Meltdown of trust in weakly governed economies

Abstract

A well-functioning society requires well-functioning institutions that ensure prosperity, fair distribution of wealth, social participation, security, and informative media. Such institutions are built on a foundation of trust. However, while trust is essential for economic success and good governance, interconnected mechanisms inherent in weakly governed market economies tend to undermine the very trust on which such success depends. These mechanisms include the intrinsic tendency for inequality to grow, media to boost perceived unfairness, and self-interest to gain rewards at the expense of others. These mechanisms, if left unchecked, allow wealth concentration to result in state capture where institutions facilitate further wealth concentration instead of the promoting the common good. As a result, people may become alienated and untrusting of fellow citizens and of institutions. Several democracies now experience such dynamics, the United States being a prime example. We discuss ways in which well-functioning democracies can design institutions to help avoid this social trap, and the much harder challenge of escaping the trap once in it. Successful cases such as the ability of Scandinavian democracies to maintain high-trust, and the US progressive era in the early 20th century provide instructive examples.

Trust is the coin of the realm. When trust was in the room, whatever room that was—the family room, the schoolroom, the locker room, the office room, the government room or the military room—good things happened. When trust was not in the room, good things did not happen. Everything else is details. George Schultz, Former US Secretary of State and Secretary of Treasury (Washington Post, December 11, 2020).

Adressing global challenges such as climate change, loss of biodiversity, and public health during a global pandemic requires coordination and cooperation on a global scale. Individual actions, and even individual country actions, cannot tackle these problems at the scale required. Other challenges on national or regional scales also require large-scale coordination and cooperation. How to achieve and maintain cooperation at large scales is a central question for a large and interconnected human population facing problems that require collective action to solve.

In this paper, we focus on trust as an essential element for undertaking collective action beyond very local levels. Trust is central to a well-functioning society (1–3). A study across 150 countries in the wake of the first waves of the COVID-19 pandemic revealed that the percentage of people agreeing with the statement “most people can be trusted” was one of the best predictors of the capacity of a country to reduce cases and deaths (4). Although such trust in fellow citizens is not the same as trust in institutions, and trust in institutions varies across sectors (e.g., police, media, science, government), trust in these different elements of society is often correlated. When we use the term “trust” in this essay, we refer to generalized trust across the range of institutions and fellow citizens needed to make society work effectively (5, 6).

Trust is also important for a well-functioning economy (7). Modern economies rely on extensive supply chains and division of labor. Division of labor and specialization brings increased productivity, enabling large increases in per capita income and wealth. But specialization means that every individual is utterly dependent on the efforts of others for virtually everything they need to survive and thrive. We trust that by specializing in some specific activity providing only a small portion of what we need we will generate credits in the financial accounting system and that others will accept these credits in exchange for food, clothes, housing, and all manner of other goods and services. Absent such trust, modern economies, built on exchange among countless individuals, most of whom do not know each other, would seize up and cease to function.

Trust is entangled with many elements of well-functioning societies including functional institutions and prosocial norms. Well-functioning institutions and prosocial norms tend to foster trust, and trust tends to foster well-functioning institutions and prosocial norms. Thus, trust, prosocial norms, and functional institutions can reinforce each other in a virtuous cycle. Similarly, a breakdown in trust, poorly performing institutions, and selfish behavior can also reinforce each other in a destructive cycle. Such feedbacks make it difficult to isolate any single factor that is responsible for good (or poor) performance of societies. Trust affects the functioning of societies in many ways but is at the same time is shaped by societal functioning. As we will argue, this makes trust an interesting variable. Trust is not quantified as easily as GDP or other indicators of societal performance. Neither can it be immediately shaped by policies. Instead, it is the long-term result of societal functioning and a catalyst of many social processes. As we will argue, understanding societies as complex adaptive systems requires understanding the role of trust as a central variable in the web of interactions.

We compile evidence that trust is a valuable asset that improves economic performance—“economic value of trust.” We then discuss the intrinsic tendencies in weakly governed market economies that tend to undermine trust. Finally, we discuss how to overcome these tendencies, and how a potentially vicious cycle of vanishing trust, societal degradation, and economic decline may be bent toward a virtuous cycle with increasing generalized trust, social cohesion, and a vibrant, prosperous, and sustainable economy.

