their effects on how corporations and companies form. He argues strongly that mutual trust, a commodity linked to the concept of social capital,21 is very important to how people in different cultures form groups and corporations.
Another approach is that taken by Onora O'Neill,22 who takes as one of her starting points that “trust is social”, and then goes on to discuss the “crisis of trust” in public institutions, another example of mistrust being taken as a core aspect to be studied. O'Neill then goes on to consider how this can be managed, suggesting that transparency (a removal of secrecy) is not enough if we cannot remove deception and that true accountability involves the ability to make informed, deliberate (and individually autonomous) choices. Although the language here may seem somewhat different to what we have been using, the accent on choices that are both informed and individual is very consonant with our approach.
A final example in this area is a work by Diego Gambetta, whose 1988 essay “Mafia: the Price of Mistrust”23 both explicitly deals with mistrust and also discusses very different alternatives to institutions as instantiations of Hobbes's structural authorities as the centre for trust networks. He suggests that the Mafia in Sicily and southern Italy is successful for a variety of reasons: through fear of sanctions; because cooperation with the Mafia enhances people's mutual economic interests; because people have general reasons (cultural, moral, or religious) for believing that cooperation is good irrespective of sanctions and rewards; and because people are related by bonds of kin or friendship. It is worth considering, as in the case of the Prisoner's Dilemma, whether the sort of trust relationship that an individual might have to the Mafia might actually meet our definition of trust, remembering that the assurance of bad behaviour meets it equally as well as assurance of good behaviour.
We might also consider the differences between informal institutions like the Mafia and formal institutions like a monarchy. Author Henry Farrell24 makes an interesting distinction between trust/distrust in informal institutions as opposed to formal institutions such as those we have been examining so far. To state it in the terms we have been using, the distinction is that the context(s) of the trust relationship that a person holds to the Mafia are very far being well-defined: in this case, they are very ill-defined. This means a “certain fuzziness” in how to behave in certain situations dominates the relationship, as the institution itself is informal.
Who Is Actually Being Trusted?
The main problem with discussions around institutional trust is that although they use similar terms to those we use around individual human-to-human trust, they are all about conglomerations of trust relationships or about second-order derivations such as reputation. Economists are well aware that it is difficult to extrapolate from the theoretically rational individual actors modelled in game theory to multiple actors, particularly when neither the institution being trusted nor the context(s) for that trust relationship tend to be well-defined. Consider, for example, the phrase I don't trust the government and what different overtones that may hold when uttered by a single parent in their twenties and a multi-millionaire venture capitalist in their sixties. What do they trust the government to do or not to do, and what do they mean by the government? We are even further hampered by the geographical and jurisdictional differences. What I might mean by the government, writing this in the United Kingdom, is likely to be different to what is meant by a person of similar background in the US, Singapore, or Kazakhstan: even granted that we are talking about different bodies, the functions of those governments, their responsibilities to us, and our expectations of them are likely to be radically different.
Although it can cause confusion around the definition of party and of context, this territoriality—the connection to a particular territory or locality—as Axelrod25 calls it, provides some help when trying to define trust relationships and derive reputation, as it forces repeated interactions with known and easily recognised individuals. What is interesting about this is that Axelrod is pointing out the fact that institutions are represented by actual people who act as agents for the institution, as we noted in our discussion of our second case in Chapter 1.
Not all institutions are central authorities—although central or state banks exist, many institutions do not fit into either category—but one development that has been particularly significant is the rise in what Coleman26 identifies as explicitly social contracts with multiple corporate actors, over and beyond those with, and sometimes to the detriment of, the structural authorities that Hobbes described. Given that Coleman was writing in the mid-1980s, much of his forecast seems extremely prescient. From the move (in much of the world) from the support of party political manifestos to a much more issue-led political activism (the example du jour being Extinction Rebellion), to the astonishing power of search engines and social media sites, most of us maintain many more trust relationships to institutions in many more contexts than we would have done even 10 or 20 years ago. Nor does this disallow the possibility of some of those being state actors even outside our territory: the government of Estonia, for instance, has started offering e-residency27 for those who are not existing citizens, with a variety of mainly digital services attached. Of course, such non-territorial or extra-territorial authorities have existed for centuries—examples being the Roman Catholic Church, CND (the Campaign for Nuclear Disarmament), and Communist International (Comintern or the Third International)—though often, association with them has carried significant political risk for those involved.
Trust Based on Authority
The word authority has its etymology in the Latin word auctor: creator or originator. The English word author still carries this meaning, usually describing the person who wrote a particular novel, paper, poem, or other work of text. In most contexts, however, when we think of the word authority, we tend to think about being told to do something, as in phrases such as “Does she have the authority to tell me to do this?” There is another meaning as well, related to an entity—typically a person or an organisation—with expertise in a particular area, who may act as a trustee. Sometimes these authorities will endorse ideas, people, organisations, or systems, creating a second level of authority.
How are these secondary authorities endorsed and established? Historically, authority was vested in figures or texts that had become established through either consensus or endorsement by another type of authority, such as the Roman Catholic Church. Notable examples include:
The Bible—or, specifically, particular interpretations of the Bible that led to astronomical theories of geocentricism (with the Earth and planets revolving around the Sun) and that were defended by the Roman Catholic Church against the Copernican theories for which Galileo argued
Galen, a Roman doctor and writer on medicine in the Greek tradition, whose incorrect theories around the circulation of the blood, for instance, were accepted for centuries
Trofim Lysenko, a scientist (or arguably, pseudo-scientist) whose theories espousing inherited characteristics between generations led to a campaign against Darwinism and genetic theory pursued by the Soviet Union
The establishment of the endorsing authorities for these three examples are notably different. The first example is the theocratic rule of the Roman Catholic Church, whose control of much of Mediæval Europe was almost total, with spiritual power being backed up by economic and political (and concomitant military) power.
