to begging - a phenomenon which had apparently been eliminated by welfare states in
developed countries after the second world war - as well as violence. The rise in violent
crime has reduced trust within society generally.
Evidence for reduced levels of trust during the 1980s has been documented for developed
countries, along with rising levels of crime. (See appended Charts II and III taken from
Fukuyama, 1999). There is not such systematic evidence for ‘trust’ across countries.
However, the sharpest increases in crime appear to have occurred in the societies most
affected by the transition to market values and forms of organisation - viz. in UK., New
Zealand, Canada and the US - while there was a decline in violent crime in Japan and very
little increase in Korea, Ireland, France, the Netherlands and Finland, countries which appear
to have had less strong changes towards market domination of culture and the economy. Of
course, figures for crime can be unreliable, depending on reporting rates; policing policies can
also alter incidence and reporting of crime, while drug usage is an important and, perhaps,
independent cause of rising violence. Data for trust is somewhat subjective, depending on
surveys of perceptions. Moreover, the change in dominant economic philosophy was
associated with rising inequality and it may be this, rather than the prevalent norms, which
accounts for the rise in crime and reduction in trust.
A specific example of how the switch in economic norms affected society is provided by New
Zealand, which experienced a radical switch from Keynesian state-centred policies to market
orientation, undertaken from the mid-1970s. The macro-consequences were small, with
growth rising or falling, according to the exact dates selected. However, unemployment rose
and real wages fell, while inflation seems to have accelerated (data from Dalziel and
Lattimore, 1996). A major reason for the disappointing macro-response was the huge rise in
transaction costs, as the reduced role of COOP required greatly increased monitoring. The
ratio of transactions workers to ‘transformation’ workers rose from 0.49 in 1976 to 0.96 in
1996, with the sharpest increase arising in the decade of radical market reforms19 (data from
Hazledine, 1998). Income distribution worsened markedly.
19 Transactions workers include all workers in industries devoted to providing transactions
services ‘finance, insurance, real estate, legal and other business services, guards central
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