Trust, social capital and state

1. Trust, social capital and state Lecture political science � political theory 2 � summer semester 2004 University of Fribourg

2. Program Problem of trust Levels of trust Personal trust Generalized trust Institutional trust � political trust State and trust Democracy and trust Cultures of trust Trust as the center of Social capital Case studies

3. Trust � the basic problem Why do people cooperate? ? constraints, ? economic interests, ? values: cultural/moral reasons, ? personal relations Trust is one reason for cooperation: it enables it Trust has to do with risk, a gamble, a risky investement under conditons of uncertainty (? Luhmann 1979 , Levi 1998, Strasser 1997, Seligmann 1997) Trust involves expectations: ���.we make predictions (or have expectations) concerning the behaviour of others. If we are confident that our predictions will come to pass, we trust these others. Trust thus reduces complexity by ensuring that the social system is based on mutual expectations about actors� future behaviour, encouraging social actors to select specific options of social action and reaction. The basic function of coordinating social interaction is achieved, and cooperation, rather than opportunistic behaviour, is the result.� (Clegg 1996)

4. Trust the basic problem II: risk and complexity �At issue is a cooperative venture, which implies that the truster possesses a reasonable belief that well-placed trust will yield positive returns and is willing to act upon that belief Thus, the observer can tell if an individual is trusting by noting whether a transaction took place (...) Trust implies a risk to the truster. In some instances the risk may be so low that we tend to use the label confidence instead of trust ( Levi 1998) �� no decisive grounds an be offered for trusting; trust always extrapolates from the available evidence; it is, as Simmel pointed out, a blending of knowledge and ignorance� Trust remains a risky undertaking (Luhmann 1987: 26) �Trust is required for the reduction of a future characterized by more or less indeterminate complexity� (Luhmann 1987)

5. Trust the basic problem III: trustworthiness and ethics of trust �In modal trust relationships, the trusted party has an incentive to be trustworthy, an incentive grounded in the value of maintaining the relationship into the future. That is, my trust of you is encapsulated in your interest in fulfilling the trust. It is this fact that makes my trust more than merely expectations about your behaviour� (Hardin 2001: 3) �Trust in other people is based upon a fundamental ethical assumption: that other people share your fundamental values. They don�t necessarily agree with you politically or religiously. But at some fundamental level, people accept the argument that they have common bonds that make cooperation vital. And these common bonds rest upon assumptions about human nature. The world is a beneficent place composed of people who are well-intentioned ( and thus trustworthy) (Uslaner 2003: 2)

6. Trust the basic problem IV: to summarize the idea In a strategic perspective: A trusts B because he presumes it is in B�s interest to act in a way consistent with A�s interest. (M.Levi) ? Is the other trustworthy?? incentives to be trustworthy In a moralistic perspective: I trust others because I believe that others share my fundamental moral values (honest behaviour) (Uslaner)

7. Trust the basic problem V If moralistic trust is, contrary to strategic trust, a moral dictate to treat people as if they were trustworthy ? then what kind of people are trustworthy, people like us, friends, people of our own community, or those of the broader community? Why do we trust � distrust them? Personal experiences, socialisation, experiences with institutions, tell us, wether we have dispositions to trust Trust / distrust depends on the disappointments we made in the past Levels of trust Personal level: personal trust: families, kinship groups Generalized trust among strangers Institutional trust, trust in politics

8. 1. Personal trust Is it Strategic trust? It�s based on experience Familiarity = Vertrautheit Can we still speak of trust in the case of closely knit networks ? low risk ? commitment -> familal trust Traditional form of trust: you trust only in a familiar world, you distrust strangers How exclusive is personal trust?

9. 2. Generalized/Extended trust Trust among strangers �Most people can be trusted� ? = trusting people we don�t know It�s not based on experience Moral foundation? (Uslaner) ? positive view of strangers: Do you consider others to be a part of your moral communitiy? Standards of reciprocity Golden Rule Importance of third-party and third-party enforcement

10. 3. Institutional trust Faith in institutions = Is it possible? as faith in holders? Capacity of government to do the job well ? confidence Trust in Government: is it really important? Trust in government is declining Problem of trustworthiness of institutions Importance of distrust: institutionalized distrust and distrust in government Causal link between institutions and generalized trust Role of the state as �third party enforcement�: do we trust others because we have faith in the effectiveness of institutions? Trust in political institutions: because we trust others?

