Sizing up social capital, J Engeström

Tags: social capital, social networks, social structure, network, Granovetter, Robert Putnam, Knowledge and social capital, Butterworth Heineman, development, E. L. Lesser, Michael Woolcock, University of Chicago Press, social science, Ma., James Coleman, generational change, Human Capital, social norms, Economic development, generalized reciprocity, Martti Ahtisaari, Boston, New York, Hillary Clinton, Activity Theory, Alanen, A., social connectedness
Content: 21/02/13 SIZING UP SOCIAL CAPITAL
Introduction
Jyri Engestrцm
University of Helsinki
Paper presented at "Activity Theory and Knotworking", the 2000 Summer Seminar of Kansai Association for Activity Theory (KAAT)
Osaka, Japan, Sept. 7, 2000
Send comments to author at: [email protected]
For more information, see:
Center for Activity Theory and Developmental Work Research
http://www.helsinki.fi/~jengestr/activity
Table of Contents
Introduction
I set out to write this paper with the intention of gaining a grasp on the literature on social capital. I spent some time monitoring the popular media, and found the concept surfacing in the talk of some of the most influential politicians. As I traced the lineage of the concept, I learned to my surprise that it had been invented and reinvented time and again in the field of social science throughout the last century. "Odd", I thought, and begun to speculate why this was the case. I begin by illuminating some of the current popular discourse on the topic, and follow the trail all the way down to the first known inception of the term by a rural school supervisor early in the last century. I then try to sort out the spectrum of the current boom of literature on the subject, ranging from corporate management to the education of children, and voice my own hypothesis on why the promise of social capital has captured such a wide intellectual assemblage. It seems that what these various perspectives have in common is the explicit acknowledgement that communities of various scope ranging from local to national to multinational, built on generalized reciprocity and trust, provide significant advantages to arms-length market transactions between strangers. From this consensus emerges a simple question, which runs through the literature reviewed in this paper: what makes these communities develop and survive? Out of the myriad of alternatives, I align to stand behind Michael Woolcock's eloquent definition of social capital because it allows us to compile a set of powerful conceptual instruments to answer this question. Through the study of these instruments, developed by various scholars, we accrue capabilities to analyze the constructive and destructive aspects of social capital, the structure and density of network ties, the norms that form the principles of exchange, and the developmental processes on the level of individuals as well as the collective.
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Finally, I conclude by postulating that what is lacking from this body of research is a methodology that
enables us to take the everyday practice of actors as the starting point of our analysis. Without such methods,
we are left to adopt the criteria of economic success as universal measures for the functioning of social
capital, reducing networks to structure without content, and silencing the voice of the actors themselves by
ignoring what they consider to be of value. I argue that we need to develop a situated, developmental
approach to social capital that is sensitive to the motives, rules and artifacts that become the carriers of
network linkages. It is only through such a hands-on approach that we can hope to rid ourselves of a
structural bias and develop an understanding of the way in which the manifestations of social capital permute
and the value derived from it changes as the object of the activity develops and transforms.
Discovering Social Capital
In his traditional New Year's address to the nation on Jan. 1st 2000, the President of Finland Martti Ahtisaari emphasized the importance of social capital for the republic: "A society is not just the sum of the individuals that comprise it; its strength and development depend also on the social capital that consists of people's mutual trust and their ability to cooperate" (Ahtisaari 2000). Ahtisaari's words echo the message broadcast by the Clinton administration and bound into hardcover in "It Takes a Village" (Clinton 1996), Hillary Clinton's best-selling opus which helped bring to public eye the apparent decline of social participation in American society. The leading rhetorician of this trend is Harvard professor and Bill's advisor Robert Putnam, whose article "Bowling Alone: America's Declining Social Capital" (1995) sparked a flurry of debate that has yet to secede. The dramatic fall of league bowling became the symbol for how Americans have been "pulled apart from one another and from our communities over the last third of the century" (Putnam 2000, 27).
At the same time as the lament for dissolving community ties became a favorite topic in the public sphere, the corporate world has conspicuously taken up these ties as an explicit personal and organizational asset. San Francisco's famous DrinkExchange, FastCompany's Company of Friends network, or the local Torstaiklubi in Helsinki are examples of explicit efforts to facilitate "networking" on scales ranging from the very local to those spanning the globe. On the one hand, the role that personal connections play in career advancement has shifted from an uneasy, toned-down issue into a recognized advantage that individuals are expected to demonstrate visibly. On the other hand, efforts towards globalization, flexibility and faster reaction times are pushing entire company hierarchies to experiment with network structures spanning across departmental, geographic, and even interorganizational boundaries (Nohria & Ghoshal 1997).
Alongside the discourse on Western society and business, we find the same interest in social networks emerging in the fields of development theory and policy of third world economies. Repeated developmental failures throughout the last century have raised wide critique of the purely economic approach to analysis of developmental issues. More recent world-systems and neo-classical growth theories have been criticized for adopting either nation-states or "rational" individuals and firms as their units of analysis, and thereby ignoring the networks mediating the space between states and markets. According to the World Bank's prominent social scientist Michael Woolcock, "The idea of social capital is both appealing and promising precisely because it offers a potential strategy for obviating these concerns while bridging theoretical and disciplinary divides." (Woolcock 1998; 153--154).
Over the past decade, a growing number of researchers have found themselves coalescing around the concept of social capital. Their search for answers in issues related to a range of social science disciplines has led them to share the belief that social networks play a key role in the puzzle, whether the problem falls in the field of sociology, political science, development economy or education. Can this kind of convergence tell us something more general about evolution of the playing field of social science? Social capital seems to have emerged as the latest in a series of "knots" or boundary objects (Star, 1989) in the field -- concepts that have
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remained relatively open in terms of theory, and rather serve as meeting points that draw together research
from various disciplines. In this manner, social capital follows the interdisciplinary concepts of the learning
organization (which emerged in the 1980s) and knowledge management (a popular topic of the early 1990s).
