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Social Capital

Social capital is a form of capital that exists within relationships among individuals. According to Bourdieu (1986), capital is accumulated labor that can be appropriated by individuals or groups for their exclusive use to further their interests and increase their capital holdings. By drawing on the social capital resources in their relationships, individuals can further their own goals. For example, the larger the social network an individual has while looking for a job, the more resources—through company contacts, information, and higher-status references—that individual can draw on. Greater availability of resources increases the likelihood that the individual will find a job better than will an individual with fewer social network resources. It is also likely that a well-connected individual will find employment sooner. Simply put, social capital is ‘‘an elegant term to call attention to the possible individual and family benefits of sociability’’ (Portes and Landolt 1996, p. 94).

Some scholars have remarked on the ‘‘plethora of capitals’’ recently appearing in social and economic theories that refer to virtually all aspects of social life as a form of capital (Baron and Hannan 1994). The notion of physical capital, as embodied in machines, tools, and equipment, has been extended by economists to include human capital. Just as investments can be made to improve physical capital—newer and better tools— human capital can be increased by enlarging an individual’s skills or knowledge base. Social capital, then, is created when relationships are used to enable actions by individuals to further their own interests. According to Coleman (1988), each actor has control over and interests in certain resources and events. Social capital constitutes a specific kind of resource that is available to an actor. Unlike other resources, social capital is based on reciprocity and thus comes with the expectation that obligations will be repaid as requested by other individuals in the network. Social capital does not have a set rate of exchange, and payments often are made according to need rather than in standard purchase terms as is done with equipment and education.

The theoretical foundation of the concept of social capital is still in a nascent phase, and there is much debate about its definition, creation, and utility as well as its role in public policy and modernization strategies. Advanced most notably in the work of the French sociologist Bourdieu and further developed by Coleman, the notion of social capital has been put forth as a conceptual tool to bridge two divergent theories of social action: economism and semiologism (Bourdieu 1986). Economism reduces all social exchanges to economic transactions in which independent social actors pursue their own self-interest with little attention to social context. In this view, social action is based on the principle of maximizing utility. In contrast, semiologism reduces social exchanges to communicative acts by socialized actors and downplays the impact of economic factors. In this theoretical orientation, social action is governed by social norms, rules, and obligations. The notion of social capital mediates these divergent orientations by acknowledging both the self-interest of actors and the influence of the social and economic context.

As social capital refers to the aspects of the social structure that are of value to social actors as resources that can be mobilized in pursuit of their interests, it is defined by its function. Social capital is not located in the actors themselves (as with human capital) or in any physical implements of production (as with physical capital). Instead, it is located in the relationships and personal networks between and among social actors. Social capital, then, appears in a variety of forms that have two common elements:

(1) Social capital appears as an aspect of social structures, and

(2) actors are able to use social capital as a resource to achieve their goals within the social structure.

Coleman (1988, 1990) conceives of social capital as a social structural resource that is a capital asset for the individual. It is productive, making it possible to achieve certain goals that cannot be achieved in its absence, and it is constituted within social organizations often as a by-product of activities undertaken for other purposes. For Coleman, the value of the concept lies primarily in accounting for different outcomes of individual efforts and illuminating how resources can be combined with other resources to create system-level differences. The concept of social capital is most useful in qualitative analyses of social systems and studies relying on qualitative indicators.

Forms of Capital

Coleman (1990) identifies six forms of social capital: obligations and expectations, information potential, norms and effective sanctions, authority relations, appropriable social organizations, and intentional organizations.

Obligations and Expectations

A social system that relies heavily on reciprocal actions creates obligations and expectations on the part of its participants. Each ‘‘favor’’ is expected to be repaid, and those who can provide ‘‘favors’’ are expected to do so when requested. This form of exchange engenders social capital for a group member who has done many favors without collecting reciprocal favors in return. These unreciprocated favors create obligations that allow the favor-granting member to request aid from those who are obligated to her or him. These unpaid obligations accrue in the form of social capital that the member can use.

This form of social capital has two critical elements: the mutual trust within the social system and the extent of outstanding obligations. Without trust that obligations will be reciprocated, there is no incentive to accrue social capital. For social capital to have value, there must be trust that the resources will be there to be drawn on when needed. Furthermore, it is the extent of outstanding obligations that denotes the amount of social capital an individual can draw on. Indeed, the overall number of outstanding obligations within a system can be a measure of its interconnectedness as members are obligated to one another. This connectedness also increases the resources available to each member.

