Social capital

Social capital is a concept used in sociology and economics to define networks of relationships which are productive towards advancing the goals of individuals and groups. It involves the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. Some have described it as a form of capital that produces public goods for a common purpose, although this does not align with how it has been measured. Social capital has been used to explain the improved performance of diverse groups, the growth of entrepreneurial firms, superior managerial performance, enhanced supply chain relations, the value derived from strategic alliances, and the evolution of communities.

History While it has been suggested that the term social capital was in intermittent use from about 1890, before becoming widely used in the late 1990s, the earliest credited use is by Lyda Hanifan in 1916 (see 20th century below). The debate of community versus modernization of society and individualism has been the most discussed topic among the founders of sociology: such theorists as Tönnies (1887), Durkheim (1893), Simmel (1905), and Weber (1946) were convinced that industrialisation and urbanization were transforming social relationships in an irreversible way. They observed a breakdown of traditional bonds and the progressive development of anomie and alienation in society.

18th–19th century The power of community governance has been stressed by many philosophers from antiquity to the 18th century, from Aristotle to Thomas Aquinas, and Edmund Burke. This vision was strongly criticised at the end of the 18th century, with the development of the idea of Homo Economicus and subsequently with rational choice theory. Such a set of theories became dominant in the last centuries, but many thinkers questioned the complicated relationship between modern society and the importance of old institutions, in particular family and traditional communities. The concept that underlies social capital has a much longer history; thinkers exploring the relation between associational life and democracy were using similar concepts regularly by the 19th century, drawing on the work of earlier writers such as James Madison (The Federalist Papers) and Alexis de Tocqueville (Democracy in America) to integrate concepts of social cohesion and connectedness into the pluralist tradition in American political science. John Dewey may have made the first direct mainstream use of social capital in The School and Society in 1899, though he did not offer a definition. In the first half of the 19th century, de Tocqueville had observations about American life that seemed to outline and define social capital. He observed that Americans were prone to meeting at as many gatherings as possible to discuss all possible issues of state, economics, or the world that could be witnessed. The high levels of transparency caused greater participation from the people and thus allowed for democracy to work better.

20th century L. J. Hanifan's 1916 article regarding local support for rural schools is one of the first occurrences of the term social capital in reference to social cohesion and personal investment in the community. In defining the concept, Hanifan contrasts social capital with material goods by defining it as: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 people, namely, goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and families who make up a social unit.… If he may come into contact with his neighbour, and they with other neighbours, there will be an accumulation of social capital, which may immediately satisfy his social needs and which may bear a social potentiality sufficient to the substantial improvement of living conditions in the whole community. The community as a whole will benefit by the cooperation of all its parts, while the individual will find in his associations the advantages of the help, the sympathy, and the fellowship of his neighbours. Following the works of Tönnies (1887) and Weber (1946), reflection on social links in modern society continued with interesting contributions in the 1950s and in the 1960s. In particular, mass society theory – as developed by Daniel Bell (1962), Robert Nisbet (1969), Maurice R. Stein (1960), William H. Whyte (1956) – proposed themes similar to those of the founders, with a more pessimistic emphasis on the development of society. In the words of Stein (1960:1): "The price for maintaining a society that encourages cultural differentiation and experimentation is unquestionably the acceptance of a certain amount of disorganization on both the individual and social level." Jane Jacobs used the term early in the 1960s. Although she did not explicitly define the term social capital, her usage referred to the value of networks. Political scientist Robert Salisbury advanced the term as a critical component of interest group formation in his 1969 article "An Exchange Theory of Interest Groups" in the Midwest Journal of Political Science. Sociologist Pierre Bourdieu used the term in 1972 in his Outline of a Theory of Practice, and clarified the term some years later in contrast to cultural, economic, administrative capital, physical capital, political capital, social capital and symbolic capital. Sociologists James Coleman (1988), as well as Barry Wellman & Scot Wortley (1990), adopted Glenn Loury's 1977 definition in developing and popularising the concept. In the late 1990s, the concept gained popularity, serving as the focus of a World Bank research programme and the subject of several mainstream books, including Robert Putnam's Bowling Alone, and Putnam & Lewis Feldstein's Better Together. All of these reflections contributed remarkably to the development of the social capital concept in the following decades. The appearance of the modern social capital conceptualization is a new way to look at this debate, keeping together the importance of community to build generalized trust and the same time, the importance of individual free choice, in order to create a more cohesive society. It is for this reason that social capital generated so much interest in the academic and political world.

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