Social capital

Published: October 15, 2013, 12:38 am

Topics:

Economics (main)

Sociology and Social Capital

It is common to think that social capital is everything related to any kind of human (Earth, Inc. Shareholder Report: Human Capital) interaction, but actually that is the work of sociology. If we look for a definition of sociology, we can find that it is the “science of society, social institutions, and social relationships, and specifically the systematic study of the development, structure, interaction, and collective behavior of organized human groups”. If we look for a definition of social capital there is not one yet in the encyclopedia, but sociology and social capital are not the same thing.

According to Alejandro Portes, Professor of Sociology at Princeton University, “the concept of social capital has become one of the most popular exports from sociological theory into everyday language … but despite its current popularity, the term does not embody any idea really new to sociologists”.

The evolution of Social Capital concept

The first author referring to social capital in the academic literature was L.J. Hanifan who working on rural school community center provided the following statement "…In the use of 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 group of individuals and families who make up a social unity…”. Many years later, the term social capital concept indeed acquired the feature of capital, as any other type of capital: human (Earth, Inc. Shareholder Report: Human Capital), build, financial.

The development of the social capital as a capital started in the 1970s by a French sociologist, Pierre Bourdieu, who explained the benefits obtained by individuals as a result of participation in groups and on the intentional construction of sociability for the purpose of creating the resource; Bourdieu explained that social networks are not a natural given and must be constructed through investment strategies and usable as a source of benefits; he explains for instance that social relationships may allow individuals to claim access to resources possessed by their associates. He defined the concept 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 or recognition”. But being this a French written work did not have the proper impact on the social research world. Other influential contributor to the concept of social capital is the economist, Glen Loury, who also in the 1970s and 1980s, approached to the concept while researching on racial income inequalities. He argued that economic theories were too individualistic, focusing exclusively on individual [[human (Earth, Inc. Shareholder Report: Human Capital)] capital] and on the creation of a level field for competition based on such skills, and particularly he said that “… in a free society, each individual will rise to the level justified by his or her competence conflicts with the observation that no one travels that road entirely alone. The social context within which individual maturation occurs strongly conditions what otherwise equally competent individuals can achieve”. He introduced the social sphere to the economics studies to be considered as an asset itself.

The most developed concept about social capital can be found in the work of James Coleman. The above mentioned authors were one a sociologist and other an economist, and what Coleman did was to build a concept upon both disciplines. Coleman became the most recognized author for introducing the concept of Social Capital to the recent literature through his work “Social Capital in the Creation of Human Capital”.

Coleman states that there are two broad intellectual fields contributing in the description and explanation of social action: the first is the sociology, which sees the actor as socialized and action as governed by social norms, rules, and obligations. The contribution of this field is to analyze action in social context and to explain the way action is shaped, constrained, and redirected by the social context; the second field is the economics, which sees the actor as having goals independently arrived at, as acting independently, and as wholly self-interested. Its principal approach lies in having as a principle of action the maximizing utility.

Coleman highlights that sociology tends to consider the individual as shaped by the environment, with no internal mechanism of action that gives the actor a purpose or direction. On the other hand, he refers to economics rationales such as that persons' actions are shaped, redirected, constrained by the social context, where norms, interpersonal trust, social networks, and social organization are important in the functioning of the economy. Coleman complements his work referring to sociologist Granovetter‘s arguments about the failure of economics in recognizing the importance of concrete personal relations and networks of relations- what he calls "embeddedness"- in generating trust, in establishing expectations, and in creating and enforcing norms; he also refers to the work developed by economists, as Yoram-Ben-Porath, which argues that families, friends, and firms (called F-connection) affect economic exchange.

Coleman introduces the concept of Social Capital as one that accepts the principle of rational or purposive action which in conjunction with particular social contexts, can account not only for the actions of individuals in particular contexts but also for the development of social organization. In other words, under the theory of rational action, in which each actor has control over certain resources and interests in certain resources and events, then social capital constitutes a particular kind of resource available to an actor. Like physical capital and human capital, social capital is productive, making possible the achievement of certain ends that in its absence would not be possible.

