xTrust Social xDilemmas and xCollective Memoriesx

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Trust, Social Dilemmas and Collective Memories∗∗

Bo Rothstein

Abstract

What does it take to move a society from an inefficient equilibrium, characterized by low

social capital, distrust and inefficient legal and political institutions, to the opposite situation?

The starting point is a discussion of solutions to the “social dilemma” problem presented in

rational choice theory, which are found wanting. Without norms of trust, the “tragedy of the

commons” is unavoidable. An institutional mechanism is identified which implies that trust

can be established “from above”, that is, the trustworthiness of “efficient” institutions creates

interpersonal trust, which in its turn make the “production” of social capital in civil society possible. It is argued that the theory of “collective memories” can serve as the missing link in

the theory of social capital and game-theoretical explanations of cooperation. The advantageof this approach is that it brings action and power into the theory of social capital and social

dilemmas.

∗

Forthcoming in the Journal of Theoretical Politics


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A Story from Moscow1

In November 1997, I was invited to Moscow to lecture about the Swedish civil service for

academics, politicians and bureaucrats. The topic given to me was, “How To Control the Civil

Service”. After the talk, I had the opportunity to speak with one of the top officials in the

Russian tax authority. He was very interested in what I had to say because he had learned, in

Sweden, taxpayers are actually paying their tax bills. That is, of the total amount of taxes that people are suppose to pay, according to tax authorities, ninety-eight percent also reaches thegovernment. The tax official told me that, at that time, the equivalent level in Russia at that

time was twenty-six percent. Again, we are talking about the taxes the government knows itscitizens are suppose to pay according to the tax laws, thus, excluding the “black” and “gray”

parts of the economy. When we talked about this huge difference and how to comprehend it,he gave me the following explanation for the situation in Russia. He argued that it was not the

case that most Russians did not want to pay taxes or were especially dishonest, instead, the

problem, he explained, was that of a classical “social dilemma” (Dawes 1980, Ostrom 1998).

Most Russian citizens actually wanted to pay what they were supposed to because they

cherished the things that would be done with their tax money (health care, education,

pensions, defense, etc.). But, they would only be willing to pay their tax bills on two

conditions, which were both never fulfilled. First, they rightly did not believe that all “theother” taxpayers where paying their taxes properly, so it was really no point in being “the

only one” who acted honestly. The goods (public, semi-public or private) that the government

was going to use the money to produce, would simply not be produced because there were too

little taxes paid in the first place. Secondly, they believed that the tax authorities where

corrupted, so that even if they paid their taxes, a significant part of the money would never

reach the hospitals or schools, etc. Instead, the money would fill the pockets of the tax

bureaucrats. In both cases, trust in others was in extremely short supply.I then asked if this was true, and was told that “yes”, there is a significant amount of

corruption in the huge Russian tax bureaucracy, consisting of more than 100,000 persons.But, again, the problem was explained to me as a standard “social dilemma” (or very large n-

persons “prisoners dilemma”). I was told that most of the bureaucrats did not really want thiscorruption to continue. They were willing to stop taking bribes and stealing tax money, if they

could be convinced that (almost) all the other bureaucrats were also willing to comply withthe rules. The problem was, so far, top officials in the tax authority had found no way of

convincing the lower level bureaucrats that corruption would come to an end. Again, this was

a case of lack of interpersonal and institutional trust .

I told him that I could very well believe his argument, that the reason Swedes were

willing to pay their (high) taxes was not least that they a) thought that most other citizens paid

what they were supposed to pay, b) that the degree of corruption was very low. In fact, there

is pretty good survey research on tax-evasion in Sweden that confirms that citizens belief in if

other citizens complied with the tax rules had great influence on their own willingness to pay

their taxes, (cf. Rotter 1980, Laurin 1986). Moreover, the story also seemed to confirm the

survey based research about tax paying in the United States by Scholz and Lubell, whoconcludes that “citizens will meet obligations to the collective despite the temptation to free

ride as long as they trust other citizens and political leaders to keep up their side of the social

contract,” (Scholz and Lubell 1998: 411). This was, I told him, variations in political behavior

that social scientists had excellent theoretically sophisticated models to explain (Levi 1988).In the words of Bardhan: “corruption represents an example of what are called frequently-

1 Thanks to Madge Spitaleri and Eric Wanner at the Russell Sage Foundation for providing an excellent

environment for research. Special thanks also to Paola Cesarini and Piotr Swistak for very helpful comments on

earlier versions.


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dependent equilibria, and our expected gain from corruption depends crucially on the number

of other people we expect to be corrupt” (Bardhan 1997: 1331). In other words, the more

people that we think are corrupt, the more people will be corrupt. The sad news is of course

that especially a non-efficient equilibrium of the kind existing in the Russian tax system,

seems to be very robust (Bendor and Mookherje 1987, Bendor and Swistak 1997).2

The question I then got from the Russian tax bureaucrat, and that had to admit I could

not answer, was the following: “How do you go from a situation such Russia’s to the situationwhich exists in Sweden?” That is, how do you move a society (or an organization) from a lowtrust situation with massive tax fraud and corruption, to a high trust situation where these

problems, while existing, are much less severe. In the words used in game-theory, what doesit take to move a society from a stable, but inefficient, equilibria, to a stable efficient

equilibria?3 Examples of this problem are easy to find. An expert on the economic problems

in Latin America, recently interviewed in the New York Times states that, “I don’t think there

is any more vital issue in Latin America right now….It’s a vicious cycle that is very hard to

break. People don’t want to pay taxes because they say government doesn’t deliver services,

but government institutions aren’t going to perform any better until they have resources,

which they obtain when people pay their taxes.” (Rother 1999). What is the interest of the

individual citizen in such a situation is not so clear because it depends on what they think

other citizens will do. As Margaret Levi has argued, in political and social situations such asthese, “there is nothing comparable to the economics dictum of getting the most for the least

for one’s money in the marketplace” (Levi 1997: 24).

