Interpersonal Trust is Key for Democracy, Free Markets to Work

April 11, 2015 "The culmination of years of talks resulted in this handshake between the President and Cuban President Raúl Castro during the Summit of the Americas in Panama City, Panama." (Official White House Photo by Pete Souza) This official White House photograph is being made available only for publication by news organizations and/or for personal use printing by the subject(s) of the photograph. The photograph may not be manipulated in any way and may not be used in commercial or political materials, advertisements, emails, products, promotions that in any way suggests approval or endorsement of the President, the First Family, or the White House.
President Obama and President Castro shake hands. (wikimedia)

What most impressed the French political thinker Alexis de Tocqueville when he visited the United States in the 1830s was the Americans’ inclination to create civic associations. To Tocqueville, this disposition was central to the Americans’ adeptness to democracy. In recent years, social scientists have confirmed that democracy is more likely to succeed in civically engaged societies, and that quality of governance is linked to civic engagement or its absence.

More specifically, societies where people tend to trust each other have sturdier democracies, wealthier economies, are healthier and less susceptible to a variety of social ills. Interpersonal trust — that is, how much we trust each other — is one of the components of what scientists call social capital. Our knowledge of social capital is limited, and our measuring tools primitive, but studies are beginning to identify the critical importance of social capital, in the form of an active civil society in the consolidation of democracy in post-communist countries.

In international comparative surveys, trust is often gauged by questions such as: “Generally speaking, would you say that most people can be trusted, or that you need to be very careful in dealing with people?” Possible answers are: Most people can be trusted, or You have to be very careful when dealing with others.

According to experts, if you are reading this opinion column, chances are that you are a very civically engaged individual. So how would you answer?

In the international surveys, the countries of Northern Europe generally show the highest level of interpersonal trust. The United States also rates high in interpersonal trust, but arguably with a declining trend. Interpersonal trust runs low in the Middle East, Latin America, and Africa. To be sure, social capital is a complex social phenomenon, but our current understanding points to traditions of independent civic engagement and association as a principal source of social connections that facilitate collective action.

In the United States, church groups constitute the most common type of social organization. Others include school-service groups, sport clubs, professional societies, labor unions, fraternal groups, literary societies, veteran groups, civic and service organizations and more. The extent to which people trust each other and are able to cooperate fosters the interpersonal trust required for political and economic cooperation for mutual benefit. As our social and civic engagements decrease, so do our private prospects. Democracy and economic progress require civil interactions.

In contrast, absolutist governments promote a passive reliance on the state, and prohibit these types of organizations in favor of a single voice such as that of the Communist Party. For example, article 53 of the Cuban Constitution states that: “Freedom of expression and the press will be recognized in accord with the goals of a socialist society … the press, radio, television, movies and other means of mass communication will be property of the state and cannot be, in any case, privately held to assure their exclusive use in the interest of society.” These policies erode interpersonal trust and social capital and may help explain many observed social problems in absolutist societies.

When looking at economic reforms in a politically oppressed country like Cuba, it is necessary to understand that progress depends on the way that political and economic institutions interact and the role of social capital in that interaction. Yes, sound market-based policies are essential for progress, but it is the political class and its institutions that determine the economic policies.

To put it another way, economic policies shape the economic incentives, but political engagement shapes the economic policies.

What is not well understood by some is that economic problems flow from a lack of political rights and that social capital is a driver of these processes. The absence of civic engagement in absolutist societies means there is no effective feedback loop from society to policymakers. Without the feedback made possible by political rights, economic reforms can not generate inclusive economic progress and inevitably degenerate into concentrated power and wealth. What oppressed societies need most is the restoration of political rights to promote interpersonal trust and civic engagement.

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