Issues / Solutions

Social Capital as an Alternative to Authoritarianism

Unlearning habits rarely works without creating an alternative habit. But what could be the alternative to leader-oriented, authoritarian thinking? The answer lies in the literature of trust. Replacing individual channels between the ruler and each of his subjects (vertical bonds) with the option to cooperate with each other (horizontal bonds) would complete the job.  In other words: social capital. 

But how could one hack the vicious spiral of distrust?

The Absence of Social Capital

The absence of horizontal bonds in a society makes people crave for individual ties to power – as the cost of cooperation.

“The firm belief in the reliability, truth, or ability of someone or something”. (Oxford English Dictionary definition of Trust)

There is one aspect of trust that is often neglected but plays a crucial role nonetheless. It is the perception of (and trust in) people’s competence. It is an important distinction when trying to build social capital and induce trust.

There is ample research on the subject of trust within societies and how social capital (and trust in particular) relates to economic growth and prosperity (Putnam, 1993). There are generalised and institutional trust questions in international surveys, such as the World Value Survey, where generalised trust denotes the level of trust in strangers. (Inglehart – Welzel 2009) This, however, does not separate between the two aspects of trust: competence and moral.

Lack of trust in other peoples’ moral behaviour is widely accepted to increase transaction costs (Knack, 1999), diverting resources from innovation and production into protection and enforcement.

By this logic, prosperous countries are the ones with more social capital, where transactions can be conducted in a less formal and less costly manner on the basis of trust. When it comes to growth, however, the poorer the country, the more there is to gain by any increase in social capital (and trust in particular).

The empirical evidence regarding the relationship between trust and economic growth is inconclusive. The correlation between the degree of social capital (trust) growth appears to depend on the samples of countries selected. The relationship between trust and economic growth is more likely to be observed in lower income countries, assumedly due to the lack of protection of property and contractual rights (Uslaner, 2010).

Where generalised trust is missing, societal bonds are formed along family ties and other dysfunctional loyalties, thereby limiting the scope of business as well as creating rigidities and warranting state intervention. (Yamagishi, 2001)

“It is best to regard everyone as a thief”

With this Japanese proverb starts Toshio Yamagishi’s 2001 paper on the nature and relevance of social capital. The proverb illustrates the general sentiment that people tend to associate distrust with smartness while trust is associated with naivety, gullibility or ignorance (Yamagishi 2001).

And yet, plenty of ‘smart’, distrustful people add up to a sick society – for a number of reasons:

1. Assuming malevolence creates resentment and eventually actual disincentives to moral behaviour – thereby creating a vicious cycle of mutually invoked distrust and unreliability.

Assuming the absence of morals in others also happens to provide a convenient excuse to relativize our own immoral behaviour. Anne Applebaum, in her book about life in Eastern European countries after the Second World War describes wartime behaviour in details. Following the monstrous atrocities of war, the immorality displayed by others made it not only pointless to maintain high moral standards, but downright irrational. Being the only one who keeps respecting property rights and sometimes even human life becomes a disadvantage while higher principles are put on hold (Applebaum, 2012).


2. We outsource morals into laws and government enforcement.

Into the cracks of mutual trust walks the government. The less we trust others’ morals the more likely we are to resort to the government to control others’ behaviour.

The more we identify with the state, the less we associate with each other.

The overgrowth of rules erodes our own inherent sense of morality or the need for us to make our own moral judgments in the first place.

We outsource our morals into laws and eventually flip into allowing ourselves everything the law does not explicitly prohibit – or enforcement is not imminent.

3. Trust leads to higher institutional quality and lower corruption (Uslaner, 2008).

Higher degree of trust leads to less corruption because people do not assume that other people engage in corruption. And since corruption can be interpreted as another form of transaction cost or tax, its absence serves as a powerful economic boost.

“People Are Stupid”

If the definition of trust encompasses more than just trust in other peoples’ moral behaviour, do these detrimental effects apply to perceived competence, too?

In order to measure the perception of competence we should understand what exactly we mean by incompetence, particularly when we dismiss people as “stupid”. And what is the opposite of this “stupidity”?

Any discussion of intelligence predictably turns into a discussion about the various forms of intelligence. (Social intelligence – the ability to detect signs of risk in social interactions.[1] Logical intelligence – as measured by IQ. The phrases “emotional intelligence”, “spiritual intelligence” and “common sense” will inevitably pop up.)

Measuring intelligence of any kind is a notoriously vague and controversial area. Measurement of IQ is a misleadingly tempting way to quantify people’s mental worth – hence its popularity, but its value is controversial at best.

For the purposes of this research it doesn’t matter what intelligence is or how (or if) we can measure it.  What matters is how we perceive it, what influences it (and our perception of it) and how man-made incentives and the political environment interacts with it.

Perceived competence of others plays a major role in how people do business since the costs of other people’s incompetence can be just as high as that of their precarious morals. The consequences of perceived incompetence are strikingly similar to those of perceived lack of morals:

1. Assuming that others are less intelligent creates resentment and a disincentive to act intelligently.

It is thus a convenient excuse for our own less considerate behaviour.

