---
description: High-trust societies form larger porous networks that accumulate more personbytes while low-trust familial societies rely on family ties and state intervention limiting their complexity ceiling
type: claim
domain: teleological-economics
created: 2026-02-16
source: "Hidalgo, Why Information Grows (2015)"
confidence: likely
tradition: "complexity economics, information theory, network science"
---

If knowledge and knowhow must be accumulated in networks, and if network size determines the complexity of what can be produced, then the binding constraint on economic complexity is whatever limits network formation. Hidalgo, synthesizing Fukuyama, Putnam, Granovetter, and Saxenian, argues that constraint is trust. Trust reduces the cost of forming links between people and between firms, enabling larger, more porous networks that can hold more personbytes of productive knowledge.

The mechanism operates through three channels. First, trust directly reduces link costs: in Fukuyama's words, "certain societies can save substantially on transaction costs because economic agents trust one another." Jewish diamond merchants in New York let strangers inspect diamonds in private before transactions -- feasible only because social networks implicitly enforce trust. Without trust, the same interaction would require costly contracts, insurance, and enforcement. Second, trust creates porous organizational boundaries. Silicon Valley's open labor markets and dense social networks enabled information flow between firms -- Steve Jobs could wander through Xerox PARC because people trusted him. Route 128's secretive, hierarchical firms had impervious boundaries that trapped knowledge inside organizations, limiting the regional network's ability to accumulate and recombine personbytes. Third, trust determines whether networks piggyback on family (limited scale) or civil associations (larger scale). High-trust societies (Japan, US, Germany) generate spontaneous sociability through Rotary Clubs, Freemasons, and professional associations, enabling large non-kin networks. Low-trust familial societies (southern Italy, much of Latin America, pre-modern France) rely on family enterprises and, when larger networks are needed, turn to the state -- producing mixed results like France's aerospace success and its catastrophic Plan calcul for computers.

The trust-network-complexity chain is not deterministic at the individual level -- variations between individuals dwarf variations between groups. But at the population level, it explains why economic complexity clusters geographically and why development interventions that provide capital without building trust infrastructure (the network formation substrate) consistently underperform. The challenge is especially acute for new communities forming in isolation, where [[space settlement governance must be designed before settlements exist because retroactive governance of autonomous communities is historically impossible]] -- trust-enabling institutions must precede the settlement itself because isolated populations with underdeveloped trust infrastructure cannot retroactively build the coordination mechanisms that complex production requires. Since [[economic complexity emerges from the diversity and exclusivity of nontradable capabilities not from tradable inputs]], and since trust is itself nontradable and locally embedded, the trust constraint is a second-order version of the capability constraint -- trust is the capability that enables all other capabilities to accumulate.

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Relevant Notes:
- [[economic complexity emerges from the diversity and exclusivity of nontradable capabilities not from tradable inputs]] -- trust is the meta-capability enabling accumulation of all other nontradable capabilities
- [[the personbyte is a fundamental quantization limit on knowledge accumulation forcing all complex production into networked teams]] -- trust determines how large the networks holding personbytes can grow
- [[intelligence is a property of networks not individuals]] -- trust is the social substrate that enables network intelligence to scale
- [[the internet enabled global communication but not global cognition]] -- communication technology reduces one link cost but does not substitute for trust as a network formation mechanism
- [[value is an intersubjective technology that enabled coordination beyond dunbars number by creating shared measurement independent of personal relationships]] -- trust and value systems are complementary coordination technologies: value enables exchange, trust enables the network structures that produce what is exchanged
- [[products are crystallized imagination that augment human capacity beyond individual knowledge by embodying practical uses of knowhow in physical order]] -- trust constrains the size of networks that can crystallize imagination into complex products
- [[economies cannot replicate knowhow like biology because they lack the intimate marriage of information and computation that DNA and cells provide]] -- trust networks cannot be transplanted like biological seeds, which is why Fordlandia failed
- [[the product space constrains diversification to adjacent products because knowledge and knowhow accumulate only incrementally through related capabilities]] -- trust infrastructure determines which regions of product space a country can access
- [[space settlement governance must be designed before settlements exist because retroactive governance of autonomous communities is historically impossible]] -- trust infrastructure for off-world communities must precede settlement because isolated populations cannot build coordination institutions retroactively

Topics:
- [[livingip overview]]