KYKLOS, Vol. 54 – 2001 – Fasc. 2/3, 415–444 415 Macintosh HD:Aufträge:HEL002:13425_S_Kyklos_02-03/01:13425_3AK:Kyklos_2-3/01_193-506_3AK 12. April 2001 13:47 Trust and Honesty in Post-Socialist Societies Susan Rose-Ackerman* I. INTRODUCTION Two conflicting stories are told about the impact of the past on societies making a transition from socialism to market democracy. The first recognizes the over- all failures of the planned economies but points to cooperation between family and friends as a means of coping with a dysfunctional system. This sense of community has been broken up by the move to the market and to democracy leading to a loss of trust and to an increase in opportunism. The second story stresses the socialist governments’ lack of legitimacy – a fact that led citizens to assume that official state actors were self-serving and that rules were irra- tional. Individual horizons were limited by the difficulties and risks of imper- sonal, arms length dealings. The new democratic governments inherited a citi- zenry with low levels of trust in public institutions and with the habit of relying on inter-personal relations, not public institutions and laws. The differences in emphasis produce different reform proposals: The first story argues for policies that reinforce interpersonal trust, and the second, for policies that develop trust in the impartiality and competence of the state. The topic of honesty and trust in the post-socialist societies thus touches on issues central to the transition process and its eventual outcome. There are four intertwined themes. First, what is the relationship between the citizen and the officials and institutions of state power? Do people feel victimized and ex- ploited by state officials; do they try to ‘work the system’ for their personal ben- efit; or do they recognize the legitimacy of the state as a trustworthy provider of services to the public? Second, how do businesses deal with each other? Does the state provide a reliable set of background norms and an impartial fo- rum for dispute settlement so that firms can develop a reputation for trustwor- thiness? If not, what kinds of coping mechanisms have firms developed? Third, * Yale University, USA. E-mail: susan.rose-ackerman@yale.edu. I am grateful to Amnon Lehavi for very helpful research assistance. This paper is a shortened version of an umpublished back- ground paper to be presented at a workshop in this topic at the Collegium Budapest in May 2001.