The Relationship between Competition and Trust. An Essay in an Historical and Theoretical Perspective

Among the virtues of competition, one recently emphasized is that it generally enhances agents’ trustworthiness in market economies, thus stimulating trust. This paper emphasizes that the fundamental issue of ensuring an acceptable level of agents trustworthiness in market economies is historically being characterized by increasing complexity. Technological and organizational changes have progressively made more troublesome to cope with this problem, stimulating the emergence of a plethora of institutions, both market-based or enforced by the law. What can be considered as the better institutions, whether market-based or ultimately rooted in public regulation, is not possible to say a priori. It depends on the given historical circumstances. A basic claim of the paper is that the virtues of competition necessarily require an adequate institutional structure to emerge. This puts at the foremost the highly controversial issue of how to enforce an appropriate set of rules in a global economy.