Trust: The Invisible Hand of a Free Society
Frankness and openness conciliate confidence. We trust the man who seems willing to trust us. We see clearly, we think, the road by which he means to conduct us, and we abandon ourselves with pleasure to his guidance and direction. Reserve and concealment, on the contrary, call forth diffidence. We are afraid to follow the man who is going we do not know where. The great pleasure of conversation and society, besides, arises from a certain correspondence of sentiments and opinions, from a certain harmony of minds, which, like so many musical instruments, coincide and keep time with another.—Adam Smith, The Theory of Moral Sentiments
The American Revolution was borne of suspicion, mistrust, and finally distrust. All goodwill between the American colonists and the British State was broken by Parliament’s passage of the Stamp, Declaratory, Townshend, Tea, Coercive, and Prohibitory Acts during the decade between 1765 and 1775. The framers of the revolutionary state constitutions and the federal Constitution of 1787 were also suspicious and distrustful of power, which meant they did not trust any men with unlimited power.
By limiting the power and scope of government, America’s Founding Fathers expanded the social and economic realms of freedom for ordinary Americans. But if men are naturally suspicious of the power lust of other men, how can a free society stay free or prevent itself from descending into a state of chaos on the one hand or a state of tyranny on the other?
The answer of the clearest and furthest seeing Jacksonian democrats was that government should, in the words of William Leggett, editor of The Plaindealer, an influential newspaper in New York City during the 1830s, “institute the natural system in all matters both of politics and political economy.” According to Leggett, this meant that government should free up the self-regulating “simple order of nature” so that individuals could achieve the maximum amount happiness and prosperity.
And what is the “simple order of nature”?
America’s eighteenth-century revolutionary constitution-makers provided the political framework for a free society and restored to men unheard of amounts of social and economic freedom. As a result, the sphere of government action in nineteenth-century America’s new socio-political order was delimited and the sphere of social freedom was large. But if government has only a minimal role to play in society, then what—to repeat—could hold this society together without spinning off into a maelstrom of social disorder? Would not the “natural system” and the “simple order of nature” lead to the chaos of the Hobbesian state of nature, where life is “solitary, poor, nasty, brutish, and short”?
The vitality and stability of a liberal political and economic order depends on the health of its underlying cultural institutions and associations, and the health of its cultural institutions and associations depends on the willingness of people to freely associate with each other in mutually advantageous relationships. Truly free societies are built on a complex network of subsidiary institutions and voluntary associations, such as neighborhoods, schools, churches, charitable organizations, professional societies, social clubs, fraternities and sororities, athletic associations, and businesses etc. In turn, voluntary associations are grounded in healthy families, which are the cornerstone of any free society. Ultimately, all these associations from the family to the corporation are upheld by a government that protects private property and contracts.
But there’s something more, something not seen by the naked eye that emanates first from families and informs all other free associations. It is with the family that most people learn the cardinal social value of a free society, namely, trust. (Dysfunctional families can, of course, be a source of mistrust and distrust.) The simple truth is that free and healthy societies are held together by a high degree of social trust, which serves simultaneously as an adhesive holding society together and as a lubricant easing relations between individuals.
But what exactly is trust, where does it come from, how does it arise and work, and why is it necessary for a free society? And, more to the point, if the American revolution and the American constitution were borne of suspicion and distrust as they surely were, how could trust have developed in the post-Revolutionary period? How does trust develop in a free society not held together by traditional manners and mores or by Church and State?
This essay examines trust as the invisible hand of a free society.
Defining Trust
Let’s begin by defining the concept “trust” as it was understood in the eighteenth and nineteenth centuries. Samuel Johnson’s Dictionary of the English Language defined trust as “Confidence; reliance on another.” Noah Webster’s American Dictionary of the English Language defined the word “trust” as “Confidence; a reliance or resting of the mind on the integrity, veracity, justice, friendship or other sound principle of another person.”
Let’s breakdown these definitions and think through how trust is formed and performed.
Trust is a relationship (even with oneself) that involves a form of knowledge and judgment—a knowledge and judgment of the moral values, the moral character, and the moral actions of another person or group of people. Trust happens when we gain confidence in the ideas, motives, and actions of others. In other words, trust is first and foremost earned through honesty and integrity.
