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Trust

From a gene eye's view, non-reciprocal altruism is impossible. Yet humans cooperate all the time, and they do so via the prisoner's dilema. It turns out that the prisoner's dilemna ceases to be a dilemna if both players trust each other---mutual trust leads to the win-win situation. Trust, therefore, is the very foundation of social and economic life. Trust is as vital a form of social capital as money is a form of actual capital. Some economists have long recognized this. 'Virtually every commercial transaction has within itself an element of trust,' says economist Kenneth Arrow. Trust, like money, can be lent ('I trust you because I trust the person who told me he trusts you'), and can be risked, hoarded or squandered. It pays dividends in the currency of more trust.

Ridley (1997) includes a chapter on trust: "Trust and distrust feed upon each other. As Robert Putnam has argued, soccer clubs and merchant guilds have long reinforced trust in the successful north of Italy and fallen apart because of a lack of trust in the more backward and hierarchical south. That is why two such similar peoples as the north Italians and the south Italians, equipped with much the same mixture of genes, have diverged so radically simply because of a historical accident: the south had strong monarchies and godfathers; the north, strong merchant communities." "As Putnam's Italian example shows, where authority replaces reciprocity, the sense of community fades. In Britain, the welfare state and the mixed-economy 'corpocracy' replaced thousands of effective community institutions -- friendly societies, mutuals, hospital trusts and more, all based on reciprocity and gradually nurtured virtuous circles of trust -- with giant, centralized Leviathans like the National Health Service, nationalized industries and government quangos, all based on condescension." Ridley (1997). Strong merchant communities garner trust. Trust requires voluntary exchange of goods, information, fortune and power between free individuals in small enough communities for trust to be built. Just as trade between countries is the best recipe for friendship between them, so exchange between enfranchised and empowered individuals is the best recipe for cooperation. We must encourage social and material exchange between equals for that is the raw material of trust, and trust is the foundation of virtue.

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