What Coleman explains is that “just as physical capital is created by changes in materials to form tools that facilitate production, human capital is created by changes in persons that bring about skills and capabilities that make them able to act in new ways. Social capital, however, comes about through changes in the relations among persons that facilitate action. If physical capital is wholly tangible, being embodied in observable material form, and human capital is less tangible, being embodied in the skills and knowledge acquired by an individual, social capital is less tangible yet, for it exists in the relations among persons”. In addition, Coleman mentions the characteristics of different capitals in terms of [[property] rights], he says that physical capital is normally a private good, making possible for the person who invests in physical capital to capture the benefits it produces; in the case of human capital the person who invests the time and resources in building up this capital obtains its benefits in the form of a “higher-paying job, more satisfying or higher-status work, or even the pleasure of greater understanding of the surrounding world”; but in the case of social capital, it has a public good aspect where the actor or actors who generate social capital generally capture only a small part of its benefits, a fact that according to the author may cause to underinvestment in social capital. Other authors explained that social capital is not strictly a public good because, although there is a principle of generalized reciprocity in some of its forms individual consumers can be excluded from a source of supply; and in addition, we find that “whereas a resource obtained by the use of social capital may exist independently, these acts cannot be owned by any individual and truly exist only within relationships”.

In summary, after Coleman’s work is that we can refer to social relationships as an asset that can be increased or diminished according to individual needs for collective actions. The ongoing literature on social capital is providing to researchers more detail on how to analyze this concept and possible methods to measure it.

Definitions of Social Capital

Probably each author working on social capital can formulate his own definition according to the scope of his research, but there are some definitions already well accepted and used by several authors.

Robert Putnam is also well known author for his work in analyzing the trends of social capital in United States, in his publication called “Bowling Alone: America's Declining Social Capital”, he provides the following definition: “social capital refers to features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit”. Providing further detail, in his work of 2000 Putnam makes the most detailed case for the contribution of social capital in human life, arguing that it makes people happier, more secure, more prosperous, and better governed.

One of the preferred definitions used by authors is the one provided by the World Bank where “social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions … social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together” (emphasis added).

Concepts related to Social Capital

The social capital has different levels of analysis, since we can refer to it as a merely social interaction to the creation of institutions. In my opinion, the first is the individual level, since several studies take into account the time spent by individuals to socialize, either to visit friends and family or to participate in groups as a way to increase social capital among individuals and also because the impact is on individual well-being related to health, happiness, safety, education, among others. The next is the family level, given that marriage is the smallest and most important social cell in a community and it has always been seen as a positive way to achieve well being, some authors consider that people are more integrated to society if they are married, increasing their opportunities to experiment health and happiness, as well as a way to provide better opportunities to next generations, the main contributor to social capital from this level is household labor. The third is the community level, where either individuals or married people can participate in a community dynamic through the formation of groups and creation of rules, norms and institutions to reach common goals. This last level of analysis can be addressed by using either Putnam’s or the World Bank’s definition of social capital, which focuses more on the impacts at community and national levels.

There are other specifications of social capital analysis that are worthy to mention. The concept of community of place refers to social relationships based on residence in a particular locality; and community of interest refers to social relationships based on a common set of interest. We can analyze the social dynamics either at a specific place at any scale (watershed, city, neighborhood, etc.) where people live or by looking specific topics around which people interact (e.g. international association of ecological economists who exchange ideas and information through internet or annual meetings).

Other important consideration when analyzing the social capital is the using of bonding and bridging concepts. Bonding capital refers to bringing people together who already now each other with the objective to strengthen the relationship that already exists. The similar backgrounds can be on class, ethnicity, kinship, gender or similar social characteristics. Bridging capital refers to bringing together people or groups who did not previously know each other with the objective to establish new social ties and networks. It connects diverse groups within the community to each other and to groups outside the community.

