Trust in Economics and Politics

The lack of study of interpersonal trust and the virtues that lead to trust in the disciplines of economics, political economy and politics is surprising. The absence of trust in economic life can lead to huge increases in transactions costs which impoverish society. The lack of the virtues that lead to trust in political life can destroy society and make political institutions exploitative, with catastrophic consequences. There is a strong empirical link between the level of trust in society and levels of wellbeing. The paper argues that markets and competition will often promote virtues that lead to trust, but that this is not guaranteed. If trust in economic life is absent, governments may be able to regulate markets to overcome the problems created, but we should not assume that those in political life do not fall prey to the same temptations as economic operators. We need to rebuild trust by nurturing virtues, and this should start in the family. This is necessary because, ultimately, whilst political institutions can be better or worse when it comes to their efficacy in promoting trust, a change in culture is also necessary.