Generalized Trust and Trust in Government

I think this is a very important problem for both theoretical and political reasons. Simply put,

I think we know quite a lot about the “statics” in this area. Field research, historical-comparative research, formal game theory and experimental psychological research now seem

to have reached a point where very different types of equilibria can be explained when itcomes to establishing more or less efficient solutions to social dilemmas (Bates, de Figueiredo

Jr et al. 1998, Ostrom 1998). It is not difficult to understand or explain the social mechanismsthat make the agents, such as the Russian taxpayers or tax bureaucrats, when stuck in an

equilibria , choose to act in ways which reproduce that equilibria, even if it is collectivelyirrational for them to do so. In popular language, we know why “once the system gets there, it

stays there”.4 As it has been formulated by Fritz Scharpf:

If actors were able to choose their orientations (…), they would be better of, in purely

individualistic terms, if they could opt for solidarity - and could trust others to do

likewise. But the ability to trust is of course the crucial problem. If one party acts from a

solidaristic orientation while the other is motivated by competitive preferences, then the

trusting party would be left with its own worst-case outcome… In other words, being

able to trust, and being trusted, is an advantage-but exploiting trust may be even more

advantageous (Scharpf 1997: 86f).

2 For analyses of how moves from inefficient to efficient equilibrium in tax policy have been made, see

Levi (Levi 1988), Berentzein (1996) and Thorp (1996).3 I thank Piotr Swistak for reminding me that every important problem in the social sciences may have an

explanation, but they may not have a solution that we like.4 Technically there are many different types of equilibria. When the term is used here, it refers to what is

known as a Nash-equilibrium: “a pair of strategies that are best replies to each other on the equilibrium path”

(Morrow 1994: 351). It is a situation where non of the players can do better by making a unilateral change of

strategy.


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From a political economy point of view, it has been forcefully argued by Mancur Olson and

Douglas North that it is the lack of efficient institutions that explains why so many countries

remain poor, despite growth in the world economy. As North recently has argued: “historical

experience makes clear that efficient institutions are the exception” (North 1998: 494).

Without efficient institutions, agents can usually not produce public goods and the transaction

costs in economic exchange can become detrimental to economic growth. Buying private

protection to protect ones property rights is usually both expensive and an uncertaininvestment (North 1990, Olson 1996). To quote Mancur Olson’s last published article:

the large differences in per capita income across countries cannot be explained bydifferences in access to the world’s stock of productive knowledge or to its capital

markets, by differences in the ratio of the population to land or natural resources, or bydifferences in the quality of marketable human capital or personal culture. Albeit at a

high level of aggregation, this eliminates each of the factors of production as possible

explanation of most of the international differences in per capita income. The only

remaining plausible explanation is that the great differences in the wealth of nations are

mainly due to differences in the quality of their institutions and economic policies

(Olson 1996: 19).

The human costs, from Sierra Leone to Kosovo, from Rwanda to Palermo, for the peopleliving in societies without efficient institutions, are immense (Bardhan 1997). Thus, the

problem we face is to explain the dynamics, that is, under what circumstances a system is

likely to move from the one situation to the other. How can Palermo become Milan, and how

can Moscow become Stockholm? And what does it take for Stockholm to become Moscow?

As Elinor Ostrom has argued, “the really big puzzle in the social sciences is the development

of a consistent theory to explain why cooperation levels vary so much and why specific

configurations of situational conditions increase or decrease cooperation in first- or second

level dilemmas” (Ostrom 1998: 9). If it is some form of trust that is needed, and as I will

argue below there seem to be good arguments for this, then how can trust be created? It iswell known from field and experimental research that placing persons in small groups where

they have to talk to one another, is beneficial for creating trust and collaboration. Talk, or personal communication, or engaging in mutual discourse of common problems, can build

trust. “Cheap talk”, as is the game theoretic expression, turns out to be not so cheap (Sally1995). But we can not put 100,000 Russian tax bureaucrats in a room for face-to-face

communication, not to mention the entire Russian population. Deliberative democracy, for all

its sophisticated theoretical elegance, seems to be difficult solution for simple reasons of

practicality (cf. Gutmann and Thompson 1996, Elster 1998). Interpersonal trust, and trust in

societal institutions and in other citizens whom you do not know, are two very different things

(Levi 1998, Rothstein 1998).

While the “discourse” solution is ruled out in such large-n situations, the simple

answer to the Russian bureaucrat would have been that they should introduce “the rule of

law” type of institution. Corrupted bureaucrats and tax-cheating citizens would then be caught

by the police and punished by the courts. By “fixing the incentives” in this way, standardeconomic theory tells us that the problem would be solved. It’s simple, just increase the

negative pay-off for cheating and corruption (including the risk of being caught) to a point

where the fear of being caught would be higher than the greed that leads agents to engage in

tax fraud and corruption. When society is constructed so that fear is larger than greed, thingsgo well.

But as have been argued by e.g., Pranab Bardhan, Michael Hechter, Mark Lichbach,and Gary Miller, accomplishing this is not an easy thing to do, because constructing such an

institution is in itself a collective action problem (Miller 1992, Bardhan 1997). Presuming


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standard utility maximizing self-interested agents, where do you find the uncorrupted judges,

bureaucrats and policemen in a society where corruption is rampant? Most judges and

policemen may reason like the Russian tax bureaucrats above, perfectly willing to act

honestly, but only if they trust most other policemen and judges to do the same (Hechter

1992, Weingast 1993, Lichbach 1995). Comparing four different solutions to this problem,

(markets, hierarchies, norms and contract enforcing institutions) and writing from within a

game-theoretic approach, Lichbach has stated that: “The major difficulty with every solutionto the Cooperator’s Dilemma is that each presupposes the existence of at least one othersolution. All solutions to the Cooperator’s Dilemma, in other words, are fundamentally

incomplete. This is, of course, quite troubling” (Lichbach 1995: ix). It should be added that(from a rationalistic point of view), it is the efficient “Stockholm” type of solution to

problems of social dilemmas that are difficult to explain (Molander 1994, North 1998). Whatis most likely to happen with the “homo economicus” type of players is that they end in

