TOPIC 2.10: Building Social Capital

Cox (1995)^[1] pointed to the importance of building social capital as much as other types of capital – financial, physical and human. Cox’s idea of social capital is broader than Putnam’s in that it includes ‘private lives’ along with the more explicit forms of social organisation. Social capital is generated through neighbourliness and community support, such as looking after neighbours’ children or informal activities based on trust, such as people gathering in a local coffee shop or park.

Putnam (2000)^[2] linked economic growth to social capital. Where communities have features of social organisation, such as networks, norms and trust that facilitate co-ordination and co-operation for mutual benefit, there is likely to be economic development.

Perhaps a role of government (and managers) is to create the conditions in which social capital flourishes?

As organisations and agencies seek to collaborate with communities to identify needs and sustainable service systems, the process of appreciating and valuing and building on the capacity and capital within the community is vital.

Identifying informal local leadership, respecting local history and understanding cultural and social norms will build patterns of trust, reciprocity and co-operation. Social cohesion in turn will contribute to economic development. Social capital differs from place to place.

Although there is general agreement on social capital’s importance, there is no consensus about what it means in practical terms, which poses difficulties for public sector managers who are being asked to develop policies and programs to ‘develop social capital’.

Questions about social capital include the role of power and social conflict and social capital as a resource for local development and poverty eradication.

Some of the main areas being debated are:

• Does social capital exist as the property of individuals or groups?
• Does social networking improve an individual’s social capital by enabling them to draw on the collective resources of others, or is social capital the collective product of social relations between people? This has implications for the debate about community strengthening.
• Is it about enhancing people’s skills and networking capacities to improve their social capital? Or is it about developing networks and processes to create interactions between people to generate social capital?
• Is social capital increased or lessened when there are beneficial outcomes for participants but not for the wider community, such as a residents’ group which acts to protect existing housing forms, but which may adversely affect those who cannot afford such housing? To overcome this difficulty, it has been suggested that there can be both ‘bonding capital’ (social interactions in which members provide mutual support and reinforce social solidarity) and ‘bridging capital’ (in which groups may encourage members to seek or establish relationships with others outside the group) (Ostrom & Ahn, 2009, p24)^[3]. Do governments sometimes create social capital as the unintended outcome of their policies? For example, local protests about the location of a prison or a toxic waste dump may create social capital and strengthen a community but are a perverse outcome of a government policy.

There have also been particular difficulties when governments try to measure social capital. It is unclear whether one form of participation (unpaid) creates more social capital than participation in the paid workforce and the well-documented social relations inherent in work.

Whatever the conceptual and measurement difficulties, the concept of social capital has been highly influential on governments. There appear to be two major advantages to the concept:

1. It challenges the view that policies supporting social development are a drain on economic growth and wealth creation. Organisations such as the World Bank are now foremost among those who assert that sustainable economic growth cannot take place without social capital.
2. It encourages governments to move beyond the rationalist view of people implied by economic analysis of consumers and markets, to a more holistic view of people and their relationship with governments. It recognises the importance of the soft systems: social relationships, networks and mutual obligations.