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Prof. Rose-Ackerman Guides Inquiry into "Honesty and Trust"

If you were to begin searching for information about the terms "honesty and trust" on the Internet, a Google search pulls up as its top result a page titled "Honesty and Trust: Theory and Experience in the Light of Post-Socialist Transformation" hosted by the Collegium Budapest Institute for Advanced Study in Hungary. Other search engines produce different results, and one even offers to "Comparison shop for 'honesty and trust.'" Which results to trust?

The page titled "Honesty and Trust" is a part of a scholarly research project, of which Susan Rose-Ackerman, the Henry R. Luce Professor of Jurisprudence at YLS, is a co-director. The project is assembling scholars from all over the world to examine the state of institutional honesty and trust in the nations of Eastern Europe and the former Soviet Union and to suggest solutions to the problems in the region. These scholars come from a plethora of disciplines, in order to consider the many different ways in which trust functions within a society.

This endeavor requires first an understanding of what "trust" is. Common in the lexicon (it appears on more than twelve million webpages), it's a word that most people could define in some form and would describe as beneficial. But, just as an Internet search for "trust" can produce different contexts--from banks to charities to personal philosophies and romance--trust itself can twist two ways and avoid simple analysis.

Rose-Ackerman explains that while trust seems like a good thing, and the goal of the project is to increase institutional honesty and trust, personal trust among friends and families can actually undermine trust in the state. "It's one of the paradoxes about trust," she says. "A rule-of-law kind of trust" requires that each individual believes that public officials will treat them honestly, and not favor them because of a personal relationship. This conflict is a particular challenge in former socialist states, where people commonly relied on personal relationships rather than an indifferent or irrational state.

Furthermore, Rose-Ackerman points out that even a corrupt regime requires some type of trust, as bribers and bribe-takers must have faith that each will perform certain acts--as well as not turn the other in to the authorities. And an organization like the mafia functions with a high level of interpersonal trust.

And so the scholars of the Project on Honesty and Trust have to be very careful about how they use the slippery word. Rose-Ackerman defines three types of trust, as well as five categories in which trust is generated, in her paper outlining the research agenda of the project. The three types of trust are: "generalized trust" in society and the nature of humanity; "one-sided reliability," or the kind of trust between an individual and a bureaucracy; and "reciprocal trust," or instances where people trust each other. The project is most interested in how honesty and trust affect the functioning of the state and the market, but this question inherently involves all three types.

The question of trust is particularly crucial in the countries transitioning from socialism to democracy and free markets, because the system had become so discredited under the old regime. Rose-Ackerman points out that these nations have taken the initial steps of writing democratic constitutions and changing the structure of their governments, but "more reforms are needed." In many cases, the problems of the old governments have persisted. In addition, many of these countries lack the private-sector institutions that bolster responsible government, such as civic societies, business associations, and watchdog groups.

There is variation from country to country, and the nations that are candidates for membership in the European Union are generally more advanced than the others. But all face the same conundrum of establishing institutions and practices appropriate for a new form of government.

Rose-Ackerman was first asked to join the Project on Honesty and Trust by J?s Kornai, now her co-director. Kornai, the Allie S. Freed Professor of Economics at Harvard University and a permanent fellow at Collegium Budapest, wanted to work with someone experienced in the study of administrative law and bureaucratic structures, and Rose-Ackerman's scholarship was uniquely fit for the purpose. She has published two books on the subject of corruption, which is not only a practical concern in Eastern Europe, but is also related to the theoretical concerns of the project--as corruption is a violation of trust. Although Rose-Ackerman wasn't an expert particularly in the region, she did have one connection to it--her books had been translated into Polish and Russian.

The project is now in an in-between, developmental stage, leading from the initial "brainstorming" and organization to the actual program of conferences and seminars next fall in Hungary. Individual participants are taking the time to work on their papers and ideas. Rose-Ackerman's contribution will focus on how the administrative law system functions in Eastern Europe. "How is government moving to be accountable to citizens?" she asks. And she says she wants to look beyond "electoral accountability" to "bureaucratic accountability" in day-to-day interactions, such as setting up phone service in a new home.

The academic concerns of the conference's participants bear on "real choices that the Central European countries have to make. . . . There's tremendous salience to these questions," says Rose-Ackerman. And because the situation in these countries is so fluid, and so many institutions are being considered for some degree of change, the questions range from the broadest social engineering to the minutiae of administrative functioning.

For example, in some Eastern European countries, the medical system is state-run but radically underfunded, and so doctors and other professionals regularly accept illegal payoffs for their services. Will the best solution to this problem be to change the system in a fundamental way, possibly by privatizing it? Or will more funding work better? Or is there another option?

Rose-Ackerman emphasizes that there is no easy answer to these queries, as there isn't a clear model. "It isn't just a question of what's the best policy out there," she says. European countries take one approach. The U.S. takes another. And so their thoroughgoing review starts with the value of honesty and trust and will work through ways to establish these qualities in institutional structures. The output of the fall conferences will be a volume or two of scholarly writing, but Rose-Ackerman also hopes that their work will have a direct influence on some of the decision-makers in government.

As Rose-Ackerman continues searching for a better understanding of "honesty and trust" and begins to consider remedies for the region, the paradox of trust recurs. She wrote in her outline for the project: "[T]he fundamental puzzle is how to create state and market institutions that are reliable and trustworthy at the same time as interpersonal relations based on mutual trust (or distrust) are kept from undermining these reform efforts."