How Trust Boosts Economies

• Virtually every commercial transaction has within itself an element of trust, certainly any transaction conducted over a period of time. It can be plausibly argued that much of the economic backwardness in the world can be explained by the lack of mutual confidence. Kenneth Arrow (8)

Within the discipline of economics, the focus on the individual and the pursuit of self-interest has diverted attention away from a key feature of highly productive economic systems: they are built on cooperation and trust. This notion is present in Adam Smith’s famous quote about self-interested behavior:

• “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages” (Book 1, Chapter 2, ref. 9).

“Their advantages” come from engaging in specialization and market exchange, which means we are utterly dependent on the efforts and cooperation of others. Far better to have a butcher, brewer, baker, (and banker, barber, biochemist, bookkeeper, botanist,...) than to have each person try to do everything on their own. We are all so highly dependent on the performance and cooperation of others, and this dependence is so basic to the functioning of the economic system, that the deep level of trust this requires goes almost unseen.

Monetary exchange itself may have evolved as a mechanism for promoting trust among strangers that allows for trade and specialization. In several behavioral experiments, researchers have found that the presence of tokens that functioned as money allowed cooperation among strangers who did not necessarily trust each other but trusted that the tokens would be acceptable to others for future transactions (10, 11). Others have speculated that the development of market institutions allowed for cooperation in larger and more complex societies (12).

Several authors have observed the importance of trust in contributing to the “social fabric” that enables societies to “scale up” interpersonal trust to generalized trust and, in turn, to create and maintain intermediate-scale organizations (large firms, civic organizations) that provide the foundation for economic performance (3). Perhaps best known is Weber’s observation that norms associated with Protestantism may have contributed to the capacity of groups to increase trust, reduce transaction costs of exchange, and, in turn, increase economic efficiency (13), although increasing literacy from Bible reading may also have contributed to conditions conducive for economic success (14).

Trust is recognized as an important asset by businesses. Jim Burke, former Chairman and CEO of Johnson and Johnson said “You can’t have success without trust” (quoted in ref. 15), and Francis Fukuyama likened distrust to “a kind of tax on all forms of economic activity, a tax that high-trust societies do not have to pay” (3). Edelman, a leading public relations firm puts trust at the center of business operations and all well-functioning institutions “...trust...is the ultimate currency in the relationship that all institutions—companies and brands, governments, NGOs and media—build with their stakeholders. Trust defines an organization’s license to operate... lasting trust is the strongest insurance against competitive disruption, the antidote to consumer indifference, and the best path to continued growth.” (https://www.edelman.com/trust).

Trust is also recognized as a core component of the financial system. In a review of a book entitled “Values” by Mark Carney, former governor of the Bank of England, the Economist magazine explains that trust is central to maintaining the stability of a currency or a financial system: “Few public officials will be more aware of the risks from a breakdown in mutual trust and regard for others than those charged with fending off runs on the financial system” (19).

The link between a thriving economy and trust is reflected in the positive relationship between income and wealth with trust (e.g., refs. 7 and 20–23, see Fig.1). Positive correlations of trust and economic performance exist across countries, across US States, and across regions within European countries (7). Such correlations are not proof of causation. However, other studies support the idea that trust may affect economic performance. For instance, Algan and Cahuc (24) measured trust of descendants of people who migrated to the United States from different countries to infer past trust levels in those countries of origin at the moment of migration. This independent estimator of the variation of trust over time in countries of origin allowed them to show that high trust promoted subsequent economic performance (7). The trust effect was large relative to factors such as institutions or geography captured in their analysis by the country fixed effects. They conclude that

Fig. 1.

Relationship between economic performance and generalized trust at the country level. Adapted from “Interpersonal trust vs. GDP per capita,” Our World in Data (16), CC BY 4.0. Data Sources: refs. 17 and 18.

• “Inherited trust turns out to explain a significant share of the economic backwardness of developing countries and an important share of economic differences between developed countries over the twentieth century”.

Most likely, there is a positive feedback between a well-functioning economic system and trust. When all members of a society are doing well, they may be more willing to trust others, which in turn promotes good economic performance. A vibrant economy in which prosperity is spread widely may enter a virtuous cycle in which prosperity generates trust, and trust generates prosperity. The reverse may also be true. When people struggle economically, they may be less willing to trust, with rising distrust leading to worse economic performance leading to further breakdowns in trust in a viscous reinforcing cycle.

