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Social Capital
Social Capital is a form of economic and cultural capital in which social networks are central,
transactions are marked by reciprocity, trust, and cooperation, and market agents produce goods
and services not mainly for themselves, but for a common good.
The term generally refers to (a) resources, and the value of these resources, both tangible (public
spaces, private property) and intangible ("actors", "human capital", people), (b) the relationships
among these resources, and (c) the impact that these relationships have on the resources involved
in each relationship, and on larger groups. It is generally seen as a form of capital that produces
public goods for a common good.
Social Capital has been used to explain the improved performance of diverse groups, the growth
of entrepreneurial firms, superior managerial performance, enhanced supply chain relations, the
value derived from strategic alliances, and the evolution of communities.
During the 1990s and 2000s the concept has become increasingly popular in a wide range of
social science disciplines and also in politics.
Background
The term social capital was in intermittent use from about 1890, before becoming widely used in
the late 1990s.
In the first half of the 19th century, Alexis de Tocqueville had observations about American life
that seemed to outline and define social capital. He observed that Americans were prone to
meeting at as many gatherings as possible to discuss all possible issues of state, economics, or
the world that could be witnessed. The high levels of transparency caused greater participation
from the people and thus allowed for democracy to work better. The French writers highlighted
also that the level of social participation (social capital) in American society was directly linked
to the equality of conditions (Ferragina, 2010; 2012; 2013).
L. J. Hanifan's 1916 article regarding local support for rural schools is one of the first
occurrences of the term social capital in reference to social cohesion and personal investment in
the community. In defining the concept, Hanifan contrasts social capital with material goods by
defining it as:
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 people, namely,
goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and
families who make up a social unit… If he may come into contact with his neighbour, and they
with other neighbours, there will be an accumulation of social capital, which may immediately
satisfy his social needs and which may bear a social potentiality sufficient to the substantial
improvement of living conditions in the whole community. The community as a whole will
benefit by the cooperation of all its parts, while the individual will find in his associations the
advantages of the help, the sympathy, and the fellowship of his neighbours (pp. 130-131).
John Dewey used the term in his monograph entitled "School and Society" in 1900, but he
offered no definition of it.
Jane Jacobs used the term early in the 1960s. Although she did not explicitly define the term
social capital, her usage referred to the value of networks.[4] Political scientist Robert Salisbury
advanced the term as a critical component of interest group formation in his 1969 article "An
Exchange Theory of Interest Groups" in the Midwest Journal of Political Science. Sociologist
Pierre Bourdieu used the term in 1972 in his Outline of a Theory of Practice, and clarified the
term some years later in contrast to cultural, economic, and symbolic capital. Sociologists James
Coleman, Barry Wellman and Scot Wortley adopted Glenn Loury's 1977 definition in
developing and popularising the concept. In the late 1990s the concept gained popularity, serving
as the focus of a World Bank research programme and the subject of several mainstream books,
including Robert Putnam's Bowling Alone and Putnam and Lewis Feldstein's Better Together.
The concept that underlies social capital has a much longer history; thinkers exploring the
relation between associational life and democracy were using similar concepts regularly by the
19th century, drawing on the work of earlier writers such as James Madison (The Federalist
Papers) and Alexis de Tocqueville (Democracy in America) to integrate concepts of social
cohesion and connectedness into the pluralist tradition in American political science. John
Dewey may have made the first direct mainstream use of social capital in The School and
Society in 1899, though he did not offer a definition.
The power of community governance has been stressed by many philosophers from antiquity to
the 18th century, from Aristotle to Thomas Aquinas and Edmund Burke (Bowles and Gintis,
2002). This vision was strongly criticised at the end of the 18th century, with the development of
the idea of Homo Economicus and subsequently with rational choice theory. Such a set of
theories became dominant in the last centuries, but many thinkers questioned the complicated
relationship between modern society and the importance of old institutions, in particular family
and traditional communities (Ferragina, 2010:75). The debate of community versus
modernization of society and individualism has been the most discussed topic among the fathers
of sociology (Tönnies, 1887; Durkheim, 1893; Simmel, 1905; Weber, 1946). They were
convinced that industrialisation and urbanization were transforming social relationship in an
irreversible way. They observed a breakdown of traditional bonds and the progressive
development of anomie and alienation in society (Wilmott, 1986).
After Tönnies' and Weber's works, reflection on social links in modern society continued with
interesting contributions in the 1950s and in the 1960s, in particular mass society theory (Bell,
1962; Nisbet, 1969; Stein, 1960; Whyte, 1956). They proposed themes similar to those of the
founding fathers, with a more pessimistic emphasis on the development of society (Ferragina,
2010: 76). In the words of Stein (1960:1): "The price for maintaining a society that encourages
cultural differentiation and experimentation is unquestionably the acceptance of a certain amount
of disorganization on both the individual and social level." All these reflections contributed
remarkably to the development of the social capital concept in the following decades.