This could be seen as a sign of the broadening of the problem context within the various fields of social
science: researchers are formulating their questions in such a way that it is no longer possible to provide
satisfactory answers without the parallel engagement of multiple perspectives.
It's Not What You Know, It's Who You Know
The weak theoretical connection doesn't mean social capital would be a neutral term void of connotations that point the way for reasoning. On the contrary, I argue that the reason for the emergence of social capital as a boundary concept is that it renders social networks apparent and injects them with the essence of capital as "wealth used or available for use in the production of more wealth". Social capital explicitly draws attention to the value-creation potential planted in social ties. According to Putnam, "The core idea of social capital theory is that social networks have value." (Putnam 2000, pp. 18-19). In other words, the affluence of social ties can increase productivity. Classical economists defined land, labor, and physical capital as the three basic drivers of economic growth (Woolcock 1998). In the 1960's, neo-classical economists (Schultz 1961; Becker 1964) extended the concept of physical capital as embodied in tools, machines, and other productive equipment to include human capital as well (Coleman 1998). "Whereas physical capital refers to physical objects and human capital refers to properties of individuals, social capital refers to connections among individuals--social networks and the norms of reciprocity and trustworthiness that arise from them." (Putnam 2000; 19). Putnam demonstrates that the concept of social capital appears to have been invented independently at least six times over the twentieth century. The very first to apply the term was L. J. Hanifan, a state supervisor of rural schools in West Virginia. His 1916 account of the importance of community involvement for successful schools included nearly all of the crucial elements found in contemporary definitions of social capital. Most importantly, he had the insight to make the distinction between how "social intercourse" benefits both the individual and the community as a whole. I will return to this differentiation between individual and collective agency later. However, Hanifan's work did not raise commentary, and was subsequently lost for more than a generation. It took exactly 40 years for the concept to resurface, when it was independently rediscovered by Canadian sociologists to describe club positions of upstart suburban residents. In the 1960s, urbanist Jane Jacobs reinvented the term to describe neighborliness in cities, and in the 1970s economist Glenn Loury recast it in his analysis of the social legacy of slavery. The first theoretically refined sociological analysis of social capital was produced by Pierre Bourdieu in 1980s. Bourdieu's initial treatment of the concept was published in some brief "Provisional Notes" in the Actes de la recherche en sciences sociales in 1980, but because they were in French, the article did not gain widespread attention in the English-speaking world (Portes 1998, 45). In the 1980s, yet other original writings on the subject began to emerge. German economist Ekkehart Schlicht used the term to underline economic resources embodied in social networks. However, it wasn't until James Coleman's seminal paper on the subject in 1988 that the concept of social capital gained wide use and acceptance in sociology and related fields (Sandefur & Laumann 1998). 1916 L.J. Hanifan educational practitioner 1956 John Seeley, Alexander Sim and Elizabeth Loosley sociologists 1961 Jane Jacobs urbanist 1977 Glenn Loury economist 1980 Pierre Bourdieu sociologist 1984 Ekkehart Schlicht economist 1988 James Coleman sociologist Table 3.1. Independent inventors of the concept of social capital in the 20th century
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The Promise of Social Capital
Coleman's treatment of the concept of social capital led to a proliferation of various applications and further development. Soon after, the work of Putnam on civic participation and institutional performance in Italy (1993) and the United States (1995) brought social capital to the headlines. I argue this was partly due to the need for such concepts that promised to transcend the divide between sociological and the economic intellectual streams without imposing reductionist conditions on the development of new hypothesis. Woolcock (in press) lists nine primary fields into which the research on social capital has subsequently centered: (1) families and youth behavior problems; (2) schooling and education; (3) community life ("virtual" and civic); (4) work and organizations; (5) democracy and governance; (6) general cases of collective action problems; (7) public health and environment issues; (8) crime and violence; and (9) economic development. Figure 4.1 depicts the genesis of the concept of social capital through its various inceptions and subsequent expansion.
Figure 4.1. The genesis of the concept of social capital
What accounts for so many different unrelated inventions of the concept of social capital? It could be argued that the term has repeatedly emerged as a counter-reaction to the dominant economic stream that "flies in the face of empirical reality" Coleman (1998); unconnected social scientists evoked the term to draw attention to the failures of economic instruments in measuring and predicting development. The argument of social capital theorists is that the analysis of market economies which focuses exclusively on physical and human capital is not able to sufficiently account for the fact that people's actions are shaped by their social context. Whereas the notion of human capital was an innovation that extended the means of production to account for personal capabilities that the individual was born with or had learned (typically measured by the level of education), " [s]ocial capital (...) 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." (Coleman 1998; 22). It's not what you know, it's who you know. "The latest equipment and most innovative ideas in the hands or mind of the brightest, fittest person (...) will amount to little unless that person also has access to others to inform, correct, assist with, and disseminate their work." (Woolcock 1998; 155).
Should I List My Friends on My Tax Return?
But is it proper to pick up on social relationships as "capital"? After all, we've come to place capital in the very specific context of economic exchange, and conceiving of social relationships unreflectively from this angle runs the danger of reducing them into mere vehicles for economic advancement. Moreover, attaching "capital" as an ending to all sorts of nouns uncritically will cause an inflation of the term's descriptive power. This is the concern of Baron and Hannan (1994), who poignantly refer to "a plethora of capitals" in their complaint about the careless import of economic terms into sociology.
