Trust – the Anchor of a Liberal Order

Chapter Extracts

Press and Trust

Ignaz Miller

In the book “Trust – Anchor of a Liberal Order” (edited by Gerhard Schwarz), Ignaz Miller writes about the relationship between the press and societal trust. While a free press is not a guarantee, it is certainly a necessary foundation for building trust. By criticizing conditions and taking positions against prevailing policies, newspapers, for example, make an important contribution to creating and preserving trust in free societies. Where there are only state-controlled and censored information organs, it is not meaningful to speak of “trust” at all. Miller is convinced that not only quality media but also tabloids and gossip magazines make a significant contribution to a functioning liberal social order. These media follow the logic of the market and cater to consumer demand, but ultimately, even with news about Hollywood stars, they also serve transparency—and thereby trust.

The text is available as a PDF here:

Ignaz Miller: Presse und Vertrauen

The Perspective of Economic Psychology

Erich Kirchler

In the book “Trust – Anchor of a Liberal Order” by the Progress Foundation, economic psychologist Erich Kirchler highlights the importance and multifaceted nature of trust. According to Kirchler, in economics, trust is viewed as the result of rational and utility-maximizing considerations. This has significant advantages compared to costly contract safeguards that would become necessary in an environment of distrust.

However, trust is always associated with uncertainty for the trustor, as it is unclear whether the person being trusted will actually behave in a trustworthy manner, writes Kirchler. Moreover, trust involves a certain risk because the trustor could suffer harm. Where trust is repeatedly broken, high transaction costs arise, as societies characterized by distrust require bureaucratic measures to secure agreements and ensure their enforcement. This not only has negative economic consequences but can also severely impact political institutions and entire states. Therefore, Kirchler emphasizes the enormous importance of trust not only for economic but also for state actors.

According to Kirchler, the economy is not solely driven by mistrust-based, rational, and utility-maximizing behavior. Rather, there is often an attempt to foster cooperative and mutually beneficial behavior through an advance of trust. This can help avoid the costly consequences of bureaucratic and narrowly rational contract safeguards.

The text is available as a PDF here:

Erich Kirchler: Die Perspektive der Ökonomischen Psychologie

Trust in Medicin

Gerhard Schwarz (NZZ)

In our book “Trust – Anchor of a Liberal Order,” the physician and specialist in Evidence-Based Medicine, Johann Steurer, explains the significance of trust in the medical field. On the one hand, the direct trust relationship between doctors and patients is of central importance. Most of the time, absolutely certain knowledge in medicine is simply impossible; rather, it is almost always “only” probabilistic knowledge. Therefore, it is essential that trust exists between doctor and patient: The patient must be able to trust that the diagnosis is made carefully and that the proposed treatment is in the best interest of the patient. The doctor, in turn, must be able to trust the patient regarding the accuracy of symptom descriptions or the proper intake of medications.

On the other hand, Steurer notes that trust is also required at another level: both doctors and patients must be able to trust the entire medical system. For example, state regulations for quality control are necessary. Doctors must be confident that the methods and devices recommended by experts are not merely sponsored by large pharmaceutical or medical technology companies but are genuinely beneficial for treatment. Conversely, patients must be sure that doctors genuinely care about patient concerns and are not primarily motivated by (financial) self-interest.

Without such trust relationships, medicine would not be possible at tolerable costs and manageable complexity, Steurer emphasizes.

Money, Monetary Policy, and Trust

Gerhard Schwarz (NZZ)

Unsere mit hochkarätigen Referenten besetzte 50. E

Unfortunately, our 50th Economic Conference, featuring high-caliber speakers, had to be postponed due to the event ban. One of the speakers would have been Thomas J. Jordan, Chairman of the Governing Board of the Swiss National Bank. In our book “Trust – Anchor of a Liberal Order,” some of Jordan’s thoughts on the role of trust in monetary stability and monetary policy, expressed many years ago, can be read.

Jordan writes that for a currency to be widely accepted, there must be a balance: All actors must find it advantageous to trust a particular currency so that deviating behavior is no longer worthwhile. This balance can be disrupted if there are too many different (partly not even convertible) currencies or if counterfeits unsettle people. The SNB ensures that this balance is not jeopardized through its monopoly on coins and banknotes.

A key mandate of the SNB is to maintain the stability of the currency’s value. Previously, this was achieved through the gold standard. Today, without the gold standard, the trust of the public in a central bank’s capabilities is crucial. The higher the credibility of a central bank, the better it can influence market expectations. A constitutional or legal mandate to ensure price stability and the guaranteed independence of the central bank are particularly important for this. And since building trust in the central bank and its monetary policy is an extremely lengthy and costly process, central banks and governments must not recklessly squander the credibility of monetary policy.

Geld, Geldpolitik und Vertrauen (Mai 2020)

Islands of Trust in a Sea of Distrust

Gerhard Schwarz (NZZ)

Due to the COVID-19 pandemic, some state and private actors, such as health authorities or vaccine producers, have become the focus of attention. It is particularly important that these actors enjoy public trust. A few years ago, Guy Kirsch wrote an essay for our book “Trust – Anchor of a Liberal Order,” which, given the limited social interactions and the struggle for a trustworthy COVID policy, has gained new and extraordinary relevance.

Kirsch describes four pillars of trust. First, one can trust a person if one senses them. Signals such as facial expressions, eye contact, or the manner of speaking can convey an impression of trustworthiness—or not. For this to work, however, a certain degree of physical and social proximity is necessary.

Second, people who are believed to have a conscience are more likely to be considered trustworthy. However, perception can be deceiving, so caution is advised.

Third, the future perspective is important. If one expects to deal with a particular person in the future, trust is more likely to develop, as any abuse of trust would lead to a break in the relationship.

Fourth, a dense social network is a sign of trustworthiness. The more and the tighter someone is embedded in a network of relationships, the more they have to lose if they do not behave trustworthily.

Inseln des Vertrauens im Meer des Misstrauens (April 2021)