Information Potential

By interacting with informed members, individuals can increase their knowledge without having to obtain the information directly, whether by reading the newspaper or by interpreting research findings. A member also may become privy to specialized information—such as unadvertised business opportunities— through informal information exchange. Useful information can be the impetus for action that furthers the individual’s on goals and can be a beneficial commodity.

Norms and Effective Sanctions

Within a social system, norms can support and provide rewards for specific behaviors. Norms that encourage the subjugation of self-interest to the needs of the community are an especially powerful form of social capital. By promoting certain activities, norms by nature constrain other activities. Criminal pursuits are an obvious example of activities that communities want to constrain. Less obvious examples would be that the promotion of athletic activities constrains the time available for other interests and that norms that promote conformity constrain innovation. Effective ‘‘norms can constitute a powerful form of social capital’’ (Coleman 1990, p. 311).

Authority Relations

Within groups organized to address a specific issue, a leader often is chosen and given the right to make decisions and speak for the group. Thus, the members of the group transfer the ‘‘rights of control’’ to one individual, who then has access to an extensive network of social capital that can be directed toward a specific goal. When the rights of control are located in one individual, the social capital of all the members is amplified. Examples of this form of social capital can be found in political action groups, business cartels, and grassroots organizations.

Appropriable Social Organizations

Social organizations usually are created to address a specific issue, and after that issue is resolved, the organization often continues to exist through a redefinition of its goals. Thus, an organization that was developed for one purpose can be appropriated for another purpose. This constitutes a form of social capital available for use.

Intentional Organizations

This form of social capital occurs when individuals join together to create an organization that will benefit them directly. An example of this can be a joint business venture or a voluntary association that produces a public good, such as a Parents and Teachers Association (PTA) chapter. This form of social capital advances the interests of those who invest in it. Additionally, it can create two by-products as social capital: a public good that benefits others who did not invest directly and a social organization that can be appropriated for other purposes.

These six forms of social capital have certain properties that distinguish them from other assets. Social capital’s value lies in its use and cannot be exchanged easily. Additionally, it is not the private property of those who benefit from it. Rather, it is most often a by-product of other intentioned actions. Individuals who invest in the creation of the necessary social structures (norms, reciprocal obligations, etc.) are not the primary beneficiaries of the social capital that is generated. Instead, the social capital profits all those who are part of the social structure. Thus, it is not necessarily in an individual’s self-interest to bring social capital into being. If another form of assistance that does not incur an obligation, such as a government program, is available or if individuals can meet their needs through self-sufficiency, they may choose to utilize these resources rather than those which accrue social capital through reciprocity. Using such forms of assistance or sufficiency does not increase the general pool of social capital in the community.

Coleman (1990) identifies factors that can increase or diminish social capital. A high degree of closure in a social network strengthens its ability to engender norms and effective sanctions. Closure is also important in achieving mutual trust among members. Conversely, lower closure reduces the effective norms and trust that would lessen the social capital engendered. The stability of a social structure affects the development or destruction of social capital. Individual mobility can threaten the stability of an organization, which in turn threatens its social capital. Organizations and social relations that are dependent on specific individuals are less stable than are those which rely on positions that can be filled by various individuals. Those organized around positions have more stability and thus a more steady supply of social capital on which the members may draw. Ideology can create social capital by influencing individuals to act in the interest of the whole rather than in their own interests. Religious ideologies are an example of this factor. Alternatively, ideologies of self-sufficiency or individualism can hinder the generation of social capital. Other factors Coleman mentions include affluence, availability of official aid such as governmental support, and other factors that may make individuals less dependent on each other. Additionally, social capital must be maintained, as it depreciates over time and must be renewed.

Refining Social Capital Theory

Portes and Sensenbrenner (1993) have extended Coleman’s basic theory of social capital, claiming that it contains two specific shortcomings. First, they call for a more defined discussion of the forms of social capital and how they are developed. Second, they question Coleman’s optimistic instrumentalist orientation which focuses on the positive side of social capital. Furthermore, Portes and Sensenbrenner reidentify the sociological origins of notions of social capital by grounding their contribution in the works of classical social theorists. They begin by redefining social capital as ‘‘those expectations for action within a collectivity that affect the economic goals and goal-seeking behavior of its members’’ (1993, p.1323). This definition differs from Coleman’s emphasis on social structures that can facilitate individual actions.

