surveys – the former denoting the level of trust in strangers. Lack of trust in other peoples’ moral behaviour is widely accepted to increase transaction costs (Knack, 1999), diverting resources from innovation and production into protection and enforcement.
By this logic, prosperous countries are the ones with more social capital, where transactions can be conducted in a less formal and less costly manner on the basis of trust.[i] Where generalised trust is missing, societal bonds are formed along family ties and other dysfunctional loyalties, thereby limiting the scope of business as well as creating rigidities and warranting state intervention. (Yamagishi, 2001)
“It is best to regard everyone as a thief”
With this Japanese proverb starts Toshio Yamagishi’s 2001 paper on the nature and relevance of social capital. The proverb illustrates the general sentiment that people tend to associate distrust with smartness while trust is associated with naivety, gullibility or ignorance (Yamagishi 2001). And yet, plenty of ‘smart’, distrustful people add up to a sick society – for a number of reasons:
Assuming malevolence creates resentment and eventually actual disincentives to moral behaviour
Thereby creating a vicious circle of mutually invoked distrust and unreliability.
Assuming the absence of morals in others also happens to provide a convenient excuse to relativize our own immoral behaviour.[ii]
We outsource morals into laws and government enforcement.
Into the cracks of mutual trust walks the government. The less we trust others’ morals the more likely we are to resort to the government to control others’ behaviour.
The more we identify with the state, the less we associate with each other.
The overgrowth of rules erodes our own inherent sense of morality or the need for us to make our own moral judgments in the first place.
We outsource our morals into laws and eventually flip into allowing ourselves everything the law does not explicitly prohibit – or enforcement is not imminent.
Trust leads to higher institutional quality and lower corruption (Uslaner, 2008).
Higher degree of trust leads to less corruption because people do not assume that other people engage in corruption. And since corruption can be interpreted as another form of transaction cost or tax, its absence serves as a powerful economic boost.
If the definition of trust encompasses more than just trust in other peoples’ moral behaviour, do these detrimental effects apply to perceived competence, too?
“People Are Stupid”
According to the online Oxford dictionary definition, trust is the “firm belief in the reliability, truth, or ability of someone or something”.
In order to measure the perception of competence, however, we should understand what exactly we mean by incompetence, particularly when we dismiss people as “stupid”. And what is the opposite of this “stupidity”?
Any discussion of intelligence predictably turns into a discussion about the various forms of intelligence. (Social intelligence – the ability to detect signs of risk in social interactions.[iii] Logical intelligence – as measured by IQ. The phrases “emotional intelligence”, “spiritual intelligence” and “common sense” will inevitably pop up.)
Measuring intelligence of any kind is a notoriously vague area. But for the purposes of this research it doesn’t matter what intelligence is or how (or if) we can measure it. What matters is how we perceive it, what influences it (and our perception of it) and how man-made incentives and the political environment interacts with it.
Perceived competence of others plays a major role in how people do business since the costs of other people’s incompetence can be just as high as that of their precarious morals. The consequences of perceived incompetence are strikingly similar to those of perceived lack of morals:
Assuming that others are less intelligent creates resentment and a disincentive to act intelligently.
It is thus a convenient excuse for our own less considerate behaviour.
Distrust flies on the wings of conformity and takes the false shortcuts to knowledge called prejudice. Stereotype threat, in turn, appears to lower our own intelligence. (Steele – Aronson, 1995)
Others’ perceived incompetence breeds more government
Others’ perceived irrationality makes people demand state intervention, just like perceived immorality (the threat of terrorism and criminality) does. We are so compelled by the notion that others are more stupid than us that we give rise to all sorts of appalling regimes that will in turn restrict our own scope of choices.[iv]
An intellectually unchallenging environment (real or perceived) causes decline in cognitive functions.
Socially unintelligent people tend to believe that others are stupid because they lack the skills to detect the absence of intelligence. By refraining from interaction based on this perception they fail to improve their skills (Billari, 2014). So contrary to the notion that trusting people are ignorant, it may be socially unintelligent people that are distrustful in the first place.
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Featured image: Doors of the World by Andre Vicente Goncalves
[i] The empirical evidence regarding the relationship between trust and economic growth is inconclusive. The correlation between the degree of social capital (trust) growth appears to depend on the samples of countries selected. The relationship between trust and economic growth is more likely to be observed in lower income countries, assumedly due to the lack of protection of property and contractual rights (Uslaner, 2010)
[ii] Anne Applebaum, in her book about life in the Eastern European countries after the Second World War describes wartime behaviour in detail. Following the monstrous atrocities of war the immorality other people displayed made it not only pointless but downright irrational to maintain high moral standards, keep respecting property rights and sometimes even human life (Applebaum, 2012).
[iii] Trust is also a form of social intelligence (Yamagishi 2001). Turns out, intelligent people trust more. The reason is unknown, but researchers assume the correlation is based on the fact that intelligent people make better judgements and are thus better at avoiding disappointment. (Billari, 2014)
[iv] The most obvious examples are central economic planning, laws restricting civil liberties, the right to move or migrate, to make one’s own sexual choices and reproductive decisions, but softer attempts at saving people from their own incompetence and wrong choices can be observed in the ‘nudge’ theory and various elements of the welfare state.
References at the end of the next post