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Last Updated on May 7, 2015, by eNotes Editorial. Word Count: 2144

Francis Fukuyama has never shrunk from controversy. In his 1992 book The End of History and the Last Man, he announced that humankind had come to the end of history. In doing so, Fukuyama was not arguing that the world had reached the end of wars, assassinations, and elections. Rather, he was trumpeting the advent of a consensus, hard won after seventy-five years of brutal ideological conflict, that democracy and capitalism provide the only viable path to development. Fukuyama was ridiculed by critics who misunderstood his book. Yet The End of History and the Last Man remains one of the most compelling documents to have emerged from the end of the Cold War. With his latest book, Trust: The Social Virtues and the Creation of Prosperity, Fukuyama confirms his place as one of America’s boldest and most original social commentators.

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Having laid the past to rest with his first book, in his second Fukuyama looks to the future. He addresses the issue of international economic competition, which has replaced the military balance of power as the leading concern of American foreign policy. Fukuyama observes that while people may look forward to a liberal and democratic dispensation, there are different kinds of liberalism and different kinds of democracies. Some nations will prosper more than others in the new world order. Fukuyama believes that the wealth of the successful will reflect more their cultural than their material resources.

In arguing for the importance of culture in a nation’s productive life, Fukuyama is challenging an economic orthodoxy—one recently made all the stronger by the collapse of the Soviet Union. With Marxism consigned to the historical rubbish heap, neoclassical economists have come to cling all the more tightly to the twin pillars of the free market and economic individualism. Fukuyama suspects that this faith could ultimately prove as self-defeating as the Marxists’ attachment to the Communist ideal.

Man does not live by bread alone. This homely truth from the Jewish and Christian Scriptures lies at the heart of Fukuyama’s message in Trust. He is careful to point out that Adam Smith, the intellectual father of modern capitalism, had the same insight. Although Smith is most famous for his great tome Inquiry into the Nature and Causes of the Wealth of Nations (1776), he was also the author of The Theory of Moral Sentiments (1759), which argued that the economic motivations of people are highly complex and always involving concerns that transcend the desire for profit. In short, Smith realized that people create values as well as goods.

Fukuyama has long been preoccupied with the importance of “values” when calculating social policy. He wrestled with the threat of human desires to the capitalist order in The End of History and the Last Man. In that book, he predicted that the greatest challenge to the safe and comfortable world emerging in the developed nations would be the human drive for mastery and the taste for glory that accompanies it—what the German philosopher G. W. F. Hegel termed the desire for recognition. According to this view of human nature, people want respect just as much as material well-being. As many poets and moralists have observed, power is every bit as seductive as gold. Pride as well as greed runs before a fall. Hence humankind’s long history of wars and oppression, with lust for supremacy clothed in the specious rhetoric of martial virtue and political necessity.

Like it or not, argued Fukuyama, the old warrior passions lie just beneath the surface in modern men and women. Liberalism, he said, faces the delicate task of redirecting these energies into constructive channels. One of his suggestions for doing this was to sublimate the struggle of the battlefield into the competitiveness of the boardroom—to let business become the moral equivalent of war. Such considerations make a mockery of the “rational man” model of conventional economic analysis.

Fukuyama believes that economics must grapple not only with unreconstructed man, full of tumultuous needs and emotions, but also with constructed man, the socialized product of a culture, programmed with the inherited habits and prejudices of generations of forebears. People betray both individual wants and collective ambitions. They operate within a web of meaning and intent shared with others. No individual can be fully understood outside the context of the culture within which he or she was reared. In Trust, Fukuyama takes these social facts of life and applies them to international economic rivalries.

He assumes that it is possible to discern national styles of economic enterprise, rooted in the idiosyncrasies of culture. Differences in choices made by societies reflect variations in these societies’ understanding of the good. Some societies will value communal cohesion over individual self-expression. Others will celebrate the private at the expense of the public. All such cultural predilections will find concrete expression in a nation’s economic organization and institutions.

Fukuyama’s rejection of orthodox economics, and his reification of the economic importance of culture, makes Trust a book at once exciting and frustrating. His brave venture into an anthropology of the business world is refreshing in its iconoclasm. The insights he draws from this approach are remarkably evocative. At times, his sweeping and pungent generalizations read like the judgments of a latter-day Alexis de Tocqueville, skillfully dissecting the soul of democratic man. Yet Fukuyama’s theoretical temerity comes at a price. His assertions are often stunning in their explanatory elegance but also essentially unprovable. He is vulnerable to charges that his thesis masks more mundane reasons for the phenomena he describes. Ultimately, any analysis of events predicated on social psychology must become as ambiguous as the wants of the human heart.

Fukuyama’s path, for all of its inevitable imprecision, nevertheless remains well worth following. He reminds readers that all social constructs are in the end products of men’s and women’s aspirations and needs and are not the expression of abstract forces, divorced from the messiness of human reality.

The cultural trait that, in Fukuyama’s eyes, most conditions economic activity is the quality of trust embedded in a society. The unsung virtue of trust is what makes the economic world go round. The level of trust in a society determines the degree to which people will cooperate to build and maintain businesses. Societies vary widely in levels of trust. For example, Fukuyama points to the rescues of Mazda Motors of Japan and Daimler-Benz of Germany during the Arab oil embargo of 1973-1974. Declining sales pushed both of these automakers to the brink of bankruptcy. In each case, however, a bank with a tradition of doing business with the company stepped in, extended credit, and preserved its future. Each bank swallowed short-term losses in order to maintain a working relationship with a business that, over time, had earned trust. The confidence of these banks would be rewarded handsomely a few years later, when prosperity returned to Mazda and Daimler-Benz.

