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A Botched Look at Social Virtues

Francis Fukuyama, author of The End of History and the Last Man, argues that ideological conflicts are over and that the world is converging on democracy-cum-capitalism, with national economies integrated into a global one. However, democracy and capitalism require a healthy civil society, which itself depends on “a people’s habits, customs, and ethics,” which must be “nourished through an increased awareness and respect for culture.” (p. 5)

Everyone, Fukuyama maintains, has a deep desire “to have his or her dignity recognized (i.e., evaluated at its proper worth)” by others, which can only occur in a social setting. Recognition-seeking now occurs primarily in the economic realm, making economics perhaps the most crucial way in which culture affects social well-being. Trust argues that “a nation’s well-being, as well as its ability to compete, is conditioned by a single, pervasive cultural characteristic: the level of trust inherent in the society.” (pp. 6-7)

Fukuyama defines trust as “the expectation that arises within a community of regular, honest, and cooperative behavior, based on commonly shared norms, on the part of other members of that community.” Trust is indispensable for forming “social capital,” or ability to collaborate for common purposes. (p. 10) Rational, utility-maximizing self-interest does not, pace economists, adequately or exhaustively explain behavior. (pp. 13, 17-20) Human nature has a sociable aspect, and societies require pervasive trust and “spontaneous sociability” in order to function. (pp. 26-27)

Trust and social capital have crucial economic consequences. “Different types of ethical habits are conducive to alternative forms of economic organization and lead to large variations in economic structure.” (p. 37) High levels of trust facilitate economic interaction and lower transaction costs, thus encouraging development of large-scale corporations. Low trust entails higher transaction costs, as suspicious people protect themselves with negotiations, detailed contracts, and lawyers. Development lags accordingly. (p. 27-28)

Generating different levels of trust, different cultures yield different economic outcomes. Societies with plentiful trust and social capital more easily create the large firms which help them compete in the global economy. (pp. 28-32) Most businesses start as family-owned, but successful ones often become too big for a family to run. The family must then either retain control, which usually entails limiting the firm’s size, or bring in non-kin to control it, allowing it to evolve into a corporation. In familistic societies, socialization occurs mainly through the family; trust of non-kin is slight, indicated by few voluntary organizations intermediate between family and state; and firms remain in family hands. Where people are more trusting of non-kin, indicated by numerous voluntary organizations, corporations are more easily formed.

The bulk of Trust applies this to scrutinize individual countries’ economic development as shaped by culture. The largest German and American firms are far larger than the largest French and Italian firms, and Japan and Korea have far larger firms and more highly-concentrated industries than do Taiwan and Hong Kong. Why? Italy, France, China, and South Korea are familistic; voluntary associations of non-kin are sparse. Hence development of large-scale firms owned by non-kin in these “low-trust” societies is difficult. “High-trust” Japan and Germany have a high propensity for voluntary associations, hence readily create large modern corporations.

Contrary to myth, America has had strong communitarian as well as individualist tendencies. (pp. 10-11, 50-51) America was “a relatively high-trust society throughout the period of its initial industrialization,” facilitating development of large corporations. (pp. 275-278) Unfortunately, rising crime, dwindling participation in civic organizations, clubs (e.g., the Elks) and parent-teacher associations, and increased litigation bespeak erosion of trust and sociability. (pp. 308-311) Fukuyama attributes this to capitalism’s destruction of social bonds; unintended consequences of liberal reforms (e.g., destruction of communities by slum clearance); the welfare state’s assumption of church, charity, and family responsibilities; wielding of legal power by aggrieved groups battling “discrimination,” which weakened communities’ authority; the proliferation of “rights,” construed in an absolutist sense; and electronic technology’s profoundly privatizing effect, letting people amuse themselves in isolation with TV, radio, VCRs, etc.

While government can’t restore trust, it should at least do no harm, and especially shouldn’t weaken communal institutions to pursue “abstract diversity or openness.” (p. 318) Educated Americans should “be more tolerant of religion and aware of its potential social benefits” and “look to religion’s social consequences in terms of promoting the American art of association.” (p. 317)

Fukuyama’s thesis is trivially true, a laborious reiteration of old news. Trust facilitates economic development and cuts transaction costs. Obviously. “Spontaneous sociability is likely to be helpful from an economic standpoint only if it is used to build wealth-creating economic organizations.” (p. 318) I wouldn’t have guessed.

Trust manifests too a crippling lack of discipline, focus and integration. Rather than dribble out his conceptual discussion of trust among the country studies, which makes his presentation patchy, diffuse and repetitive, Fukuyama should have massed it at the outset. Excruciatingly turgid and lengthy discussion of industrial structures, family structures, inheritance, etc. is only tenuously linked to trust. Indeed, trust frequently disappears under clogging masses of detail and self-indulgent digressions on, for example, Germany’s apprenticeship system and Park Chung Hee’s development strategy for South Korea. (pp. 237-242, 143-144)

For all this verbiage, Fukuyama’s support for his claims is shockingly weak. He asserts “the relatively low-trust character of Korean culture” without proof. (p. 144) Likewise the Japanese “proclivity to trust one other.” (p. 180) Citing the French obsession with status, and French businessmen’s timidity, risk-aversion, and dependence on the state, doesn’t establish low trust; people may be unventuresome or un-businesslike because worldly winning just isn’t important to them. (pp. 113-125) Acknowledging nineteenth-century America’s widespread crookedness, Fukuyama lamely adds, “But for the economic system to have worked as well as it did, there had to be a significant element of generalized social trust”–an inference barely supported. (p. 276)

Moreover, discussing voluntary organizations alone hardly establishes a society as high- or low-trust. Surely, that entails examining several indicators–propensity to litigation, crime, etc.–and extensive study of history and customs to glean abundant anecdotal evidence of pervasive trust or its lack.

