“Perhaps the most crucial area of modern life in which culture exercises a direct influence on domestic well-being and international order is the economy,” writes Francis Fukuyama in his seminal work, Trust: The Social Virtues and The Creation of Prosperity.1 “There is scarcely any form of economic activity, from running a dry-cleaning business to fabricating large-scale integrated circuits, that does not require the social collaboration of human beings,” Fukuyama writes. This ability to collaborate — with strangers and at scale — is the source of our shared prosperity. More, “economic activity represents a crucial part of social life and is knit together by a wide variety of norms, rules, moral obligations, and other habits that together shape the society.” And it all hinges on shared trust.
In The Great Degeneration: How Institutions Decay and Economies Die,2 economic historian Niall Ferguson writes, “The peculiar essence of our financial system is an unprecedented trust between man and man; and when that trust is much weakened by hidden causes, a small accident may greatly hurt it, and a great accident may almost destroy it.”3 This is the central theme of this series of reports.4 “A good set of institutions is hard to achieve,” Ferguson rightly observes. “Bad institutions, by contrast, are easy to get stuck in. And this is why most countries have been poor for most of history, as well as illiterate, unhealthy, and bloody.” Does this overstate our current travails?
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