How to measure Social Capital

Probably the author measuring social capital at a broad extent is Robert Putnam. The author has worked on social capital as synonym of civic engagement. He describes his work as the study of that social connections and civic engagement that influence the public life in the United States, as the starting point for an empirical survey of trends in social capital in the contemporary America. He created an Index according to the available data, measuring the following variables:

1. Served on committee for local organization
2. Most people can be trusted
3. Most people are honest
4. Voting Presidential Elections
5. Served as officer for local organization
6. Charitable organizations
7. Attended club meetings
8. Civic and social organizations
9. Town meetings
10. Organizational membership per capita
11. Spend time with friends
12. Entertained at home
13. Volunteer
14. Worked on community project

Putnam used data from archives, census and surveys. He was even able to map the results by states in the country (Figure 1):

Figure 1. Putnam’s Map: Measuring Social Capital in America (2000)

The World Bank has developed an extensive survey and applied it to different countries to measure social capital. Through this instrument they obtain information on group memberships, or structural dimensions; and subjective perceptions of trust and norms, or cognitive dimension of social capital.

The questionnaire aims to obtain information on six major topics:

1. Groups and networks – the questions consider the nature and extent of a household members’ participation in social organizations and informal networks, and the range of contributions that one gives and receives from them, and how involvement has changed over time.
2. Trust and solidarity – the questions consider trust towards neighbors, key service providers, and strangers, and how this perception has changed over time.
3. Collective action and cooperation - the questions explore whether and how household members have worked with others in their community in joint projects and or in response of a crisis.
4. Information and communication – the questions explore the ways and means by which households receive information regarding market conditions and public services.
5. Social cohesion and inclusion – the questions refer to the nature of differences and the mechanisms by which they are managed, and which groups are excluded from public services.
6. Empowerment and political action – the questions look for the household members’ sense of happiness, personal efficacy, and capacity to influence both local events and broader political outcomes.

Other recognized author in measurement of social capital is William M. Rohe, professor of city and regional planning and the director of the Center for Urban and Regional Studies at The University of North Carolina, who suggests that any measure of social capital needs to include assessments of the four key elements:

a) it must assess the level of community engagement

b) it must gauge the characteristics of local social networks

c) it must assess levels of trust among community members

d) it must assess the extent and effectiveness of community organizational infrastructure

According to Rohe, when measuring engagement, it is important to make distinctions between horizontal and vertical engagement. Measuring social network characteristics among residents of a community is possibly the most difficult to accomplish, but it will tell a lot about communication flows in the community. Trust levels should be assessed within and among the various groups involved in community development work, including residents, local neighborhood organizations, nonprofit organizations, city agencies, etc. Finally, to assess the strength of social capital, it is needed to know about the community's institutional infrastructure. This will provide information about the degree to which local residents have been able to create organizations through which their collective goals can be accomplished.

Rohe argues that the most rigorous approach to measuring social capital would involve a combination of resident and organizational surveys, along with qualitative interviewing of key actors in a community. Once these data are collected, they should be used to create a series of indices. If the resources are not available to conduct the surveys, interviews of a wide range of key informants could be used to assess the various components of social capital qualitatively.

Innovative quantitative methods to measure Social Capital

The previous descriptions of methods to measure social capital were more qualitative than quantitative. Being part of the world of ecological economics (An Introduction to Ecological Economics (e-book)), I would like to mention the efforts to measure social capital with quantitative methods. For instance, when estimating the Genuine Progress Indicator (GPI) some variables are considered as part of the social capital of the community under analysis and statistical data is mainly used for the measurement.

When measuring the GPI for a certain community several variables are consider as social capital:

1. Cost of crime
2. Cost of family breakdown
3. Cost of loss of leisure time
4. Cost of underemployment
5. Value of household labor
6. Value of volunteering

Number 1) can be analyzed as community level, using statistical data on the number of crimes and the economic cost of losses and expenses to protect against crime; numbers 2) and 5) can be analyzed as family level, using data on number of divorces and the estimated economic costs for the family members, as well as the economic value of hours spend as household labor; numbers 3), 4) and 6) can be analyzed as individual level, using data on use of time and the economic costs of losing leisure time or for not working the desired time, the same for value of hours spent in volunteering work. The economic costs, from these and other variables related to human, built and natural capital) are either subtracted or added to the Gross Domestic Product (GDP) as a way to estimate the progress in a broader way than only on production terms.

References

Citation

Martinez, L. (2013). Social capital. Retrieved from http://editors.eol.org/eoearth/wiki/Social_capital