Distrust flies on the wings of conformity and takes the false shortcuts to knowledge called prejudice. Stereotype threat, in turn, appears to lower our own intelligence. (Steele – Aronson, 1995)

2. Others’ perceived incompetence breeds more government

Others’ perceived irrationality makes people demand state intervention, just like perceived immorality (the threat of terrorism and criminality) does. We are so compelled by the notion that others are more stupid than us that we give rise to all sorts of appalling regimes that will in turn restrict our own scope of choices.[2]

3. An intellectually unchallenging environment (real or perceived) causes decline in cognitive functions.

Socially unintelligent people tend to believe that others are stupid because they lack the skills to detect the absence of intelligence. By refraining from interaction based on this perception they fail to improve their skills (Billari, 2014). So contrary to the notion that trusting people are ignorant, it may be socially unintelligent people that are distrustful in the first place.

Social Capital present

In the presence of social capital, horizontal cooperation patterns emerge – and leave direct links to power less relevant.

Improved perception of others’ competence

But what happens when we think others are more moral/intelligent?

In short, we make an effort. And that leads to improvement and a virtuous cycle.

Distrust in others’ intelligence is the single most pervasive sentiment that underlines our dealings with each other and poisons our view of humankind. Stupid people must be nudged, compelled, diverted to do what is good for them. Even if we trust ourselves to make our own choices, we do not trust others’ and use the government as a proxy.

An overprotective environment leads to deterioration of competence (and disincentives to improve) just like overregulation leads to the erosion of one’s own moral compass.

Outsourcing thinking to government is just as damaging as outsourcing morals

When looking for a solution to how to reverse the impact of too much government on morals, we instinctively reach for the rules to rewrite them. We also call for more government to save people from the (perceived) incompetence caused by outsourcing thinking. But government efforts can only generate change in the wrong direction.

The sequence of a possible change is not necessarily that morals improve first and people relax later. Perception of improvement itself can trigger actual improvement. The same stands for intelligence.

It is notoriously difficult to raise the level of trust within society at will. Improving our perception of others’ intelligence and competence would face less resistance than trying to build trust directly.

Belief in one’s own competence is not static either. By analysing research of what impairs decision-making (and perception of it) we can attempt reverse engineering to find out what would improve it.[3]

Benefits of Trust in Competence

One of those things fluctuating with the tide and ebb of the economic cycle is the level of trust within societies. A mitigating factor – acknowledgement of others’ ability to take control of their lives without hurting others – would be highly desirable.

The well-known conclusion of the Stanford Marshmallow test of delayed gratification was that control of deferred gratification in children was a good predictor of life outcomes and cognitive functions. The conclusion that strong willpower is an indicator of a child´s cognitive functions went unchallenged until 2012, when a researcher set out to prove that children who are exposed to unstable situations may eat the marshmallow – but not because of lack of self-control or because they are not intelligent enough. They ate it because they did not trust adults to (be able to) keep their promises. (Kidd 2012)

What looks like self-control and willpower may also be trust.

And what looks like stupidity may just be distrust.

People who trust in their own competence to make a living are more likely to project these attributes on others. They also don’t consider the economy as a zero-sum game and don’t regard other people as a drain on common resources.

People who trust themselves and others to make their own choices are fortified against political populism and fear mongering.

Conditional intelligence, just as conditional morals could be used to induce trust – and thereby prosperity in society. It would boost society’s immune system to withstand the ever growing interventions of the state in the name of risks and dangers to be eliminated.

(This chapter is a work in progress.) 


[1] Trust is also a form of social intelligence (Yamagishi 2001). Turns out, intelligent people trust more. The reason is unknown, but researchers assume the correlation is based on the fact that intelligent people make better judgements and are thus better at avoiding disappointment. (Billari, 2014)

[2] The most obvious examples are central economic planning, laws restricting civil liberties, the right to move or migrate, to make one’s own sexual choices and reproductive decisions, but softer attempts at saving people from their own incompetence and wrong choices can be observed in the ‘nudge’ theory and various elements of the welfare state.

[3] Since measurement of intelligence (of any kind) is a complicated and controversial endeavour, but studying decision making is available, it is a good proxy to what we need now.

Decision making is influenced by factors ranging from our blood sugar level to willpower depletion during the day. We make worse decisions when tired, stressed or intoxicated. Various forms of fearfulness (anxiety, worry, insecurities, etc.) can seriously impair our ability to reach optimal decisions. Our ability and nature of making decisions even changes over time as we age. By amassing experiences we tend to seek shortcuts to decision making – with varying results. Stress or fear lowers intelligence, shortens time horizon for decisions, lowers the quality of decisions or make you reluctant to make them in the first place. The same way it affects our ability to stay moral and not succumb to moral temptations.

Our temporary intellectual performance can be affected by various factors, including interpersonal intimidation, threatened belongingness (Baumeister, 2002) or the stereotype threat/ identity threat (Steele – Aronson, 1995). The phenomenon is dubbed ‘conditional stupidity’.


7 thoughts on “Social Capital as an Alternative to Authoritarianism

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