In a previous post, I talked about how there are two different kinds of trust, and how important that is to understanding what needs to happen in the currency world. Here is a fantastic essay on confucianism technical standards and culture, which gets to the same essential pattern but in a different arena. The essay includes the following quote from Confucious’ Analects:

Lead the people with administrative injunctions and keep them orderly with penal law, and they will avoid punishments but will be without a sense of shame. Lead them with excellence and keep them orderly through observing [禮] and they will develop a sense of shame, and moreover, will order themselves.

This is exactly related the trust question. Do we organize ourselves through internal or external processes? Shame and punishment are both processes that can lead to social conformance. The first is internal the second external.