In our recent discussion of Robert Putnam’s ethnic diversity and distrust research, Eva Cox had this to say:

I suspect also the lack of bridging social capital in such diverse areas may also be fired by too much neo-liberal emphasis on markets that place risk on individuals, encourages self interest and undermines social cohesion.

This is an argument Eva has been pushing for more than a decade, with most publicity surrounding her 1995 Boyer Lectures ‘A Truly Civil Society’, later published as a book of the same name, which I gave a rather harsh review in the March 1996 issue of Quadrant.

Eva took a contrary position in the social capital and trust debate of the time. When most other writers were emphasising the bottom-up nature of these social phenomena, Eva took the top-down view – they would be increased by more state activity rather than less. One chapter is even called ‘The Companionable State’. People acting freely without the state could be bad. ‘Competing marketers in head-on battle destroy society’, she told us, to no doubt much nodding of heads in Glebe and Fitzroy.

There are many of us who feel pessimistic about the future, who feel society is gradually coming apart at the seams. The idea of the social is losing ground to the concepts of competition, and the money markets are replacing governments. The social aspects of humanity have somehow disappeared…

A decade on Eva’s pessimism seems distinctly misplaced. In a chapter she wrote for Robert Putnam’s Democracies in Flux she reported on the standard interpersonal trust question for 1983 and 1995, in which 46% and 39% respectively thought that most people can be trusted. In 2005 it was up to 53%. There is other evidence suggesting that our social capital is improving. The Giving Australia research project reported that volunteering and donations had both increased since the 1990s.

Other aspects of Eva’s theories have also been discredited. ‘Telling us not to trust government spills over into not trusting our neighbours or even ourselves’, she said. Yet it now seems that to the extent that there is spillover in trust between spheres of life it goes the other way, that trust at a local level leads to trust in government. She thought that ‘ever longer hours of paid work’ put social capital at risk, but HILDA has shown that people who work long hours tend to be better connected than those who work shorter hours, and those with the most time – the unemployed – suffer worst from social isolation.

As I pointed out back in 1996, Eva does not understand markets – that they are fundamentally an other-person orientated institution, which promote co-operation with customers and within firms. And to the extent that markets do allow self-interest space, there is little reason to believe that this encourages people to act self-interestedly in spheres of life where that is not appropriate. Even having babies and raising children, the most generous thing most people will ever do, is on the rise again.

One change over the last decade makes me hesitate to declare complete victory. This is that, in line with the broad ideological thrust of a A Truly Civil Society, the Howard government has been on a huge spending spree. Interestingly, much of that has been directed through the institutions of civil society, in family benefits and the outsourcing of services (Eva would presumably prefer direct government control). I think this trend has worrying long-term implications in the politicisation and bureaucratisation of non-government institutions. But perhaps in some way it may have contributed to the good social results we have seen since the 1995 Boyer lectures.

In his paper on ethnic diversity and interpersonal trust, Andrew Leigh remarks that:

‘At the very least, trust appears to be a useful proxy variable for a variety of outcomes that are important to economists.’

And not just economists. But the note of caution in this statement is warranted. We can, I think, say fairly confidently that high levels of stated interpersonal trust are likely to be a good thing, but that lower levels are ambiguous – they might be a sign of trouble, but there are other possible interpretations.

One reason is the wording of the question. In the survey Andrew used, the 1997-98 Australian Community Survey, he coded as ‘trusting’ people who disagreed with the statement ‘generally speaking, you can’t be too careful in dealing with most Australians.’ That’s a common wording in the surveys on trust, but it seems to force people into a trust/don’t trust choice, precluding more nuanced responses. Trust/distrust is more like a continuum from naivety to paranoia about others than a simple choice between one or the other.

We can see the effects of more nuanced answer options in the 2005 Australian Survey of Social Attitudes (available here, though it is a user-unfriendly website). It has the same wording as the ACS, except that ‘Australians’ is replaced with ‘people’. Only small proportions are naive or paranoid – 2% saying that people can almost always be trusted, and 5% saying ‘almost always’ you can’t be too careful. 52% chose ‘people can usually be trusted’, and 39% ‘usually can’t be too careful’. The year before, in the Australian Election Survey, a simple two-choice answer option (though with a slightly different question ‘most people’, rather than ‘people’) saw 53% go for the negative response, compared to 44% in the social attitudes survey. Possibly offering a more qualified ‘trusting’ option improves apparent trust levels.

The broader problem with this question is that in practice trust is contextual, and so we are usually dealing with a narrower set of circumstances and persons than ‘Australians’ or ‘people’ in general. Other polling shows that we are more trusting when we are asked about a specific person or group of persons than asked very general questions. For example, we tend to rate specific politicans more highly for trustworthiness than politicians in general; we claim not to have confidence in banks in general, but all the individual banks have mostly satisfied customers – and who thinks that the banks will steal their money?

Because trust is contextual, I’m not at all sure how I would answer the more general question about trust. Would I leave my apartment door unlocked or post my PIN on my blog? No, I wouldn’t. Would I invest my savings in a get-rich-quick scheme? Again, no. So I do not believe that people can always be trusted. But I trust shops not to rip me off and not to serve me contaminated food, even if I have never been to them before and will never go to them again. I buy things on the Internet from foreign countries. I’m almost never concerned about my personal safety. So while I know there are untrustworthy people around, I am also confident that I can avoid them in my daily business. This enables me to act as if people are trustworthy.

Saying that people can usually be trusted in answer to these poll questions means, I think, that those respondents trust the people they need to deal with. But responding negatively does not necessarily mean a respondent is completely untrusting. They could be trusting in some contexts, but not others. So if ethnic diversity causes fewer people to express trust in general this may not be much of an issue, if they still have trust where that is useful in reducing monitoring and enforcement costs. The intriuiging aspect of Putnam’s latest research, as Andrew Leigh noted, is that he seems to be suggesting that in diverse cities people are less trusting of their own ethnic group as well as other people. It will be interesting to see more evidence on that.