11. Role of State institutions for generalized trust Third-party enforcement = impartial enforcement by a legitimate state ? facilitates trust States guarantee markets, protect rights, facilitate cooperation Third-party enforcement supports and increases generalized trust ? which increases faith in effectiveness of political and legal institutions Levi speaks of transference of trust ? facilitating trust ? facilitating cooperation High level of (generalized) Trust ? institutional efficiency ? strength

12. Role of the state in promoting generalized trust States can promote generalized trust (Levy) Condition: the state has to be trustworthy Honesty and competence of bureaucracy creates chances for cooperative behaviour and belief in trustworthiness of bureaucrats Compliance = depends on perception that governement acts in the interest of citizens, that procedures are fair = conditions of contingent consent (Levy 88): �Contingent consent is a citizen�s decision to comply or volunteer in response to demands from a government only if she perceives government as trustoworthy and she is satisfied that other citzens are also engaging in ethical reciprocity� Ethical reciprocity � cooperate under condition that others also cooperate

13. Trustworthiness of institutions � Hardin Legitimacy, support and trust How many of us invest in trust in government? How much distrust in government is necessary? Who controls the government? Importance of opposition groups for trustworthiness � relation of failing and distrust How important are low voter turnouts for explaining distrust/trust? �having only 5 percent of the citizenry alert and committed to politics is all it takes to make things work� (Hardin 2002: 163) Experience with institutions: reputation of being trustworthy �Most of the time, we can inductively suppose that an organization that has been performing well in some sense is likely to continue to do so unless its conditons are altered� (172)

14. Efficiency of institutions and generalized trust Individual experience with the efficiency or inefficiency of institutions ? disappointments with instititutions or the officials representing them (Rothstein 2000 and Rothstein/Stolle 2002) Importance of judicial system and police ? if people trust effectiveness and fairness of these systems ? generalized trust would be facilitated (? see table trust in institutions) Effectiveness means: are they able to punish �treacherous� behaviour Importance of memory: historical record of these institutuions with regard to fairness and effeciveness ? collective memory about actual operations of institutions (Rothstein 2000: 492) Have a look at the society where generalized trust is supposed to develop: Inclusive and exclusive societies ? different cultures of trust Trust building institutions = Inclusion = equality = identy of community = range of trust A complementary perspective points much more to the individual experience with the efficiency or inefficiency of institutions. This experience influences the level of trust in other people. In other words trust depends also on the disappointments we made in the past with institutions or the official representing them. With this regard Rothstein / Stolle 2002: 16 point to the importance of particular institutions such as the judicial system and the police: If citizens can trust the institutional effectiveness and fairness of these systems then �one�s generalized trust in others can be facilitated�. It should also be underlined that the way people look at the fairness and effectiveness of institutions responsible for handling �treacherous� behaviour is a function of the �historical record� of these institutions, their reputation with regard to fairness and effectiveness, Rothstein (2000: 492) speaks here of �collective memory about the actual operations of institutions. Eventually it makes sense then to have a look at the type of society where generalized trust is supposed to develop. Countries like Switzerland or Sweden, which have well-established cultures of trust, are fairly inclusive societies with well developed political and legal mechanisms that have been specially designed as trust-building institutions for distribution of resources (the welfare state), political involvement and integration of minorities (federalism and direct democracy) or protection of civil and human rights. Such features shape the identity of a national community and its values, and certainly determine the range of trust in society. In some regions of Eastern Europe, such experiences are unknown. In deeply inegalitarian societies it is hardly surprising that generalized trust is lacking (see also Uslaner 2002). A complementary perspective points much more to the individual experience with the efficiency or inefficiency of institutions. This experience influences the level of trust in other people. In other words trust depends also on the disappointments we made in the past with institutions or the official representing them. With this regard Rothstein / Stolle 2002: 16 point to the importance of particular institutions such as the judicial system and the police: If citizens can trust the institutional effectiveness and fairness of these systems then �one�s generalized trust in others can be facilitated�. It should also be underlined that the way people look at the fairness and effectiveness of institutions responsible for handling �treacherous� behaviour is a function of the �historical record� of these institutions, their reputation with regard to fairness and effectiveness, Rothstein (2000: 492) speaks here of �collective memory about the actual operations of institutions. Eventually it makes sense then to have a look at the type of society where generalized trust is supposed to develop. Countries like Switzerland or Sweden, which have well-established cultures of trust, are fairly inclusive societies with well developed political and legal mechanisms that have been specially designed as trust-building institutions for distribution of resources (the welfare state), political involvement and integration of minorities (federalism and direct democracy) or protection of civil and human rights. Such features shape the identity of a national community and its values, and certainly determine the range of trust in society. In some regions of Eastern Europe, such experiences are unknown. In deeply inegalitarian societies it is hardly surprising that generalized trust is lacking (see also Uslaner 2002).