In what sense, then, can we talk about social ties as a form of capital? In order to place social capital on a sound footing, we should be able to differentiate it from other forms of capital, and be able to make the
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distinction between which phenomena should and which should not be christened with the term. Let's begin
with the easier challenge, and attempt to answer the first question: what distinguishes social capital as capital?
Adler and Kwon (1998) provide a helpful review of four notable similarities between social capital and other
forms of capital:
First, social capital is a resource into which other resources can be invested with expectation of future, albeit uncertain, returns.
Second, social capital is "appropriable" (Coleman 1988) and to some degree "convertible" (Bourdieu 1985). "Appropriable" means that the same social capital can be appropriated for different uses, from getting hired for a job by a friend to finding a shoulder to lean on during family crisis. "Convertible" means that social capital can be exchanged for other forms of capital. This is not as easy. "Among the many forms of capital identified by Bourdieu, economic capital is the most liquid; it is readily convertible into human, cultural, and social capital. By comparison, the 'convertibility rate' of social capital into economic capital is lower: social capital is less liquid and more 'sticky'" (Adler & Kwon 1998; 94).
Third, like physical and human capital, but unlike financial capital, social capital requires maintenance to remain productive. Connections tend to erode over time if people stop keeping in touch. However, unlike human capital, an individual can't cultivate social capital alone: it requires the joint participation of multiple parties.
Fourth, like human capital, but unlike physical capital, social capital does not have a predictable rate of depreciation. The more a used car has mileage, the lower its price; but the value of relationships does not depreciate with use. There is no standard way to predict how staying in contact with someone will change the value derived from the liaison.
However, there is a fundamental difference that sets social capital apart from other forms of capital. Social capital is not "located" in the actors themselves, but in their relations with other actors. Social capital is a public good. It is not the private property of those who benefit from it, because it depends on the benevolence of other people: you can't own your network. "No one player has exclusive ownership rights to social capital. If your partner in a relationship withdraws, the connection dissolves with whatever social capital it contained" (Burt 1992; 58). There is a problem that inheres from this quality: it renders social capital susceptible to the "tragedy of the commons", where a single individual can destroy something that can only be built by mutual collaboration and commitment.
Social Capital--The Key to the Iron Cage?
Because social capital resides in the intermediate space between the individual and the collective, it has been regarded as a potential conceptual instrument to overcome the classical micro-macro divide that characterizes the tradition of explaining social action. To elaborate on Max Weber's classic example, social capital has been regarded as a key to the "iron cage". In his influential 1988 article, which inspired much of the current discussion on social capital, James Coleman attempted to unite the sociological and the economic intellectual streams by means of the concept of social capital. He first discusses the virtues of both traditions:
"One, characteristic of most sociologists, sees the actor as socialized and action as governed by social norms, rules, and obligations. The principal virtues of this intellectual stream lie in its ability to describe action in social context and to explain the way action is shaped, constrained, and redirected by the social context."
The other stream, however, which characterizes the work of most economists, "sees the actor as having goals independently arrived at, as acting independently, and as wholly self-interested. Its principal virtue lies in
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having a principle of action, that of maximizing utility" (Coleman 1998; 17-18, my italics).
But according to Coleman, both intellectual streams also have serious defects. The problem with the sociological argument is that it fails to explain the individual's motivations for action that cannot be traced to the social context: the actor has no independent "engine of action" (Coleman 1998; 18). This point was at the root of Dennis Wrong's well-known critique of the oversocialized conception of man in modern sociology (Wrong, 1961). In contrast, the problem of the economic stream is that although it attributes free will to utilitarianism, its individualistic view of the actor neglects the obvious fact that even if people were always trying to maximize their own returns, economic exchange would still be influenced by the larger social context.
Coleman's agenda is to create a theory of rational action by merging elements of the economic stream emphasizing utility, economic transactions and free will with the sociological stream emphasizing the socialized nature of actors and the dependence of action on norms and obligations. In essence, he is introducing social structure into the rational action paradigm. He does this by framing social capital as a resource for action. Coleman's social capital is really accumulated history in the form of social structure, which is appropriable for productive use by a rational actor in pursuit of her own interest (Sandefur & Laumann 1998).
How does this social structure emerge, then? Coleman's answer is a rational actor framework: social structure emerges out of the interaction of individuals in pursuit of their own interests. The idea is to provide a method for quantifying social capital. If we wanted to determine the optimal amount of social capital in a given situation, we first need to define the actor's goals. Then, we define the benefits that aid in reaching these goals. Coleman (1998) discusses three types of benefits, or "mechanisms through which social capital increases an actor's capacity for action": information, influence and control, and solidarity. Finally, we measure the different types of social structure to determine which provides the best match of those benefits.
7. Whose Network Is It, Anyway?
Coleman's work demonstrates the promise of social capital as an instrument to overcome the micro-macro or individual-collective division in explaining the causes of rational action. However, for Coleman, the focus is not on the collective, but an individual, rational actor. Coleman succeeds in broadening the definition of the rational actor from a self-sufficient or isolated individual to one fundamentally embedded in social context. This actor does not necessarily have to be a single person: Coleman also acknowledges that "corporate actors" are capable of functioning as independent units of rational action, arguably possessing their own free will. Nevertheless, the focus of Coleman's analysis remains on the individual actor and the good that social capital can do to this actor; not on the network as a whole.
Because Coleman's framework is designed to explain the motives behind the actions of a single focal actor, his approach leads us to analyze social capital from the eye-level of these actors. "If we begin with a theory of rational action, in which each actor has control over certain resources and events, then social capital constitutes a particular kind of resource available to an actor" (Coleman 1998; 20). Social capital becomes seen as a resource for individual actors.
