ISET Economist Blog

Inflation of Trust
Monday, 12 April, 2021

World economies hampered by the pandemic; countries facing public healthcare crises, with millions killed by COVID-19; thousands of cities under lockdown; social distancing and transformed social practices; countless institutions functioning online; the youth spending endless days and nights in front of computer screens; and, globally, over a year of online education. This is the reality in many countries around the world, including Georgia, in the spring of 2021.

Arising like a spring syndrome, there also are signs of inflation of trust throughout the country. An unfortunate chain of events has affected virtually everybody. Where post the 2020 elections, political polarization has deepened and the dialogue between the opponents has become increasingly complicated: despite the direct involvement of highly competent foreign strategic partners. Awaiting the resolution of the said impasse, citizens are puzzled and confused, thus causing shrinking trust towards the most significant state processes. Cases of vindictive action, at times, translating into criminality, have also been on the rise in our deeply polarized society, thus further shaking the foundations of societal trust. At this stage, when the voice of public figures and leaders is of utmost importance, many leaders have become discredited and public interest in their opinions is plummeting fast. While the economic challenges brought by the pandemic and lockdowns have also led to a deterioration in business confidence (see ISET Policy Institute’s Business Confidence Index).

In order to withstand the pandemic, a speedy vaccination of the population appears necessary, however, research (and anecdotal evidence) suggests there is low uptake, ultimately due to lacking trust in the benefits of vaccines and fears surrounding its potential risks. Furthermore, the tragic post-vaccination death of a young nurse from Akhaltsikhe has unfortunately created a phobia towards vaccination, further exacerbating the already-forming, negative public opinion. This is clearly evidenced by extremely sluggish registration for the AstraZeneca vaccine.

So, why is this blog dedicated to the inflation of trust? Primarily, trust will be vital for any post-pandemic recovery from the economic, political, and social crises (without long-lasting or even permanent impacts), and for effectively utilizing local and global opportunities and resources during the aftermath of the pandemic. In order to achieve this, significant public trust alongside the spirit of partnership and social capital will be required.

Social capital represents a feature within society that defines the potential for achieving notable prosperity and a spirit of cooperation towards common objectives, and it is grounded within a particular country’s culture. In his famous work Trust (Fukuyama, 1995), the well-known American scientist and author, Francis Fukuyama, suggests that social capital is a manifestation of trust within a society that rests on its existing levels. Therefore, Fukuyama claims that achieving prosperity is tied to the trust factor within society. Even without providing a legal definition of trust, it could be said – with a high level of social capital – that resource and capital mobilization can be achieved in a more effective manner. Fukuyama proposes that the existing levels of trust within a given society consequently determine its economic competitiveness.

In societies with high social capital, individuals and institutions can more effectively mobilize, develop, manage, and redirect human and institutional capital and resources towards cooperation for common goals and benefits. In such societies, the trust factor is in many ways based upon attitudes towards public institutions, such as the judiciary, the police, etc.  In turn, the strength, consistency, and sustainability of these official institutions, including economic institutions, heavily depend on the social capital within a society. Therefore, countries and societies with high social capital are more resilient. They are able to tackle expected and unforeseen challenges more easily by adapting to new realities, and also able to retain the ability to make better use of presented opportunities during their development.

Social capital and the existing level of trust in any society significantly affect the formation of political culture and values. In countries with high social capital, governments are more accountable to their people, thus following the values and attitudes of the public. In a culture with high social capital and trust, cooperation between formal and informal institutions is more effective; including public authorities, parliament, universities, research institutions, NGOs, professional unions and clubs, private companies, religions, and local authorities. Despite the often-contradictory views of these institutions, they can cooperate to achieve outcomes in the best public interest. This process however is ineffective or completely non-existent in societies with low social capital.

This issue is highly relevant today considering our ability to benefit from new opportunities. In the post-pandemic period, the shuffling of regional and global competitiveness may well bring about greater opportunities for Georgia. The potential benefits for development from innovative technologies and scientific achievements may prove unprecedented. Although to utilize such opportunities, a flawless network of cooperation is required both inside as well as outside the country – between the state, NGOs, and private organizations; among political parties; between the country and its international partners; between investors and local organizations; with universities, research institutes, and scientists; and within society as a whole, despite individual political beliefs.

The prerequisite for such cooperation is trust within Georgian society – seemingly at a fairly low level today and which is hardly easy to improve – and this requires time, effort, and it has to be earned and deserved. In order to overcome the existing crisis in the country, we need there to be trust towards the vaccine, as to reach public immunity to fight the pandemic; public trust towards the government and political processes; trust between political actors to overcome the political crisis; trust in scientific proof, not only in vaccinations but also related to climate change and the necessity of mainstreaming green policies in the post-pandemic recovery; and trust from investors to finance Georgia and support restoration of the economy. It is therefore time to consider how to restore the nation’s currently inflated trust.

The views and analysis in this article belong solely to the author(s) and do not necessarily reflect the views of the international School of Economics at TSU (ISET) or ISET Policty Institute.