15. Countervailing powers and trust: interdependency of strong State, strong economy and strong civil society Beziehungen zwischen POLITIK UND GESELLSCHAFT (v.a. Zivilgeschellschaft und Wirtschaft) so institutionalisiert werden k�nnen dass: Machtmissbrauch nicht m�glich ist oder wenn er eintritt, korrigiert werden kann Pol Entscheide transparent Vertrauensbildung Wenn dies die Grundidee ist von GG, dann m�sste das Institutionengeflecht Politik-Wirtscahft-Zivilgesellschaft so beschaffen sein, dass keine dieser drei Ordnungen, die �berhand gewinnt, Es brauch eine Art Machtbalance zwischen den drei Ordnungen, die sich gegenseitig auch gewaltenteilig kontrollieren k�nnen. Es geht also nicht darum wer st�rker ist - Nullsummenspiel Debatte: starker Staat / schwache Gesellschaft Frage: wie k�nnen sich starker Staat, starke Wirtschaft, starke Zivilgesellschaft gegenseitig so verst�rken und bedingen, dass Freiheit f�r alle gr�sser wird. Wie k�nnen sie sich in Schach halten, dass Missbrauch von MACHT UND VERTRAUEN verhindert werden kann: Besonders wichtig in OME Staaten mit schwachen Zivilgesellschaften, zum Teil zu starken Staaten und Wirtschaften Die folgende Graphik dr�ckt dies aus: Wie sehr k�nnen wir Staat, Markt oder Zivilgesellschaft VERTRAUEN, dass sie unsere Freiheit st�rken Beziehungen zwischen POLITIK UND GESELLSCHAFT (v.a. Zivilgeschellschaft und Wirtschaft) so institutionalisiert werden k�nnen dass: Machtmissbrauch nicht m�glich ist oder wenn er eintritt, korrigiert werden kann Pol Entscheide transparent Vertrauensbildung Wenn dies die Grundidee ist von GG, dann m�sste das Institutionengeflecht Politik-Wirtscahft-Zivilgesellschaft so beschaffen sein, dass keine dieser drei Ordnungen, die �berhand gewinnt, Es brauch eine Art Machtbalance zwischen den drei Ordnungen, die sich gegenseitig auch gewaltenteilig kontrollieren k�nnen. Es geht also nicht darum wer st�rker ist - Nullsummenspiel Debatte: starker Staat / schwache Gesellschaft Frage: wie k�nnen sich starker Staat, starke Wirtschaft, starke Zivilgesellschaft gegenseitig so verst�rken und bedingen, dass Freiheit f�r alle gr�sser wird. Wie k�nnen sie sich in Schach halten, dass Missbrauch von MACHT UND VERTRAUEN verhindert werden kann: Besonders wichtig in OME Staaten mit schwachen Zivilgesellschaften, zum Teil zu starken Staaten und Wirtschaften Die folgende Graphik dr�ckt dies aus: Wie sehr k�nnen wir Staat, Markt oder Zivilgesellschaft VERTRAUEN, dass sie unsere Freiheit st�rken

16. Democracy and trust � Levi Democracy as a prerequisite of an appropriately trusting citizenry and trustworthy government ? institutional protections ? skepticism + distrust Influence of democracy: Information ? protection of civil liberties, free speech, free assembly, and free press Inclusion ? citizenship ? preferences Democracy ? change of preferences ? new practices ? new values Citizen control of government action ? change their behavior ? cooperation ? commitments Democracy ? inclusion of concerned ?contingent consent ? compliance Importance of distrust in democracy � Levi: The healthy skepticism of citizens is a prerequisite of democracy -

17. Democracy and trust � Levi II �Democracy creates as well as solves problems for building citizen trust in their government. The free press and oversight institutions of democracies put government actors under extraordinary scrutiny. Open discussion about government actions contributes to its trustworthiness by providing a check on obfuscation and secret promises (or promise-breaking). Free speech permits a level of public and scientific debate that eliminates certain abuses by lowering the costs to the normal citizen of both information-gathering and monitoring. It is impossible in this day and age, for example, to hide nuclear testing or to make the claim that it is safe. The current government of France has promoted distrust of itself by failing to understand these simple facts� (Margaret Levy)

