Forms, Foundations, Functions, Failures and Figures

Bart Nooteboom

Trust deals with a range of questions such as: what are the roles of trust? What can we trust in? Can trust serve as an instrument for the governance of relations? Is trust a substitute, a precondition or an outcome of contracts? The author then goes on to analyse what trust is based on, what its limits are, how it grows and how it can also break down. The role of intermediaries is also discussed.

Chapter 4: Functions

Bart Nooteboom

Subjects: economics and finance, economic psychology, industrial organisation


The previous chapter discussed the question what the basis for trust is. The present chapter turns the question around. For what does trust serve as a basis? What is its role in society, and how does that work? In the absence of all trust, in the wide sense of reliance, all action would stop. For action we depend on things and on people, and we can never be certain that our expectations will be met. Our confidence in natural laws is seldom broken, but our reliance on institutions and people often is. If we are not prepared to accept any uncertainty, we will not be able to act. If we do not have any trust, we will not engage in relations, and thereby we rob ourselves of the opportunity to find that there may be a basis for trust. If, on the other hand, we begin with trust and it is betrayed, we learn to adjust it. Blind trust may prevent such learning. Such failure and pathology of trust will be discussed in Chapter 5. Trust is indispensable in private life, in politics and government, and in economics and business. In personal life, there is relatively more scope for the micro, altruistic sources of cooperation, indicated in Chapter 3. In politics and government, the focus lies more on the macro sources of legality and social values and norms. There, one may want to avoid the micro sources, in both altruism and self-interest, to avoid nepotism, clientism and corruption. In...

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