Economics, values, and organization: Trust: beliefs and morality

Trust is necessary for organizations to function well, both internally and in their relations with each other. Trust has been considered a form of human capital, a public good. Few if any social scientists or political leaders complain about there being too much trust. Many contributors to this volume are concerned with trust as a good. Trust is important in the functioning of firms and institutions. One of the qualities of good academic departments, for example, is that people do their work for real, without pretending or excessive complaining. Trust is also important in relations between citizens and government. Giving power to the government requires believing, or acting as if one believed, that the government officials involved will use the power correctly. Ultimately, this involves trust in one’s fellow citizens. They must not only be trusted to do their jobs when they are government employees, but they must also be trusted to be recognize and correct future errors of policy. Without such trust, change becomes difficult. People are afraid to risk giving power to the government for fear of some error that will not be corrected, so they attached to the status-quo. Breyer (1993) has described a vicious circle resulting from mistrust of government: simplistic laws that tie the hands of government, government abuses as a result of trying to ∗Citation: Baron, J. (1998). Trust: beliefs and morality. In A. Ben-Ner & L. Putterman (Eds.), Economics, values, and organization, pp. 408–418. Cambridge University Press.