Hicham El Moussaoui, Ph.D
Trust is the lubricant of trade. It reduces the costs of transactions and uncertainty, which allows it to provide a dual mission : the incentive for individuals to participate in the exchange and coordination of their individual plans. Therefore, without trust no exchange and without exchange no market economy. Adam Smith (1776), argued that wealth was built on the division of labor. He gave the famous example of the pin factory, but the pin factory could achieve nothing if the workers can not trust each other. Trust matters ! Economists distinguish between the personal, specific trust that comes from Being friendly with your neighbors and the impersonal, institutionalized trust that lets you give your credit card number out over the internet. The two kinds of trust are correlated with each other, because we are more willing to trust people if we feel that, ultimately, we can call the police or get a fair hearing in court. In the Islamic world today, market economy has hardly to take root and consolidate, which also explains the nature of rentier economies in the Muslim world where rent- seeking behavior push out productive behavior. This fact explains the lag in development of Muslim countries despite achieving high growth rates.