Trust and its cognates can be seen as working on a sliding scale: it is a form of conscious judgment and sub-conscious risk-assessment that gives individuals in a social context a greenlight to act (trust), a yellow light to proceed with caution (mistrust), or a red light to stop and go no further (distrust). Trust is an assumption and even an investment denoting certain expectations of or between people about future actions based on past actions. It is also a two-way street where something is given and something is gained. Trust is often silent and unseen. It serves as a kind of Smithian “invisible hand” that regulates behaviors between individuals, between individuals and groups, and within or between groups. Trust is a necessary precondition for cooperation and association. There can be no civilized society without it.
Let’s consider one high-level articulation of what trust is. In his Art of Rhetoric, Aristotle says that orators gain the trust of their audience by projecting three qualities: “prudence and virtue and goodwill.” By Aristotle’s standard, individuals gain trust when they demonstrate to others that they reason well, that they are men of their word, and that they demonstrate a benevolent sense of life toward others. Put differently, trust assumes that a man has the ability and good sense to carry out what he has promised to do; second, that he has the moral integrity to do what he said he would do, and third, that he is good-natured (i.e., benevolent) and appreciates the goodwill of others.
The problem with trust, however, is that human knowledge is neither omniscient nor infallible. Sometimes the people we trust the most make mistakes or their moral character changes over time, which means that trust is rarely ever 100% given or guaranteed. Absolute trust is hard to come by and it is relatively rare. (The trust that most children have in their parents or that husbands and wives have in each other may come the closest to trust that is absolute.) There are, in other words, many levels or gradations of trust.
Trust is also context dependent. Sometimes external circumstances militate against our having absolute trust in someone’s judgment. If the cost of trust is too high (e.g., in life and death situations), we will often withdraw our trust in someone or something temporarily. Trust is therefore constantly fluctuating, like prices in the market, according to its present value, which is always being assessed and reassessed consciously or subconsciously. Everyday we meet people, most of whom we subconsciously judge and place along what we might call the “trust spectrum.”
Still, trust is an invaluable cultural commodity that is measurable and has a value affixed to it. Trust, like market prices, represents an assessment and a measurement. The spectrum of trust ranges from absolute trust to absolute distrust and every level of trust, mistrust, and distrust in between. Every day, men and women engage in trust evaluations of other people, which are signals of approval or disapproval. We find some people more trustworthy than others, which means that we are more willing to invest time and resources in them. Such evaluations and signals are necessary for individual planning and interaction in a complex society.
The antipode of trust is distrust, which means a rejection or a kind of repulsion. Typically, we do not like people we distrust, which means that we do not want to associate with them. We try to avoid people we distrust. Likewise, mistrust implies a degree of uncertainty, which implies vulnerability. Our guard is always up to one degree or another with people we mistrust, and we are cautious with them. Trust means overcoming doubt, and, in some cases, trust involves a leap of faith, which can have positive or negative consequences. A leap of trust necessarily involves a degree or level of risk.
The Trust Price and Index
As I have suggested already, trust, mistrust, and distrust are measurable forms of evaluation. What we might call the “trust index” is akin to the price system in economics, which means that it a general system of evaluation that fluctuates in value over time. Trust, mistrust, and distrust represent an evaluation and judgment of a man’s moral character and ability to deliver on promises made. Men and women constantly assess, reassess, and sometimes change their trust evaluations and judgments. Trust, mistrust, and distrust are moral phenomena that begin in childhood with individual evaluations of other people.
The social function of trust, mistrust, and distrust serves as mechanism for sending information to or between people that coordinates the separate evaluations, decisions, and actions of individuals in a complex society through what I call the “trust price.” In other words, trust, mistrust, and distrust can be assigned a value or price, which is a condensed, concretized, and objective form of information that sends a signal to buyers and sellers in various social or economic markets. The market valuation of trust, mistrust, and distrust allows individuals to predict with a high degree of confidence, or at least to have some expectations and confidence about, the intentions, actions, and reliability of their fellow citizens.
