I hope you want a serious answer, because you are getting one. :-)

Even today there are companies that work on handshakes. For instance with the glaring exception of a [link|http://www.papyrusweb.ch/Quekese/KingstonSun.asp|patent lawsuit] against [link|http://www.sun.com/|Sun], I do not think that [link|http://www.kingston.com/|Kingston] has hired any lawyers. (Before they were threatened, they certainly hadn't. And they are not a small company.)

Conversely when you look back in history you cannot find a time when unethical practices were not widely considered part of life. For a totally random instance in the fur trade it was standard practice for trading stations to not be heated. You see they used spring scales to measure how much fur they bought. Cold springs are stiffer and hence underweigh.

Similarly one of the key inventions that lead to Western Commerce being so powerful was double-bookeeping. It made it far easier to catch cheating employees. People are never so honest as when they think they will be caught.

So what makes the difference? It is quite simple. A business' incentive to be honest and decent is directly correlated with how likely it is to do repeat business. If your car breaks down in a small town and the mechanic knows full well that you ain't coming back, you are going to get soaked. Conversely a company like Kingston depends on established relationships. They would be stupid to damage them, so they have a lot of incentive to behave nicely, and conversely. Which is why they were able to survive without lawyers and without contracts. (Though that is extreme.)

So what changed? Well quite simply, we used to be organized far more into small ocmmunities. Screw someone, and everyone would know about it, and the conseuences would come back to haunt you. Today we live in a much more anonymous world.

Cheers,
Ben