Like Coleman, a number of researchers look at social capital from the point of view of the individual actor. "This view, more common among sociologists, begins with the idea that the actions of individuals and groups can be greatly facilitated by their membership in social networks, specifically by their direct and indirect links to other actors in these networks" (Adler & Kwon, 1998; 90). This type of egocentric definition of social capital has been used to explain the relative success of individuals and firms in their competitive rivalry. Typical examples of the egocentric point of view are studies on differences in the income levels of corporate managers, performed by network analysts like Meyerson (1998).
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However, because social capital exists in the linkages between such individuals, we could also imagine
stepping back and forming a birds-eye view of the entire network that emerges as an aggregate of these
interlinked actors. This alternative approach leads us to define social capital from a different angle -- that of
the collective.
Other researchers, typically political scientists and developmental economists, take a socio-centric view, asking what the different linkages between individuals mean in terms of the entire network. This viewpoint leads to regard networks as collective actors. The network of people becomes seen as the internal structure of these collective actors, who may yet connect with one another to form networks of their own.
Putnam (2000) has pointed out that "[s]ocial capital can thus be simultaneously a 'private good' and a 'public good.' Some of the benefit of the investment in social capital goes to bystanders, while some of the benefit redounds to the immediate interest of the person making the investment." There is both an individual and a collective aspect to social capital -- a private face and a public face. A small group of volunteers can raise money against disease, refurbish the local school, or help make the neighborhood a safer place for everyone while providing the activists themselves with friendships or business contacts that pay off personally.
Adler and Kwon (1998) have called the former approach the "external view" because it locates social capital in the network that extends around the focal actor. Respectively, they call the latter approach the "internal view" because it places social capital in linkages inside the boundaries of the collective actor.
Figure 7.1. Internal and external views in defining social capital
Figure 7.1 depicts the two points of departure regarding social capital. Following Coleman, we can adopt the standpoint of a single actor, which we can define to be a collective or an individual, and analyze social capital as a resource in the ties extending from that unit to others around it. This is what Adler and Kwon call the external view. However, we can also adopt a "whole network" approach and try to determine which actors are in contact with each other in such a way as to form bounded networks. We can then regard the social capital carried by these social ties as an internal quality of those networks, and hypothesize on their effects for the aggregate as a whole. Adler and Kwon (1998) use this distinction between the internal and the external view to categorize the various definitions of social capital offered by social scientists throughout the years (see Table 7.1).
Table 7.1. Definitions of Social Capital (Adler & Kwon 1998; 91-92)
It is important to note that the internal and external views are not mutually exclusive -- on the contrary, they
complement each other. "A collective actor such as a firm is influenced by both its external linkages to other
firms and institutions and the fabric of its internal linkages: its capacity of effective action is typically a function
of both" (Adler & Kwon, 1998; 93). This is largely a question of the preferred unit of analysis. Some
definitions appear neutral on this axis (see Table 7.1). Research on social capital, however, has tended to
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Introduction
So, can we come up with a single, self-explanatory definition of social capital that would take into account these complementary perspectives? Woolcock (in press) offers perhaps the most basic definition of social capital in stating simply:
For us, social capital refers to the norms and networks that enable people to act collectively.
Why norms? Why networks? There's more to this definition than just the simple, no-nonsense attitude. In fact, I believe it is not only the most basic, but also the most powerful definition of social capital that I have thus far encountered, because it permits us to make several important arguments about social structure, its development process, and the norms that govern social and economic exchange. However, in order to arrive back at this basic postulate, we now need to depart by taking a shortcut to look at the consequences of social capital, and then trace our way back through the mechanisms and processes through which these consequences emerge.
8. How Does Social Capital Work Its Magic?
Defining social capital through social norms and the networks that enable people to enforce them raises the question, how should a student of social capital expect to observe this in everyday practice? How can we put our finger on social capital? This challenge can be tackled through examining the consequences through which social capital is expected to bring economically measurable returns. Illuminating the way social capital "works its magic", Robert Putnam (2000; 288--829) describes the general benefits that redound from social capital. First, social capital allows citizens to resolve collective problems more easily. This refers to cases where people benefit greatly as a collective if everyone is willing to pitch in with a small personal investment. Trivial examples of this process abound in our daily lives, from paying taxes to recycling to stopping at a red light to flushing the toilet. These practices only work if people trust each other to do the same, like in the classic problem of the "prisoner's dilemma". The dilemma is best solved by an institutional mechanism--a norm or an expectation--that can be enforced by social networks.
Second, social capital reduces transaction costs. Everyday business and social transactions are much less problematic when such norms and networks are in place, so that there is no need to spend extra time and money making sure that others keep their promises.
Third, growing up in an environment of mutual confidence socializes people to develop benevolence towards others. Active, reliable connections with family members, friends, etc. make it easier to see things from their point of view. "Without such opportunities, people are more likely to be swayed by their worst impulses. It is no coincidence that random acts of violence, such as the 1999 spate of schoolyard shootings, tend to be committed by people identified, after the fact, as 'loners'" (Putnam 2000; 289).
Fourth, networks channel helpful information. Those low on social capital--fresh immigrants, for example-find it much more difficult to get ahead economically, even though they might be well trained and educated. They have trouble finding the opportunities to employ their human capital.
Lastly, Putnam asserts that social capital also improves people's psychological and physical well being. "Mounting evidence suggests that people whose lives are rich in social capital cope better with traumas and fight illness" (Putnam, 2000; 289).
Putnam sets as his formidable task the analysis of the decline of social capital in American society over the past few decades. After an extensive analysis of different quantitative indicators, Putnam (2000; 287) asserts
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that "By virtually every conceivable measure, social capital has eroded steadily and sometimes dramatically
over the past two generations. The quantitative evidence is overwhelming, yet most Americans did not need
to see charts and graphs to know that something bad has been happening in their communities and in their
country." Asking why, Putnam provides an estimate of the relative impact of a total of five different causes.
