China’s Social Credit System An ambitious attempt to build social capital

China is developing a social credit system (SCS), a national reputation system that aims to promote the traditional virtues of integrity, discourage dishonesty, and build an environment of trust^[1]. The SCS will utilise big-data enabled surveillance infrastructure to manage, monitor, and predict the trustworthiness of citizens, firms, organizations, and governments^[2]. The scheme has attracted considerable criticism from Western media over concerns it may create a dystopia of social control^[3]. This article will not comment on these concerns, instead, will focus on the potential of the system to build social capital.

What is the Social Credit System?

Under the scheme, every individual and organisation will have a social credit score that is increased by actions that are determined to be appropriate and reduced by inappropriate actions. These scores will then result in various rewards or punishments as feedback to actors^[4]. The system will utilise surveillance infrastructure and facial recognition that will track the movements and actions of individual citizens and process them to produce quantified scores^[5]. It will include a wide variety of online behaviours as well as offline activities that require reports and documentation.

It is claimed that scores will relate to the morality of actions, covering economic, social and political conduct^[4]. It is hoped that this will create an environment where trust and prosocial norms can develop. This is required because, as the government and various commentators have identified, Chinese society lacks a public morality of honesty and trust^[6]. This is the kind of social environment in which social capital does not thrive.

Distrust and dishonesty in China

The problems of distrust in Chinese society have been linked to the decades of strict government controls^[7] that have been plagued by frequent corruption, scandals, and a criminal justice system that is often harsh, unjust, and discriminatory^[8]. People often expect to be cheated or to get in trouble without having done anything^[7]. This creates suspicion, distrust, and people tend to be insular for fear of getting in trouble.

The Chinese government has acknowledged these problems since at least the early 2000s, and see the SCS as a remedy^[1]. However, will more top-down intervention reverse these problems, or will it ultimately deepen rather than correct the disequilibria in the country’s social capital?

It seems ironic that the government aims to solve the problems of distrust that was caused by strict government controls by adding what amounts to more, and potentially stricter, government controls.

Social capital and governance in China

At the societal level social capital is fundamentally about the attitudes and values governing interactions amongst people^[9]. These attitudes and values can create a potential willingness for people to cooperate with each other and to engage in civic endeavours collectively^[10]. It is this willingness to act pro-socially that underpins social capital, and this is what has been eroded by Chinese governance over the last 50 years.

Humans are social by nature. We have evolved to be social, to be cooperative, and to collaborate with others in the pursuit of shared goals. It is a fundamental aspect of what it means to be human, however, after decades of control, many Chinese people have learned not to be. They have learned to be distrusting because they expect others to be dishonest, they have learned that integrity can have severe costs, and that generosity is often not reciprocated.

Can the Social Credit System reverse the loss of social capital?

Yes, it could reverse the loss of social capital, but it may not and there may be better ways to build social capital in China.

It could because governance is an important source of social capital since it provides a framework for establishing society wide shared understandings. At the societal level, strong coordinating institutions are very important. They act like a glue that keeps modern society together by producing universally understood rules^[11]. They give people a degree of confidence in how others will act, especially where institutions have the capacity to compel the observance of these rules.

The SCS may create a strong set of rules that promote integrity and moral behaviour with strict enforcement through powerful rewards and punishments. If people believe that others will abide by these rules, for the hope of reward or opportunity and for fear of disadvantage or punishment, then in theory at least this should reduce transaction costs and promote interaction and exchange. Dishonest behaviour such as corruption, fraud, theft, and cheating should be less common, creating an environment where trust can develop.

The SCS may be effective as a tool to create confidence in others behaviour if people believe that others will not be untrustworthy for fear of losing SCS credits. This outcome is not preordained. It depends on what people think of the system – the dominant attitude of people towards the system and whether they think others are sufficiently concerned by the consequences the system creates to be trustworthy. I’ll return to the issue of attitudes and beliefs later.

