Review: Trust

Fukuyama offers a general theory of prosperity that provides provocative answers to certain of the questions he raised in The End of History and the Last Man (1992). While conceding that neoclassical economists have uncovered important truths about markets and money, the RAND Corp. analyst argues that they give a poor account of human behavior. In search of links missed by these practioners of the dismal science, Fukuyama probes the impact of culture (broadly speaking, any society's inherited ethical habits) on economic life. Focusing on such factors as trust (a community's shared expectation of honest, cooperative behavior outside the family) and social capital (the values created by tradition, religion, or other means), the author examines the ability of various peoples to organize effectively for commercial purposes without relying on blood ties or government intervention. Fukuyama surveys emergent as well as established industrial powers (the US, Canada, China, Germany, Italy, Japan, Korea, et al.) to determine which might have superior reserves of social capital. These reserves are important, he points out, because market-oriented societies in which there is a high degree of moral consensus and cooperation have lower transaction costs and hence greater competitiveness. The author puts paid to any idea that the US is a nation of rugged individualists; indeed, Americans are joiners without peer. He warns, though, that ongoing deterioration in the ties that bind (e.g., declines in church attendance and membership in fraternal or voluntary organizations), coupled with a persistent rise in divorce rates and special-interest groups, could deplete the nation's social capital and over time levy an economic toll. In turn, he cautions, the weakening of civil authority could strengthen the state's judiciary and executive branches, an outcome that, he says, is in nobody's best interest. A challenging, elegant exegesis that puts intellectual meat on the bones of Benjamin Franklin's tip to his fellow revolutionaries at the signing of the Declaration of Independence: ""We must all hang together, or assuredly we shall all hang separately.

+james coleman 'social capital'
+james fallows 'looking at the sun' p14 sweeping indictment of neoclassical economics in his book. fallows argues that hte anglo-american preoccupation with market-oriented economics has blinded americans to the critical role played by governments and that much of hte world outside the US operates on assumptions very much at variance iwth the rults of neoclassical economics.
p19
some economists try to get around this problem by broadening the definition of utility beyond pleasure or money to take account of other motivations such as the 'psychic pleasure' one receives for 'doing the right thing; or the 'pleasure' people can take in other people's consumption. economists assert that one can know what is useful only by what people reveal to be useful by their choices--hence their concept of 'revealed preference.' the abolitionist dying to end slavery and the investment banker speculating on interest rates are both said to be pursuing 'utility', the only difference being that hte abolitionsis'ts utility is of a psychic sort. at its most extreme, 'utility' becomes a purely formal concept used to describe whatever ends or preferences people pursue. but htis type of formal definition of utlity reduces hte fundamental premise of economics to an assertion that people maximize whatever it is they choose to maximize, a tautology that robs the model of any interest or explanatory power. by contrast, to assert that people prefer their selfish material interests over other kinds of interest is to make a strong statement about human nature.
from pages 313-4
Americans have developed a "culture" of rights that is quite distinctive among other modern liberal democracies. The constitutional scholar Mary Ann Glendon has pointed out that although most other modern democracies have adopted American-style bills of rights since World War II, there remains a unique character to the American "language of rights." For Americans, rights have an absolute character that is not balanced or moderated by constitutional language outlining duties to the community or responsibilities to other people. The constitutions or basic laws of most European countires contain, in addition to enumerated rights, language similar to that of the Universal Declaration of Human Rights to the effect that "everyone has duties to the community." American law does not support any kind of duty to rescue or otherwise enjoin citizens to do good to strangers in need. A Good Samaritan in the United States is much more likely to be sued for administering the wrong kind of help than rewarded for his or her troubles.
As Glendon points out, the American language of rights gives political discourse in the United States an absolute and uncompromising character that it need not have. This is a characteristic that pertains to Americans on both the right and the left. Liberals are extremely vifilant against any effort to curtail pornography as an abridgment of the First Amendment's freedom of speech; conservatives are equally vehement about gun control, citing the Second Amendment's right to bear arms. In fact, neither right has ever been exercised unconditionaly; the television networks are no more able to broadcast hard-core pornography during prime time than private citizens are allowed to own shoulder-fired anti-aircraft missiles. Yet proponents of these righst tlak as if exercise of that particular freedom were an end in itself, regardless of cosequences for the larger community, and they fiercely resist the slightest abridgment for fear of a slippery slope that somehow quickly end in tyranny and a total loss of rights.
The uncompromising character of American righs discourse is based on the belief that the end of government is to protect the sphere of autonomy in which self-sufficient individuals can enjoy their natural rights, free of pressures, constraints, or obligations to those around them. That sphere of autonomy has grown 

Review: Trust: The Social Virtues and The Creation of Prosperity

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