The most important factor is generational change: the replacement of the community-building generation that
witnessed the Second World War by their less involved children and grandchildren accounts for as much as
half of the causes of the overall decline. The second strong cause of the decline that overlaps with
generational change is the advent of television and electronic entertainment. The "screens" account for as
much as a quarter of the overall decline, while the joint impact of generation and TV adds another 10--15
percent to the mix - Putnam calls this phenomenon "the TV generation". Putnam also considers changes in the
workplace (most notably, the transition of women into the career-oriented work force) as important, citing
"the pressures of time and money" as accounting for about 10% of the total decline. He also regards the
effects of suburbanization, commuting, and sprawl as important, weighing them at an estimated 10% of the
total. Putnam depicts his explanation in the form of the following pie chart:
Figure 8.1. "Guesstimated Explanation for Civic Disengagement, 1965--2000" (Putnam 2000; 284)
Putnam emphasizes this as a "rough-and-ready" image of the relative importance of the different factors. The effects of these causes vary greatly depending on the specific forms of social interaction. Generational change, for instance, is more important in explaining the decline of churchgoing than the decline in visiting friends. Furthermore, Putnam insists that his present analysis is far from complete: "The missing chunk from the pie chart accurately reflects the limits of our current understanding. Work, sprawl, TV, and generational change are all important parts of the story, but important elements in our mystery remain unresolved" (Putnam 2000; 284).
9. "More Is Better", Right? Wrong.
The lament of the decline of community participation easily leads to a view of social capital as a positive asset that should me maximized. Communitarian perspectives exemplified by scholars like Amatai Etzioni emphasize the positive consequences of self-sufficient, informal communities, often overlooking the importance of the underlying infrastructure required to support this type of activity in the form of wellfunctioning institutions, for example. The first point, then, is that maximizing the efforts to build informal social networks may underscore the development of necessary formal infrastructure. Communities need infrastructure, from treating sewage to legal litigation. If these institutions perform poorly, informal networks can sometimes substitute for some of their functions. Often, however, the formation of such networks would be impossible without the existence of this type of infrastructure. Therefore, the important role that institutions and infrastructure play should not be forgotten in the analysis of social capital.
Second, it is important to realize that social capital is not inherently "good": it comes in both constructive and destructive blends. Like other forms of capital, social capital can be directed towards malevolent or antisocial purposes. "For example, where communities or networks are isolated, parochial, or working at crosspurposes to society's collective interests (e.g. ghettos, gangs, drug cartels), 'productive' social capital is replaced by what Rubio (1997)--discussing the case of Colombia--calls 'perverse' social capital, which
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greatly hinders development" (Woolcock; in press). Robert Putnam's first book on social capital (1993) dealt
with the economic benefits of community networks in Northern Italy--but unfortunately, we've also come to
know Italy as the home turf of the Mafia.
Furthermore, it is important to realize that social capital also requires the investment of other forms of capital. Building social capital has its costs. Making new contacts and maintaining existing ones requires time and energy, and these obligations can become highly demanding. Woolcock (1998) refers to the findings in literature on ethnic entrepreneurs, where it has been shown that social capital tends to be high in disadvantaged immigrant groups with distinct cultural characteristics that increase prejudice towards them (Portes & Sensenbrenner 1993).
New immigrants can benefit greatly from a small, tightly knit ethnic community that gives the newcomers access to financial and personal support so that a small business can be started. Discussing examples like the community of Koreans in Los Angeles or the Puerto Ricans in New York, Woolcock argues that "Lacking material assets (physical capital), recognized skills and fluency in English (human capital), the immigrant is able to call upon her social capital to launch a new life" (Woolcock 1998; 158). However, if the business is successful, there may become a time when the dependence on close ties within the ethnic community starts to hinder the growth of the business. Examples of this kind of friction can be found in businesses that become "hotels" for the family and friends of the entrepreneur, or among successful Asian Americans who anglicize their names in order to avoid having to support the rest of the immigrant community. These examples demonstrate how strong community ties may shift to work against individuals, so that their costs start to greatly outweigh the benefits.
10. Closure of the Social Structure
Noting that the balance between the costs and benefits of social capital may change so that groups or individuals can find themselves possessing "too much" or "too little" of it suggests that there may be different forms of social capital, and that different combinations of these forms may be necessary at various phases of development. From an economic point of view, social capital turns out to be a resource to be optimized, not maximized. Having narrowed down social capital to the norms and networks that enable people to act collectively, and having examined the kinds of benefits and drawbacks it may generate, we should now turn our attention to the qualities in social structure through which different forms of social capital emerge. In other words, we must build some kind of understanding of how social networks, by enforcing norms, create social capital. James Coleman demonstrates how effective norms depend on a specific structural property of social relations, which he calls closure. "Norms arise as attempts to limit negative external effects or encourage positive ones. But, in many social structures where these conditions exist, norms do not come into existence. The reason is what can be described as lack of closure in the social structure" (Coleman 1998; 27). Consider the two simple networks in Figure 10.1:
Figures 10.1(a) and 10.1(b). "Network without (a) and with (b) closure" (Coleman 1998; 27).
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Figure 10.1a displays an open structure, in which actor A has established relations to both actors B and C.
Now, if A was to somehow break a norm and take advantage of either B or C or both, they could not
combine forces in order to sanction A since they have no relations with one another, only with completely
unrelated individuals (D and E). We could imagine a situation where A is a bully at school who routinely
abuses loners B and C by forcing them to turn over their lunch money. If B and C do not know each other,
but only have friends who go to different schools (D and E), they have no way of fighting back together.
