Why trust and ethics are the most important currencies in our economy

Our economic future is our choice and is in our hands, both as individuals and collectively as citizens. But the sustainable economy and future we hope for is only going to be built if we have a foundation of trust and ethics, as a growing body of evidence suggests.

Here’s how trust and ethics can impact society and the economy:

Firstly, trust and ethics make all kinds of economic interactions easier in the private sphere by greatly reducing transaction costs. Legal and insurance fees would be replaced by less expensive, informal agreement methods. More importantly, fewer problems and costs arise when it comes to monitoring and rewarding employees owing to this greater trust.

Governments need trust to be able to effectively enact public policy and it is highly unlikely that pressing socio economic challenges will be solved in a society that is divided and distrustful. This is especially important for issues related to the provision of public goods and constitutional reforms, each of which requires healthy popular support.

Trust is important in order to have the credibility needed to change economic incentives along with the behaviour of businesses and citizens. Distrust can thus be detrimental even in the face of valiant public policies.

Trust and ethics are inherently critical for building economic cooperation in all its forms. Countries need to trust each other to establish international treaties. Governments need the trust and support of their citizens with regards to these treaties as well.

Companies must also trust governments or else they may choose to direct their investments elsewhere. This could leave potentially profitable opportunities on the table including various outsourcing and offshoring activities. The absence of trust can sabotage economic welfare as well as greater economic, social and political harmony.

Finally, there is increasing empirical evidence to suggest that trust promotes economic growth. This is done through various channels, including international trade and financial development.

Trust in financial markets and systems attracts greater investment. Moreover, it can increase innovation, entrepreneurship and firm productivity, which are amongst the primary drivers of economic growth.

The world’s economies have never been more interdependent than they are today. As this interdependency grows, the quantity of and the demand for greater trust and ethics are on a completely different scale now than ever before in our history. Fortunately, we have the power as conscious citizens and leaders to rebuild this trust. Here’s what’s needed:

We need courageous leadership to bring people who are different together and bond them. This leadership should be reflected in a set of institutions with a vision of perfection and a mandate to strive towards it. It will require leaders, who are willing to take risks, to be the first to extend their hand and act with integrity. Economics alone will not guide a country without strong leadership.

It is imperative that we embody an innovative mindset to look beyond the obvious and seek solutions to our challenges in unlikely places. We must be creative and embrace mistakes as a necessary step towards discovery. This is relevant to all aspects of economic solutions. Can we think of new ways of investing beyond traditional capital? Can we better align country and company goals? Can we redefine what international agreements of cooperation entail?

It is critical, now more than ever, to address widening economic inequalities which erode trust. More specifically, we should strive to tackle inequality with regards to income, education and opportunities. Social mobility becomes tremendously important so those who are willing and able to work may be rewarded.

This inequality of opportunities, where it is not based on individual merit, lowers one’s sense of fairness and trust. An inclusive approach is necessary to provide low-income groups with the networks and connections they need.

The way to wellbeing is built by character; our happiness is built by character and ethics is at the heart of character and individual responsibility. In Existentialism is a Humanism, Jean-Paul Sartre writes that we are “responsible for all men”: when man makes a choice, “in choosing for himself he chooses for all men”.

Do you hold yourself accountable to the same standard to which you hold others? Are you being responsible? Are you the example that the rest of society can look to? If not, take radical personal responsibility. Recognize your faults and learn from them. Be strong in tough times but do not forget kindness. Assume the best of others and play the long game. Become the standard and do it all with deep devotion and love.

We are all inventors of the future and we have the power to transform the world we live in. Let’s become the standard and take the path of integrity to build more unity and harmony, doing it all with deep devotion and love.