“social traps”, i.e., the “worst for all” outcome predicted by the famous prisoners’ dilemma

game (Platt 1973). As Michael Hecther has formulated the problem, if agents act from the

standard self-interested rationality, it is most likely that “the agents will outsmart themselves

into supoptimal equilibria” (Hechter 1992). Adam Smith’s famous ‘invisible hand” can not

run an efficient market economy by itself, because the institutions needed to prevent

“opportunistic” behavior will not automatically be produced by self-interested utilitymaximizing agents (Ben-Ner and Putterman 1998: 4). The standard solution presented in

game theory to this problem, known as “iterated play”, may work in two-persons’ games, but

does not hold for n-persons’ games (Bendor and Mookherje 1987). It has even become

doubtful for two-persons’ games because of the “shadow of the last game”. If the agents know

that there will be an end-game where it will be in the interest for the one who has the last

move to “defect”, this will make the player with the next to the last move, “defect”, and so on

(Rapoport 1987).Furthermore, regarding the standard “rule of law” solution, Weingast have made a

very important comment, namely that “(a) government strong enough to protect propertyrights is also strong enough to confiscate the wealth of its citizens” (Weingast 1993:287). If a

government has the power to establish the institutions to implement a “rule of law” system,they would abuse that same power to break the “rule of law” (i.e., infringe on property rights)

if acting as agents in game theory are supposed to act (cf. Molander 1994). Without a verylong time horizon, and lacking sophisticated knowledge of the relation between incentives,

investment and economic growth, governments are not likely to respect “the rule of law”.

How to understand the existence of the “rule of law’ and other similar efficient

institutions from within a rationalistic perspective is complicated. Weingast’s analysis of the

role of the U. S. Supreme Court in the New Deal era is an interesting example. The story is

well-known – in order to stifle the Court’s resistance to his New Deal policies, President

Roosevelt wanted to increase the number of judges in the Court. The new judges he would

appoint would be expected to vote against propositions which deemed the New Deal

legislation unconsitutional. In his analysis of why this strategy to “pack” the Court failed,

Weingast falls back on the following, fairly non-rationalistic, normative argument: “(b)ecauseit constituted a direct assault on the constitutional principle of the separation of powers, large

number of citizens, including many of the intended beneficiaries, viewed the plan as

illegitimate” (Weingast 1997:254). Thus, Weingast seem to argue that even if it was in their

instrumental interest to support Roosevelt’s strategy to pack the Court, for the majority ofRoosevelt’s supporters, the norm against tampering with the constitution took precedence.

According to Weingast, Roosevelt’s supporters did not withhold their support because theythought would gain something. Instead, they simply viewed the plan as “illegitimate”. If this

is the case, then Weingast’s ambition to explain the “rule of law” from within rationalistic


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theory is incomplete, because if agents act against their instrumental interests, the

assumptions of the theory are violated.

Another case in point is Gary Miller’s and Thomas Hammond’s discussion of the use

of the so-called “city managers” as a successful way to get rid of corrupt party-machine

politics in American cities during the interwar period. These where highly trained civil

servants known for their high moral standards and for being disinterested, selfless servants of

the public good. They had a reputation, that as a rule, they could not be bribed. But as Millerand Hammond state, “(t)o the extent that such a system works, it is clearly because citymanagers have been selected and/or trained not be economic actors” (Miller and Hammond

1994: 23). And, of course, there is then no collective action problem in the first place, becauseit is “solved” by blurring the assumption about human behavior on which the model is built.

Due to what is known about bureaucratic discretion, the possibility to solve this problem byimplementing controls from above is very limited ( cf. Miller 1992, Brehm and Gates 1997).

Miller and Hammond’s advice to our Russian friend mentioned above is thus very simple,

namely: “to find out how such disinterested altruistic actors are created, and then reproduce

them throughout the political system” (Miller and Hammond 1994: 24). Well, what more can

you say, than “good luck”.

Apparently, without strong ethical norms against self-interested behavior, the “rule of

law” can not work as a trust enhancing institution (Dagger 1997, pp.105-116). Douglas Northhas recently argued that while formal institutions can help to create trust, “it is the informal

constraints embodied in norms of behavior, conventions, and internally imposed codes of

conduct that are critical” (North 1998, p 506, my emphasis). Without such internally imposed

codes, the first uncorrupted judge or civil servant would not have seen the light of day, given

the assumptions made within rationalistic theory (Miller and Hammond 1994). Thus, the

question is: How can the government, or any other powerful actor, establish credibility and a

reputation for trustworthiness so that other actors (citizens, firms and organizations) believethat state officials will honor their commitments in the future? (Levi 1998). The argument is

that it is not formal institutions, per se, that can solve this problem of credible commitments, but instead the actors “cognitive maps” about how trustworthy the actors are in operating

these institutions. This is, by and large, an effect of the institutions historical record of beingtrustworthy or not (Rothstein 1998). As Williams et. al. have stated this problem:

Credible commitments are sticky - hard to establish and hard to change - because they

are based on a long history of past policies. Jump-starting capitalism, with the

importation of institutions, thus looks problematic. The beliefs to support capitalism

must evolve with institutions’ longetivity. … For those societies without a policy

tradition of respecting property rights, the perceptions of credible commitment may

therefore be all but possible to establish. Institutions can be changed almost at will, but

political memories are long and hence belief systems relatively entrenched.” (Williams,

Collins et al. 1995: 18)

It is not the formal institutions as such, but the perceived history of how these institutionshave acted, that matters (Bardhan 1997: 1333). That is why exporting a formal institution

from one setting to another usually fails to have the expected positive effects. Institutions as

such do not automatically change values and behavior, because they do not operate in a

history or context free environment (Katznelson 1998). In game theoretic parlance, “history of play” matters. As Fritz Scharpf writes in his Games Real Actors Can Play, “(t)he fact that two

actors have a memory of past encounters as well as an expectation of future dealings witheach other is assumed to have an effect on the individual interactions” (Scharpf 1997: 137). If


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this is correct, then rationalistic theories need to be combined with a theory of how this

“memory of the past” is determined.

The problem stated above, how individual and collective rationality comes into

conflict, is the major theoretical problem within this approach. And I agree with Elinor

Ostrom when she argues that this is the major problem in political science (Ostrom 1998).