How Economic Forces Can Erode Trust

Ironically, while trust appears to be an essential ingredient in economic success, there is an intertwined set of mechanisms inherent to the functioning of weakly governed market economies that tend to undermine the very trust on which they depend. In this section, we highlight four such mechanisms: 1) the intrinsic tendency for inequality to emerge in market economies, 2) the incentive for media to boost perceived unfairness, 3) the incentive to gain rewards at the expense of others (rent seeking behavior), and 4) the tendency to monetize interactions that psychologically puts people in a more selfish mode. As we will argue, these four mechanisms are related and work synergistically to erode trust.

The Autonomous Rise of Inequality.

A pervasive autonomous tendency in a wide range of societies is the emergence and persistence of inequality. Evidence for inequality has been found in societies for the past 10,000 y (25). Data for past 150 y for Europe and the United States show high levels of wealth inequality with the top 10% owning between 60 and 90% of total net wealth (26). Why is inequality so pervasive? At its simplest, the phenomenon can be understood as an autonomous process resulting from chance alone (26–29). Suppose that in each period, individuals invest their wealth and that investment returns are determined solely by chance. Even if all individuals start with equal wealth, wealth will concentrate as some individuals earn high returns and accumulate wealth while others earn low returns. As this process continues, the share of wealth accruing to the very top of the distribution increases until the percentage of wealth owned by the very richest people approaches one. Differences in skills leading to differences in expected returns, and high returns to capital that tend to have higher variance compound this tendency (26, 30). Preventing the concentration of wealth requires instituting countervailing measures. Small-scale societies have strong sharing norms to check inequality. In large-scale societies, wealth redistributing institutions such as an inheritance tax or wealth tax can limit the concentration of wealth (28, 30). However, wealth also generates political power that can be used to prevent such redistributive policies (31).

A robust finding across cultures, economic development levels, and political systems is that inequality and trust are negatively correlated (e.g., refs. 5, 22, 23, and 33–36). This negative correlation across countries between trust and inequality, here measured as income inequality, is shown in Fig. 2. Uslaner (5) finds that inequality is the single strongest factor in predicting trust levels. Trust in others is fostered when individuals face similar circumstances and have greater interaction, which is more likely in more equal societies. Inequality increases the social and economic distance between the “haves” and the “have-nots” making it easier to view others as being from different classes without common interests or sharing common fates (37). Economic inequality can contribute to individuals’ feelings that the system is not working for them, the system is unfair or unjust, and provides fertile ground for conspiracy theories that institutions are rigged. The decline in economic fortune over the past decade of many working class people has helped foster a rise of populism both in the United States and Europe (38, 39). The general public is less trusting of both domestic political institutions and attempts at global governance to tackle global challenges than are people who hold elite positions in society (40). Inequality lessens civic participation and social capital (41). Wealth inequality has also been linked to lower economic growth (42). All of this suggests that economic equality matters in building and maintaining trust. Thus, to nurture trust, countries should invest in ensuring that all members of society do well.

Fig. 2.

Negative relationship between income inequality and interpersonal trust. Adapted from “Interpersonal trust vs. income equality,” Our World in Data (16), CC BY 4.0. Data Sources: refs. 17 and 32.

Another reason to avoid excessive inequality is that it may reduce economic growth (43–45). In addition to eroding trust, which in itself may affect economic performance, Stiglitz argues that inequality can also lead to reduced growth because inequality i) reduces aggregate demand as those at the bottom of the income distribution do not have money to spend, ii) reduces opportunities for those at the bottom of the income distribution to reach their potential and contribute to their full potential, and iii) reduces public investments that enhance productivity (44, 46).

Media Incentives Boost Perceived Unfairness.

