Social capital

Overview

Social capital is a concept used in sociology and economics to define networks of relationships which are productive towards advancing the goals of individuals and groups. It involves the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. Some have described it as a form of capital that produces public goods for a common purpose, although this does not align with how it has been measured. 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.

History

While it has been suggested that the term social capital was in intermittent use from about 1890, before becoming widely used in the late 1990s, the earliest credited use is by Lyda Hanifan in 1916 (see 20th century below). The debate of community versus modernization of society and individualism has been the most discussed topic among the founders of sociology: such theorists as Tönnies (1887), Durkheim (1893), Simmel (1905), and Weber (1946) were convinced that industrialisation and urbanization were transforming social relationships in an irreversible way. They observed a breakdown of traditional bonds and the progressive development of anomie and alienation in society.

18th–19th century

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. 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. 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. In the first half of the 19th century, 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.

20th century

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. Following the works of Tönnies (1887) and Weber (1946), reflection on social links in modern society continued with interesting contributions in the 1950s and in the 1960s. In particular, mass society theory – as developed by Daniel Bell (1962), Robert Nisbet (1969), Maurice R. Stein (1960), William H. Whyte (1956) – proposed themes similar to those of the founders, with a more pessimistic emphasis on the development of society. 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." 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. 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, administrative capital, physical capital, political capital, social capital and symbolic capital. Sociologists James Coleman (1988), as well as Barry Wellman & Scot Wortley (1990), 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 & Lewis Feldstein's Better Together. All of these reflections contributed 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, at the same time, the importance of individual free choice, in order to create a more cohesive society. For this reason, social capital generated a great deal of interest in the academic and political world.

Definitions and forms

Social capital has multiple definitions, interpretations, and uses. 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 involves networks of relationships based on trust that allows individuals and institutions to access resources needed. 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" (Baker 1990, p. 619). Early attempts to define social capital focused on the degree to which social capital serves as a resource – be it for public good or private benefit. Robert D. Putnam (1993) 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, others focus on the private benefits derived from the web of social relationships in which individual actors find themselves. This is reflected in Nan Lin's concept of social capital as "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) treats social capital as a subjective phenomenon formed by values and attitudes that influence interactions. Nahapiet and Ghoshal (1998), 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.

Definitional issues

A number of scholars have raised concerns about the imprecision in defining social capital. Portes (2000), for example, notes 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." The term capital is used by analogy with other forms of economic capital, as social capital is argued to have similar (although less measurable) benefits. However, the analogy may be misleading in that, unlike financial forms of capital, social capital is not depleted by use; instead, it is depleted by non-use (use it or lose it). In this respect, it is similar to the economic concept of human capital. Robison, Schmid, and Siles (2002) review various definitions of social capital and conclude that many do not satisfy the formal requirements of a definition. They assert that definitions must be of the form A=B, while many explanations of social capital describe what it can be used to achieve, where it resides, how it can be created, or what it can transform. In addition, they argue that many proposed definitions 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. This proposition appears to follow Adam Smith, Theory of Moral Sentiments to some degree, but Smith's conceptualization of sympathy (particularly in the first two chapters of this work) appear more concerned with the roles of acceptance or congruence – in ethics or virtue – in evaluating an individual's 'propriety of action'. Social capital is different from the economic theory of social capitalism, which challenges the idea that socialism and capitalism are mutually exclusive.

Forms of capital (Bourdieu)

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.

Norms of trust and reciprocity (Sander, Putnam, Coleman)

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. 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 D. Putnam, social capital refers to "connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them." In the view of 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 suggests that a root cause of the decline in social capital is women's entry into 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.

Civic association (Fukuyama)

In "Social Capital, Civil Society, and Development", political economist Francis Fukuyama defines social capital as generally understood rules that enable people to cooperate such as the norm of reciprocity or religious doctrine like Christianity. Social capital is formed by repeated interactions over time and, he argues, is critical for development and difficult to generate through public policy. The importance of social capital for economic development is that these norms of behavior reduce transaction cost of exchange such as legal contracts and government regulations. Fukuyama suggests that while social capital is beneficial for development, it also imposes cost on non-group members with unintended consequences for general welfare. Referencing Alexis de Tocqueville in Democracy in America, and what he described as the art of association of the American propensity for civil association, Fukuyama argues social capital is what produces a civil society. While civic engagement is an important part of democracy and development, Fukuyama states that, "one person's civic engagement is another's rent-seeking." Therefore, while social capital can facilitate economic development by reducing transaction cost and increasing productivity, social capital can also distort democracy if civic association enables special interest to gain special favors. However, Fukuyama argues despite the risk of society having too much social capital, it is nonetheless worse to have too little and be unable to organize for public goods and welfare enhancing activity.

Social ties

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 (1973). Bridging the weak ties that individuals with heterogeneous limited interactions form. Bridging social capital is more likely to provide valuable new information (Moshkovitz and Hayat, 2021). Some others describes the weak and strong ties relationship as bonding and bridging social capital. Social capital refers to the networks of relationships among individuals that facilitate cooperation and enable societies to function more effectively. < https://brill.com/view/journals/ajss/37/3/article-p480_12.xmlThis is best characterized through trust of others and their cooperation and the identification an individual has within a network. Hazleton and Kennan (2000) 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 (1995), and Boland & Tenkasi (1995), meaningful communication requires at least some sharing context between the parties to such exchange. The cognitive dimension focuses on the shared meaning, representations and interpretations that individuals or groups have with one another.

Negative social capital

Whereas some scholars, most prominently Robert D. Putnam, posit that social capital has positive ends, a sizable body of literature finds that social capital can have adverse effects. Research by Sheri Berman and Dylan Riley, as well as economists Shanker Satyanath, Nico Voigtländer, and Hans-Joachim Voth, have linked civic associations to the rise of fascist movements. 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. An example of the complexities of the negative of effects social capital is violence or criminal gang activity that is encouraged through the strengthening of intra-group relationships (bonding social capital). The negative consequences of social capital are more often associated with bonding vis-à-vis bridging. Without "bridging" social capital, "bonding" groups can become isolated and disenfranchised from the rest of society and, most importantly, from groups with which bridging must occur in order to denote an "increase" in social capital. Bonding social capital is a necessary antecedent for the development of the more powerful form of bridging social capital. Bonding and bridging social capital can work together productively if in balance, or they may work against each other. As social capital bonds and stronger homogeneous groups form, the likelihood of bridging social capital is attenuated. Bonding social capital can also perpetuate sentiments of a certain group, allowing for the bonding of certain individuals together upon a common radical ideal. The strengthening of insular ties can lead to a variety of effects such as ethnic marginalization or social isolation. In extreme cases ethnic cleansing may result if the relationship between different groups is so strongly negative. In mild cases, it isolates certain communities such as suburbs of cities because of the bonding social capital and the fact that people in these communities spend so much time away from places that build bridging social capital.

Accessibility

Edwards and Foley, as editors of a special edition of the American Behavioral 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 (1998) has identified four negative consequences of social capital:

exclusion of outsiders; excess claims on group members; restrictions on individual freedom; and downward levelling norms.