Human behaviour as rational

SCS is based on the premise that human behaviour is the rational pursuit of maximum utility. However, is human behaviour the result of simple cost-benefit analysis? That rational theory approach assumes that if various costs and benefits are enforced upon individuals, then people will naturally change their behaviour to maximise benefits and minimise costs.

The underlying principle is that the bigger the benefits and the more severe the costs the more effective the program would be in changing behaviour. However, the rational theory approach is an incomplete explanation for human behaviour since it ignores other motivations of behaviour. It provides little account of biological and psychological factors or of morality and emotion as motivations of behaviour.

Assuming the rationale for human behaviour – the lost wallet example

For example, we can observe that a person returns a lost wallet. We could explain this behaviour as the person predicting that the owner will give them a reward, if not now, sometime in the future. So, it is consistent with deliberate calculation and a selfish motive.

However, the behaviour may be consistent with a learned habit where there is no calculation at all: the person never imagines an alternative behaviour. The behaviour just fits the situation.

Another explanation is that returning the wallet is the right thing to do. It may be linked to a cultural or religious value or belief. For example, it’s what ought to be done, or that those who do good deeds will go to heaven. So, the observation of the behaviour does not explain the motive.

A further reason to return the wallet may be sympathy for the person who lost it. Emotion can play an important role and can be incongruent with rationality. The person may return the wallet because they feel good doing so, or because not doing so would weigh on their conscience, not because of any tangible reward or benefit.

A final reason to return the wallet may relate to biological or psychological factors derived from human evolution that has created a disposition to be cooperative and to seek social recognition and inclusion, often beyond or at the expense of personal benefits.

Attitudes and beliefs – interpretation of meaning and significance

The above example highlights how the SCS directly targets the rational aspects of human behaviour by changing the cost-benefit equation. It may also indirectly change attitudes by sending a clear signal of how one ought to act and how one ought not act. However, this signal may not create the desired norms, depending on how it is interpreted. For example, rules that are interpreted as unfair may be rejected, having little effect or even an opposite effect on related norms. And it is this interpretation that tends to have flow on effects to moral beliefs and emotional responses.

How a policy is interpreted is incredibly complex and different for every person since it relates to the ways individuals perceive the world around them and react to it. This is commonly referred to as one’s worldview (also relevant is Bourdieu’s concept of habitus and Habermas’ concept of lifeworld). It is based on all previous experiences and our memory and interpretation of them.

It could be somewhat simplified to the derived meaning and significance of all previous issues and events, distorted by memory and retelling, and influenced by shared understandings stemming from others’ comments on the issues or events.

So, the SCS could be rejected by the majority of the population because of how it is understood and interpreted. Thus, creating more strict government rules and punishments that are perceived to be unfair and unjust that simply reinforces the problem.

This means the SCS in isolation may fail to achieve its stated goal of creating an environment for the development of integrity and trust. If people’s motives are reduced to utility maximising and rationally calculating interests, then there is little hope for the program. However, it could be successful in combination with other initiatives and policies that focus on more encompassing values such as belonging, solidarity, friendship, and esteem.

External reinforcement

The SCS represents a top-down approach that involves external reinforcement, both external to the local community and external to the individual.

If the scheme fails to change societal level attitudes and values towards trustworthy behaviour, then it will simply represent further regulation of human behaviour. Regulation is never perfect since it cannot be universally prescriptive and is dependent on the effectiveness of monitoring and enforcement. China has extensive mass surveillance infrastructure^[12], but it seems unlikely it could capture and accurately evaluate all actions and interactions.

So, if the system has little effect on changing attitudes and values, then people may just play the rules of the game. The system would fail to change worldviews that have wider implications for behaviour. Where the SCS is not watching or where there are no consequences for credits and demerits there may be no change in behaviour.

Change the SCS influence social capital?

China is an interesting case study of how human behaviour towards others changes in response to strict government control. Can a prescriptive top-down scheme like China’s social credit system be effective in changing societal-level social capital? Or will it reinforce the problem? Perhaps China needs to consider the broader sources of social capital and how less prescriptive changes can influence the creation of social capital. When social capital is externalised, regulated, or used as a currency it loses its core character.