Beyond Keynes, Volume Two
Edited by Shelia C. Dow
Chapter 6: Trust, time and uncertainty
Vicky Allsopp1 INTRODUCTION This chapter aims to examine the nature and signiﬁcance of trust in economic relationships, whether in market or non-market transactions – indeed, in brief or protracted economic encounters. Here an emphasis is placed on the relevance of diﬀerent conceptual treatments of time, and the related ideas of knowledge, ignorance and uncertainty for emphasizing and explaining the importance of trust. Trust has not featured conspicuously on the conventional economic agenda. Whilst Adam Smith (1776) recognized trust as a valuable asset and had no qualms about highlighting the role of trust in determining wage diﬀerentials, many economists completely overlook trust. Smith (1776: 66) clearly stated that, in settling the wages of a principal clerk, ‘some regard is had commonly, not only to his labour and skill, but to the trust which is reposed in him’. Trust had an important function. Although trust has been aﬀorded a notable place in game theory, and wider discussions of trust have developed amongst economists in recent years (with contributions, for example, from Casson, 1991, 1995; Williamson, 1993; Fukuyama, 1995), economists, by and large, have ignored the concept. This is a signiﬁcant omission, particularly as it can be argued that trust, or its absence, is important for explaining economic behaviour, economic outcomes and the eﬀectiveness of economic policy. Indeed, whether the claim is that ‘[t]rust is central to all transactions’ (Dasgupta, 1988: 49) or simply that there is a component of trust in every transaction, in this account...
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