New ending from the history man

Francis Fukuyama tells David Walker why greater trust between people would lead to more prosperity. Alfred Schutz is not a name that appears among the many social thinkers listed in the compendious bibliography at the back of Francis Fukuyama's latest blockbuster, Trust. He is, however, there in spirit.

Consider, Schutz once wrote, the pillar box on the corner (since he was an Austrian, his were green, decorated with imperial hunting horns). What a seemingly irrational thing it is to put a letter into that gaping mouth. How many unseen and disconnected acts will be needed for that letter to be picked up, checked, sorted, despatched and finally - post office permitting - delivered to its destination? There is no formal agreement beyond the purchase of a stamp . . . how much of our social life we take for granted, how much trust we invest in relations with people we do not know face to face.

Yet the more we trust strangers the less we need to specify details in legally binding contracts, so making a range of economic transactions cheaper. The more we trust, the better able are firms to grow beyond the larval stage when only family members can own and control. Trust, in other words, is functional in economic life; those economies which have most (Fukuyama's key examples are Japan and Germany) prosper most. Their workers are better motivated; there is a fluidity about dealings which is lacking in "trust-poor" societies such as France or China.

It is easy to see all sorts of fingerprints over that trail of thought, running between central European Karl Polanyi and his idea of "tacit" knowledge to British traditionalist Michael Oakeshott to French positivist Emile Durkheim. You do not have to be an ace detective in the history of ideas to identify those thinkers as conservatives and so is Francis Fukuyama. A conservative means someone distressed by instability and disorder, alienation and fragmentation, as much concerned with the silences and the invisibles in social and economic life as with words and surfaces.

But Fukuyama's problem is how to be a conservative when history has ended up with liberal, free-market and anarchic capitalism everywhere and in his terms for ever. His ambition is, in essence, the task set for Alfred Schutz when he was called upon to provide the "socio-philosophical foundations" for Ludwig von Mises's neoclassical and antistatist economics. It is to give capitalism "spirit"; it is to prescribe culture in order to give markets meaning. There is a plaintive reference in the book to the need for IBM employees to think they are advancing information technology rather than maximising returns to holders of the company's equity.

Fukuyama is small in stature but big in argument, confident he will be listened to as intently in Kobe as in Kansas. He is unafraid to write about history with a capital "H" because he is a Hegelian and soars with that eagle of thought above the common herds. The End of History, a global bestseller, presented the liberal capitalist order as the one successful regime left at the end of the great contest - Saddam and the Serbs are mere flotsam on the beach. He virtually subtitles his latest book "things you ought to worry about now that history is ended". (They do not incidentally include nationalism, something critics of his earlier book thought he had missed. He implies, of Central Europe and the Balkans, it is just a silly phase they are going through.)

What we do need to look out for is the relationship between three essential components of all societies - government, the family and "civil society", meaning the variety of organisations from churches to the Rotary Club in which people freely associate outside their homes, and beyond the baleful eye of bureaucrats. (His book, to be fair, avoids that kind of cheap alliteration as well as the business school neatness of various recent entrants in the big idea stakes.)

You measure "best" in terms of economic growth and general prosperity and so the object becomes explaining why the Japanese, and the Germans, do so well. That game has been going on now for decades and Fukuyama's contribution is Trust and its first cousin, Culture. His big idea is that societies with weakish central governments (at least after the Allies had pulverised the fascist regimes in both Japan and Germany) and strongish civil societies can support big firms along the lines of Sony and Siemens, and they do not have to worry too much about the workers. Trust and mutual dependence have their roots in "pre modern" culture, defined as inherited habits and ethics. The trick is getting the right combination of capitalism and culture, ancient and modern.

There are good reasons, he says, why France and Italy have done less well than Germany (Britain does not figure in the analysis, which may be as well since his few references suggest his bookshelf on this country is a bit dusty.) These have principally to do, in France, with the way the monarchical then the revolutionary state eviscerated civil society, and in Italy with the antagonism of family-based capitalism to big enterprise.

