Terrorism & Trust

This article was published in National Review Online, November 20, 2002. It is the second part of a three‐​part series.
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The civilized world’s exposure to barbarian assault arises today, as it did in the past, out of the very sources of our prosperity and power. Most obviously, Western technological prowess can now be turned and used against us. The logic of technological progress is that it democratizes power over the elements. As we continue to innovate and grow richer, more and more people have ever‐​greater access to increasingly potent capabilities. Since the capabilities themselves are morally neutral, the consequence is this dark irony: The more technological dynamism unleashes the creative energies of the best among us, the more widely available are destructive energies to the worst among us.

We now know the horrific purposes to which commercial aircraft can be put. Many other humdrum, taken‐​for‐​granted aspects of our technology‐​intensive lives can likewise be used to stock the armory of terror. Remember, after all, what Timothy McVeigh did with fertilizer, fuel oil, and a van. And more exotic technologies raise even more terrifying possibilities. Tons upon tons of enriched uranium and weapons‐​grade plutonium have been produced and stockpiled; if only a few pounds of this vast amount were to fall into the wrong hands, millions could die. Large and growing stockpiles of chemical and biological weapons pose similar threats. And terrorists need not restrict themselves to scavenging military production: Many commercial labs have the capacity to weaponize chemical and biological agents.

Our vulnerability goes deeper than the physical damage that can be inflicted. The root of our vulnerability is the same as the root of our technological virtuosity: our fantastically elaborate social organization and the institutions that make it possible. To put the matter as simply as possible, all the wonderful material blessings that we in the West enjoy rest ultimately on the amazing extent to which we are able to trust each other. Terrorism strives to shatter that trust.

The West is rich because its people participate in a globe‐​spanning, mind‐​bogglingly complex division of labor. Every moment of our lives is supported and enhanced by the anonymous creativity and hard work of untold millions of people. In the words of F. A. Hayek, the 20th century’s greatest theorist of this “extended order”:

The more civilized we become, the more relatively ignorant must each individual be of the facts on which the working of his civilization depends. The very division of knowledge increases the necessary ignorance of the individual of most of this knowledge.

Which raises the question: How is this possible? How do we come to trust each other so implicitly that we are able to put our lives routinely into the hands of strangers? To bring the matter down to concrete detail, how is it possible to fly to another city, or even another country, hand a complete stranger a piece of plastic, and get a $20,000 car, which you then promise to return to another stranger in another city?

The answer, in a word, is institutions. First of all, formal legal and political institutions define and enforce property and contract rights, thereby facilitating the ability of people without personal connections to do business with each other. In the parlance of economists, those institutions reduce the “transaction costs” associated with potential market exchanges. In other words, they make it possible for strangers to trust each other — which in turn makes possible the highly evolved division of labor on which our affluence depends.

But formal institutions are not enough. They must be buttressed by intangible cultural institutions — invisible bonds of reciprocity that restrain members of society from taking advantage of each other to the maximum extent the law allows. If the terms of every economic transaction had to be reduced to writing, and every ambiguity in that writing then led to litigation, the transaction costs of dealing with strangers would be staggering. Consequently, the potential for open‐​ended specialization, and for the kind of large‐​scale, long‐​term investments that produce Western‐​style prosperity, would be fatally compromised. Large‐​scale divisions of labor thus require that participants in that order share, to some minimum extent, a kind of Golden Rule ethos that inhibits opportunistic behavior.

“How effectively agreements are enforced is the single most important determinant of economic informance,” states Douglass North, a pioneer in the fast‐​growing field of institutional economics. The rich countries of the West thrive because their institutions — both the “hard” institutions of police, courts, and bureaucracies, and the “soft” institutions of cultural values — allow agreements to be enforced between total strangers across the span of years and continents.

Terrorism strikes at the foundation of the distinctive, Western form of civilization — namely, our unprecedented ability to trust one another. Just as the new barbarians turn our technology against us, so do they “weaponize” the institutions that make advanced technology possible.

Terrorism’s random acts of destruction, because they are targeted at nobody in particular, make everybody feel unsafe. Consequently, they make us apprehensive, wary — distrustful. Every Arab‐​looking passenger on your flight sets off personal alarm bells. So did every piece of mail from a stranger during the anthrax attacks. So did every white van in the D.C. area just recently.

Terrorism thus leverages its acts of physical destruction into larger contagions of economic and social disruption. Air travel plunged after September 11, and has yet to recover. Not just the airlines but the tourism industries as well have been dealt a heavy blow. Mail delivery more or less ground to a halt in the cities affected by the anthrax scare. All outdoor activities, including trips to shopping centers, were victims of the Washington‐​area sniper attacks.

The disruptions we have suffered to date, however burdensome they were or are, pale into insignificance when compared to what is possible. Imagine that a “suitcase nuke” is detonated in downtown Seattle or Atlanta — and that the group claiming responsibility announces that a second device has already been planted in another city. The massive casualties, the economic devastation that would befall the shattered, contaminated target city — those would be only the first dominoes to fall. What would happen in the rest of the country? What would be the consequences — economic, political, and cultural — of the mass evacuation from cities that followed the first blast?

Here is the grim truth: We are only one act of madness away from a social cataclysm unlike anything our country has ever known. After a handful of such acts, who knows what kind of civilizational breakdown might be in store?

Terrorism, of course, is nothing new: Its modern history dates back at least to 19th‐​century Russia. But the march of economic development and technological progress has, perversely, led to a qualitative increase in terrorism’s virulence. The power to inflict physical damage has grown by orders of magnitude, while the escalating intricacy of the division of labor means a similar, exponential increase in the economic and social costs associated with any particular act of physical destruction. As a result, the leading edges of civilization are now prone to outside attack for the first time in half a millennium. If we do not now take the full measure of this threat, and bend our considerable energies towards countering and neutralizing it, we are likely to pay a grievous price for our complacency.