TRUST

Fukuyama offers a general theory of prosperity that provides provocative answers to certain of the questions he raised in The End of History and the Last Man (1992). While conceding that neoclassical economists have uncovered important truths about markets and money, the RAND Corp. analyst argues that they give a poor account of human behavior. In search of links missed by these practioners of the dismal science, Fukuyama probes the impact of culture (broadly speaking, any society's inherited ethical habits) on economic life. Focusing on such factors as trust (a community's shared expectation of honest, cooperative behavior outside the family) and social capital (the values created by tradition, religion, or other means), the author examines the ability of various peoples to organize effectively for commercial purposes without relying on blood ties or government intervention. Fukuyama surveys emergent as well as established industrial powers (the US, Canada, China, Germany, Italy, Japan, Korea, et al.) to determine which might have superior reserves of social capital. These reserves are important, he points out, because market-oriented societies in which there is a high degree of moral consensus and cooperation have lower transaction costs and hence greater competitiveness. The author puts paid to any idea that the US is a nation of rugged individualists; indeed, Americans are joiners without peer. He warns, though, that ongoing deterioration in the ties that bind (e.g., declines in church attendance and membership in fraternal or voluntary organizations), coupled with a persistent rise in divorce rates and special-interest groups, could deplete the nation's social capital and over time levy an economic toll. In turn, he cautions, the weakening of civil authority could strengthen the state's judiciary and executive branches, an outcome that, he says, is in nobody's best interest. A challenging, elegant exegesis that puts intellectual meat on the bones of Benjamin Franklin's tip to his fellow revolutionaries at the signing of the Declaration of Independence: "We must all hang together, or assuredly we shall all hang separately."