The “trust price” in a social market recognizes and rewards high trust individuals or groups and neglects and punishes low trust people or groups. The trust price is an efficient indexing of a certain kind of information, i.e., moral judgment. The trust price reduces transaction costs between individuals by reducing or eliminating the need for extensive information gathering, thereby reducing transactional risk. Over time, our trust evaluations become an implicit, lightning fast, and automatized function in society. Without the trust index, a free society is not possible.
Trust is a high-value commodity that lowers the costs of social interactions and transactions, whereas mistrust and distrust are low value commodities that increase the costs of association. The “trust price” or the purchasing price of trust goes up when it is in high demand and in low supply, and the trust price goes down when trust is in high supply and in low demand. When two or more people trust each other, the transaction costs of their association go down. The opposite is true for distrust. The “distrust price” or the purchasing price of distrust goes down when it is in high supply and in low demand. When two or more people distrust one another, the transaction costs of their association go up.
Trust is a necessary condition for the civic association, cooperation, and trade that underpins a free society. All human associations freely made and freely joined are built to one degree or another on trust, and trust is built upon shared ethical norms. Free and prosperous societies are held together by certain shared habits, customs, folkways, rules, manners, mores, and moral principles, which in turn must be accepted and enforced voluntarily by most people. Social trust assumes that most people act to one degree or another according to certain commonly held moral values and virtues, such as a respect for rationality, wisdom, prudence, honesty, integrity, initiative, productiveness, loyalty, dependability, politeness, cooperativeness, benevolence, etc. Trust manifests itself as a form of confidence in the ideas and actions of others in the present and future, which in turn allows us to predict how they will act.
As with the transactions in a market economy, trust depends on freedom and freedom is necessary for individuals to form their own independent judgment of other men and to exchange ideas and information with each other. Trust is also motivated by and is an expression of individuals acting in their own self-interest by pursuing mutually beneficial relationships with one another. Contrary to popular belief, freedom and self-interest do not encourage predatory or rapacious grasping but rather connectedness and collaboration between individuals. Freedom and self-interest encourage trust. First-use compulsion and coerced self-less-ness are the twin enemies of trust, which is why communist regimes are high distrust societies. (This point can be clearly seen historically in virtually any communist regime.)
This matrix of manners, mores, and virtues is sometimes referred to as “social capital,” which relies on unstated or unwritten standards of association and reciprocity. Social capital represents the accumulated, non-governmental moral and cultural resources (i.e., the folkways, manners, mores, and commonly shared principles) of a community or nation. The radius of trust in a free society is determined by the extent to which its members share, communicate, and enforce via certain cultural norms commonly held moral principles and social values. Post-founding, antebellum America witnessed high degrees of generalized social trust and social capital. This was true of all Americans engaged to one degree or another in commerce, and it was true of those pioneers who trekked together across America in wagon trains. Their survival depended upon their ability to trust one another.
Nineteenth-century America saw, for instance, an explosion in the creation of voluntary associations. (See below.) The world had never seen anything like it. At the deepest level, the nineteenth-century American art of association was grounded in freedom and self-interest (self-interest “rightly understood” as Tocqueville put it). Freedom is the necessary cultural precondition for a trust-based society, and self-interest provides the necessary and proper motivation for people to form new kinds of civil association that serve their needs, wants, and ends.
What Trust Does
Because the formation of social capital occurs between the seams of civil association, its formation is often unseen and its processes mysterious. Trust most often involves an implicit relationship or expectation between two or more people who anticipate and expect certain kinds of thoughts or actions from each other. The custom that a man’s handshake is his word and his word is his honor assumes, for instance, that men share common values and virtues, that they will do what they promise, and that a culture of men doing what they promise to one another (uncoerced by government) provides a cultural barometer or index of social health. Social trust allows men to predict and respond to the actions of others with a high degree of confidence. Trust therefore serves as an invisible hand holding a free and healthy society together, while distrust breaks the bonds of civil association.
Trust is not the result of a top-down system of social regulation. Nor is it governed or enforced by explicit rules of conduct conceived and directed by government or by some centralized system of command and control. Quite the opposite. Trust is the consequence of a decentralized, bottom-up, voluntary system of natural human interaction. The multivariate associations characteristic of a free society arise spontaneously and are self-organizing, which means through freedom and without the force of centralized authorities.