However, as I hope to have shown, it can not be solved within an approach where agents are

presumed to act solely from self-interested utility maximization. The temptation to free-ridewill, sooner or later, overwhelm such agents (Dagger 1997: 107). This occurs because as soonas the payoffs are high enough, they will engage in opportunistic behavior and thus destroy

what credibility and trust there is (Miller and Hammond 1994). As Ziegler has recentlyargued: “In a strategic trust game there usually is an incentive for the trustee to misuse trust”,

(Ziegler 1998:445). Obviously, something other than pure self-interested utility maximizationis needed to solve the problem of collective action which game theory so forcefully has put

forward (Ben-Ner and Putterman 1998). This is probably the reason why there is an

increasing interest in “non-rationalistic” variables such as norms, signs, history, culture. etc.

within the game theory approach in political science (Levi 1998, Ziegler 1998).

What is Trust?

If trust is what is needed to move from a non-cooperative to a cooperative situation, we need a

definition of what it is. Here, I will limit myself to contrasting two different approaches. One,

which has been presented by Russell Hardin, strives to keep the concept within the

rationalistic instrumental paradigm (Hardin 1998). This means, A will trust B, if A believes

that B’s incentive structure is such that it is in B’s interest to fulfill A’s expectations in a

particular exchange. According to Hardin, we do not trust people generally, but only in

specific exchanges.The question is if such a narrow definition captures the essence of trust. For example,

as soon as B’s incentive structure changes, she will betray A if her utility increases by doingso. If so, this puts a heavy burden on A, because in order to deal with B, he needs to know B’s

incentive structure very well, and also be aware of sudden changes in that incentive structure.The amount of information A needs in each an every moment, when A must decide whether

of not to trust B, must be very high. While this definition is very precise, and has theadvantage of simplicity, I doubt if it can capture trust between agents as it takes place in the

real world. Do agents really make such complex calculations each an every time they decide

whether or not to trust? Probably not, and in any case, the time and resources they would need

to gather that type and amount of information about B, would make trust very rare (i.e., the

transaction costs would prevent a lot of cooperative exchanges).

For example, even in New York, in the middle of the night, people jump into a taxi,

driven by a person they know nothing about. Furthermore, if according to Hardin, A will trust

B as long as A assesses that it is in B’s self-interest to act as to be trusted, then trust would be

very infrequent because B would only pretend to be trustworthy but choose to “free-ride” on

A’s trust as soon as it pays to do so. If strictly an “homo economicus, this B personality wouldtry to mimic trustworthiness until A decides to trust him with something really important or

valuable, and then (s)he’d deceive A. In such a word, trust would be very infrequent. It can

also be argued that such an instrumental model of social ties leads to more fundamental

problems. Granovetter has e.g., argued that “a perception of others that one’s interest in themis mainly a matter of ‘investment’ will make this investment less likely to pay off; we are all

on the lockout for those who only want to use us” (Granovetter 1988: 115).Definitions must not only be precise, elegant and simple (as is Hardin’s), they must

capture the essence of what we want to communicate when we use a specific term. As Robert


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Wuthnow concluded from his thorough empirical research about trust based on survey data:

“For most people, trust is not simply a matter of making rational calculations about the

possibility of benefiting by cooperating with someone else. Social scientist who reduce the

study of trust to questions about rational choice, and who argue that it has nothing to do with

moral discourse, miss that point” (Wuthnow 1998). The result from experimental research

also seem to show that the calculative notion of trust does not conform to empirical findings

(Rapoport 1987, Tyler and Degoey 1996). Recent overviews of the field states thatexperimental research simply refutes the standard behavioral assumptions of game theory(Ledyard 1995, Sally 1995). Psychological research shows that trust is linked with norms

against opportunism such as lying, cheating and stealing (Rotter 1980). From the perspectiveof contract law, Deakin and Wilkinson have argued trust between economic actors “cannot be

merely calculative. This is because the complexity of the environment is such that completecontracting over future contingencies is impossible” (Deakin and Wilkinson 1998: 154). From

this, I draw the same conclusion as Elinor Ostrom: At the end of the day, there must be limits

to how unrealistic assumptions social scientists can work from and still pretend to have

something important to say about real world problems (Ostrom 1998).

Furthermore, Hardin’s definition seems to be difficult to use in order to understand

why the willingness to trust other individuals (and societal institutions) varies so markedly in

different societies. Survey and other types of data seem to indicate that there are different“cultures of trust” around the world. When it comes to who and what you can trust, what is

taken for granted in some societies is highly dubious in others (Sztompka 1998). This would

indicate that in societies with a “low” culture of trust, the rationalistic definition would be

suitable, while in societies with a “high” culture of trust, in most cases people use other things

than rationalistic calculation. The conclusion is that we need a more open definition of trust,

for example the one suggested by Piotr Sztompka: “trust is a bet on the future contingent

actions of others” (Sztompka 1998, p 20). The question to answer is then how people arrive atsuch bets. They can use rationalistic calculation, but as I will argue below, in most cases,

people use something else.As should be clear by know, I agree with Elinor Ostrom’s argument that political

science is in desperate need of a more realistic behavioral theory of human agency than the pure rationalistic instrumental homo economicus. How bad is the present state of affairs?

Using results from psychological research, Eckel and Wilson have stated that “it might beargued that the rational agents in standard game theoretic models are autistic: that is, they

only require an actor to assume the other is seeking the same advantage as himself” (Eckel

and Wilson 1999). They refer to psychological experiments with small children which show

that they can usually detect signals from other persons and make inferences about their

intentions. However, children suffering from autism have difficulties doing this, and usually

can not detect intentions other than their own which complicates their ability in social

exchanges (cf. Baron-Cohen 1995). This argument may sound a bit harsh with respect to

game theory, yet the argument is very compelling. As economists Ben-Ner and Putterman

have recently argued:

being, by assumption, bereft of concern for friend and foe as well as for right or wrong,

and caring only about his own well-being, homo economicus cannot, by construction,

be at the center of a meaningful theory of how and when behavior is influenced by

ethics, values, concern for others, and other preferences that depart from those ofstandard economic models. (Ben-Ner and Putterman 1998).

