Trust, Honesty and Ethics in Business

L’alternative a la confiance est la verification. Toutefois, la verification et les precautions peuvent avoir un cout tres eleve. Trust is crucial to the health of the financial system and the economy. In the past, when most trade and finance were conducted by people who knew each other, trust or mistrust developed naturally. In small communities, sanctions, like exclusion, could be a powerful means of preventing abuse of trust. But today, in a global financial system, people are forced to interact with strangers, and trust cannot be established as it was in the past. What is the state of trust in the financial system today? When I was writing the book on Trust and Honesty, America’s Business Culture at a Crossroad (published in 2006), I found a significant change in people’s attitudes towards honesty and trustworthiness. There is no proof that there are more incidents of fraud today than there were in the past. America has always had its fair share of scandals and fraud. It has had its Robber Barons and medicine men who defrauded gullible people in small towns. It has had many corporate and financial frauds throughout the ages. I cannot prove that there is a change in the number of frauds today compared with the past. What has changed, however, is the attitude towards dishonesty and breach of trust. Today, there is great er acceptance and more justification of dishonesty. In some cases, we have legitimized what in the past would have been considered an abuse of trust. And, moreover, the potential victims are required to protect themselves from abuse. This new and very dangerous trend leads to a culture of dishonesty and, in some respects, this cultural change is far more serious than an increasing number of cases of dishonesty.