The appearance of the modern social capital conceptualization is a new way to look at this
debate, keeping together the importance of community to build generalized trust and the same
time, the importance of individual free choice, in order to create a more cohesive society
(Ferragina, 2010; Ferragina, 2012 It is for this reason that social capital generated so much
interest in the academic and political world (Rose, 2000).
Evaluation
Pierre Bourdieu's work tends to show how social capital can be used practically to produce or
reproduce inequality, demonstrating for instance how people gain access to powerful positions
through the direct and indirect employment of social connections. Robert Putnam has used the
concept in a much more positive light: though he was at first careful to argue that social capital
was a neutral term, stating "whether or not the shared are praiseworthy is, of course, entirely
another matter", his work on American society tends to frame social capital as a producer of
"civic engagement" and also a broad societal measure of communal health. He also transforms
social capital from a resource possessed by individuals to an attribute of collectives, focusing on
norms and trust as producers of social capital to the exclusion of networks.
Mahyar Arefi identifies consensus building as a direct positive indicator of social capital.
Consensus implies "shared interest" and agreement among various actors and stakeholders to
induce collective action. Collective action is thus an indicator of increased social capital.
Edwards and Foley, as editors of a special edition of the American Behavioural Scientist on
"Social Capital, Civil Society and Contemporary Democracy", raised two key issues in the study
of social capital. First, social capital is not equally available to all, in much the same way that
other forms of capital are differently available. Geographic and social isolation limit access to
this resource. Second, not all social capital is created equally. The value of a specific source of
social capital depends in no small part on the socio-economic position of the source with society.
On top of this, Portes has identified four negative consequences of social capital: exclusion of
outsiders; excess claims on group members; restrictions on individual freedom; and downward
levelling norms.
An interesting distinction of social organization is that between bonding and bridging ties, which
complicates the neo-Tocquevillean view of social capital.
Varshney studied the correlation between the presence of interethnic networks (bridging) versus
intra-ethnic ones (bonding) on ethnic violence in India. He argues that interethnic networks are
agents of peace because they build bridges and manage tensions, by noting that if communities
are organized only along intra-ethnic lines and the interconnections with other communities are
very weak or even nonexistent, then ethnic violence is quite likely. Three main implications of
intercommunal ties explain their worth:
Facilitate communication in the community across ethnic lines
Squelch false rumors
Help the administration carry out its job and in particular peace, security and justice
This is a useful distinction; nevertheless its implication on social capital can only be accepted if
one espouses the functionalist understanding of the latter concept. Indeed, it can be argued that
interethnic, as well as intra-ethnic networks can serve various purposes, either increasing or
diminishing social capital. In fact, Varshney himself notes that intraethnic policing (equivalent to
the "self-policing" mechanism proposed by Fearon and Laitin) may lead to the same result as
interethnic engagement.
Social capital is often linked to the success of democracy and political involvement. Robert D.
Putnam, in his book Bowling Alone makes the argument that social capital is linked to the recent
decline in American political participation. Putnam's theoretical framework has been firstly
applied to the South of Italy (Putnam, 1993). This framework has been rediscussed by
considering simultaneously the condition of European regions and specifically Southern Italy.
Definitions, forms, and measurement
Social capital has multiple definitions, interpretations, and uses. Thomas Sander defines it as "the
collective value of all social networks (who people know), and the inclinations that arise from
these networks to do things for each other (norms of reciprocity)." Social capital, in this view,
emphasizes "specific benefits that flow from the trust, reciprocity, information, and cooperation
associated with social networks". It "creates value for the people who are connected, and for
bystanders as well." Meanwhile, negative norms of reciprocity serve as disincentives for
detrimental and violent behaviors.
David Halpern argues that the popularity of social capital for policymakers is linked to the
concept's duality, coming because "it has a hard nosed economic feel while restating the
importance of the social." For researchers, the term is popular partly due to the broad range of
outcomes it can explain; the multiplicity of uses for social capital has led to a multiplicity of
definitions. Social capital has been used at various times to explain superior managerial
performance, the growth of entrepreneurial firms, improved performance of functionally diverse
groups, the value derived from strategic alliances, and enhanced supply chain relations. 'A
resource that actors derive from specific social structures and then use to pursue their interests; it
is created by changes in the relationship among actors'.
Early attempts to define social capital focused on the degree to which social capital as a resource
should be used for public good or for the benefit of individuals. Putnam suggested that social
capital would facilitate co-operation and mutually supportive relations in communities and
nations and would therefore be a valuable means of combating many of the social disorders
inherent in modern societies, for example crime. In contrast to those focusing on the individual
benefit derived from the web of social relationships and ties individual actors find themselves in,
attribute social capital to increased personal access to information and skill sets and enhanced
power. According to this view, individuals could use social capital to further their own career
prospects, rather than for the good of organisations.
