Social Capital

"Social capital generally refers to trust, concern for one's associates, a willingness to live by the norms of one's community, and to punish those who do not."Social Capital and Community Governance by Samuel Bowles and Herbert Gintis

Whereas physical capital refers to physical objects and human capital refers to the properties of individuals, social capital refers to connections among individuals – social networks and the norms of reciprocity and trustworthiness that arise from them. In that sense social capital is closely related to what some have called “civic virtue.” The difference is that “social capital” calls attention to the fact that civic virtue is most powerful when embedded in a sense network of reciprocal social relations. A society of many virtuous but isolated individuals is not necessarily rich in social capital. (Putnam 2000: 19)

Robert Putnam (2000) Bowling Alone: The collapse and revival of American community, New York: Simon and Schuster: 288-290 Via : Robert D. Putnam: Why social capital is important

First, social capital allows citizens to resolve collective problems more easily… People often might be better off if they cooperate, with each doing her share. But each individual benefits more by shirking their responsibility, hoping that others will do the work for her…. [Resolving this dilemma is] best served by an institutional mechanism with the power to ensure compliance with the collectively desirable behavior. Social norms and the networks that enforce them provide such a mechanism.

Second, social capital greases the wheels that allow communities to advance smoothly. Where people are trusting and trustworthy, and where they are subject to repeated interactions with fellow citizens, everyday business and social transactions are less costly….

A third way is which social capital improves our lot is by widening our awareness of the many ways in which our fates are linked. People who have active and trusting connections to others – whether family members, friends, or fellow bowlers – develop or maintain character traits that are good for the rest of society. Joiners become more tolerant, less cynical, and more empathetic to the misfortunes of others. When people lack connection to others, they are unable to test the veracity of their own views, whether in the give or take of casual conversation or in more formal deliberation. Without such an opportunity, people are more likely to be swayed by their worse impulses….

The networks that constitute social capital also serve as conduits for the flow of helpful information that facilitates achieving our goals…. Social capital also operates through psychological and biological processes to improve individual’s lives. Mounting evidence suggests that people whose lives are rich in social capital cope better with traumas and fight illness more effectively. … Community connectedness is not just about warm fuzzy tales of civic triumph. In measurable and well-documented ways, social capital makes an enormous difference to our lives.

The notion of social capital first appeared in Lyda Judson Hanifan's discussions of rural school community centres (see, for example, Hanifan 1916, 1920). He used the term to describe 'those tangible substances [that] count for most in the daily lives of people' (1916: 130). Hanifan was particularly concerned with the cultivation of good will, fellowship, sympathy and social intercourse among those that 'make up a social unit'. However, it has taken some time for the term to come into widespread usage. Most recently, it has been the work of Robert D. Putnam (1993; 2000) that has launched social capital as a focus for research and policy discussion. However, other notable contributions have come from Jane Jacobs (1961) in relation to urban life and neighbourliness, Pierre Bourdieu (1983) with regard to social theory, and James S. Coleman (1988) in his discussions of the social context of education. It has also been picked up by the World Bank as a useful organizing idea. It is argued that 'increasing evidence shows that social cohesion is critical for societies to prosper economically and for development to be sustainable' (The World Bank 1999). We have also begun to see social capital as a focus for organizational maintenance and development (Cohen and Prusak 2001).