What is Social Capital? Explained
More Menu

What is Social Capital? Explained

byRavi KishanPosted at
The amount of research on social capital exploded in the 1990s. Social capital provided the necessary boost to encourage group action and social cohesiveness against the backdrop of neoliberalism and postmodernism. Although the idea of social capital existed long before the 1990s, Robert Putnam's work in this area in 1990 reignited interest in it. Since then, this idea has advanced significantly, drawing both criticism and support from notable academics and international organizations. With the help of this module, we hope to develop a comprehensive understanding of social capital and its components while examining its applicability to social policy.

Content

  1. Introduction
  2. Features of Social Capital
  3. Impact of Social Capital
  4. Downsides of Social Capital
  5. Relevance of Social Capital in Social Policy 

Introduction

The idea of social capital has a long history that dates back to 1916 and the publication of "The Rural School Community Center" by L. J. Hanifan. His attempt to define social capital in his article is given below;
“In the use of the phrase social capital I make no reference to the usual acceptation of the term capital, except in a figurative sense. I do not refer to real estate, or to personal property or to cold cash, but rather to that in life which tends to make these tangible substances count for most in the daily lives of a people, namely, goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and families who make up a social unit, the rural community, whose logical center is the school. In community building as in business organization and expansion there must be an accumulation of capital before constructive work can be done”(Farr, 2004)

Following this, numerous academics including Pierre Bourdieu, James S. Coleman, and Glen C. Loury utilised the idea of social capital in their writings. But Robert Putman's 1990 book, "Bowling Alone," rekindled like never before the interest of academics, commentators, and politicians in social capital. Since its introduction, social capital has been widely employed as a leading theory to explain phenomena in the social, political, cultural, and economic arenas. In his definition of social capital from 1995, Robert Putnam says that it is "a property of social organization, such as networks, norms, and trust that promote coordination and cooperation for mutual benefit" (Putnam, 1994). The following are further definitions of social capital  

"… the institutions, relationships and norms that shape the quality andquantity of a society’s social interactions” – World Bank 
“networks together with shared norms, values and understandings thatfacilitate co-operation within or among groups” – OECD 
“…the networks, norms and relationships that help communities andorganisations work more effectively”
Many academics from many fields have freely utilized the phrase "social capital" to describe its advantages, which include economic growth, social advancement, increased civic involvement, and efficiency. Many theories in the social sciences, economics, and political science have been defined using the prism of social capital. It is currently employed by public policy makers in a number of disciplines, including community development, education, child care, sports, and the arts. Social capital was defined by David Hume as a fundamental sense of collaboration and reciprocity, or "do unto others as you would have them do unto you." The importance of this shared trust and collaboration may be seen in a number of theories, including the logic of collective action, the tragedy of the commons, and the prisoner's dilemma. While tools and training are referred to as physical and human capital, social capital is used to describe social networks, social norms, and social trust, all of which improve the quality of social relationships and society as a whole. Social capital can be a pre-condition to benefit from investments in physical and human resources

Features of Social Capital

To understand social capital and its elements one must closely look at the features of Social Capital ;

Three Components of Social Capital 

  1. Networks
    • Inter-connected groups of people having a common attribute and offering each other support or any other benefit such as group of activists, religious groups etc
      • Examples 
        • Neighbours 
        • Diamond Merchan
  2. Norms
    • Shared understanding, informal rules, or conventions which guides the behaviour such as reciprocity, ethics, respect for elder and alike
      • Examples 
        • Reciprocity of property care, emergency support in crisis. 
        • Reliability and exchange on credit
  3. Trust
    • Level of confidence people have in each other to act the way they expect or assume such a mutual trust of employer and employee
      • Examples 
        • Recognition, respect and social inclusion in neighbourhood matters 
        • Goodwill and Recognition in market
Social norms are accepted truths, unwritten laws, or accepted practices that direct or govern human behavior, such as reciprocity, ethics, and respect for authority figures. It is prevalent and relevant to many situations, including societal norms like timely payment of bills, maintaining a clean neighborhood, standing in line at checkout counters, allowing space for an ambulance van, and giving up seats for elderly passengers in public transportation. These norms provide the social fabric of the society color and encourage good behavior among its members. Social norms, however, might differ from one nation to the next. For instance, traffic etiquettes in India and the US are distinct. Additionally, social norms do not always result in advantages; instead, they might legitimize inequality by making discrimination a societal standard, as is the case with caste prejudice in India. Either psychological considerations like guilt, shame, or the fear of rejection, or physical threats and penalties, can induce compliance with social standards. Thus, simply possessing social standards may not represent positive social capital in the community. (2003) Commission