Thus, there are two problems that need to be solved. One is how to incorporate norms into our

models of human behavior. The other, is how to build our models from a somewhat more


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realistic assumption about the agents’ capability to handle and process information and act

consistently upon this information. The first problem can be handled by thinking of agents as

having “dual” utility functions in social dilemma situations. That is, they want to “do the right

thing”, that is, abstain from opportunistic behavior, but they do not want to be the “only ones”

who are virtuous, because there is usually no point in being the only one who is virtuous. As a

result of the information that others will only act according to their “myopic” self interest,

they are likely to do the same (i.e., “autistic” action). But, if agents have information that “theothers” have a normative orientation (or some other reason) that makes it likely that they willcooperate for the common good, the norm-based utility function will usually “kick in” (Levi

1991). Agents can get information about this from their social interaction with others, fromthe media, or from government institutions (Levi 1988). Be that as it may, what is needed to

solve social dilemmas of the kind discussed above are agents who can play more than oneinstrument. That is, they can be motivated by self-interested when they act in market

relations, but when elected or appointed to a public position, they recognize that they are in a

different situation and obey the laws rather than ask for bribes (Ben-Ner and Putterman 1998:

5). If the “public choice” approach would be correct when that agents in public office can be

expect to behave according to the same instrumental rationality as agents on the market, there

is no possible solution to social dilemmas of the kind discussed here (Rothstein 1996).

In regard to the problem of using a more realistic approach about human behavior thanthe “autistic” standard model, I think that Peyton Young’s approach on modeling agency in

evolutionary game theory may be very promising. His conception of how we should

understand human agency is that:

agents are not perfectly rational and fully informed about the world in which they live.

They base their decisions on fragmentary information, they have incomplete models of

the process they are engaged in, and they may not be especially forward looking. Still,they are not completely irrational: they adjust to their behavior based on what they think

other agents are going to do, and these expectations are generated endogenously byinformation about what other agents have done in the past (Young 1998: 6)

There are several advantages with this view of agents compared to the standard rationalistic

model. Most important is the realistic view of what type of (limited) information agents have,the importance agents give to history (i.e., experience) when judging other agents, and that

what they finally do, is based on what they think “other agents are going to do”. A reasonable

interpretation of the results from experimental studies and field studies about behavior in

social dilemma situations, is that it is very likely agents do not only take into consideration

the incentive structure of the “other agents”. On the contrary, they are likely to take into

account what is known about the moral standard, professional norms, and historical record of

these “other agents”. For example, do civil servants take bribes or not, do professors usually

discriminate people of different race or gender or not, do judges the follow or violate legal

rules, do union leaders honor agreements, or not, etc. In other words, agents take into account

what they think is the “logic of appropriatedness” of the other actors (March and Olsen 1989).The question then, is where does this view of “the others” come from? In small groups

it can of course come from personal knowledge and communication. Experimental research

gives strong support for the importance of communication as a way of increasing cooperation

in social dilemmas (Sally 1995). But, in large n settings, the problem is very different. Noagent can have knowledge about all the other agents or groups of agents. Who are the judges,

the tax-collectors, the policemen, the politicians, the civil servants, the social welfare workers,the other tax payers, the welfare clients, the unions, etc? What sort of people are they? What

is known about their trustworthiness and their moral standards? Can these people be trusted,


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and if so, with what can they be trusted? If agents “adjust to their behavior based on what they

think other agents are going to do” (Young 1998: 6), these are the type of questions agents,

who think about whether to trust or not, must try to answer. The stakes, if trust is misplaced,

can be very high. As Braithwaite has stated “(t)he key to linking value systems and trust

norms lies in the way in which ‘the other’ is construed” (Braithwaite 1998: 45). If this is so,

we need a theory of how “others” are constructed.

Where does Social Trust Come From?

The most important lessons so far are is that a) information is a problem and b) agents arelikely to act based on what information they have about “the others.” In certain economic

setting, such as a spot market, information is free, general, accurate and immediatelyavailable. No agent can hide what he or she is willing to pay or to sell for from other agents.

In politics, things are usually very different. Information is not free, almost never generally

available and seldom accurate. Yet, agents have to act on whatever information they possess

(Mailath 1998). This information problem creates a demand for agents that are “information

entrepreneurs”. This is usually political leaders or intellectuals who engage in producing or

reproducing ideas and system of ideas (i.e., ideology). What they do, to a large extent, is to

produce ideas about whom and what can be trusted. In a potential social dilemma situation,what are the actors’ interests can not be taken for granted, because it depends on what ideas

they think other actors have.

In her work about the importance of ideas in major policy choices made by different

European Social Democratic parties in the inter-war period, Berman argues that “actors with

different ideas will make different decisions, even when placed in similar environment”

(Berman 1998: 33). From a rationalistic perspective, the argument is similar: “ideas matter

because they affect how individuals interpret their world via the likelihood they accorddifferent possibilities” ( cf. Scharpf 1997: 60, Bates, de Figueiredo Jr et al. 1998).

If so, the solution to our problem must be found in who controls what information (orideas) agents will use when deciding how to act (Berman 1998, ch. 2). The problems are, 1)

where does ideas come from and, 2) what or who determines which ideas that will dominatemost agents. As Mailath puts it in his discussion about the realism in the approach known as

evolutionary game theory: “(t)he consistency in Nash equilibrium seems to require that players know what the other players are doing. But where does this knowledge come from?”

(Mailath 1998). One answer, of course, is that this is given by the “Culture”, or the

“Dominant Ideology”, or “History”. It is in the American political culture to “hate the

government”, while Scandinavians, for example, put enormous trust in their political system

and gladly pay more than half of their income in taxes (Rothstein 1998). Russians have of

course very good reasons to be distrustful of their government institutions, as do most citizens

of Latin Europe and Latin America. According to Robert Putnam (Putnam 1993), the reason

Northern Italians trust each other can be traced back to political traditions established in the

medieval city states, while southern Italians have much less social capital, because no such

“horizontal” political culture ever got started

5

.The problems with all these explanations are well-known. First, they reduce the agents

to, more or less, cultural or structural “dopes” (Giddens 1984). Instead of being able to chose,

they have no choice at all, and instead of having perfect information, they are “doped” by the

culture (or history, or ideology) in which they, by no choice of their own, happen to live in.Second, cultural explanations have difficulties in getting at our main problem, namely how to

explain change. If the culture is strong, then change in values is less likely. But if the culture

5 I admit that this is a very unfair caricature of Robert Putnam’s sophisticated argument, but think of it as

an “ideal-type” instead, that usually makes things easier for social scientists.