Trust is borne of and expressed by implicit and internalized manners and mores that assign to each member of the community certain reciprocal relations and expectations. Trust encourages association just as mistrust encourages suspicion and therefore discourages the formation of social capital. The manners and mores that promote social trust are the necessary adhesives holding a free society together, and a free society typically has a surplus of trust. A society defined by mistrust or distrust is almost certainly, to one degree or another, an unfree society. (On this count, see the film The Lives of Others, which demonstrates the distrust of life under East German communism.)
Habituated trust assumes a twofold role in a free society: first, as a social glue binding people together, and second as a social lubricant that eases and reduces the cost of association. In high-trust societies, socio-economic interaction is predictable and comes with a low cost, whereas transaction costs in low-trust societies are uncertain and come with a high cost. In other words, trust is a social mechanism for conveying silent or unseen information from one person to another. Trust is a high-value commodity, while distrust is a low-value commodity. Trust also promotes a network, force multiplier, or knock-on effect, which means that trust can broaden and deepen the value of certain kinds of social cooperation, while mistrust has the opposite effect, namely, it contracts and causes us to proceed with hesitation and caution.
Social and economic markets are efficient allocators of trust that reduce transaction costs. When trust is low, the personal-social cost of investment is high; and when trust is high, the personal-social cost of investment is low. Over time, the social market sends signals identifying who is and is not trustworthy. Ultimately, the market rewards those who are honest and therefore trustworthy and punishes those who are dishonest. Thus, it is in one’s rational self-interest to be trustworthy and to promote trust as a social value.
Paradoxically (to some at least), the freedom of post-Founding America that unleashed the energy of several generations of rugged individualists also formed a new kind of civil order the likes of which had never been seen before, certainly not in the Old World. This paradox was compounded by the fact that Americans have long had a strong anti-statist, self-governing tradition, while simultaneously building and joining a plethora of voluntary and private associations at the same time. In other words, what is most distinct about nineteenth-century American culture is that it naturally combined individualism and social cooperation.
It would be a mistake, though, to think that these modes of existence represent different or contradictory traditions that were somehow, mysteriously, brought together in nineteenth century America. The truth is that individualism and social cooperation are perfectly compatible because the one grows out of the other. They are, in other words, inextricably linked.
Trusting Oneself: Self-Governance and the Free Society
Nineteenth-century Americans were individualists, sometimes even rugged individualists, and their culture was the most individualistic in world history. Americans mostly wanted to be left alone to pursue their own affairs without the government telling them how to live. They prized their freedom and independence. The moral ideal envisioned by Americans for themselves was to stand on their own two feet and to manage their own affairs. They aspired to be self-owning, self-governing, self-reliant, and self-determining.
No other society anywhere or at any time was like the one that emerged in the United States in the decades after the American Founding. This new people believed that individuals had moral rights that protected their liberty to act free of oppressive public opinion and governmental force. This meant the freedom to pursue one’s familial, cultural, political, and economic interests and the freedom to pursue one’s freely chosen responsibilities to others free of government control and prescription.
What did this philosophy mean in practice? How did it play out morally and socially?
In this new society, each man was responsible at the very least for taking care of himself as well as his family. The principle of rights and the freedom that made rights necessary implied that individuals live according to certain moral virtues, such as rationality, honesty, independence, justice, and productiveness. These virtues are corollaries of the individual rights’ teaching.
The twin doctrines of self-interest (rightly understood) and individual rights also recommended that individuals assume certain responsibilities for themselves and to others. Often cut free from their families and communities, nineteenth-century Americans were legally self-governing when they turned sixteen and often left home and their communities at that age to search for work and look after their own affairs. They were held largely responsible by their fellow citizens for their choices and actions, both good and bad, and they bore full responsibility for the consequences of their choices and actions. Individuals were free to choose their course of action, and they were responsible for the results. If they chose a profligate lifestyle, they bore the consequences of their decisions and actions; if they lived according to certain virtues, they bore the fruit of their ideas and practices. America’s moral culture told individuals that they reaped what they sowed.
