The theses supported in this essay are that the world is to some extent constructed by each of us, that it can and ought to be constructed in a more benign way, that such construction will require more trust than most people are currently willing to grant, and that most of us will be better off if most of us can manage to be more trusting in spite of our doubts.

This qualitative study looks at the complex relationship of transaction costs, norms, and social networks through a comparison of industrial buyer-seller relationships in the United States and Mexico. Despite arguments by transactioncost theorists that the nature of cooperation in business is largely a function of the nature of investments in transaction assets, this article illustrates several cases where the economic logic is attenuated and a mutual orientation develops as the social structure promotes greater trust either because of shared norms or (...) network ties. It also suggests that asset specificity may at times be a product of the social structure in which the transaction is embedded. The article develops theoretical propositions and suggests directions for future research. (shrink)

As levels of trust decrease and the necessity for trust increase in our society, we are increasingly driven toward the untoward, even disastrous, outcomes of the prisoner's dilemma. Yet despite the growing evidence that (re)building conditions of trust is increasingly mandatory in our era, modern moral philosophy (by default) and the social sciences (implicitly) legitimize an instrumental rationality which is the root problem. The greatest danger is that as conditions of trust are rationalized away through the progressive institutionalization of an (...) instrumental rationality, we are driven towards the most virulent form of the prisoner's paradox — ethical relativism and its nihilistic consequences. (shrink)