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is weak, change is possible but then other things than culture come into play (Laitin 1988).

This is the difficulty, in order to explain why social dilemmas can sometimes be

solved, rationalistic theories must be completed with theories about how the agents come to

embrace norms, ideas, or culture that make them refrain from self-defeating myopic

instrumental behavior (Denzau and North 1994). But this must not lead us into the other

extreme, i.e., viewing agents as determined by a cultural hegemony produced by anonymous

historical or political forces (cf. Lichbach 1997). The whole notion of “social dilemmas”serves to remind us that groups do not always have the norms that would be most functionalfor theirs needs or interests. On the contrary, the rationalistic approach’s focus on the

discrepancy between individual and collective rationality, implies that we should usuallyexpect the opposite to be the case. Norms or culture should thus not be seen as something

inherited and stable beyond strategic action. Instead, as Bates et. al have argued, “the struggleover subjective worldviews should itself be treated as a strategic process” (Bates, de

Figueiredo Jr et al. 1998).

This is where real-world politics kicks in, for the simple reason that it is very much a

struggle over which “subjective worldviews” that shall dominate in a certain group (cf.

Hardin 1995). Recent work by, for example, Berman and McNamara about the importance of

dominant ideas in major policy choices, point in the right direction, because which ideas that

will dominate are fought about by strategically acting political agents (Berman 1998,McNamara 1998). What political leaders do, is very much trying to communicate notions of

who are “the others”, and most especially, if these “others” can be trusted (Bates, de

Figueiredo Jr et al. 1998). “Others” can be ethnic groups or nations (the Serbs, the Croatians,

the Tutsis), professional groups, “the bureaucrats in Washington”, “the unions”, “the

employers”, and so on. And within this strategic approach, when providing answers to the

type of questions above, political leaders are at the same time providing an answer to the

question of the identity of the group they represent: the “who are we” question (Hall 1993,Ringmar 1996).

In the more empirically oriented research, there are basically two arguments abouthow trust between citizens is produced. The first one comes from Robert Putnam’s already

classic study about variations in democratic efficiency between the Italian regions. The mainthrust of his argument is that “what makes democracy work” is trust, or social capital, and this

is produced if citizens engage in horizontal voluntary organizations such as choral societies,PTAs and charities. In this Tocquevillian notion of the social order, it is a vibrant civil society

where citizens’ engage in local grass root organizations, that they learn the noble art

overcoming social dilemmas. At the aggregate level, Putnam is able to show very impressive

correlations between the density of the world of voluntary organizations and democratic

efficiency (Putnam 1993). There is also an argument that countries which historically have

had strong popular grass-root organizations, such as the Scandinavian countries and the

Netherlands, score high on the survey question used in the World Value studies to measure

generalized trust (Inglehart 1997).

At the micro-level, however, things look quite different. While there seem to be

empirical support for the thesis that the more organizations people are members of, the morelikely are they to trust other citizens, it is difficult to get a grip at how the causal relations

works. Is it agents who already trust other citizens who join many organizations, or is it the

activity in the organizations that increases trust? Recent work by Dietlind Stolle seems to

confirm the former thesis more than the latter. From her very interesting micro-level data, sheconcludes that “(p)eople who join associations are significantly more trusting than people

who do not join”, and “(i)t is not true that the longer and the more one associates, the greaterone’s generalized trust” (Stolle 1998: 521).

The other major argument about trust among citizens is that it can also be created


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“from above”. Political and legal institutions that are perceived as fair, just and (reasonably)

efficient, increase the likelihood that citizens will overcome social dilemmas (Brehm and

Rahn 1997, Levi 1998, Newton 1999). If our friend, the Russian tax official, could make

Russians believe that his tax bureaucrats would be honest and that they would have means to

make sure that (almost) all other citizens paid their taxes, most Russians would pay there

taxes. Several such instances of creating “trust from above” in tax policy have been analyzed,

for example Levi on Australia in 1980s and Rosemary Thorp on Peru in the 1990s (Levi1988, Thorp 1996). It should be added that although Putnam’s analysis by most commentatorshas been connected to the organic Tocquevillian understanding of trust, there are important

parts of his book that take this more institutionalized causal relation into consideration. Bethat as it may, Swedish survey data seem to give some support to this “statist” argument about

how trust is created.People were asked whether they had very high, high, middle, low or very low

trust/confidence in different political and societal institutions such as the banks, Parliament,

the unions, the police, the courts, etc. (see table below). The measure on this five-scale

question of trust in institutions was then correlated with a ten-scale question asking people:

“in general, do you think you can trust other people”. The question we wanted to get at was

whether there is any correlation between horizontal trust (i.e., trust in other people) and

vertical trust (i.e., trust in political and societal institutions). Table 1 below shows correlations between these two types of trust:


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Table 1. Correlation Between Horizontal and Vertical Trust

TYPE OF

INSTITUTION

PEARSON’S r

Police 0.18

Courts 0.18Public Health Care 0.16

Parliament 0.15

Government 0.13

Local Government 0.13

Royal House 0.10

Public Schools 0.10

Church of Sweden 0.10

Unions 0.08

Banks 0.08

Major Companies 0.08

Armed Forces 0.08

Source: SOM 1996 survey. N= 17076

Even though all of these correlations are weak, they all point in the same positive direction

The more people trust other people, the more they tend to have confidence in the societal and

political institutions. But again, the difficulty is to understand in what direction the causal ling

goes. One noteworthy result here is that the two strongest correlations in the table above are

the ones between horizontal trust and trust in the institutions of law and order, that is, the

courts and the police. At a first glance, there seems to be no reason why there should be a

causal mechanism between trusting other people and trusting these two particular institutions.