When it comes to trust, economic inequality by itself is perhaps less important than the perception that society is unfair. Media plays a powerful role in shaping such perceptions. To be profitable, media must grab attention, and this generates incentives to emphasize shocking stories (even if untrue), rather than truthful (but less entertaining) stories. Recently, social media has been a particularly strong force in promoting political polarization and spreading conspiracy theories (47). An (over)exposure of a wide range of problems may happen as activist groups seek to muster support (48, 49). For instance, social media catalyzed the Arab spring by sharing atrocities of the regime among a wide audience (50), jihadist videos motivate terrorists by showing gruesome acts committed by US soldiers (51), and veganism is promoted by social media campaigns highlighting appalling animal welfare issues (49).

Social media has also proven adept at enabling people who share a common interest to find each other and create tight subgroups within larger society. Mainstream media as well as social media have found it profitable to target content for such specific groups, whether truthful or not, which tends to exacerbate divisions between in-group and out-group. Creation of echo chambers within subgroups increases trust within the group but also increases the distrust of those outside of the group. The distance between in-group and out-group beliefs can become so large that groups cannot even agree about basic facts and truth itself becomes a casualty. For example, in the United States, public polling consistently finds that the vast majority of Republicans think that the 2020 election was fraudulent despite the conclusions of elections officials (many Republican) and the courts that there was no credible evidence of fraud that could change election results (52–54).

Many of the problems highlighted on social media are real, and social media provides attention to issues that may have been largely hidden from the public eye. However, fabrications or misinformation can also go viral on social media. The spread of misinformation (55) and conspiracy theories (56) may be preferentially facilitated by social media consistent with the observation that online diffusion of false news is significantly broader, faster, and deeper than that of “true” news (57). Conspiracy theories originate particularly in times of uncertainty and crisis (56, 58) and generally depict established institutions as hiding the truth and sustaining an unfair situation (59). As a result, misinformation and conspiracy theories may find fertile grounds in minds where a sense of unfairness boosted by social media fuels antiestablishment views.

Independent of whether issues are real or fabricated, one overall effect of media is to boost the perception of a world entangled in multiple crises. This tendency is not new, but the rise of social media has amplified its power, which seems likely to boost discontent with the status quo. This may add to a broadly shared perception that the “system isn’t working for people like me” and, in turn, to loss of trust in institutions.

In summary, all media compete for attention, which generates an incentive to stress the sensational. However, social media companies have become particularly potent actors, and their success depends in part on their addictiveness which, in turn, is boosted by emotional content. This implies that there is an economic incentive for crafting such media in ways that effectively undermine trust. At a US congressional hearing in 2021, Frances Haugen, a former employee at Facebook said that “Until the incentives change, Facebook will not change. Left alone, Facebook will continue to make choices that go against the common good, our common good” (Washington Post, October 5, 2021).

Incentives for Deliberately Undermining Trust.

While the negative effects of media on trust may be seen as collateral damage, in other cases, business leaders, politicians, and others may find it in their self-interest to deliberately undermine trust. One example of this involved tobacco companies spreading doubts about the science linking cancer and smoking (60). More recent examples of efforts to discredit science are provided by attacks on climate change science, vaccines, and public health (60–63). While scientific assessments have become increasingly confident about the impact of human actions on the climate and the potentially catastrophic consequences of climate change as exemplified by comparing the first Intergovernmental Panel on Climate Change (IPCC) report (64) with the most recent IPCC report (65), a polarized political disagreement on what should be done to address climate change remains in many countries including the United States (66). Significant reduction in greenhouse gas emissions would require a massive and rapid shift in global energy systems away from fossil fuels, damaging the profits of large oil, natural gas, and coal companies. Some of these companies have fueled efforts to discredit the science and thereby forestall policy actions detrimental to their business interests (60, 62, 63). Such campaigns are still influential. For instance, while >99% of climate scientists agree that global warming is human driven, the public across six countries thinks that only 68% of the scientists agree (67).

At a US Congressional Hearing in late 2021, the CEOs of Exxon Mobil, Chevron, BP, and Shell were questioned about their well-documented role in promoting disinformation about climate science and called upon to “pledge to stop lobbying against efforts to reduce emissions” but “(n)one of the executives agreed” to do so (New York Times, October 28, 2021). Similarly, efforts to prevent deaths and serious illness through vaccination and public health measures during the Covid-19 pandemic triggered a strong antiscience backlash among some portions of public, which was then amplified by politicians seeking political gain (61).