18. Democracy and trustworthiness of government

19. Trust, Democracy, politics and knowledge How confident can we be, that the �right�, competent politicians are being elected. How do we evaluate competence in politics / of governments � contrary to other social areas: science (universities), medical doctors, engineers. Criteria of our election: candidates operate with a mix of competence, values and interests (Hardin) But in politics interests are dominating. Otherwise why would we have competing experts in politics. What are interests, our interests in this case Often even expert knowledge is not available

20. Trust, Democracy, politics and knowledge II How can citizens evaluate the effects of policies. How can he know what is a good policy? We are adopting very often one among other expert opinions, because it corresponds to our values. Evaluation of the influences of authority of experts ? Which knowledge deserves our trust? Which sources? Which experts? Democratic choice does not mean choice of the dominant scientific truth. Both are not clearly distinguished. INTERESTS are in the centre of politics. INTERESTS vs. TRUTH We are always deciding according to our opinions, dispositions, interests: We should discover the blind spot in our own judgements. We cannot trust ourselves to be able to make the right choice.

21. Cultures of trust � distrust � the case of Central and Eastern Europe Cultures of trust � distrust � meaning specific patterns of norms and networks Premodern structures of trust: clientelism and power networks in countries of former USSR, familism, politics based on old and new personal networks Cultural and political gap between countries of central Europe and countries from the former Soviet-Union � some of these countries cannot be considered anymore as transition countries Can we really speak of low trust societies? Explanations? Origins of trust / distrust? The question concerning the causal link between institutional and interpersonal trust is not at all academic, since we have to face particularly in third world countries but also in post-communist societies of Central and Eastern Europe huge variations of cooperation and differences in the cultures of trust. Eastern Europe we should ask ourselves how it comes that despite never ending reforms many countries of the region are still living under conditions of a culture of distrust or are dominated by structures of trust which are not really modern, if one considers clientelistic patterns of corruption and power networks in Russia, Ukraine or countries of the Balkan region. With this regard several authors have stressed factors such as culture and geography which could explain the persistence of distrust, familism or politics based on old and new personal networks.[1] One has to consider also the considerable cultural and political gap between countries of central Europe and countries from the former Soviet-Union. On the other hand the successor states of the Soviet Union have also to be differentiated in undemocratic parts and countries like Russia and Ukraine oscillating between stagnation and reform, and which are at least partly paralysed by strong networks of power. [1] See Rose 2002, Fukuyama 2002 Eastern Europe we should ask ourselves how it comes that despite never ending reforms many countries of the region are still living under conditions of a culture of distrust or are dominated by structures of trust which are not really modern, if one considers clientelistic patterns of corruption and power networks in Russia, Ukraine or countries of the Balkan region. With this regard several authors have stressed factors such as culture and geography which could explain the persistence of distrust, familism or politics based on old and new personal networks.[1] One has to consider also the considerable cultural and political gap between countries of central Europe and countries from the former Soviet-Union. On the other hand the successor states of the Soviet Union have also to be differentiated in undemocratic parts and countries like Russia and Ukraine oscillating between stagnation and reform, and which are at least partly paralysed by strong networks of power.

22. Trust � distrust in Central and Eastern Europe Low Trust societies Reasons for the failure of the establishment of institutionalized structures of trust Old elites Old rules of law Betrayal of promises Corruption Culture of �secret� arbitrary, No routine procedures Money ? mafia

23. Trust � distrust in Central and Eastern Europe � different explanations II Implications for analysis: What kind of theories do we need? Is trust culturally determined? Path-dependant? = cultural theories Levels of generalized trust in society determine predispositions to democratic institutions: �government is as good as its people� ?Consequence: change of values difficult, trust in democratic institutions would take decades (R. Rose) Critics: relationship between interpersonal trust and trust in political institutions: direction of causal arrow: interpersonal /generalized trust ? political trust or Political trust / democracy ? interpersonal/generalized trust

24. Trust � distrust in Central and Eastern Europe � different explanations III Is trust generated by institutional performance = Institutional theories Institutional theories: culture can condition institutions but is not derministic Democratic institutions are catalysts of trust � by providing economic growth and good governance practices Trust is being considered as a function of performance of institutions: economic performance In postcommunist countries: add the political character of institutions ? good governance practices

25. Importance of political and economic performance for trust in institutions Mishler / Rose: �Trust or distrust in political institutions is substantially endogenous and largely determined by the political and economic performance of new democracies�(2001: 55) Little effect of generalized trust on institutional trust ? nature of Communist regime control Political trust in post-communist societies determined by institutional performance Consequence: scepticism since bad economic perfomance Prospects for change: governments can generate political trust ? good governance, institutions can earn trust through efficient economic policies ? welfare