Portes and Sensenbrenner (1993) outline four different types of social capital, with each one corresponding to a classical tradition. From Parsons and Durkheim, they define value introjection as the first source of social capital because it promotes behaviors based on morals and values rather than on self-interest. From Durkheim’s work, they conceive of economic transactions as reflections of an underlying moral order and contracts as reframing existing norms or values rather than creating new rules. Their second source of social capital—reciprocity transactions—comes from the work of Simmel and focuses on the dynamics of group membership. Reciprocity transactions are the obligations and expectations, backed by norms of reciprocity, that emerge through social networks of exchange. The third form of social capital is bounded solidarity, developed from Marx and Engels’s writings on situational circumstances that lead to principled group action. This type of social capital is created when individuals join together in response for an adverse situation. The fourth form of social capital is drawn from Weber’s distinction between formal and substantive rationality in market transactions; enforceable trust. Enforceable trust refers to the different mechanisms that formal institutions and particularistic group settings use to engender members’ disciplined compliance with group norms and expectations. Formal institutions use legal, rational mechanisms, whereas particularistic groups utilize substantive, social means.

Acknowledging the Negative Effects

Portes and Sensenbrenner also point out the negative effects of social capital in direct contrast to Coleman’s more positive position. The same social structures ‘‘that give rise to appropriable resources for individual use can also constrain action or even derail it from its original goals’’ (1993, p. 1338). The costs of solidarity can be obligations and interconnections within the community. The costs of community conformity can constrain individual freedom. Obligations to the community can inhibit attempts to succeed in a broader network with a richer array of rewards. Individuals may come to see these costs of developing and maintaining social capital as being too high and not in their best interest.

In spite of its inchoate state and the ongoing debates, Coleman’s optimistic discussion of social capital has become popular with policymakers who see it as the key to solving a variety of social problems. These policy proponents identify social capital as the features of social organizations (networks, norms, and social trust) that enable cooperative efforts for mutual benefit. Social capital is favored for its ability to promote and maintain voluntary associations that allow individuals to work together to resolve collective difficulties. In direct response, Portes and Landolt (1996) warn of the ‘‘downside’’ of social capital by making three specific criticisms of this use of social capital. First, social capital is discussed as the property of groups (communities), not individuals. Second, no distinction is made between the ability to access resources and the quality of those resources: Having networks is not enough; the networks need to have sufficient resources of value to make a difference. Third, policy proponents focus exclusively on the positive benefits of high levels of social capital and ignore the possibility of negative consequences.

Portes and Landolt (1996) specifically identify the less desirable possibilities of developing social capital. Social networks can promote ‘‘public bads’’ just as easily as public goods. Social capital can contribute to discrimination, restriction of individual freedom and creativity, lack of economic opportunity, and overwhelming obligations. Strong voluntary associations, communities, and social networks that maintain high levels of solidarity often do so by excluding outsiders. Thus, noninsiders are disadvantaged within those groups. Additionally, high social capital is contingent on a high degree of conformity within the group, and nonconformists can be ostracized. This greatly impinges on personal freedom and expression. It also can result in a great deal of power for those in leadership positions in the group. Mafia-type power structures are an example of this.

Tight social networks also can undermine entrepreneurial activity. Successful business owners often are expected to help others, and this can affect their ability to maintain their businesses. Portes and Landolt (1996) identify further ‘‘downward leveling pressures’’ that can be consequences of social capital. The pressure to conform to group norms in order to access group resources (which may be perceived as the only resources available) can keep an individual from attempting to enter the mainstream and find a way up from poverty. Portes and Landolt use the examples of prostitution rings and youth gangs. The network norms function to keep individuals within the familiar group culture. Any attempt by a member to achieve something outside the network may be seen as a threat to group solidarity and is discouraged.

Social Capital and Sociology

Within the discipline, sociologists recognize the need to conduct empirical investigations as an important component of theory building. The concept of social capital has been advanced in many diverse subfields of sociology. Sociologists have applied it to the macro issues of modernization, economic development or lack of it, networks, and organizations. Others have studied the empirical implications of social capital for families and youth behavior problems, schooling and education, community life, work and organizations, democracy and governance, and collective action (see Woolcock 1998 for an overview).

As a theoretical concept, social capital holds great promise for furthering the sociological understanding of social action. There is still much to learn; the perspective needs to be grounded in established bodies of empirical research before it can be translated into optimistic public policies. Its greatest promise, Woolcock (1998, p.188) points out, ‘‘is that it provides a credible point of entry for sociopolitical issues into a comprehensive multiand interdisciplinary approach to some of the most pressing issues of our time.’’ Social capital may be seen as a common theoretical language that can allow historians, political scientists, anthropologists, economists, sociologists, and policymakers to work together in an open and constructive manner.

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