Can economics create trustworthiness? The importance of good social capital in times of crisis

After the devastation of WWII, Western governments acted to improve equity and fairness in their countries. Now social change rarely rates a political mention. What happened towards the end of 20th century that slowly destroyed the political status of societies? 

I offered some answers to this question 25 years ago when I wrote and delivered the 1995 ABC Boyer lecture “A Truly Civil Society”.

Back then, the Boyers were the broadcaster’s valued annual contribution to public debates, and my invitation to deliver them on national radio was an unexpected honour. I used them to explore my concerns about how Australia and many other democratic societies were risking losing many of the social gains of the post-war decades. 

Much of the content was oriented to revisiting the ideals of civil society, the focus on citizenship and fairness and good relationships. My question then is still pertinent — what is the missing component that seems to make the difference between living civilly with others, even strangers, and having the capacity to trust others and those in power?

There was work being done on these questions then, and I was attracted to the concept of social capital. Adding this concept to others — financial capital, human capital and environmental/physical capital — makes sense. Social capital is the only one that records the value of our social connectivity.

The quality and effects of its absence determine much of our history and present problems. In my final chapter, “A Utopian Road Movie”, I suggested that it was therefore up to us, as citizens, to challenge the directions that were depleting the social capital needed to fix the mess that was showing up. 

Unfortunately, while there was considerable interest in the topics raised at the time, it was still too early to expect the institutions which had bought the neoliberal recipe to recognise its flaws.

Now, 25 years later, we’ve seen the failures show up in the global financial crisis, failures that are still damaging democracies. So maybe we should change it.  

So back to 1945. Then, socio-political changes were introduced by governments the world over to reduce the likelihood of a repeat of pre-war fascism taking control. The pre-war crumbling of young democracies and the rise of multiple dictators, including Hitler, showed it was easy to destroy democracy with poverty and shame.

The lesson was that maintaining the trust of citizens would require governments to increase their roles of providing social support with a view to creating fairer societies. Creating welfare states was the solution to this: welfare payments, public education, health care and public services showed voters that their government resourced the public good. 

This approach lasted and grew until the 1970s, when oil funding shifted capital sources away from nation states, making nations less necessary as stable bases. By the 1980s, Thatcher and Reagan introduced the paradigm-shift to criteria of the neoliberal market by reducing public spending, cutting-taxes, globalising trade and privatisations.

These views put a stop to much of what was achieved in the ’70s and ’80s, including the many changes to gender and racial equality and reduced poverty.   

One of the reasons I, as an early refugee of Hitler’s regime, became an activist was the desire to work on ideas to reduce the likelihood of such dictatorships rising again. Yet there we were in 1995, just 50 years from the war’s end, already making similar mistakes. Social spending decreased, public assets were sold, and privatisation of public services grew, and trust of democracies was reducing.

Those in power believed voters were self-interested and greedy, but the evidence was then, and still is, that people are essentially interdependent, social beings, not waiting for tax cuts to buy their vote.

Growing distrust of democracy in the last decades has coincided with the rise of the strongman in politics the world over, as populists and nationalists offered antidotes to economic fears. Refugee crises have created ripe grounds for racist tensions, and problems of market failures suggest that future funding for public social funding is increasingly at risk.

Because low trust levels damage the social fabric, calls for care of others, responsibility and co-operation tend to be officially neglected and undervalued, when the response to COVID-19 requires faith that those in power will do their best. This has worked in some places such as New Zealand, but here, businesses want tax cuts and reduced public resources, ignoring social needs. 

Our nation needs more than the current debates and proposed policies of the federal government. So far we are offered tax cuts that benefit middle incomes, mainly blokey jobs in building, and more infrastructure. The damage done socially is not considered; the social and emotional consequences of isolation, and the damage of the closure of many organisations. 

The options so far on offer are to the private sector or via subcontracts. It is wrongly assumed these will fix the economy because the policies are designed to mop-up (male) unemployment — and don’t forget, more women have lost jobs than men! There are no signs of interest in funding the various supports already identified in child, aged disability and other community services. 

So, I return to my Boyer lectures. Can we use good social capital advocacy to fix the quality and strength of our social connectivity?

We need to recognise that social well-being depends on adequate trust of others, not just those like us, and those in power. The second is seriously in deficit, and the first is fragile as we easily blame others for problems. 

Social capital is the glue that holds societal links, and its quality is an indicator of the strength of our connections.

If it is in short supply and we trust only those like us, we end up with the distrust that creates populism and flawed social fabrics. We need to rekindle hope, the belief we can fix it, and I can offer the Elpis.network (Greek for hope, who emerged last from Pandora’s box), a developing site for posting solutions to fix the deficit.

Without an investment in good social capital we are doomed to exacerbate mistakes of the past, at a time when we need trust most.

Eva Cox AO was born in Vienna just before Hitler took over. This made her a frequent social change seeker and commentator. Her particular interests include offering sociological analyses to counter excessive economic biases. Her feminist viewpoints advocate for missing and better social policies, that create more civil societies, not just GDP. She is an Adjunct Professor at UTS’ Jumbunna Indigenous Institute of Education and Research.