After the Rain : how the West lost the EastVaknin, Samuel
History
After the Rain : how the West lost the East
Vaknin, Samuel
Europe, Eastern -- Economic conditions -- 1989-; Europe, Eastern -- Politics and government -- 1989-
Trust is really the crux of the matter. Economy is called the dismal
science because it pretends to be one, disguising its uncertainties and
shifting fashions with mathematical formulae. Economy describes the
aggregate behaviour of humans and, in this restricted sense, it is a
branch of psychology. People operate within a marketplace and attach
values to their goods and services and to their inputs (work, capital,
natural endowments) through the price mechanism. This elaborate
construct, however, depends greatly on trust. If people were not to
trust each other and/or the economic framework (within which they
interact) - economic activities would have gradually ground to a halt.
A clear inverse relationship exists between the general trust level and
the level of economic activity. There are four major types of trust:
a. Trust related to Intent - the market players assume that other
players are (generally) rational, that they have intentions, that these
intentions conform to the maximization of benefits and that people are
likely to act on their intentions;
b. Trust related to Liquidity - the market players assume that
other players possess or have access, or will possess, or will have
access to the liquid means needed in order to materialize their
intentions and that - barring force majeure - this liquidity is the
driving force behind the formation of these intentions. People in
possession of liquidity wish to maximize the returns on their money and
are driven to economically transact;
c. Trust related to knowledge and ability - the market players
assume that other players possess or have access to, or will possess,
or will have access to the know-how, technology and intellectual
property and wherewithal necessary to materialize their intention (and,
by implication, the transactions that they enter into). Another
assumption is that all the players are "enabled": physically, mentally,
legally and financially available and capable to perform their parts as
agreed between the players in each and every particular transaction. A
hidden assumption is that the players evaluate themselves properly:
that they know their strengths and weaknesses, that they have a
balanced picture of themselves and realistic set of expectations,
self-esteem and self-confidence to support that worldview (including a
matching track record). Some allowance is made for "game theory"
tactics: exaggeration, disinformation, even outright deception - but
this allowance should not overshadow the merits of the transaction and
its inherent sincerity;
Public-domain text, read in full here on John Shaqi.
Reviews
Reviews
No reviews yet
Be the first to share your thoughts on this work.
Join the Discussion
Join the discussion
Sign in to leave a comment or review.
Sign InorCreate an account