Nineteenth-century moral culture in the United States could not conceive of the possibility that its Lilliputian government should redistribute wealth from Peter to pay for Paul. The idea that otherwise healthy and able-bodied citizens should receive taxpayer assistance was morally repugnant to the American people. They rejected out of hand the idea that one man has a moral claim on the fruits of another’s labor. The poor, for instance, had no moral claim on the life, liberty, property, and happiness of those who were not.
But what of assistance for those who could not help themselves?
In 1854, President Franklin Pierce vetoed a bill that would have provided taxpayer assistance for the care of the insane. Pierce spoke for virtually all Americans in stating what a moral and just government should and should not do:
I readily, and I trust feelingly, acknowledge the duty incumbent on us all, as men and citizens, and as among the highest and holiest of our duties, to provide for those who, in the mysterious order of Providence, are subject to want and to disease of body or mind, but I cannot find any authority in the Constitution for making the Federal Government the great almoner of public charity throughout the United States. . . . It would, in the end, be prejudicial rather than beneficial to the noble offices of charity. . . .
As with almost all nineteenth-century Americans, President Pierce was a strong proponent of charity and an equally strong opponent of the redistribution of wealth by government fiat. America’s free and individualistic culture had a long-established and robust culture of assisting families, friends, and neighbors during times of unexpected hardship. Familial relatives were expected to take care of orphaned children, and when that was not possible the Americans made sure there were orphanages for parentless children.
Trusting Others: Voluntary Associations and the Free Society
The result of all this freedom and individualism, however, was neither moral anarchy nor social disintegration. The single most remarkable feature of nineteenth-century American society was the way this nation of self-interested, rugged individualists came together voluntarily to form innumerable associations to serve common moral, religious, social, cultural, political, and economic interests. Antebellum Americans quickly realized that self-interested individuals could unite to share a common interest by working together cooperatively. Sometimes there are wants and needs that cannot be served by the work of particular individuals; sometimes it takes large numbers of individuals working together to achieve common ends. And it turns out that men and women often work much harder and are more productive when they work on something they have chosen to do voluntarily.
As we saw in my essay “Order from Chaos,” America’s nineteenth-century, free society was held together by certain moral and social laws of nature that naturally and spontaneously organized society without the heavy hand of the State. As a result, men learned to first govern themselves morally as individuals, and then they came to organize themselves socially through the practice of voluntary association. Amazingly, almost all the associating undertaken by nineteenth-century Americans was done without the help or coercion of government. As a result of all this freedom, Americans began to accomplish many of the tasks once done by government by doing them on their own in association with their fellow citizens.
The greatness of American society had very little to do with the action of its state and federal governments. In fact, American greatness was and is primarily connected to the ideas and actions of its citizens. The American story after the Founding period was the story of a free people working, inventing, building, and trading; it’s the story of ordinary people moving hundreds if not thousands of miles by foot or horse, clearing and tilling the land for farms, growing and selling crops, and building churches, schools, roads, dams, mills, and factories from scratch. They did these things almost always without the guidance or assistance of any government. They did it as individuals, as families, as communities, and as voluntary associations of various kinds.
Nineteenth-century Americans created a new way of living virtually unknown to and unseen by all cultures and civilizations hitherto. Old-world visitors to America were first struck and some horrified by the radical individualism and hustle-and-bustle of the American people, who seemed to be constantly on the move. America seemed to these visitors to lack order and cohesion. They were accustomed to seeing order imposed on society from the top down by Church or State. Eventually, though, as they got over the shock of what they were seeing, the most discerning European visitors began to see patterns of association that were forming in America from the bottom up. In America, governments were largely toothless (certainly relative to their European and Asian counterparts), and individuals were empowered to pursue their own interests alone or in voluntary associations with others.
Not all foreigners visiting the United States between 1790 and 1860 were horrified by what they saw. Most in fact were positively awestruck by the number and variety of voluntary associations created by these highly individualistic Americans. Whereas great undertakings in Europe were almost always assumed by the aristocracy, kings, and powerful governments, such ventures in the United States were pursued by organizations of ordinary people.
