Ecological Policy Handbook - Vol. III

Economics is about meeting human needs and, at its core, it is about the exchange of goods and services. It is a basic human activity and occurred long before there were economists and economic theories. Exchanges occurred because they benefited both parties, and did so without advertising, stock exchanges or global corporations. Exchanges of tools and raw materials between regions occurred even before agriculture emerged. Neoclassical economic theory is based on the view that people are insatiably acquisitive and that if individuals act in their own self interest to satisfy these needs, then the greatest good will occur for the largest number of people. This view of people as “homo economicus” is at the core of the idea that the market can provide the greatest good; it is the invisible hand of the market, through individuals acting in their own self interests, that creates the greatest social good. This view of human nature is in sharp contrast with the view that humans are essentially social beings, whose happiness and well being are largely determined by their relationships with each other. And this is an issue concerning trust. To what extent is the effect of social trust on participation mediated by political efficacy? The question is why it is important to focus our attention particularly on the mediation effects of internal and external political efficacy in the analysis of the relationship between social trust and political decision makers. This debate centres on social capital and political capital literatures, explaining how social trust, as a social attitude, can convert into political skills.