Start of Main Content


CONTRIBUTOR / Bruce Carruthers


Contracts and other legal devices facilitate economic exchange, but they are insufficient in themselves. They rely on a foundation of trust, which emerges from our responses to uncertainty and vulnerability. We attempt to lessen uncertainty by acquiring new information, or we manage our vulnerability by finding ways to protect ourselves from harm. In doing so, we divide people into two categories—those who are trustworthy, and those who are not. But our judgments are sometimes mistaken: we might distrust people who are trustworthy, and trust those who are not.


As a social scientist, I’m very interested in trust as it concerns people because really society, human cooperation, human coordination, all of the activities that we do together, really depend on trust.

And you might kind of wonder, well, trust sounds a bit like faith? You know, we’re just going to take people on faith.

And don’t we have a bunch of ways of coordinating our activity and making sure that the left hand knows what the right hand is doing, and I can figure out what’s going on vis-a-vis my employer or all the people that I interact with — and don’t we have a bunch of formal coordination devices like contracts or instructions or standard operating procedures?

Why aren’t those good enough? Why do we have to go beyond that and trust people? And there’s a couple of reasons for this. And one of them is that, as wonderful as these formal devices are, they really do have limits.

And one of the reasons is that contracts and other instructions, lists, standard operating procedures, all of these devices — they’re always incomplete; that is, the world is more complicated and unpredictable than we can anticipate.

And so, stuff will happen that will effect whatever it is you’re doing with these other people. It will have an impact on your ability to execute whatever it is you’re trying to do, and it’s not going to be in the contract what’s up.

You might think to yourself, “Well, maybe trust isn’t such an issue if we go to the marketplace.” Let’s think about markets and capitalism and self-interest and competition — maybe that’s a world in which contracts and other formal devices will be sufficient.

And once you’ve got an airtight contract, you don’t have to worry about the personal character or the trustworthiness of the people you’re dealing with, because you’ve got a good contract and you hired a good lawyer.

So, the most famous person who thought about this sphere, of course, was Adam Smith in his famous book The Wealth of Nations, which really did talk about the virtues of capitalist production and competitive markets and so forth.

And I think it’s very telling that before he wrote The Wealth of Nations, Adam Smith wrote a book on The Theory of Moral Sentiments.

And in this previous book, he posited that people are linked through strong bonds of sympathy and empathy and trust, and that on top of this, we’re able to have markets and capitalism and all that kind of fun stuff.

It was clear to me (and I think clear to Smith) that some measure of some baseline, some foundation of trust is very important even in social settings where we might think that the issue of trust can be solved or avoided.

You might want to ask, when does trust arise? I’ve talked about it as kind of ever-present — it’s all over the place. But really, there’s two elements that drive trust situations.

One of them is uncertainty, and the other is vulnerability — that is, people are uncertain about what others are going to do (they don’t know what’s going to happen in the future), and they’re vulnerable to what those other people do to the extent that their interests and those other people’s actions are intertwined.

So, the trick for dealing with a trust situation is really addressing these two key elements: either trying to deal with uncertainty by acquiring more information and learning (or trying to figure out) what is likely to happen in the future.

…Or by managing your vulnerabilities and thinking about ways to mitigate or reduce the impact (or the potential harm) that others’ actions, future actions, could have on your interests.

So, this kind of sets up a generic recipe book for how to deal with trust situations. How do people trust?

People rely on a lot of heuristics, rules of thumb, to decide who is trustworthy and who is not, and that distinction is really important because you can’t go through the world trusting everyone, and you can’t function in the world if you trust no one.

And so, what you have to do at the simplest level, is kind of put everyone into two bins: there’s people that are trustworthy; there is people who are not. And you want to be able to trust the trustworthy and avoid those who are not trustworthy

I’m going to offer a couple of distinctions that help clarify the discussion of trust. And one of them is the difference between trust and trustworthiness. And this really speaks to who is doing the trusting and who is being trusted.

One party trusts the other, and the other party may or may not be trustworthy — that is, they deserve the trust. But someone who is trustworthy may not be trusted, and someone who is trusting may end up trusting someone who is not trustworthy.

So, these two things have to be kept separate. Another distinction is the distinction between generalized and relational trust.

Generalized trust really speaks to the question of how you deal with strangers. Do you trust abstract institutions? Do you trust the average citizen that you might run into on the street?

That kind of a thing — where you’re really dealing with someone with whom you have no relationship and about whom you have no prior information. What kind of ambient or generic level of trust do you have?

Relational trust is, what happens after you start to get to know someone? What happens after you start to develop a social relationship?

You have a history together; you have contracts; you have prior transactions. That is a very particular and non-anonymous form of trust, and it is really driven by the nature of the interaction that you have with that individual.