Conversely, in a structure with closure like the one exemplified in Figure 10.1b, B and C can combine to
provide a collective sanction, or either can reward the other for sanctioning A. Gossip, for example, is great
way for collective sanctioning that depends on closure.
11. The Norm of Generalized Reciprocity
Closure of the social structure is a powerful way not only for enforcing collective sanctions on deviant behavior, but also for another form of social capital: the trustworthiness of social structure that allows the proliferation of obligations and expectations. "Reputation cannot arise in an open structure, and collective sanctions that would ensure trustworthiness cannot be applied. Thus, we may say that closure creates trustworthiness in a social structure" (Coleman 1998; 28). Trust and trustworthiness have been extensively discussed by sociologists like Fukuyama (1995), who notes that "Trust begins where knowledge ends". It is common sense that trust lubricates social life. But where does trust inhere?
Trust requires the emergence of certain reliability in social and economic exchange, where assets and returns end up in relative balance over a prolonged period of time. In the economic stream of thinking, social capital can thus be seen as the accumulation of mutual obligations according to the norm of reciprocity. According to Putnam (2000; 20) "Networks involve (almost by definition) mutual obligations; they are not interesting as mere 'contacts'. Networks of community engagement foster sturdy norms of reciprocity: I'll do this for you now, in the expectation that you (or perhaps someone else) will return the favor." Portes (1998; 49) points out that the exchange of social favors differs from purely economic exchange in two aspects. First, there is no single currency for social obligations: they may be paid back in very different forms; and second, the timing of the repayment is often unspecified.
Putnam makes an important differentiation by distinguishing between specific and generalized reciprocity. Specific reciprocity closely resembles economic exchange, and has been characterized as the passing of "credit slips" by Coleman (1998; 23). "If A does something for B and trusts B to reciprocate in the future, this establishes an expectation in A and an obligation on the part of B. This obligation can be conceived as a credit slip held by A for performance by B". A person holding many such credit slips will obviously enjoy a more affluent position as long as the network structure (through closure, for example) facilitates mechanisms (like gossip) that guarantee the repayment of these obligations. Coleman's famous example of this type of condition is the wholesale diamond market in New York City, which is in the hands of a tightly knit Jewish community who inhabit a certain quarter in Brooklyn, frequently intermarry and maintain a religious collective with very regular and ancient rituals. There, bags containing thousands of dollars worth of diamonds are passed from one merchant to another for private inspection without formal insurance or legal agreements. This kind of exchange can function very efficiently as long as trust in specific reciprocity remains total between the merchants.
Even more valuable, however, is the norm of generalized reciprocity. In a well functioning community, people are constantly doing small favors for each other without expectation of direct returns. "A society characterized by generalized reciprocity is more efficient than a distrustful society, for the same reason that money is more efficient than barter. If we don't have to balance every exchange instantly, we can get a lot more accomplished" (Putnam 2000; 21). This resembles Durkheim's classical theory of social integration through
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common rituals of giving. In this kind of exchange, the expectation of repayment is not based on knowledge
of the recipient, but on the insertion of both actors in a common social structure. This resembles buying a
round of drinks among friends who often meet for a pint at the pub. "First, the donor's returns may come not
directly from the recipient but from the collectivity as a whole in the form of status, honor, or approval.
Second, the collectivity itself acts as guarantor that whatever debts are incurred will be repaid" (Portes 1998;
49).
12. Bonding and Bridging Social Capital
Closed communities allow generalized reciprocity and trust to emerge within the dense networks of members characterized by frequent, multiplex interaction and structural closure. However, social capital functions as a double-edged sword. As such close-knit communities become more and more bounded from their environment, the benefits that its members derive from the network may begin to fall behind the costs. Exchange is smooth, but there is not enough diversity. Knowledge is shared, but ideas begin to sound the same. This effect can be illuminated with the help of a simple diagram (see Figure 12.1).
Figure 12.1. The widening gap between expected and actual benefits derived from a closed network
Groups with strong ties, clear boundaries and high levels of trust and generalized reciprocity can be said to rate high on exclusive, "bonding" social capital. However, at times the linkages to resources outside the immediate range of close contacts can become critical for the survival of the individual actor or the community as a whole. This type of inclusive "bridging" social capital emerges in a very different type of network structure. Building on the work of Granovetter (1973), scholars in the field of network research have developed conceptual instruments that help us understand how these differences in network structures facilitate different forms of social capital. Granovetter pointed out that contrary to the commonsense notion that dense networks like close family and friends would be the most effective in finding new jobs, people usually heard about new employment opportunities from "friends of friends", or individuals outside the immediate circle of one's personal contacts. Granovetter called this the strength of weak ties, referring to the power of such indirect influences (Portes 1998; 53). Developing Granovetter's ideas further, Burt coined the notion of structural holes to describe how individuals could benefit more from a few contacts to unconnected groups than from multiple connections to people who all know each other. Redundant contacts are likely to hear the same information at about the same time. However, "Nonredundant contacts offer information benefits that are additive rather than redundant. Structural holes are the gaps between nonredundant contacts ... A structural hole indicates that the people on either side of the hole circulate in different flows of information" (Burt 1998; 258). By establishing strong relations with contacts on both sides of the structural hole, an individual can span the hole and gain access to both information flows. Burt has depicted this with the diagram shown in Figure 12.2.
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Figures 12.2(a) and 12.2(b), "Illustrative managers' networks**" (Burt 1998; 259).