All this should be no surprise. When there are benefits to undermining trust and the means to undermine trust are relatively inexpensive, there will be active efforts to destroy trust, in science, in institutions, and in others who might not share the same political or economic objectives.

The Psychological Effects of Markets and Monetizing Social Interactions.

There is another subtle but pervasive way in which the workings of a capitalist economy itself may erode trust. Controlled experiments find evidence that framing interactions in monetary terms makes people more likely to be selfish and less concerned about the welfare of others (68, 69). For instance, priming subjects with cues of money made them less likely to request help and to help others (70). When a daycare instituted a monetary fine for late pick up of children at the end of the day, they found to their surprise that parents were more likely to be late because imposing a fine switched thinking from guilt about being unfair to daycare workers to a monetary transaction by which parents could pay for the privilege of being late (71). Even training in economics may have the effect of making individuals more self-interested and less caring of others. Experimental results find that graduate students in economics give much less to the common good and are more selfish than students in other disciplines (72). Bowles summarized experimental literature on this topic as “saying that the more the experimental situation approximates a competitive (and complete contracts) market with many anonymous buyers and sellers, the less other-regarding behavior will be observed” (73). This market-oriented erosion of “moral sentiments” has led some to question whether economic thinking and market transactions have spread too far into areas that would be better served by other governance institutions (74, 75). Just as inequality may increase social and economic distance among groups in society, increasing self-interest and erosion of empathy and caring for others can increase social distance and make individuals less likely to trust others (10–12).

A Virtuous and a Vicious Cycle

The feedback between the functioning of the economy and trust implies that governance for economic performance requires seeing the bigger picture of this web of interactions (Fig. 3). Trust and economic performance underlie our capacity for large-scale collective action, which is required to address the global-scale environmental and social challenges we now face. In this section, we discuss the intrinsic properties of the dynamical system in which trust, the economy, social structures, and the environment interact. This discussion sets the stage for the final section where we ponder whether and how the interacting system including the economy and trust might be governed.

Fig. 3.

Some emergent mechanisms in economies that may affect trust. Weakly governed market economies unleash mechanisms that can undermine trust. Well-functioning democratic regimes may dampen such effects. Note that various feedback loops (+ or −) exist that may amplify change toward either a low-trust or a high-trust regime. There is an intrinsic tendency for societies to move toward the right toward state capture and processes that undermine trust. Historically, aging states have been shown to lose resilience due to such intrinsic undermining tendencies, leading to the termination of states (76). The alternation between periods in which the virtuous versus vicious feedbacks dominate may drive oscillations between regimes (77). Yet, some states historically survived much longer than others, suggesting that processes such as institutional revitalization may prevent or delay the loss of resilience (76) and the meltdown of trust we discuss.

Alternative Attractors?

The insights summarized in the previous sections imply that weakly governed market economies have tendencies that can undermine trust, which can then undermine the performance of economic systems (top arrow showing “historical tendency” in Fig. 3). Historical tendency, however, is not historic destiny. Potential positive feedback between trust, governance, and performance can be mutually reinforcing, enhancing society’s ability for successful coordination and collective action through such things as equitably shared prosperity, social participation, and informative media (Left side of Fig. 3). Positive feedback can further enhance trust and economic performance in a virtuous cycle. Alternatively, as we have argued, the operation of the economic system can undermine trust through increasing concentration of wealth and sensationalized media that amplifies misinformation and spreads conspiracy theories, ultimately leading to social detachment (Right side of Fig. 3). This negatively impacts society’s ability for successful coordination and collective action, resulting in poorer economic performance, which further undermines trust. The self-reinforcing feedback loops of both the high-trust and the low-trust situations suggest that each of those states could be relatively stable.