"Even now a professor in a French university gets tenure not from a committee of peers because ultimately the French don't trust their colleagues. They get it through possessing purely formal criteria, referred up to Paris where authority makes the decision on formal grounds."

Does not this just amount to a redescription of the histories of the societies he is studying? No, there is a global model. In conversation he insists there are "general patterns, interrelationships between state and civil societies, showing the importance of distributed political power. These are all broader principles by which you can categorise the jumble of particular social and economic circumstances".

And yet, for all the generalisation, this is very much an American cri de coeur, an intellectual expression of the anxiety prevalent in that country in the 1990s about relative Japanese success abroad and dysfunctional African-American families at home. Here is fear of "excessive individualism", of the collapse of those values which made America great, the kind of unease that has produced a Ross Perot and a Newt Gingrich that seeks to reach back into the American past for some formula to carry the country out of the fragmented present into the 21st century. The problem is not lack of individualism but its surfeit. Fukuyama frequently cites de Tocqueville's early 19th-century observation about the plenitude of voluntary associations in American life, pro-business, trust-enhancing organisations such as the Kiwanis and the Lions. His pages echo with the old values of Main Street, US.

There, all along Main Street, were churches and these are found to be the backbone of successful American capitalism. He is upfront about wanting "more religion". Nothing specific, you understand, and certainly not authoritarian fundamentalism. It is religion "in a depoliticised form, of course, - for the moment that religious organisations become a lobbying group for an agenda, they provoke a corresponding counter reaction which is not good for the polity."

But Fukuyama the former State Department adviser, is proferring no policy advice to the Republicans or anyone else. Hegel's pupil, Karl Marx, once said the purpose of philosophy is to change the world. That, says Fukuyama, was a mistake; this pupil of Hegel is an analyst not an activist. "Since End of History the basic institutions are in place; you can tinker with them but large-scale social engineering is more likely to be counter productive than capable of bringing about improvement.

"We have a problem with social trust in the US but ultimately it is not a problem you can fix except through cultural struggle. What is hard to understand is how state action can create the habit of sociability. States can educate and train people, but school as a form of socialisation can't really be manipulated very easily."

Fukuyama rests the limbs of his argument heavily on some well worn pivots as well as Tocqueville, there is Max Weber and the contribution of the Protestant ethic to capitalist development and Adam Smith of the moral sentiments. Yet he comes across as original in two ways.

One is his strike for sociology against economics - defining sociology in the widest sense as discourse about culture and society that accepts the existence of diverse motivations to action. He hits hard against "rational choice" theory, and the presumption of economists that they can explain market behaviour without referring to ingrained habits and trusting relationships. "Economics has been imperialistic," he says. "Macro-economic models can explain maybe 65 per cent of growth but there is always a big residual at the end of the day, and that is culture. The remaining 35 per cent is important."

Fukuyama speaks with the fluent assurance you would expect from an American author on a book tour, yet he cannot quite suppress a certain plangent note. It is the reverberating sound of the conservative in pain. Collectivism died a while ago, and Fukuyama wrote its obituary in his last book. But liberalism, the victor, is problematical. It undermines the family, subverts voluntary effort. In this country - indeed on these very pages two weeks ago - John Gray chipped away at the pretentions of liberal individualism. In the US it is blamed for its obsession with individual rights, of which the O. J. Simpson debacle is this month's great example. So is there a third way, some amalgam of old, established values, altruism, voluntary effort and red-blooded marketeering?

To pose the question that way is to state the policy problems of Tony Blair's Labour party no less than Newt Gingrich's Republicans but Francis Fukuyama will not be drawn on party politics. The problem, as he puts it, is finding room in a post-modern society for "certain premodern social practices" - like unquestioning trust that the postal worker will come and empty the pillar box.

Francis Fukuyama: Trust, The Social Virtues and the Creation of Prosperity, Hamish Hamilton Pounds 25.00