** Thick lines represent a managers' direct contacts.
Figure 12.2 illustrates the networks of two anecdotal managers, James and his successor Robert. James had a network that spanned one structural hole: without him, there was only a single weak tie connecting the cluster of contacts 1, 2, and 3 and the cluster that he reached through contacts 4 and 5. Burt describes how Robert took over James's job and expanded the social capital associated with the job. "He preserved the connection with both clusters in James's network but expanded the network to a more diverse set of contacts. Robert's network, with the addition of three new clusters of people, spans ten structural holes" (Burt 1998; 258). Which form of social capital is more valuable? Bridging--the sparse network allowing for brokering between the few redundant ties exemplified by Granovetter's "weak ties" and Burt's "structural holes"; or bonding--the dense network with many redundant ties allowing for the accumulation of trust and effective norms exemplified by Coleman's notion of "closure"? Returning to Adler and Kwon's division, I argue that emphasizing the value of non-redundant network connections leads us to adopt the external, egocentric view on social capital, while emphasizing the value of dense redundant ties leads to adoption of the internal, sociocentric viewpoint. That which is more valuable depends on the specific phase in the development of the network, and the objectives of the individuals that act within it.
13. Development through Coupling and De-Coupling
After making the distinction between bonds and bridges, we need to understand when the different forms of social capital come in handy, and how to model the processes in which the transitions from one to the other happen. But first it is important to note that the two categories are not mutually exclusive. According to Putnam, "Bonding and bridging are not 'either-or' categories, but 'more ore less' dimensions along which we can compare different forms of social capital." In fact, "Many groups simultaneously bond along some social dimensions and bridge across others" (Putnam 2000; 23).
Social structure is not static, but constantly challenged, reinterpreted and recast through the process of interaction which network diagrams, like that of Burt's shown above, fail to capture in their snapshot. Changes in the social structure will affect the value of a given form of social capital to individuals and the community. Woolcock (in press) notes that "... as community members' welfare changes over time, so too does the optimal 'calculus' of costs and benefits associated with particular combinations of bonds and bridges." He demonstrates in an intriguing manner how the mechanism that Granovetter called coupling and de-coupling can foster economic growth by facilitating transitions to more diverse social networks. "Poor entrepreneurs, for example, once heavily dependent on their immediate neighbors and friends (i.e., their 'bonding' social capital) for credit, insurance, and support, require access to more extensive product and factor markets as their businesses expand. Economic development, from this perspective, takes place when an ongoing 'coupling and de-coupling' social mechanism is in place (Granovetter 1995). This mechanism allows individuals initially to draw on the benefits of close community membership, but in doing so also ensures that they acquire the skills and resources to participate in more extensive networks that transcended their community, thereby progressively incorporating them into mainstream economic life." (Woolcock; in press). Figure 13.1 shows that as the diversity of the social networks of the poor expands, so too does their welfare.
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Figure 13.1. "Social capital and poverty transitions" (Woolcock; in press)
The genius in group-based credit programs like the Grameen Bank in Bangladesh lies in enabling the poor to leverage their "bonding" social capital to set off transitional processes that can lead to the accumulation of greater wealth. Poor village women without material collateral are given loans on the basis of membership in a small peer group. This group then helps them start or expand a small business, and by doing so improve their families' welfare (A). But the economic returns to any given network soon reach a limit (B), especially when it is characterized by high endowments of "bonding" social capital. If the network continues to expand, for example when the children of these women move into urban slums, its resources become overwhelmed, reducing the well-being of long-established members. Furthermore, for those who are more ambitious, the commitments of the network may become an obstacle for further advancement. Many poor people solve this problem by partially divesting themselves of their old obligations, and moving to places where there are more opportunities for acquiring "bridging" social capital and hence economic opportunities are more promising (E).
14. Delivering on the Promise
Network research provides valuable tools for analyzing how social structure enables very different forms of social capital to emerge in a given situation. The "solidarity networks" among poor villagers can provide for vitally important protection, risk management, and consensus (Kozel & Parker 1998). By contrast, the "innovation networks" of the more affluent excel in the advancing of material and political interests. Firms employ them with the goal of enhancing productivity, profit, and market share. It could be said that the networks of the poor play "defense", while those of the non-poor play "offense" (Woolcock; in press). The problem with the network view lies in its assumption of the benefits of any group activity as primarily the property of the particular individuals involved (Woolcock; in press). In search of alternative socio-centric viewpoints to these processes it is interesting to note Simmel's (1971) classical analysis of the restructuring that takes place in communities as the diversity of social networks expands. According to Simmel, at a given point in the development of a community there rises a need to substitute "the centripetal forces of the lone group" with "a centrifugal tendency that forms bridges with other groups". Simmel argues that this transition leads to internal differentiation within the community as some members begin to specialize in "export", or maintaining the bridges to other communities, while others continue to "produce for domestic consumption", or mainly interact with each other. Furthermore, the network view does not provide good conceptual tools for the inclusion of institutions or material infrastructure in the analysis. Woolcock (in press), for example, criticizes network theorists for overlooking how the state often occupies a key mediating role in establishing common forums. Uphoff (1992; 273) has noted that "Paradoxical though it may seem, 'top-down' efforts are usually needed to introduce, sustain, and institutionalize 'bottom-up' development. We are commonly constrained to think in 'either-or' terms--the more of one the less of the other--when both are needed in a positive-sum way to achieve our purposes." Uphoff's point is well taken, but it fails in conceptualizing developmental tensions theoretically. Dismissing the disparities between bottom-up and top-down development by merely shrugging and saying that both are
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needed won't advance our understanding of the powerful dynamics these dilemmas create. This leads
researchers to miss the developmental tensions within a given community. For example, progressive
grassroots organizations like the rotating credit associations of the poor face the dilemma of becoming less
necessary as they become more successful. This type of developmental dilemmas could be conceptualized
with the aid of theoretical concepts like the notion of contradiction in the framework of cultural-historical
activity theory, which remain underdeveloped in network-analytical literature. For instance, Marx's concept of
the primary contradiction between use value and exchange value leads us to regard contradictions as
developmental drivers, creating turbulence that fuels disturbances and innovations (Engestrцm 1997).