Empirical evidence supports the idea that a high-trust state may have self-stabilizing tendencies. High-trust countries, such as the Nordic Countries (Denmark, Finland, Iceland, Norway, Sweden), have shown remarkable stability over long periods of time (16). These countries rank high in social support, per capita income, and life satisfaction and low in corruption (78), and have relatively low inequality and high social cohesion. Governance has a large role to play in maintaining high trust. As Joseph Stiglitz writes:

• “...we can create public institutions with checks and balances that prevent the abuses the Right so fears. Some countries have done a remarkably good job of this. And there is a virtuous circle. Countries that have a done better job at creating trustworthy governments have more trust in government and attract better people to public service. Indeed, so successful have some countries been that individuals willingly pay taxes know that “taxes are what we pay for civilized society,” as Supreme Court Justice Oliver Wendell Holmes famously said. In Finland, for instance, a survey commissioned by the tax administration reported that 95% of Finns consider paying taxes an important civic duty...In addition, 79% of respondents were happy to pay taxes and felt that they get good value for the taxes they pay.” (79)

The idea that a high-trust state may be relatively persistent comes from observations in regions of former high-trust countries/empires that no longer exist. The Hapsburg Empire was ruled in such a way as to avoid large-scale breaches of trust, a strategy through which the Habsburgs maintained a stable society for centuries (80). The Habsburg Empire eventually crumbled in the First World War. Interestingly, though, trust in institutions remained high within new countries in areas that were part of the former Habsburg Empire. An invisible trust border still runs through five countries over more than a century later, dividing regions with high versus low trust in institutions despite being part of the same new system. Societies still have higher trust and less corruption if they were part of the Hapsburg Empire than if they were not (80). Two mechanisms may plausibly contribute to stability of the high trust state. One is the fact that trust is anchored early in life, making it a slow cultural variable (81). The other mechanism is the self-reinforcing feedback that we have highlighted.

There is also empirical support for the idea that self-reinforcing mechanisms may drive a downward spiral of distrust and make it hard to regain trust in systems once it is lost. For instance, trust in many countries has markedly decreased along with an increasing prevalence of trust eroding factors, such as rising inequality and the spread of misinformation (16, 82). Why did this trend set in? One possibility is the rise of neoliberalism with its emphasis on individualism, personal freedom, and the capacity to prosper in competitive markets that has led to increasing inequality and lack of social cohesion (83). Neoliberalism’s emphasis on personal status based on high-income displayed through material consumption and intense competition to achieve high-income and status has diverted attention away from investing in the common good (83, 84). As success in one generation promotes success in future generations (85), long-term runaway concentration of wealth allows powerful actors to influence political institutions for their self-interest (86) with deleterious effect on trust.

Even high-trust states are not immune from such mechanisms that can erode trust. For example, Sweden has had rapidly rising income inequality, a much larger percentage of the population at risk of poverty compared to other Nordic countries, rising gun violence, and increasing support for strong anti-immigration policies (87).

Historical Cycles of Destabilization.

The US example of how a high-trust state can spiral into distrust may be an illustration of a broader historical tendency for societies to fall into this trap. There appears to be a permanent risk for the virtuous equilibrium to gradually become destabilized in the long run as wealth becomes concentrated, leading to “state capture” by an elite that is able to bend institutions to their own benefit, leading to alienation and erosion of trust. Certainly, long-run destabilization of states has historically been the rule (76). Explaining the rise and fall of civilizations and states over the millennia remains difficult. Often proximate drivers such as prolonged droughts are cited (88–91). Yet, resilience of a society may ultimately determine whether a society can survive such adversities (76, 92–94). One way to interpret historical dynamics is to see large-scale societal organization as emerging from positive feedback between cooperation and trust, while termination is eventually caused by slower intrinsic tendencies weakening the trust needed for the social contract to hold societies together in harsh times (Fig. 3). Historical patterns suggest that there can be a more-or-less predictable alternation between periods in which the virtuous feedbacks make a society thrive, versus periods in which the vicious feedbacks we describe, together with a broader blend of linked tendencies undermines the stability of states, ultimately driving an often-violent termination (77). Systematic analysis of the longevity of 324 premodern states has revealed that the chances of termination rise over the first two centuries, in line with an intrinsic loss of resilience as states age (76). Importantly, however, the same analysis reveals that longevity varies widely between states, suggesting that there are mechanisms that may help maintaining a state’s resilience. One idea is that societies that survived longest have been the ones that were successful at keeping such destabilization at bay through maintaining wealth equality and inclusive institutions (95). While we cannot compare premodern states to the current globalized setting, it seems fair to say that nurturing trust may help maintaining a thriving society in the long run. But is it possible to nurture trust?

Governing the Economy and Trust?

