Trust is priceless, but it has a cost. It is the basis of the book that has just been published by the economist Jordi Gual, professor of Economics at IESE, president of VidaCaixa and former president of CaixaBank. Gual emphasizes that “for the free market to work there must be a basis of social trust” because “contracts cannot cover everything.”
The book begins with a reference to cryptocurrencies as an example of what not to be.
I start with cryptocurrencies because for me they are the perfect example, because they are created with the explicit goal of establishing a transaction system that does not require trust. It is not necessary that we know each other or that there is an organization like the CNMV or whatever that guarantees anything. This is not understanding how free market economics works. You will never be able to create an environment that is absolutely mechanical and never fails. But also, in this way you make absolutely selfish, greedy people participate in the operations. You are calling the worst in the market. For transactions to be fruitful, an environment of trust must exist. For me they are not a financial asset, but pure speculation, a betting house that we must try to separate from the financial system.
Is trust so important for the economic system to work?
Yes, for the free market system to work there must be a basis of social trust, because contracts cannot cover everything. There are many things that don't work, unforeseen. We are all motivated by self-interest, we are all materialistic, but we also care about others and that altruism is necessary for capitalism to work well. That's why I say that trust has no price, but it also has a cost; because if I trust you it has a cost, I assume a risk, and you have the responsibility to respond to the trust I have placed in you.
Does this trust system work in Spain?
We're somewhere in between, and that's okay. But we do not reach the levels of some Central European and Nordic countries. It is an important factor, because countries that generate more trust end up progressing more economically.
Have we recovered from the great crisis of 2008 in terms of that climate of trust?
The capitalist system, the market economy, is very efficient at generating wealth. But it can suffer a lot of instability and that wealth is not always distributed harmoniously. We live in times of great social, cultural, and technological upheaval, with many changes. And people feel a lot of insecurity. They are afraid of losing their jobs, they fear for their pensions, for their disappearing well-being and for climate change. The financial crisis is an example of great turbulence, in this case generated by the system itself, in my opinion due to incorrect monetary policy and financial regulatory policy decisions. I believe that these too lax policies are the root of the crisis and the discredit of the free market system. People think that yes, it generates well-being, but also some ups and downs that the citizen cannot control and that those who administer do not know how to do it either. In other words, bad economic policies have also damaged the reputation of capitalism.
What should public policies do to regain that trust?
Fiscal and redistributive policy are key. In many countries the political class uses budgets and mechanisms to correct inequality with clientelism, to win elections. They appropriate the machinery of the State to perpetuate themselves in power. The model to follow is that of the countries known as frugal. They are rich because they have been frugal, because public finances have been well managed and social trust is high.
Are the companies trustworthy?
I defend that companies must address the problems of society, have a clear purpose, whether it is to provide the best financial service or produce quality milk that is good for health. And profits are an essential instrument, because without them there would be no investment, but not the fundamental objective. I defend a vision of the company that takes into account all those who participate in generating value (the stakeholders) and not only the shareholders. To achieve this, it is good that shareholders have a vision of working in the long term.