Social networks are interconnected groups of individuals who share a trait and provide assistance or other benefits to one another. Examples of social networks include activist groups and religious organizations. One person may be a part of many networks, including their family, neighborhood, place of employment, or interest groups. Every network has its own set of social norms that influence the level of mutual trust among the network members in different ways. The density or sparsity of the network would effectively define the social norms and levels of trust between individuals. Every member of a network gains from the network's expanded social support in times of need, access to knowledge and information (with lower search costs), and access to more opportunities.

A mutual trust between an employer and employee is an example of trust. Trust is the degree of confidence people have in one another to behave in the manner they expect or presume. The degree to which someone is trusted by another depends largely on how trustworthy that person is in the person's eyes. According to Fukuyama (1995), trust is the expectation that grows within a community of regular, honest, and cooperative behavior on the part of other community members, based on commonly shared standards. While trust may be viewed as a personal trait, it can also exist in institutions, communities, or nations in the form of a generalized level of trust. For instance, citizens who pay their taxes in full and on time show a general level of trust in their government to use the money wisely for the development of the nation. A generalized level of trust could be the propensity to trust institutions or strangers without any prior understanding of them. A society's degree of generalized trust might provide us an indication of the amount to which social norms are prevalent there; for example, a tranquil community will have higher levels of generalized trust than a community that has been ripped apart by conflict.

While Trust is frequently viewed as either an additional factor or an outcome/indicator of social capital in a culture, Social Norms and Networks are regarded to be the fundamental components of social capital.

As David Hume points out, however, the network of civic engagement establishes a norm of reciprocity, i.e., you will do something for a person in the expectation that the person will do the same for you, when required. A network of people's mutual trust is lubricated by this social norm of reciprocity, which also promotes social cohesiveness. Dense The scope for gossip that social ties establish leads to the development of a reputation, which pervades trust and obedience to social rules. For instance, diamond dealers who operate in a small community follow the rules out of concern for their reputation. In a farming community, a farmer gets his hay bales from a different person, borrows equipment and machines from someone else, and completes his labor with a small investment in physical and human capital. These aspects of trust, norms, and network also support physical and human capital.

These social capital components are cumulative in nature, which means that if there is a successful social network collaboration, it opens up new possibilities for a stronger and deeper collaboration. For instance, if a political party in power builds its social capital in the constituency, its chances of regaining power are increased. Due to these characteristics, social capital can be seen as a shared good that benefits everyone. Instead, it reproduces through social interactions and needs human participation, such as access to clean water or air.

A select few academics have recognized three types of social capital that exist in society in addition to these three key characteristics, including (Woolcock, 2001)
  • Bonding Social Capital: This social capital emanates out of social organizations which are based on strong bonds such as in family members or an ethnic group.
  • Bridging Social Capital: This social capital is generated out of social organization which are based on relatively weaker, sparse and more cross-cutting ties such amongst business associates, colleagues, acquaintances or common friends.
  • Linking Social Capital: A fairly new addition, this kind of social capital is facilitated through a social organization where there is hierarchy in the social relations such as political party in power and common citizens or relation between people from varying social classes.
The difference between a dense and a sparse link between people can be seen in the bonding and bridging social capital. While it exhibits both weak and strong ties, depending on the situation and need, each has a different relevance in a person's life. A number of hypotheses about the origins and determinants of social capital have been proposed by organizations such as the World Bank, OECD, and AIFS (Australian Institute of Family Studies). Eight factors that are important for the creation of social capital are "family, schools, local communities, enterprises, civil society, the public sector, gender, and ethnicity," according to the World Bank and OECD (Commission, 2003)

While AIFS has found a number of variables that influence an individual's access to social capital, including age, gender, health, family circumstances, employment status, educational attainment, home ownership, and era value. When social capital is created or accessed through these elements, multiple favorable developments for people, society, and the economy result. 