• “Neoliberal capitalism has created untrustworthy people and has (understandably) eroded not just trust in government but trust in private institutions and trust in each other. It has created a system that devours itself. None of this, however, is inevitable.” (79)

The tendency for long-term concentration of wealth and the destabilization of the high-trust state raises the question of whether governance can prevent loss of trust from occurring, and whether it is possible to “rescue” a society that is in the low-trust trap or is spiraling down toward it. The patterns we discussed suggest several strategies that in principle could address the governance of the economic and social system to maintain trust. Since inequality, increased social distance, for-profit media that stokes division, and self-interested actions that gain rewards at the expense of others erode trust, it stands to reason that their opposites, promoting equality in income and wealth, increasing social cohesion, transparent fact-based media, and rewarding prosocial behavior, can help societies maintain trust (Fig. 3). Remaining within the thriving democracy attractor (Left hand side of Fig. 3) may require specific and sustained investments. Largely leaving it up to a weakly governed market economy to determine income and wealth based on meritocratic competition, as has been the case in the United States over recent decades, seems like a recipe for concentration of wealth and destabilization of trust.

Several prominent scholars have made suggestions on how to curb wealth concentration and the trust-eroding factors that go with it. Piketty (96) recommends an international wealth registry to increase transparency of the distribution of global wealth, and a universal capital endowment to be disbursed to all citizens at a predetermined age of maturity. Other scholars have pointed to the problem of the revolving door between corporate and government roles (e.g., bankers that become financial regulators and vice versa), creating a wealth-power spiral that erodes trust in governance institutions (46, 85). Reich (86) suggests reforms to regulate this movement, reducing the wealth-power spiral and slowing the erosion of trust. Stiglitz (79) recommends replacing neoliberal capitalism that emphasizes minimalist governance of market outcomes with “progressive capitalism (or a rejuvenated social democracy)” that emphasizes governance to provide more equal distribution of wealth and power, investments in collective action that provide benefits to all citizens. Some of the benefits of such reforms may be relatively swift. Realizing the full effect on trust, however, will likely be slow due to the long lag in restoring trust that may play out over several generations.

In countries with highly unequal wealth and eroding trust, it may be very difficult to enact these kinds of reforms and escape the low-trust trap (Right hand side of Fig. 3). Powerful vested interests benefiting from the current system can block reforms and control institutions to their benefit, maintaining the trap of social detachment and distrust. Is there a way to build trust in low-trust societies through building social capital, civic engagement, and political organization to create sufficient social force to overcome vested interests that keep the system locked in a low-trust regime? Overcoming an entrenched elite that benefits from the status quo and the autonomous factors leading toward greater inequality is an age-old problem (26, 96).

Cautionary optimism is inspired by a recent analysis of the “progressive era” in the United States (97). Over the preceding “gilded age,” the benefits of the industrial revolution concentrated wealth in the hands of a small elite who subsequently captured political power. Around the turn of the century, the “progressive movement” emerged as a broad social reaction to the concentration of wealth and political power and to the poverty, pollution, and other problems experienced by the masses. This emerging movement was so pervasive that in the 1912 presidential election both Woodrow Wilson and Theodore Roosevelt, who between them won all but two states, described themselves as progressive. The progressive era saw the rise of anticorruption and antitrust regulations, labor unions, a progressive income tax, women’s suffrage, and accessible education, among other institutional reforms. Can a neoprogressive movement emerge as an antidote to neoliberalism and the neogilded age and rescue countries such as the United States from a low-trust trap?

In the right circumstances, humans behave cooperatively and are willing to share benefits and trust their fellow citizens (98, 99). The wrong circumstances, however, bring out our selfish, individualistic behavior. When people feel lied to or feel that they have been left behind while others reap benefits, their distrust and alienation grows. Good governance can help create the conditions that reinforce our better nature, while dysfunctional governance can bring out our inner devil. Governance of the distribution of income and wealth and regulation of media seem particularly important in fostering social cohesion and trust. Trust, in turn, is vital for enabling such governance, for maintaining a thriving economy, and ultimately for addressing global environmental challenges such as climate change and loss of biodiversity on which future well-being depends. Accounting for this intricate role of trust in societies will be essential in any policy aiming to ensure the well-being of present and future generations.

Data, Materials, and Software Availability

All study data are included in the main text.