On the contrary, you could argue that if you trust other people, you don’t need the services

provided by these two institutions.

One possibility on how to understand this is that the causal link runs the other way

around; the more you trust the institutions that are supposed to keep law and order, the more

reason you have to trust other people. The argument, inspired from non-cooperative gametheory, runs as follows. In a civilized society, institutions of law and order have one

particularly important task: to detect and punish people who are “traitors”, that is, those who break contracts, steal, murder and do other such non-cooperative things and therefore should

not be trusted. Thus, if you think (i.e., if your cognitive map is) that these particularinstitutions do what they are supposed to do in a fair and effective manner, then you also have

reason to believe that the chance people have of getting away with such treacherous behavior 7

is small. If so, you will believe that people will have very good reason to refrain from acting

in a treacherous manner, and you will therefore believe that “most people can be trusted.”Psychological and survey research confirms that social trust acts as a constraint on immoral

6 Confidence in institutions was measured on a 1-5 scale, and trust in other people was measured on a 0-

10 scale. The SOM surveys are conducted yearly by the SOM Institute at Göteborg University. The Institute is

jointly managed by the Department for Journalism and Mass Media, the Department of Political Science and the

School of Public Administration. The data are from mailed questionnaires to 2.800 randomly selected

individuals between the ages of 15 and 80 (see Holmberg and Weibull 1997)7 Game theorists usually use the term “opportunistic behavior”, which I think is a much too nice term to

describe what this is all about.


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behavior. People who believe others are trustworthy, are themselves less likely to lie, cheat, or

steal (Rotter 1980, Laurin 1986).

If the above reasoning is correct, then trust in other people may have more to do with

the way in which the political institutions of this type are operating. If people believe that the

institutions that are responsible for handling “treacherous” behavior act in fair, just and

effective manner, and if they also believe that other people think the same of these

institutions, then they will also trust other people. However, it should be added that it is probably not the formal institution as such that people evaluate, but its historically establishedreputation in regard to fairness and efficiency. What matter is the collective memory about the

actual operations of the institutions. The wordings of Joseph Stalin’s extremely democraticconstitution from 1936 did probably not increase trust in the Soviet society. Again, it is the

“history of play” more than the formally enacted rules of the institutions that matter.

Trust as Collective Memory: A Research Program

While there are now several good analyses regarding the importance of ideas in politics, there

are fewer that are useful on the production of ideas and ideologies, and especially, why some

ideas come to dominate over others (Berman and McNamara 1999). Many theories on this

topic are unfortunately not very helpful because of their strong functionalist tendency.Whichever ideology or norm is “needed” to secure the established configuration of power in

society is also “produced” because there is such a “need”. The critique of such functionalist

logic in the social sciences for its lack of microfoundations is well known and doesn’t need to

be repeated here (Elster 1983, Hedström and Swedberg 1998). But as argued above, there

seem to be a risk that when economists and rationalistic scholars in political science approach

questions about norms, culture and ideas, they fall into a functionalist trap, taken these

phenomena as just givens. But we can not accept that if what we want to explain is notcaptured by instrumental rational agency, it’s must be beyond explanation, or just a subjective

interpretation, as good as any, of a given culture. To take the argument about the rule of lawgiven by Weingast (see above), we need to know why the U.S. constitution had become such

a sacred thing even among his followers that he could not, or dared not, tamper with it eventhough they would “increase their pay-offs” by doing so. Surely, this is not the case with all

constitutions in democratic societies. In a very similar situation in the 1930s, concerningincreasing government support to agriculture, the Swedish government could tamper with the

constitution without hardly any opposition (Rothstein 1992). Although what they did was

definitely unconstitutional, almost none thought it illegitimate.

Thus, we need a theory about what culture, norms or ideas that prevail in the “mental

maps” of the relevant actors that does not fall into the functionalist or teleological trap. An

approach, which I have found very helpful, is the literature on collective memory. Compared

with many other approaches to the study of the impact of ideology, culture and history, it has

the advantage of viewing the creation of ideas and social norms as a strategic political

process. This research tradition, established in the late 1940s by the French sociologist

Maurice Halbwachs, argues that collective memories are not something given by “history”, orcreated because the present society “needs” a specific social construction of the past

(Schwartz 1991, Coser 1992). Instead, what is emphasized in this literature is that “collective

memories” are deliberately created by strategically acting political entrepreneurs in order to

further their political goals and ambitions.8 In other words, a group’s or a society’s collective

memory is contested ideological terrain, where different actors try to establish their particular

interpretation of the past as the collective memory for a particular group.An excellent recent study in this tradition is Nachman Ben-Yehuda’s book on the

8 I’m grateful to Fredrick C. Harris, for pointing me to this literature.


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creation of “The Masada Myth” in Israeli politics. Ben-Yehuda shows convincingly that “The

Masada Myth” is a “fabricated moralistic claim” that was produced in the 1940s to spur

national pride among young Israelis, in particular. The myth was established by “the central

Israeli regime, as well as by key political, social, military, and academic figures” (Ben-

Yehuda 1995: 30). Ben-Yehuda’s analysis shows that the collective memory (Jews in ancient

times fighting heroically against much stronger Roman forces and, when defeat could not be

avoided, chose a honorable death instead of loss of freedom and slavery) is according togenerally available historical sources a genuinely false story.

9 This is not the place to

recapitulate Ben-Yehuda’s very interesting analysis, but it will serve as an argument for the

importance of using the concept of “collective memory” to solve the problem of how toexplain the theoretical puzzle laid out previously. A fine summary of the role played by

“collective memory” in politics is given in Baker’s analysis of pre-revolutionary France:

Politics in any society depends upon the existence of cultural representations that define

the relationships among political actors, thereby allowing individuals and groups to

press claims upon one another and upon the whole. Such claims can be made intelligible

and binding only to the extent that political actors deploy symbolic resources held in

common by members of the political society, thereby refining and redefining the

implications of these resources for the changing purposes of political practice. Politicalcontestation therefore takes the form of competing efforts to mobilize and control the

possibilities of political and social discourse, efforts through which that discourse is

extended, recast, and - on occasion - even radically transformed (Baker 1985).