26. To summarize: causal relationship between generalized trust and trust in institutions I Two questions (see slide 11 and 15 � Rothstein 2000, p. 491): Are we confident about political institutions because we trust other people? ? argument of Putnam ? social capital ? The more people trust other people, the more they tend to have confidence in political institutions. Or do we trust other people because we are confident about the effective working of institutions? = Trust �from above� ? : If people believe that the institutions that are responsible for handling �treacherous� behaviour act in a fair, just and effective manner, and if they also believe that other people think the same of these institutions, then they will also trust other people.�(Rothstein 2000: 492) Importance of institutions of law and order ? third party enforcement ? trust in universalism and impartialitiy of institutions ? treacherous behaviour punished (slide 12, Rothstein 2002:22-26) Importance of collective memory for a culture of trust: who defines it, who can change it? Influence of political leaders on a given belief system?

27. To summarize: causal relationship between generalized trust and trust in institutions II: social capital �The more universal, uncorrupted and impartial the government institutions responsible fo the implemention of laws and policies are, the more social capital your will get�(Rothstein 2002) ? importance of institutions for generating social capital ? Let�s have a look now to another approach, based on a �buttom up� perspective � Putnam�s theory of social capital, the link between trust, networks and institutional success = Society-Centered Model � and then we will come back to Rothsteins institutional approach

28. Trust as a central component of Social capital Cooperation is facilitated if a community has inherited a substantial stock of social capital in the form of norms of reciprocity and networks of civic engagement (Putnam 1993: 167) Social capital = features of social organization, such as trust, norms and networks, that can improve the efficiency of society by facilitating coordinated actions Networks Norms of reciprocity - ��Golden rule�� trust The function of social capital is to enable individuals to achieve things they could not otherwise achieve so well�. �Coleman ? Hardin For the Worldbank social capital "refers to the networks and relationships that both encourage trust and reciprocity and shape the quality and quantity of a society�s social interactions. The level of social capital has a significant impact on a range of development processes�(World Bank 2000: 18, see www.worldbank.org/poverty/scapital/index.htm.

29. Production and reproduction of social capital: trust and norms Accumulation of social capital: social capital, such as trust, social norms and networks increase with use and diminish with disuse: virtuous and vicious circles Public good = typically undersupplied: we underinvest in trust formation (Generalized) Trust arises from norms and networks of civic engagement (Putnam 1993: 171) If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another (Fukuyama 2000: 98) Norms that produce social capital: include virtues such as truth telling, meeting obligations, reciprocity Norms of reciprocity (combination of altruism, solidarity and selfinterest)

30. Production of social capital: trust and networks Trustworthiness ? networks of social exchange ? norms of reciprocity Formal and informal networks / Vertical and horizontal networks Networks of civic engagment = form of social capital ? encourage cooperation (avoid opportunism, foster norms of reciprocity, reputations) Different societies ? different radius of trust ? different cultures of trust ? different stocks of social capital Example: sthrength of family bonds differs from society to society (Fukuyama 2000: 99) Difference between �warm� and �cold� societies We come back to importance of generalized trust: Virtues like honesty and reciprocity practiced outside the family � Importance of weak ties ? Networks of civic engagement cut across social cleavages = cooperation on the community level Dense horizontal networks ? strong society ? strong state

31. Putnams strong society � strong state thesis and its critics Social capital = horizontal networks of civic engagement ? performance of polity and economy Weakness of civil society = vertical networks ? no cooperation ? no trust ? weak institutional weakness Virtuous circles = reproduction of social capital � cumulative and serlf-reinforcing ? high levels of cooperation, trust reciprocitiy, civic engagement and collective well-being (Putnam 1993: 177) Networks (formal and informal) = creators of social capital Critics (ex. Rothstein/Stolle 2002, Portes/Landolt 1996)) Relation between membership and social capital is not clear Determinism of the theory: social capital determined by history What are the really important interactions for the creation of social capital? ? good and bad networks, organizations -> dark side of social capital

32. Critics Putnams social capital theory II Norms of cooperation in any particular network are likely to change from one situation to another. They can represent social capital in one context and unsocial capital in another --> negative social capital, ?Mafia, ?Oklahoma bomber, ? exclusion Two faces of networks: they can be agencies of development or "rent-seekers depleting the public treasury and inhibiting economic growth." What�s the logic of causal mechanism?: trust ? state performance: How trusting people create better service performance? Does governmental performance influence trust? -? Rothstein/Stolle 2002 ? Importance of institutions of order and implementation for generalized trust Problems of measuring social capital Problems of definition � risk of circularity Problems of aggregation: link between micro and society level