Institutions for equality and social trust – how did it start? Our argument so far is that different countries are set into different causal cycles between their institutions for social policies and their level of social trust. This certainly raises the difficult question on how this causal logic got started. Did the Scandinavian countries develop broad based (universal) social policies because of an initially high level of social trust, or was it the other way around? As we have no survey data about the level of social trust from the 1920s, this is of course difficult to answer. What we do have, however, are quite a few historical studies about the character of the Scandinavian states that existed before the universaltype social policies where launched. Summarizing these studies, it is safe to say that when it comes to the quality of government institutions, the Scandinavian countries started out from a very advantageous situation.
During the late 19th century, a Weberian style, rule-governed, meritocratic and fairly uncorrupted civil service had developed (Knudsen and Rothstein 1994, Knudsen and Tamm 2001). When the social reforms that formed the beginning of the universal principles of social policy where launched, suspicions about corruption in the civil service that was to handle the implementation were never an issue. The reforms where hotly politically disputed, but the argument that the civil service was corrupted and therefore could not be trusted was never put forward (or at least, it has never been reported in the historical studies that exists of the early stages of the Swedish welfare state, cf. Olsson 1993).On the other hand, mistrust between the social classes and intense class conflicts characterized all Scandinavian countries until the mid-1930s. In fact, Sweden held a world record in lost workdays per worker due to industrial strife in the 1920s (Elvander 1980). A detailed account of the historical development in the Swedish case indicates that it was the impartiality of the government institutions, especially those handling policies related to the labor market and social policy, that made the development of an “historical compromise” between labor and capital possible. This compromise was to a large extent built on “a spirit of trust”4 that developed into the well-known “Swedish Model” that came to mark the Swedish society after 1936 (Rothstein 2005). There is thus much that points in the direction that it was the existence of impartial, uncorrupted, and fairly efficient government institutions that laid the foundation for the elite accomodation that created strong norms about trust in Sweden. Public confidence in the integrity of their leaders and institutions provided the key support for the compromise that provided the basis for universalistic policies that would reduce inequality and increase social cohesion and trust.
If social trust is generated by the two types of equality that we have pointed at, and if universal policies are the best way to increase these types of equality, many countries that are plagued by low levels of social trust and social capital may be stuck in what is known as a social trap (Rothstein 2005). The logic of such a situation is the following. Social trust will not increase because massive social inequality prevails, but the public policies that could remedy this situation can not be established precisely because there is a genuine lack of trust. This lack of trust concerns both “other people” and the government institutions that are needed to implement universal policies. Since social trust both is an important intrinsic value (personal happiness, optimism about the future) and has political value (support for fair institutions, minority rights, tolerance, etc.), and economic value (its positive relation to individual earnings and aggregate economic growth), it may be that dysfunctional governmental institutions are the worst social ill of all.
Poor and inegalitarian countries thus find themselves entrapped into continuing inequality, mistrust and dysfunctional institutions. High levels of inequality contribute to lower levels of trust, which lessen the political and societal support for the state to collect resources for launching and implementing universal welfare programs in an uncorrupted and non-discriminatory way. Unequal societies find themselves trapped in a continuous cycle of inequality, low trust in others and in government, policies that do little to reduce the gap between the rich and the poor and create a sense of equal opportunity. Demands for radical redistribution, as we see in many of the transition countries, exacerbate social tensions rather than relieving them.
There will be no political support for universal programs since the rich benefit from high-level corruption and see the poor as “undeserving poor”. The poor see almost all success in the market economy as evidence of dishonest behaviour and believe that those who are well off already have taken more than enough from the state. From this perspective, the idea that the better off should also have access to public services and benefits seems awkward. Moreover, even if you could generate enough political support to enact universal programs, people may not have enough confidence in government institutions to deliver them fairly and without corruption. Persistent petty corruption may make “gift payments” appear to be rational responses to an unresponsive service sector: You may feel more secure in knowing that you can buy your children’s way into a good school and to good grades, rather than risking more neutral assignment and grading criteria. You may well prefer to make an extra payment at a doctor’s office rather than wait your turn. Corruption feeds upon economic inequality, low trust, and poor government performance. But it generates alternative ways of coping that may inhibit the adoption of programs that might alleviate inequality.
Our message is admittedly a pessimistic one. Given the stickiness over time of both inequality and low levels of social trust, we think there is reason for our pessimism. Too much of the policy prescriptions that have come out from the social capital agenda have been too optimistic. If people just got more active involved in voluntary associations, things would improve. There are three reasons why we think this approach is wrong. First, the evidence that generalized trust is created by joining associations is simply not there. Secondly, it relieves governments from their responsibilities for dysfunctional public institutions and unfair or ineffective public policies. Thirdly, governments and the political elite can use this demand for increased participation in civic groups for blaming the victims in society.5
Even though inequality is sticky, it can be moved. Generalized trust may be a critical path to redistribution, but it is not the only one. So we temper our pessimism just a bit. The East Asian “tigers” achieved dramatic economic growth and reduced economic inequality through a series of policy choices that included high levels of spending on education, land reform, increased agricultural productivity, making health care more widely available to everyone, and opening up markets (Ahuja et al, 1997, 48-53). Each of these policies made services to the public more widely available, as universal programs do. Economic growth and lower rates of population expansion, in turn, lead to less inequality (Uslaner, 2002, 234-235).
We have few surveys in these countries to test this directly. Yet, there is a bit of evidence supporting our argument: For countries with fewer than 40 percent of the public trusting others included in both the 1981 and 1990-95 World Values Surveys, trust rose in four and fell in three. Inequality rose in three and fell in four. The declines in trust in Argentina and Hungary tracked rising inequality. Mexico had the sharpest increase in trust of any country (15 percent, followed by a decline by 6.5 percent in 2001)—and an almost imperceptible increase in inequality. There were increases in trust and declines in inequality in Belgium, West Germany, and Italy. Only South Korea, one of the “tigers,” stands out as having moderate declines in both trust and inequality. The 1980s and early 1990s in South Korea were a time of great political turbulence, so factors other than falling inequality could lead to lower levels of trust.7 Overall, there is reason to believe that lower inequality will lead to greater trust in countries where trust is low. The key question is whether countries will have the political will (if not the trust) to adopt the sorts of policies that can promote greater trust.
Probit Analysis for Trust, 1992 American National Election Study
Probit Analysis for Trust, 1992 American National Election Study