Trust.

Francis Fukuyama Free Press, $25

By Jonathan Rowe

I was talking recently with a friend who had just left his job at a West Coast bank for a higher-paying job at another. It was the fifth time he had done this, and I asked him if the constant job-hopping was something he regretted. He did at first, he said. But the banks soon disabused him of such notions. "You put in your effort, you try to show loyalty," he said. "Then they sell the bank or they merge, and everything you've done, all your effort, it doesn't count for anything. They can dump you tomorrow. What I learned is, you've got to look out for yourself"

This atmosphere poisons much of the American economy today, from Silicon Valley to pro sports. In the corporate world, mergers and leveraged buy-outs have everyone looking over their shoulders. It is likely that the employees of Chemical and Chase banks in New York have their minds on more than banking these days, as the triage begins after the big merger. It was with such thoughts in mind that I started Francis Fukuyama's new book, Trust. The theme is both fertile and timely. An economy is much more than an arrangement of monetary incentives and rewards, Fukuyama reminds us. It is part of a larger culture, from which it ultimately draws its character and strength. For all the Republicans' obsessive harping upon their policy prescriptions--tax incentives and deregulation--Fukuyama shows implicitly that there's much more to prosperity than rebuilding the temple of Money and Gain. You can get the tax incentives right," let the profit-seekers turn every forest into a shopping mall and every river into a sewer. But if the social structure is falling apart in the process, the economy eventually will flounder anyway.

Regrettably, however, Fukuyama continually pulls back from the broad implications of his premise. Early on, he invokes Max Weber's refutation of Marx: Culture can determine economics, as well as vice versa. The influence clearly goes both ways, especially in America, where the economy has virtually become the culture. Not coming to terms with this, Fukuyama has written half of what could have been a truly important book. He has explored incisively how America's crumbling social structure could bring about economic decline. But he does not pursue with any vigor the role of the economy in hastening that social disintegration--and hence in the destruction of itself.

The social trait Fukuyama focuses on is what he calls "spontaneous sociability," the ability of people to deal with one another without the efficiency-reducing friction of lawyers, regulators, bureaucracies, and police. This quality begins in families and civic society, but permeates economic institutions as well. It defines, Fukuyama says, the difference between groups and economics that prosper and those that don't, though in ways that vary greatly from culture to culture.

What is remarkable, he observes, is that conventional economics ignores this seemingly obvious fact. The "neoclassical synthesis" of Alfred Marshall and his disciples is the starting point of libertarian policy belief and dominates the American economic debate today. It is economics posing as physics--Adam Smith stripped of his irony, salty wisdom, and awareness of history and culture. Neociassical economics reduces people to isolated integers of acquisition that relate only in diads, seeking always to drive the best bargain, to "maximize their utility" in an entirely rational and self-interested way.

In this hypothetical model, economic "policy" becomes noxious by definition. The very concept of "society" becomes extraneous at best; and the word "history" rarely enters, except as the sad chronicle of left-liberal folly in presuming to intervene in the divine mechanics of the market. In his sane and temperate fashion, Fukuyama puts this view to rest. "It is an act of considerable intellectual hubris," he writes, "to believe that only economic goals in the narrow sense can be considered rational."

The problem is that Fukuyama doesn't seem to trust his own insight enough to follow it to where it fairly begs to go: to ask how a consumption ethos fostered by the libertarian model can undermine the very social and cultural virtues he posits as essential. Instructively, he analyzes U.S. culture through the dual tendencies of its Protestant heritage--the individualist striving on the one hand, and the voluntary communalism on the other. An epitome is the Mormon Church, which combines the aggressive entrepreneurial spirit of its members with an organization that functions as a kind of voluntary, enlightened welfare state: tithing members, expecting two years of missionary work from them, maintaining broad welfare programs for the needy, and even a system of socialized water rights in the parched Utah desert.

This aspect of America fascinates Fukuyama. What disrupted this communalism, he argues, are two familiar villains. First, the New Deal social legislation and its Great Society progeny, which displaced voluntary sharing with the bureaucratized substitutes of the state. And second, the broad expansion of individual rights that has proceeded since the sixties, replacing informal and voluntary modes of social cohesion with a legalistic regime of associational entitlements, mediated by lawyers. I don't disagree with either of these points, as far as they go. It would have been useful, however, if Fukuyama had talked about property rights as well as individual ones. Those property owners who want monetary compensation when the public restricts their use of property in any way for the common good--they aren't doing much for the bonds of social cohesion and trust either. "What is particularly insidious about the American culture of Rights," he says, "is that it dignifies with high moral purpose what often amount to low private interests or desires." Exactly.

Instead, Fukuyama keeps steering back to safe, neoconservative policy nostrums--even as he's planting depth charges in their economic foundations. He ends up with the shoulder-shrugging, Kristolesque conclusion that government should simply lay off and "do no harm." But his argument raises a host of issues, from the scale and structure of corporations to the design of cities and towns to the way the new communications Superhighway is configured and how access to it is determined. If the goal is spontaneous sociability and social cohesion, then we need to ask how particular economic policies and market arrangements affect those qualities for good or ill. For example, if corporate mergers and takeovers tend to undermine the cohesion of corporations and communities, perhaps that should be weighed against the supposed "efficiencies" that result. Perhaps the United States should follow Japan, and discourage such disruptions in its large corporate infrastructure.

Or take our patterns of development, which government policy has affected mightily through the highway program and many others. Traditional Main Streets are much more conducive to spontaneous sociability than are humongous regional shopping malls. Perhaps Vermont is right in trying to keep out the Wal-Marts and protect the small-town culture. Maybe the family farm and small-town cafe have a social and economic function that the economists have overlooked. Anyone who has taken a train through Europe has probably noticed the spontaneous sociability that can arise when people are together in ways that are rare in America's automotive culture. Perhaps trains and mass transit have virtues that' conservatives should reconsider. The list goes on and on.

I don't want to sell Fukuyama short. His argument is intelligent, and informed by a wide range of historical and cultural examples. His prose is crystal-clear and almost clinical in its fair-mindedness and dispassion. We have become so accustomed to the tin-horn issue-mongering of a Newt Gingrich or a Dick Armey on these subjects that it is an absolute pleasure to read someone you can disagree with without feeling a polemical knee to your groin. And in a way, I'm glad Fukuyama doesn't take his theme all the way up the hill. By holding back on the implications, Fukuyama has managed to slip past the radar of the ideological Right (an excerpt appeared in a recent issue of The National Review). Coming as it does from inside the conservative camp, it may ultimately present more of a challenge to the GOP's Newtonian economics than the Democrats ever could. Jonathan Rowe is a contributing editor to The Washington Monthly.