Introduction

‘Ha, ha! What a fool Honesty is! and Trust, his sworn brother, a very simple gentleman!’ So says Autolycus in Shakespeare's The Winter's Tale. The devious peddler, named for a mythological trickster, has just taken advantage of some naive shepherds, and Shakespeare alerts us to the multiple and ironic meanings of trust. Derived from the Old Norse traust, trust has as its primary denotation confidence in a person, thing or attribute, with the related meaning of strong, as in a strong faith or bond. But placing faith in someone also brings risk, a risk of betrayal as trust is used to quietly advance selfinterest. Trust as misplaced faith seems to enter the language in Shakespeare's era, a time when the English economy ran on credit. In a credit economy, trust could be a sign of failure, as in this quotation from Dr Johnson: ‘my master lived on trust at an alehouse.’ Historians have a tendency to use trust only in its simplest and most gentlemanly or gentlewomanly form, meaning a wellplaced confidence in others. But those who know trust know that it is often not to be trusted.

The positive side of trust dominates discussions in the literature on social capital. A network of affective relationships, spatial connections, shared identities and common values, social capital is often seen as encouraging trust, and thereby lubricating the wheels of industry, commerce and finance. If humans were angels, they could always trust each other and so deal at arm's length. Since they are not, they need mechanisms to either monitor and discipline bad behaviour, or encourage and cement trust. Business organisation can provide these mechanisms but, following the argument of Ronald Coase, corporations, and formal organisation more broadly, signify the failure of the market and the need to internalise transactions. Firms are thus the bastard child of our own fallen natures. Social capital, on the other hand, puts us on the road to redemption. When present in sufficient quantity, it takes us back to decentralised economic relationships among individuals or small firms, working on the basis of trust.

While many neoclassical economists look to trust and social capital as ways to bring the market back in, and push the corporation and the state back out, many business historians see trust and social capital as the allies of small firms and a more democratic organisation of production.