Appalling sloppiness pervades Trust. Comparing Toyota’s productivity to General Motors’s, he cites GM’s Framingham, Massachusetts plant; but the footnote buried 229 pages away admits that this “overstates Toyota’s overall productivity advantage,” since Framingham is “one of GM’s worst performers”–a slip that calls Fukuyama’s credibility into question. (pp. 163, 392) Repeatedly, he confuses familism with “atomistic individualism.” (pp. 56, 94, 99) Germany’s “social market economy” is attributed variously over two paragraphs to Bismarck, the Weimar Republic, and Ludwig Erhardt. (pp. 216-217) America’s “balance has been shifting toward individualism rapidly in the last couple of decades,” Fukuyama declares. (p. 306) Two pages later, the period is “the past fifty years.” Botched grammar and syntax abound. And it says something about Fukuyama’s and his editors’ grip on his central idea that “trust” isn’t even indexed.

More seriously, numerous conceptual problems exist. Trust betrays a journalist’s or policy wonk’s perspective: hasty, shallow, narrow, slapdash, and glib.

Given the ethnic slaughters in Bosnia, Ireland’s perennial religious strife, et al., the “end of history” thesis, asserting that “virtually all political questions today revolve around economic ones,” is absurd. (p. xiii) Fukuyama’s theory of human nature is laughably shallow. Aldous Huxley’s view of individuals as “embodied spirits”1 possessing both a will to self-assertion and a will to self-transcendence2 is far more profound, as it presupposes a transcendent metaphysic, and rings more true. Moreover, Fukuyama’s claim that our desire for recognition is so strong that it is “one of the chief motors” of history is unwittingly contradicted by his concession that neoclassical economics’s utility-maximizing theory of behavior is “eighty percent correct.” (pp. 7, 13)

Which takes us to his straw man-bashing charge that neoclassical economics sees people as exclusively self-interested “rational utility-maximizing individuals.” This characterization “is subject to significant qualification”: we aren’t always rational, selfish, or utility maximizers. (p. 19) True–and had he bothered to spend a couple of hours examining some standard undergraduate principles and intermediate micro-economics textbooks, he would have found these qualifications.3 Economists routinely reject the caricature of the totally selfish calculator.4 Acknowledging individual irrationalities, demand theory merely requires that most people usually act “rationally”–meaning only that people know what they want, know how various goods promote their satisfaction, know prices, and use this information to do the best they can.5 And most economists, after all, explicitly confine themselves to economics–consumption, production and investment decisions, taking preferences as given. They don’t pretend to explain all behavior.6 That Fukuyama is unaware of nuances routinely raised even on the undergraduate level, or pretends they don’t exist, speaks volumes about his professionalism and intellectual honesty.

Trust leans heavily too on another polemical device, the loaded alternative of the isolated, selfish, atomistic individual versus the communitarian who values connectedness to others and puts larger entities’ interests first. By this standard few are “individualists,” and “individualism” is “bad” (why?). As ordinary scholarship easily shows, “individualism” consists of individualisms: for example, the individualism of eighteenth-century America, in which one is a member of a community, but not its selfless vassal; the romantic, admittedly steely but not necessarily predatory individualism of Ayn Rand; and the nihilistic individualism of the Marquis de Sade’s mouthpiece characters, who really were isolated utility maximizers seeking to “Enjoy myself, at no matter whose expense.”7 Making such distinctions is what careful argument and scholarship mean, but communitarians like Fukuyama are disgracefully derelict: simplistic, trafficking in caricatures, asserting what needs proving, citing no evidence from individualist writings.

Those who deem “individualism” (which individualism?) the bogey of civilization should ponder the fact that Christianity is deeply individualist, in the best sense. Many great saints sought God in solitary prayer and contemplation; conscience and private prayer figure decisively in Christian life (or should); it is in the privacy of one’s own mind that one makes the choices that determine one’s soul’s destiny; and Christianity’s ultimate concern is, lest we forget, saving one’s own soul unto life eternal–not social welfare. That society is better off because I strive to live my faith is, of course, a good thing. But that’s not why I do it.

America’s sectarian Protestantism, Fukuyama argues, is a source of individualism. Protestantism’s positing of an individual’s relationship to God unmediated by clergy à la Roman Catholicism “had extremely subversive consequences for all [sic!] social relationships, because it gave individuals a moral ground to rebel against even the most broadly established traditions and social conventions.” (p. 286) This reckless charge is unfair (this reviewer, incidentally, is a Catholic). Merely having a personal relationship with God gives a serious Christian no moral ground whatever for rejecting that broadly established American social convention, Christian morality. It’s a long leap from defying a fugitive slave law on grounds of conscience to denying all ties with and responsibilities to one’s neighbor. Secularized Western culture’s growing Sadean strain far better explains the latter, but Fukuyama’s scholarship wasn’t up to grasping that.

Similarly, his account of America’s loss of trust is superficial, ignoring secularization and its consequences; the metaphysical rebellion and Sadean nihilism which have increasingly informed Western culture since the Enlightenment and the Romantic movement; and their tumultuous surge in the Sixties.

Endorsing religion as a sociability-restorer is crass, glib pragmatism: to paraphrase Coca-Cola’s old jingle, things go better with God. But this is unlikely to persuade secular humanists to tolerate what they’ve long striven to destroy. Worse, it bespeaks a blasphemous, idolatrous value inversion unfortunately common among some neoconservatives and communitarians: religion is good because it promotes trust and community, which facilitate formation of large flexible corporations, which enable nations to find their place in the sun in the brave new world of global democratic capitalism. No comments necessary.

Individualism, “social virtues,” soul sickness, and their economic consequences deserve careful scholarly exploration. They didn’t get it from Francis Fukuyama.