Impact of Social Capital

The importance of social capital in fostering stronger democracies, resilient economies, and cohesive societies is becoming more widely recognized. The few domains where social capital has a positive effect are as follows:

Democracy: In his article, Portman (1995) emphasized how the social capital of the communities was credited with the success of a few north regional administrations in Italy. Italians set up a few strong regional governments in the 1970s to improve governance. While the governments' organizational structures were the same, the ecosystems of the two countries varied, from pre-industrial to post-industrial to conservative catholic cultures. Number administrations over time succeeded brilliantly, while a select few created initiatives like creative child care programs, skill training facilities, and investment-friendly economic policies. Investigation of the factors that contributed to the government's successes and failures revealed that citizen engagement was the deciding factor. Here, civic involvement was defined as things like voting, reading newspapers, joining literary clubs, lion clubs, soccer clubs, and other organizations. These formed the cornerstone of a robust democracy that succeeded in a select few places, while the remaining regions collapsed in their absence.

Residents of areas with community organizations, like Tuscany and Romagna, participated more in politics and upheld the law. The political leaders in these areas were also sincere and dedicated. These civic communities placed a high importance on civic engagement and cooperation, which supported democracy in these areas. While in the other areas, there was no public involvement in social or cultural affairs, the powerful dominated politics and the general populace showed little interest, and there was a high rate of crime. Consequently, these crumbling aspects contributed to the demise of democracy in many areas. The success of democracies in Italy was greatly influenced by social capital, particularly in the forms of social cohesion and civic participation. Therefore, social capital and civic participation can be seen as the fundamental elements of a good democracy. (Swain, 2001)

Economic growth: Social capital has many positive effects on society's economy. The few direct or indirect economic advantages of social capital are listed below: It promotes economic growth by lubricating its determinants.
  • Less Transaction Cost: The generalized trust, social norms and networks aid the transaction process without having any glitches. E.g. social norms of client first policy at companies makes way for a smooth transaction for the clients, generalized trust and network in diamond market aids the diamond merchants to operate freely in the market with any instances of cheating or duping. Lastly, networks help majorly in reducing the search cost e.g. If one needs to buy a good laptop, one will try to reach out to friends and family members who work in IT sector or has knowledge on laptops and its viability, this considerably reduce your search cost, thereby bringing down the transaction cost.
  • Conducive Economic Climate: With symmetry of knowledge in the market, lower transaction cost owing to high levels of generalized trust, social norms and dense networks, social capital enable new players and entrepreneurs to enter the market. It also facilitates effective competition which leads to efficient allocation of resources. 
  • Modern Economy: High levels of generalized trust creates a conducive eco-system for the private players to emerge and thrive, facilitate their growth and expansion. E.g. in countries U.S., Germany or Japan, the need for the State to intervene is minimal which lends private players freedom to operate and grow.
Labor Market: There are several factors that could contribute to the labor market operating efficiently.
  • Higher Educational Attainment: Effective parent to school network can develop a higher educational attainment, also a progressive neighbourhood can also impact the parent’s proclivity to send children to study and aspire for learning. Strong community network and norms can also work towards discouraging pupils from truancy. 
  • Lower Crime Levels: Strong community ties can restrict those who are likely transgress the socially accepted norms through support, guidance or the fear of shaming or ostracism. 
  • Better Health: Bonding social capital can be very effective in helping people with mental health issues. Many sociologists have found a close link between suicide and social factors. There have been many studies suggesting how people having strong bonding social capital are less likely to commit suicide. Also, a strong social capital would also contribute towards addressing health ailments in a society through better hygiene maintenance, clean environment and adoption of preventive measures such as vaccination drives and community health check-ups.
Through these advantages, social capital can promote a variety of macro, mezzo, and micro-level public policy objectives. Therefore, the government's efforts must be directed on creating and increasing positive social capital throughout the State. Social capital, however, can also contribute to unfavorable outcomes, which will be covered in the following section.