The purpose of trying to combine the analysis of (large n) social dilemmas/collective action

problems, with the analysis of collective memory, is to offer an explanation for when there is

a change from sup-optimal to optimal equilibria (or vice versa), that is, when collaboration formutual benefit is possible. Thus, what does it take for a society to move from “Palermo” to

“Milan”, or from “Moscow” to “Stockholm”? The hypothesis is that what is needed is achange of the collective memory concerning three questions. 1) who are we, 2) who are the

others, 3) and what can these others be expected to do if we choose to trust them. Withinrationalistic theory, Bates et. al. have argued that different forms of cultural or interpretavist

theory would serve to fill this function because “(p)olitical transitions seem to defy rationalforms of analysis”. I agree in part when they argue that “(g)ame theorist often fail to

acknowledge that their approach requires a complete political anthropology”. My argument is

that the theory of collective memory is superior to their use of cultural theory, because ideas,

norms and culture are not taken just “shaped by history”. Instead, these are themselves to be

seen as part of strategic political action, albeit on a different societal level (Bates, de

Figueiredo Jr et al. 1998, pp. 222-244). When they argue that the problem with existing

theories of the role of ideas is that they do not explain why one idea gains prominence over

others, my argument is that the collective memory approach can help us explain this crucial

point.

Such a research program may serve to avoid the often sterile discussion in politicalscience about the relevance of rational choice versus more historical explanations. As Karl-

Dieter Opp recently has argued, both the “narrow” and the “broad” conceptions of rational

choice theory are in need of empirical evidence about how preference formation actually

occurs (Opp 1999). For the historical-institutionalist approach, such a research program

9 Another very good analysis of collective memory is Yael Zerubavel’s Recovered Roots: Collective

Memory and the Making of Israeli National Tradition (University of Chicago Press 1995). It may come as no

surprise that in a newly established nation state like Israel, the demand for a common “collective memory” has

been particularly high, and therefor also more easy to analyze for social scientists.


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would serve two solve two crucial questions. One is to point at which type of institutions and

institutional change that are interesting to study (i.e., the ones that create or solve social

dilemmas). Secondly, what more precisely it is in the myriad of historical events that the

analysis should focus on (i.e, the strategic construction of collective memories about political

institutions). Thus, from game theory, we take the general law-like nature of the theory of

social dilemmas/collective action, which points us to expect a stable but suboptimal

equilibria. From historical institutionalism, we argue that the existing variation in the ability for groups to handle social dilemmas, can be found in the variation of the collective memoriesof the agents.

Efforts to find a general law-like explanation for the variation in groups’ ability tosolve social dilemmas, for example through experiments, evolutionary psychology or ever

more refined formal mathematical work in game-theory, are likely to fail. The reason issimple: if we were able to find such a true law of human nature, we could still not explain

what is most interesting, namely the enormous variation in groups or societies ability to find

solution to social dilemmas (North 1998, Ostrom 1998). My argument is that research in the

historical strategic construction of collective memories is a promising strategy because it can

lead us to ask questions about under what conditions different cognitive maps can come to

dominate in different societies and thereby give rise to different “cultures of trust” (Sztompka

1998).Collective memories are always historical constructions, but can not merely be

constructed by political agents. Our understanding of “our” history is neither given, nor (a

some postmodernist would have it) just a “construction” (Booth 1999). Using historical

explanations in political science, the most common problem is to take the outcome as given

and then only look for variables that led to this particular outcome (Katznelson 1997). If the

development is path-dependent, we just follow the path backwards and the explanation

becomes more convincing the longer we are able to trace the path. This often gives historicalexplanations a structuralist and deterministic bias, what happened simply had to happen

(Thelen 1999). The insight from game theory about the possibilities for “multiple equilibria”(the so called “folk theorem”), should serve as a warning flag against such an understanding

of the role historical explanations should play. If history is path dependent, this should beunderstood as an institutional explanation, meaning that when an institution, for whatever

reason, has been established, it can create a feed-back mechanism which serve to reinforce behavior along a certain historical path (Pierson 1998).

This feed-back mechanism can of course be a certain selective incentive that

changes what the agents view as a rational or reasonable behavior, which in its turn, at the

aggregate level, reinforces the strength of that very institution (Rothstein 1992). But this feed-

back mechanism can also be a certain collective memory, the very “belief system” that

Douglas North recently argued is the underlying determinant of the establishment and

evolution of institutions (North 1998: 494). Tentatively, this may work as follows: At time t1,

a specific notion of “who are the others,” is successfully established by political leaders (this

“others” can very well be a political institution). This creates a certain type of behavior among

the masses, which at t2 serves as to reinforce their political strength of the political leaders sothat they can, with even more resources, work to strengthen that particular collective memory

at t3. Thus, in order to explain a particular outcome of a social dilemma, we should therefor

not take the collective memory as something given by “nature” or “culture”. Instead, we

should look for the particular moments in history when political leaders actively andstrategically seek to change the collective memory.

In order to solve a social dilemma, it is necessary for the agents have accurateinformation about “the others”, if they will betray trust, or if they will be trustworthy. My

argument, which is inspired by the literature about collective memory, is that the answer to


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these questions is not something given by “culture” or “history” in any historically

determined or functionalist way. Instead, this is a field for strategic action by political leaders,

they fight over what is to be our collective memory of ourselves and of “the others”. One

advantage with this approach compared to game theory and historical theories about path

dependency, is that political power and power resources come into play. Central questions in

such a research program at the macro level would be: Which social agents have the resources

to make an impact on the collective memory? What mechanisms are used to influence thecollective memory. What role does collective memory play when groups move from conflictto cooperation (e.g., ending civil wars or industrial disputes). A particularly interesting

question is of course how much of a groups collective memory can be “constructed” by political leaders. At the micro level, questions about how individuals “mental maps” are

informed by “history of play” are of course important, as is the question under whatcircumstances individuals are influenced by centrally placed agents attempt to change their

understanding of history, especially (as stated in evolutionary game theory), the “information

about what other agents have done in the past” (Young 1998: 6).

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