In The Forms of Capital Pierre Bourdieu distinguishes between three forms of capital: economic
capital, cultural capital and social capital. He defines social capital as "the aggregate of the actual
or potential resources which are linked to possession of a durable network of more or less
institutionalized relationships of mutual acquaintance and recognition." His treatment of the
concept is instrumental, focusing on the advantages to possessors of social capital and the
"deliberate construction of sociability for the purpose of creating this resource." Quite contrary to
Putnam's positive view of social capital, Bourdieu employs the concept to demonstrate a
mechanism for the generational reproduction of inequality. Bourdieu thus points out that the
wealthy and powerful use their "old boys network" or other social capital to maintain advantages
for themselves, their social class, and their children.
James Coleman defined social capital functionally as "a variety of entities with two elements in
common: they all consist of some aspect of social structure, and they facilitate certain actions of
actors...within the structure"—that is, social capital is anything that facilitates individual or
collective action, generated by networks of relationships, reciprocity, trust, and social norms. In
Coleman's conception, social capital is a neutral resource that facilitates any manner of action,
but whether society is better off as a result depends entirely on the individual uses to which it is
put.
According to Robert Putnam, social capital "connections among individuals - social networks
and the norms of reciprocity and trustworthiness that arise from them." According to Putnam and
his followers, social capital is a key component to building and maintaining democracy. Putnam
says that social capital is declining in the United States. This is seen in lower levels of trust in
government and lower levels of civic participation. Putnam also says that television and urban
sprawl have had a significant role in making America far less 'connected'. Putnam believes that
social capital can be measured by the amount of trust and "reciprocity" in a community or
between individuals.
Putnam also suggests that a root cause of the decline in social capital is women's entry the
workforce, which could correlate with time restraints that inhibit civic organizational
involvement like parent-teacher associations. Technological transformation of leisure (e.g.,
television) is another cause of declining social capital, as stated by Putnam. This offered a
reference point from which several studies assessed social capital measurements by how media is
engaged strategically to build social capital
Nan Lin's concept of social capital has a more individualistic approach: "Investment in social
relations with expected returns in the marketplace." This may subsume the concepts of some
others such as Bourdieu, Flap and Eriksson.
Newton (1997) considered social capital as subjective phenomenon formed by values and
attitudes which influence interactions.
In "Social Capital and Development: The Coming Agenda," Francis Fukuyama points out that
there isn't an agreed definition of social capital, so he explains it as "shared norms or values that
promote social cooperation, instantiated in actual social relationships" (Fukuyama, 27), and uses
this definition throughout this paper. He argues that social capital is a necessary precondition for
successful development, but a strong rule of law and basic political institutions are necessary to
build social capital. He believes that a strong social capital is necessary for a strong democracy
and strong economic growth. Familism is a major problem of trust because it fosters a two-tiered
moral system, in which a person must favor the opinions of family members. Fukuyama believes
that bridging social capital (a phrase used by Putnam in Bowling Alone), is essential for a strong
social capital because a broader radius of trust will enable connections across borders of all sorts
and serve as a basis for organizations. Although he points out many problems and possible
solutions in his paper, he does admit that there is still much to be done to build a strong social
capital.
Nahapiet and Ghoshal in their examination of the role of social capital in the creation of
intellectual capital, suggest that social capital should be considered in terms of three clusters:
structural, relational, and cognitive. Carlos García Timón describes that the structural dimensions
of social capital relate to an individual ability to make weak and strong ties to others within a
system. This dimension focuses on the advantages derived from the configuration of an actor's,
either individual or collective, network. The differences between weak and strong ties are
explained by Granovetter. The relational dimension focuses on the character of the connection
between individuals. This is best characterized through trust of others and their cooperation and
the identification an individual has within a network. Hazleton and Kennan added a third angle,
that of communication. Communication is needed to access and use social capital through
exchanging information, identifying problems and solutions, and managing conflict. According
to Boisot and Boland and Tenkasi, meaningful communication requires at least some sharing
context between the parties to such exchange.
The cognitive dimension focusses on the shared meaning and understanding that individuals or
groups have with one another.
A number of scholars have raised concerns about lack of precise definition of social capital.
Portes, for example, noted that the term has become so widely used, including in mainstream
media, that "the point is approaching at which social capital comes to be applied to so many
events and in so many different contexts as to lose any distinct meaning." Robison, Schmid, and
Siles reviewed various definitions of social capital and concluded that many did not satisfy the
formal requirement of a definition. They noted that definitions must be of the form A=B while
many definition of social capital described what it can be used to achieve, where it resides, how
it can be created, and what it can transform. In addition, they argue that many proposed
definition of social capital fail to satisfy the requirements of capital. They propose that social
capital be defined as "sympathy". The object of another's sympathy has social capital. Those who
have sympathy for others provide social capital. One of the main advantages of having social
capital is that it provides access to resources on preferential terms. Their definition of sympathy
follows that used by Adam Smith, the title of his first chapter in the "Theory of Moral
Sentiments."
A network-based conception can also be used for characterizing the social capital of
collectivities (such as organizations or business clusters).
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