Downsides of Social Capital

Problems with Social Capital While social capital can quicken the pace of growth, it can also impede society's overall advancement. The following are a few social capital drawbacks:
  • Economic: Fostering behaviour can further worsen the economy and market rather than developing it. Dense networks of corporates may translate into cartelisation in the market, to the disadvantage of the consumers. It may also develop a “rent-seeking” behaviour amongst community members who would want to pursue sectional interests such ethnic groups, cartels and alike. 
  • Social Exclusion: Social capital could be social exclusionary at many levels such as ‘old boy networks’ restricting the entry of non-members of the network. Also regressive social norms may have degenerating effects on the society such as caste system. An imbalance , such as strong bonding social capital in comparison to bridging social capital, may render very restricted incremental benefits for the community, since they have internal strong ties without having ties with wider community, which could provide them better avenues such as job opportunities and alike. 
  • Higher Crime Rate: Terrorists and criminals also thrive on bonding social capital. Religious terrorist outfits would use religion as a common bond to recruit more people in their organization. Italian mafia network was founded upon familial connections and relations. Hence bonding social capital can be an impetus for such illegal activities.
  • Lower Educational Attainment: Similarly, in a community which encourages truancy, anybody aspiring for education attainment would be discouraged. Also social networks is the main channel through which unhealthy practices as drugs or smoking or infectious diseases are transferred.
Individually progressive thinking and ideas of community members might be disparaged by regressive social norms and networks, which limits their ability to grow and develop.  Therefore, for democracies to flourish, public actions must be directed at both creating positive social capital and destroying negative social capital.

Relevance of Social Capital in Social Policy

Social Capital offers both positives and cons, which needs the State to ensure that all the social policies, programmes and activities should not unduly destroy it rather it must harness the existing social capital to its maximum level. It must also be directed at eliminating the disadvantages of the social capital outlined above through focussed state action and efforts. State must start integrating the perspective of social capital in policy planning process to assess the actual cost or benefit of a policy interventions. E.g. metro plan in the city might be useful for the public but may have harmful consequences of displaced communities through destruction of their social capital or any public works program to discourage distress migration will also strengthen the social capital of the community. Such benefits and costs should be viewed as policy outcomes. Social capital can be effectively employed to enhances policy outcomes of policies such as education policies, health programmes, economic policies, labour policies and such. 

Accumulation of social capital provides positive externalities such as adherence to social norms or generalised trust, which can act as catalysts to facilitate providing of public goods, lowered crime levels, cheaper healthcare bills and lower tax evasions. The strong provision of complementarities can also encourage community members to contribute towards social capital e.g. the perks and benefits of becoming a member can lead to more people becoming a member, which eventually help in stabilising the community with active civic engagement and adherence social norms of the network. Social policy implementation thrive in a stable community, providing positive benefits. 

A strong democracy established upon active engagement from citizens in both social and political realm, may rely on its citizens to guide the State for improved policy making. These citizens are extremely inclined to contribute towards tax payments, conform to regulations, build progressive social norms and assume onus of finding a solution to common problems UKPIU (2002, 52). (2002, 52). There are evident advantages of integrating social capital into mainstream public policy analyses for better outcomes. Hence there is a rising need to develop policy design aiming boosting latent social capital and adjust existing policies which erode social capital, for a successful social policy implementation.

References

  • Commission, P. (2003). Social Capital: Reviewing the Concept and its Polcy Implications. Melbourne: Productivity Commission, Australia. 
  • Farr, J. (2004). Social Capital: A Conceptual History. Political Theory, Vol. 32, 6-33.
  •  Fitzpatrick, S. A. (2002). Social Capital - A Discussion Paper. London: Performance and Innovation Unit. 
  • Putnam, R. D. (1994). Social Capital and Public Affairs. Bulletin of the American Academy of Arts and Sciences, Vol. 47, 5-19. 
  • Swain, H. B. (2001, March 2). Investigating Democracy and Social Capital in India. Economic and Political Weekly, pp. 639-643. 
  • Woolcock, M. (2001). The Place of Social Capital in Understanding Social and Economic Outcomes. Canadian Journal of Policy Research , 11-17.
Post a Comment Tag

Comments

Thank You