Conceptualizing developmental tensions becomes critical if we are to transform situations where a community's social capital substitutes for weak, hostile or indifferent formal institutions into ones in which both realms complement each other. What I am arguing for here is a situated, developmental view of social capital. The problem with much of the reviewed sociological, economic, and network research literature lies in trying to go straight from identifying general mechanisms of social capital to assembling universal measures for quantifying it. Typically, these are structural measures such as the number of linkages or the frequency of interaction. But this leads to omitting the "content" of the exchange from the equation. We should ask, what do the connecting lines in the network diagrams stand for? The lack of serious theoretical conceptualization of the object of the practical activity--the reason why people form networks in the first place--results in the implicit adoption of economic criteria as the measures for the success of the activity. We thus begin to apply economic measures to all communities or networks, without any regard for what the actors themselves set as their goals or consider being of value. Not everyone is after increasing economic returns. A network that reaches its saturation point on economic terms may be desirable because of other "by-products" like increased safety, counseling or therapy. This is the promise that is attracting so much interest in social capital in the first place. In order to deliver on this promise, we need to develop means of analyzing the "content" of the linkages by being sensitive to the motives, rules and artifacts employed in practice, which will keep changing as the object of the activity develops and transforms. A network set to increase the economic affluence of a community may undergo a redirection towards other goals. Once the community manages to get by economically, this objective may recede to the background--the practice may even become reified into new forms of infrastructure--and new foci for the developmental network may emerge.
15. Conclusion
To conclude, I've attempted to define social capital by analyzing its sources as well as its consequences. But is social capital the cause or effect of social circumstance? Following Putnam, we could argue that "If regional and local patterns of civic engagement and social connectedness were evanescent and mutable, then correlations between social capital and other social facts (like educational performance or public health or crime) might well reflect the effect of those factors on social capital. If, on the other hand, regional and local profiles of social capital represent long-standing traditions, then it is more plausible that social capital is a cause, not merely an effect, of contemporary social circumstance" (Putnam 2000; 294). I've also tried to illuminate the most important conceptual findings of social capital literature to date, and finally sketch out some of the future challenges in this field of research.
To reiterate: how should we define social capital?
Social capital can be identified as shared norms and the networks that enforce them.
Social capital provides an opportunity to employ other forms of capital in the form of exchange relationships.
The most valuable of these shared norms can be identified as the norm of generalized reciprocity, which
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allows people to trust each other across social boundaries. The networks that enforce these norms vary on
two important structural dimensions: the extent to which they consist of bonding and bridging types of
linkages. Economic development may require a series of transitions along the bonding and bridging axes from
concise to more diverse networks through the processes of coupling and de-coupling. And lest we forget, the
same social capital can be used for both constructive and destructive purposes.
Finally, I argue that further understanding of the processes creating informal networks that complement rather than substitute formal institutions and material infrastructure requires us to develop situated, developmental methods of analyzing social capital as it manifests itself in the form of palpable human practice. I am not rejecting the quantitative approach: in fact, I believe that quantitative measures should be developed with at least the following five topics in mind: 1) network density and scope; 2) network structure; 3) the forms of "credit slips"; 4) the principles of exchange; and 5) change over time. However, the power of social capital stems from its nature as an open concept incorporating several dimensions (like time, density, and scope) and units of analysis (from individual to community to society). Different combinations provide different outcomes in different contexts. This suggests that there may never be a single universal measure for social capital. Instead, I believe there is potential in building powerful comparative instruments by placing the object of the situated practice as a starting point for analysis.
References
Adler, P. & Kwon (1998) "Social Capital: The Good, the Bad and the Ugly," in E. L. Lesser (ed.) Knowledge and social capital: Foundations and applications. Boston, Ma.: Butterworth Heineman. Ahtisaari, M. (2000) "New Year's Speech by the President of the Republic on 1.1.2000." http://www.ahtisaari.fi/puheet-1999/p000101.uven.html Alanen, A. (2000a) Voiko aineellista talouskasvua selittдд sosiaalisella pддomalla? Empiirinen kokeilu tuotantofunktioilla vv. 1970--1995 lддniaineistoilla Suomessa. (Luonnos) 21.1.2000. Tilastokeskus. Alanen, A. (2000b) Miten lasketaan sosiaalista pддomaa. Muistio 3.4.2000. Tilastokeskus. Baron, J. & Hannan, M. (1994) "The Impact of Economics on Contemporary Sociology." Journal of Economic Literature 32, 1111--1146. Becker, G. (1993) [1964] Human capital, third edition. Chicago, Il.: University of Chicago Press. Bourdieu, P. (1980) "Le capital social: notes provisoires." Actes de la recherche en sciences sociale 31: 2--3 Bourdieu, P. (1985) "The Forms of Social Capital," in J.G. Richardson (ed.) Handbook of theory and research for the sociology of education. N.Y.: Greenwood. Burt, (1992) Structural holes: The social structure of competition. Cambridge, Ma.: Harvard University Press. Burt, (1998) [1997] "The Contingent Value of Social Capital," in E. L. Lesser (ed.) Knowledge and social capital: Foundations and applications. Boston, Ma.: Butterworth Heineman. Clinton, H. R. (1996) It takes a village: And other lessons children teach us. New York, N.Y.: Touchstone. Coleman, J. (1987) "Norms as Social Capital," in G. Radnitzky & P. Bernholz (eds.) Economic imperialism: The economic method applied outside the field of economics. New York, N.Y.: Paragon House Publishers.
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kommentoi
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