Alexis de Tocqueville more than any other visitor to America saw and was impressed by the impulse and ability of the Americans, “of all ages, all conditions, all minds” to “constantly unite.” He “admired the infinite art with which the inhabitants of the United States managed to fix a common goal to the efforts of many men and to get them to advance to it freely.” The Americans, according to Tocqueville, had “perfected the art of pursuing the object of their common desires in common and have applied this new science to the most objects.” They do this, he wrote, by seeking “each other out; and when they have found each other, they unite.” The Frenchman was astounded by the number and diversity of associations created by the Americans:
Not only do they have commercial and industrial associations in which all take part, but they also have a thousand other kinds; religious, moral, grave, futile, very general and very particular, immense and very small; Americans use associations to give fêtes, to found seminaries, to build inns, to raise churches, to distribute books, to send missionaries to the antipodes; in this manner they create hospitals prisons, schools. Finally, if it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate.
Tocqueville described the propensity and ability of the Americans to unite in voluntary associations as “the mother science” from which all other depend. This is what a trust-based society looks like.
Tocqueville was not the only European to witness and note the American tendency to associate with his fellow citizens. At essentially the same time Tocqueville was touring America, the English naval officer and novelist, Frederick Marryat, visited the United States and recorded what he saw and heard in his A Diary in America. The Englishman declared the American people to be “society mad.” They joined, left, and started new organizations with dizzying regularity. In his chapter on “Societies and Associations,” Marryat provided a tiny sample of 22 of the most prominent organizations to which he had been exposed during his travels, e.g., American Board of Commissioners for Foreign Missions, American Education Society, American Bible Society, American Sunday School Union, American Tract Society, American Colonization Society, Prison Discipline Society, American Temperance Society, New England Non-Resistance Society, etc. For better or worse, Marryat found the citizens of the United States lacking in traditional folkways or government-mandated order and yet their cooperative thoughts and actions bordered on a kind of moral fanaticism.
In the seven decades before the Civil War, ordinary Americans all over the United States formed no end of benevolent societies for the amelioration of all kinds of social ills. Left alone, they formed Bible societies, missionary societies, tract societies, convents, Masonic lodges, peace societies, anti-pauperism societies, anti-slavery societies, peace societies, mechanics’ societies, temperance societies, etc. All of this was done without the government regulating and controlling how people lived and organized their lives. Without government aid or coercion, Americans also formed charitable, professional, or trade associations to build hospitals, schools, fire departments, orphanages, libraries, roads, lighthouses, canals, and wharves. Joint-stock companies and corporations pooled the resources of potentially limitless individuals to undertake large economic projects.
Maybe most amazing to twenty-first-century Americans is the historical fact that nineteenth-century Americans believed that it was the responsibility of parents to educate their children or to pay have them educated by others. For the most part, K-12 schooling was either mostly or entirely voluntary throughout much of the nineteenth century. American parents simply assumed that it was their right and moral responsibility to ensure that their children were educated, or that they find and pay for someone else to do it. Often, they would join with other parents, build a one-room schoolhouse with their own hands, and then find and pay for a teacher to educate their children. Parents claimed the right to hire and fire teachers and to determine the curriculum.
This pattern for the education of young children also carried over to higher education. Private financing built or purchased hundreds of colleges in the young nation that was the United States. In 1873, famed Harvard president, Charles Eliot, made the commonsensical and decidedly moral argument against the prospect of a taxpayer-funded national university, with this argument: “our ancestors well understood the principle that to make a people free and self-reliant, it is necessary to let them take care of themselves, even if they do not take quite as good care of themselves as some superior power might.” From freedom comes responsibility, and from responsibility comes trust.
The trans-Appalachian West was discovered and surveyed by rugged individualists such as Daniel Boone and Davy Crockett, but it was settled by hundreds of thousands of ordinary Americans (men, women, and children) who joined with land companies to form mobile communities of wagon trains that moved westward until they found their land. Enterprising Americans even brought law and order to the frontier with volunteer organizations known as possess, which were formed under the direction of a local sheriffs. The freer American society became, the more it relied on trust.
What nineteenth-century Americans created was literally a “Brave New World” the likes of which had never been seen before.
**A reminder to readers: please know that I do not use footnotes or citations in my Substack essays. I do, however, attempt to identify the author of all quotations. All of the quotations and general references that I use are fully documented in my personal drafts, which will be made public on demand or when I publish these essays in book form.