Background
Social capital refers to the networks, institutions, relationships, and social customs that determine the quality of social interactions. It encompasses the collective value of social networks and the inclinations that arise from these networks to do things for each other, which in turn often enable societal functions to work more effectively.
Historical Context
The concept of social capital has its roots in sociology, but it has been increasingly applied in economic contexts. Early references can be traced back to the work of sociologist Émile Durkheim and economist John Maynard Keynes. In the mid-20th century, political scientist James Coleman’s extensive writings on the subject contributed significantly to its development. Robert D. Putnam’s book, Bowling Alone: The Collapse and Revival of American Community (2000), brought widespread attention to the concept.
Definitions and Concepts
Social capital has proven a difficult concept to define precisely and measure directly. However, it generally refers to the asset derived from the presence of social structures. A high stock of social capital is argued to lead to numerous desirable outcomes including lower crime rates, better health, increased longevity, improved educational achievement, and less corrupt government.
Major Analytical Frameworks
Classical Economics
Classical economists did not treat social relationships as an explicit form of capital necessary to economic growth. Their focus was predominantly on physical capital and land.
Neoclassical Economics
Neoclassical economics does not explicitly include social capital within its standard framework but recognizes trust and norms as external factors influencing economic behavior.
Keynesian Economics
Keynesian Economics primarily revolves around the role of government interventions and would indirectly benefit from high social capital given its impact on effective governance and public services.
Marxian Economics
Marxian economics places emphasis on the material conditions and class struggles. Social capital could be considered beneficial insofar as it enhances cohesive activity among workers.
Institutional Economics
Institutional economists underscore the importance of both formal institutions (laws, regulations) and informal institutions (norms, traditions). Social capital profoundly aligns with the latter, supporting cooperative behavior that institutions depend on.
Behavioral Economics
Behavioral economics focuses on how psychological factors affect economic decisions. High social capital could influence individual and collective behavior positively, attesting to the impact of social norms and networks.
Post-Keynesian Economics
Similar to Keynesian economics, high social capital aligns with post-Keyesian perspectives highlighting the importance of institutions and social networks in stabilizing economic performance.
Austrian Economics
Austrian economics stresses the importance of individual actions and entrepreneurial activities. Social capital, through trust networks, may facilitate better entrepreneurial environments.
Development Economics
High social capital plays a crucial role in development economics by promoting trust and cooperation, thereby enhancing the effectiveness of collective actions and welfare programs.
Monetarism
Monetarism, primarily concentrated on controlling the quantity of money, does not specifically focus on social aspects; however, high social capital may still concomitantly favor its policies’ overall success.
Comparative Analysis
Social capital is a multi-dimensional concept closely related to human capital, physical capital, and intellectual capital. While it primarily boasts qualitative benchmarks and influences, its inability to be quantified paradoxically both underscores its importance and stalls its research progression.
Case Studies
Various studies have showcased higher levels of trust and cooperative behavior in communities with rich social networks. For example, Putnam’s analysis of Italy highlighted regions with vibrant civic communities succeeded economically compared to regions where civic engagement was lower.
Suggested Books for Further Studies
- Bowling Alone: The Collapse and Revival of American Community by Robert D. Putnam
- Social Capital in the Creation of Human Capital by James S. Coleman
- Trust: The Social Virtues and The Creation of Prosperity by Francis Fukuyama
Related Terms with Definitions
- Human Capital: Skills, knowledge, and experience possessed by an individual or population, seen in terms of their value or cost to an organization or country.
- Intellectual Capital: Intangible value of a company, and comprises its people (human capital), the value inherent in its relationships (relational capital), and everything that is left when the employees go home (structural capital).
- Physical Capital: Refers to physical assets like machinery, buildings, and technology that contribute to production and economic activities.
