How - Dov Seidman [87]
There is something of a paradox in this marriage of trust and prosperity. Those who have misread Adam Smith’s principles of reciprocal capitalism often clamor for truly unregulated, laissez-faire markets. They work under the illusion that, free of regulation, they could achieve anything they put their minds to. This is simply another form of rules-bound thinking: defining your ability to achieve in relation to regulatory constructs. But in fact, the certainty and predictability created by strong legal systems and regulatory apparatuses support achievement. Consider traffic signals as a metaphor. Traffic signals allow us to get around as speedily, efficiently, and safely as we can. They help to create a reasonable level of certainty that other drivers and pedestrians will behave in a predictable fashion. Like those free-market types, we all wish at one time or another while driving that the traffic laws did not apply to us. Occasionally, we even take the law into our own hands, so to speak, and choose to roll through a stop sign or exceed the speed limit in order to get where we’re going faster. But interestingly, when law breaks down—for example, if there’s a blackout and all the signals stop working—people do not suddenly go charging off at breakneck speed. Traffic, in fact, slows down. The absence of predictability makes everyone more cautious. People tend to prioritize safety over speed. In the absence of law, nobody enjoys driving because the risks suddenly start to weigh heavily against the rewards. The same holds true in the vastly less controllable sphere of human relations, and, by extension, in the marketplace. When we experience states of high uncertainty, everyone slows down, as does economic activity. Our circle of trust shrinks, as does our tendency to take risks, even, interestingly, if they may lead to greater rewards.
Dr. Peter Kollock, associate professor and vice chair of the department of sociology at the University of California at Los Angeles, conducted a study in the mid-1990s that demonstrated this. He set up a trading game where people traded goods in two different environments. In one environment (low uncertainty), participants knew the value of what they were trading, and in the other (high uncertainty), they did not. Kollock’s study achieved two fascinating results: (1) people have a greater tendency to form interpersonal commitments in a high uncertainty environment, and (2) they tend to forgo potentially more profitable exchanges with untested partners in favor of trades with partners who have demonstrated their trustworthiness in previous transactions. In short, economic activity in times of high uncertainty slows down and traders become risk-averse .7
HOW HIGH IS THE CEILING?
If the Certainty Gap is the space between our ideal state of security, certainty, and predictability and the state that exists in the world, and the confluence of destabilizing factors in the world today has lowered the floor of certainty, what defines the ceiling of the Gap? What defines an ideal state of certainty?
Actually, it is a trick question, because I believe there is no ceiling. When we create sufficient trust to take risks, innovate, and progress within current global or market conditions, why stop there? Why not keep going? Security and certainty are not heights to be dreamed or attained, but rather something that spreads out around you horizontally. Picture an archery target sitting on a table, with you standing in the bull’s-eye. Around you are circles and circles stretching out to the horizon. Each represents a trust gap to be filled—red, blue, green, white, and so on. The more rings of trust you can fill around you, the more secure you can be. The horizon is limited only by your imagination. Now take that same mental picture and instead of a target, imagine a football stadium with you standing in the center. All around you are the people you work with, play with,