A New Credit History: How to Understand Whom to Trust?
Book Review: Carruthers B. G. (2022) The Economy of Promises: Trust, Power, and Credit in America, Princeton: Princeton University Press. 408 pp.
Abstract
Bruce Carruthers’ book “The Economy of Promises: Trust, Power, and Credit in America” is devoted to a historical and sociological analysis of the evolution of credit relations in the United States. The key question that the author answers is how did creditors decide whom to trust in different periods of U. S. history? The author draws on earlier work by sociologists, historians, and economists, and also systematizes historical facts, showing that credit relations have changed significantly since the beginning of the 19th century. Thus, he analyzes the transition from informal credit, which was regulated by a bilateral promise, to an extensive network where credit relations are regulated by legislation, the state, as well as corporations and individuals. Carruthers shows that the invention of ratings became a way to streamline credit relations. This process has made it possible to make credit not just a service for companies, but also to provide an opportunity to lend to individuals, since with the advent of ratings it became possible to instantly assess how much a person can be trusted. The review reveals the main ideas of Bruce Carruthers’ book, focusing, firstly, on the problem of information asymmetry, which is solved by credit ratings, and secondly, on the consequences of their use. Thus, credit ratings reproduce patterns of social inequality, depriving poorer segments of the population of access to credit. Secondly, the review touches upon the ethical problem that arises as a result of the commodification of credit history information. In conclusion, it is shown how the academic community has perceived the book, and how such an approach can be applied to the history of credit relations in Russia.