On the other hand, Fukuyama cites a 1950’s study of southern Italy, where it was found that the inhabitants of a small town were unwilling to cooperate to found such badly needed institutions as a school and a hospital. The townspeople possessed the necessary labor and money to build what they needed. Yet they believed that it was the task of the government, and not themselves or their neighbors, to undertake improvements. Lacking a tradition of communal solidarity, they did nothing and had to live without a school or a hospital.

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Fukuyama divides the capitalistic world into high-trust and low-trust societies. High-trust societies are blessed with a high degree of spontaneous sociability, the capacity for individuals to build firm relationships, both within and without such traditional structures as the family. In a high-trust society people easily come together to form a variety of organizations, ranging from church congregations to trade associations. In the economic realm, people in high-trust societies are able to join in large, bureaucratically sophisticated corporations and, bound together by no other ties than loyalty to the organization, to work toward common goals.

Low-trust societies lack this capacity for unrelated people to cohere in associations, either formal or informal. In such societies, people’s allegiances are tribal; they trust only kin or clan. Low-trust societies tend to produce small, family-run businesses. Because of the vagaries of demography, these are difficult to sustain for more than a generation or two.

Fukuyama terms the propensity for trust “social capital.” The more social capital a society possesses, the more likely it is that its members will be able to create flourishing and enduring economic institutions.

Fukuyama uses this schema to classify current economic giants and in doing so subverts commonly held assumptions. He challenges notions of Asian communitarianism, and dispels fears of a monolithic Asian economic threat, by firmly classifying Japan as a high-trust society and China as a low-trust society. While accommodating time-worn stereotypes in describing France and Italy as low-trust societies and Germany as an exemplar of a high-trust society, Fukuyama defies expectations by including the United States in the high-trust camp. He counters the self-image of Americans as resolutely individualistic, arguing that traditionally Americans have been a remarkably gregarious people. A nation of joiners, satirized by foreigners for their love of committees, Americans have tempered their ideological celebration of individual independence with a remarkably elaborate network of voluntary associations. The lone riders of romance have their place in the history of the United States, but Fukuyama does well to remind readers that Americans pioneered modern corporate organization.

As a high-trust society, the United States stands to reap great benefits. Only high-trust societies can create the great corporations capable of producing such complex goods as automobiles, semiconductors, and aerospace equipment—the leading edge of industrial development. Such societies are financially and technologically better adjusted to adapt to innovations in products and shifts in markets. They also foster businesses sufficiently stable to establish widely known and accepted brand names. Kodak, Siemens, and Hitachi are American, German, and Japanese brand names recognized and respected around the world. It is much harder, Fukuyama notes, to identify a Chinese brand name. Chinese firms, usually family-run, are too small and volatile to distinguish themselves in this way.

There are some notable exceptions to Fukuyama’s rule, which he forthrightly acknowledges. Korea, a cultural offshoot of China, and France both have built impressively large and famous corporations. Yet, Fukuyama insists, these nations reinforce rather than contradict his core insights. Heavy industry in both Korea and France was encouraged and subsidized by governmental fiat. Thus the cultural effects of a low-trust culture can be minimized through determined political action, but only at the cost of establishing less efficiently run state enterprises.

The hybrid success of Korea and France is the converse of a process Fukuyama addresses toward the end of his book. If social capital can be artificially stimulated, it can also be depleted. This, according to Fukuyama, is a danger facing the United States. America’s rich endowment of social capital has rapidly dissipated in recent decades. Social scientists have measured a precipitous decline in voluntary associations. Community life has suffered with the rise in the divorce rate and single-parent households. The fear of crime has further chilled civic commitments. As broad-based coalitions have faded into the background, special-interest groups have proliferated and gained in influence.

Fukuyama attributes this unhappy state of affairs to a concatenation of social forces and corrosive ideals—most notably the cult of ever-expanding “rights.” He firmly believes that this explosion of unchecked individualism poses a grave menace to the economic well-being of the United States. An atomized American society, increasingly devoid of trust, will be unable to sustain the industries and institutions that have fueled its economic progress.

Fukuyama ends his book on a high note, rounding out his conviction that culture conditions economics and that trust is the root of prosperity. The Founding Fathers, he says, recognized that the liberal order that they were establishing could exist only on a foundation of nonliberal, traditional values. George Washington, not a conventionally religious man himself, wrote eloquently of the necessity for religious belief to guarantee the rights promised in the Constitution. This paradox—the dependence of liberalism upon values, upon culture—points the way for future action. Fukuyama concludes as he began, as a moralist, exhorting his fellow citizens to reclaim the communal virtues that were once the glory of the American nation.

Sources for Further Study

Commentary. C, October, 1995, p. 34.

The Economist. CCCXXXVI, September 2, 1995, p. 79.

Forbes. CLVI, September 25, 1995, p. 24.

Industry Week. CCXLIV, July 17, 1995, p. 27.

The Los Angeles Times Book Review. July 30, 1995, p. 3.

The Nation. CCLXI, September 25, 1995, p. 318.

The New Republic. CCXIII, September 11, 1995, p. 36.

New Statesman and Society. VIII, October 13, 1995, p. 30.

The New York Times Book Review. C, August 13, 1995, p. 1.

Publishers Weekly. CCXLII, July 10, 1995, p. 51.

The Wall Street Journal. August 11, 1995, p. A7.

The Washington Post Book World. XXV, August 27, 1995, p. 2.

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