The Benefits of Trust

Last night I was having drinks on the patio with a few friends at Zeitgeist, on the corner of Valencia and Duboce. Being outdoors in a San Francisco drinking establishment is somewhat of a novelty. I imagine it's a nice place to have a drink on a sunny afternoon, but it was cold and foggy, and the crowd and staff were particularly ill-mannered. It's at times like these when I find myself thinking that maybe conservatism isn't all bad. As mistaken, misinformed and misguided as they may be about so many things, conservatives at least seem to raise children who are better behaved than those raised by liberals.

Anyway, our conversation meandered and wandered until it landed on the documentary "The Corporation," which a few of my friends had watched the night before. All of them seemed equally struck by the message of the movie, I think, and worried about the increasing consolidation of businesses, how corporations have become arguable much larger, and undoubtedly more powerful than nation-states, and how they so often seem to act selfishly, and insensitively.

I played devil's advocate, and tried to argue that not all corporations were bad, in fact many were good citizens and demonstrated what could only be called a conscience. I'm not sure that I made much of a case, but if I didn't, it was because I hadn't yet read the following passage from "The Wisdom of Crowds,"by James Surowiecki.
In the wake of the orgy of corruption in which American businesses indulged during the stock-market bubble of the late 1990s, the idea that trustworthiness and good business might go together sounds woefully naive. Certainly one interpretation of these scandals is that they were not aberrations but the inevitable by-product of a system that play's to people's worst impulses: greed, cynicism, and selfishness. This argument sounds plausible, if only because capitalist rhetoric so often stresses the virtue of greed and the glories of what "Chainsaw" Al Dunlap, the legendarily ruthless, job-cutting CEO, liked to call "mean business." But this popular image of capitalism bears only slight resemblance to its reality. Over centuries, in fact, the evolution of capitalism has been in the direction of more trust and transparency, and less self-regarding behavior. Not coincidentally, this evolution has brought with it greater productivity and growth.

That evolution did not take place because capitalists are naturally good people. Instead it took place because the benefits of trust -- that is, of being trusting and of being trustworthy -- are potentially immense, and because a successful market system teaches people to recognize those benefits.