22 Dec 2020

The progressive and never ending erosion of trust in our fellow men

Humans evolved in small extended family groups. Our brains are wired to get to know around one hundred and fifty individuals, and know them well enough to know whether or not they are trustworthy. Primitive justice, of being excluded from the group as a consequence of a transgression, was enough to ensure good behaviour. I’m sure that life was not a bowl of cherries back then, but it functioned well enough for what was required of what passed for ‘society’.

Now things are different. We can’t know people we interact with well enough to trust them as we did back then, so we use all sorts of institutions, technologies, heuristics and guesswork to substitute for the lack of trust in society. Here is a very partial list:

• Taskrabbit,
• bedrooms, heroin,
• lawyers, surveyors, accountants, insurance, indemnities,
• witchhunts,
• hitchhiking,
• sharing economy,
• Deliveroo,
• Amazon, not corner shop,
• anti-plagiarize software,
• opinion polls, politicians,
• ‘Bowling Alone’,
• Trump and opinion polling,
• most people will not answer a call from an ‘unknown number’ to their mobile phone,
• segregation in the USA is now more than ever,
• the price premium for leafy suburban neighbourhoods (with a local good school) is higher than ever.

Capitalism is, of course, a fantastic mechanism for substituting for trust. It has some wonderful properties, not least a sort of virtuous circle, competition between producers naturally leads to good outcomes for consumers. But it is far from perfect, as we have all learned at an early age, if we have been lucky.

Bitcoin, and blockchain are the latest technologies for achieving this feat. For sure, the idea is delicious. Nobody can fail to be impressed by what Satoshi did. But I do not think it is the last word, and I do not think that we are ready to give up our paleolithic ways quite yet.

As the Internet has decoupled our social lives from our geographical ones, this problem will keep growing. We will find that we need more and more lawyers and accountants. This is a sad state of affairs, and one that will make us miserable. I am sure that lawyers and accountants are good people, but to make a living out of the fact that we don’t trust each other any longer is a sad state of affairs.

What does this mean for the price of fish? I don’t really know. Maybe brands will continue to be important. Maybe blockchain applications will allow us to disintermediate between producers and consumers and weaken the toll gate between the two, and the economic rents that flow from controlling that gate. I don’t really know, but it’s something that I haven’t really seen discussed very widely. Please share your thoughts.