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Contents | 1. Social capital | 2. Resources

1. What is social capital?


Over the last five to seven years social capital has started to get on the public agenda.

Many people are not familiar with the term social capital. In everyday language we speak about the social fabric rather than social capital.
Social capital is the term being used in the public discussion because:

  • it puts the social fabric on a par with other forms of capital such as financial capital, physical capital and human capital - social fabric has more status as social capital in an economic rationalist world view.
  • social capital has some characteristics of other forms of capital, for example, it is a resource one can build up and then draw on later.

Some of the reasons why social capital is being publicly discussed are:

  • people in the community can see economic growth and economic well-being are not necessarily building the community fabric and they are looking for alternatives to the current dominant economic ideology
  • there is increasing evidence social capital is an essential ingredient in:

    civil society
    economic development
    the health of people in communities
    community development.

What is Social Capital?

Social capital is the raw material of civil society. It is created from the myriad of everyday interactions between people. It is not located within the individual person or within the social structure, but in the space between people. It is not the property of the organisation, the market or the state, though all can engage in its production.

Social capital is a ‘bottom-up’ phenomenon. It originates with people forming social connections and networks based on principles of trust, mutual reciprocity and norms of action.

The term social capital was first used in the 1980s by Bourdieu and Coleman.

Robert Putnam - Prompting international discussion

Wide discussion of social capital was prompted after the publication in 1993 of Making Democracy Work: Civic Traditions in Modern Italy by Robert Putnam. Putnam summarises some of his work:

“ Similar to the notions of physical and human capital, the term social capital refers to features of social organization -- such as networks, norms, and trust that increase a society's productive potential....

Beginning in 1970, Italians established a nationwide set of potentially powerful regional governments. They were virtually identical in form, but the social, economic, political, and cultural contexts in which they were implanted differed dramatically ranging from the pre-industrial to the post-industrial and from the inertly feudal to the frenetically modern.

Some of the new governments proved to be dismal failures inefficient and corrupt. Others have been remarkably successful....
Contrary to our expectation, we were unable to explain the differences on the basis of such obvious factors as party politics, affluence, or population movements....

The historical record strongly suggests that the successful communities became rich because they were civic, not the other way round. The social capital embodied in norms and networks of civic engagement seems to be a precondition for economic development as well as for effective government.”
Civics matters. (PCD Forum March 6, 1995)

Eva Cox - Promoting Australian discussion

In Australia Eva Cox generated considerable discussion of social capital through her 1995 Boyer Lectures . In the Boyer Lectures she said:

“ There are four major capital measures, one of which takes up far too much policy time and space at present. This is financial capital. physical capital makes it onto the agenda because of the environmental movement. So there are fierce debates on trees, water, coal and what constitutes sustainable development. Some types of physical capital and financial capital deplete with overuse, or become scarce or too expensive. We occasionally mention human capital - the total of our skills and knowledge but rarely count its loss in unemployment.

There has been too little attention paid to social capital... Social capital refers to the processes between people which establish networks, norms, social trust and facilitate co-ordination and co-operation for mutual benefit. These processes are also known as social fabric or glue, but I am deliberately using the term 'capital' because it invests the concept with the reflected status from other forms of capital. Social capital is also appropriate because it can be measured and quantified so we can distribute its benefits and avoid its losses.'

We increase social capital by working together voluntarily in egalitarian organisations. Learning some of the rough and tumble of group processes also has the advantages of connecting us with others. We gossip, relate and create the warmth that comes from trusting. Accumulated social trust allows groups and organisations, and even nations, to develop the tolerance sometimes needed to deal with conflicts and differing interests....

Social capital should be the pre-eminent and most valued form of any capital as it provides the basis on which we build a truly civil society. Without our social bases we cannot be fully human. Social capital is as vital as language for human society. “

Themes in the Literature

There is a growing literature on social capital, a number of themes are emerging:

1. Participation in networks.
A key concept of social capital is the notion of more or less dense interlocking networks of relationships between individuals and groups. People engage with others through a variety of lateral associations. These associations must be both voluntary and equal.

Social capital cannot be generated by individuals acting on their own. It depends on a propensity for sociability, a capacity to form new associations and networks.

2. Reciprocity.
Social capital does not imply the immediate and formally accounted exchange of the legal or business contract, but a combination of short term altruism and long term self interest (Taylor, 1982). The individual provides a service to others, or acts for the benefit of others at a personal cost. They do this in the general expectation that this kindness will be returned at some undefined time in the future they might need ti themselves. In a community where reciprocity is strong, people care for each other's interests.

3. Trust.
Trust entails a willingness to take risks in a social context. We act this way based on confidence that others will respond as expected and will act in mutually supportive ways, or at least that others do not intend harm. Fukuyama defined trust as:

“ Trust is the expectation that arises within a community of regular, honest and cooperative behaviour, based on commonly shared norms, on the part of other members of that community. Those norms can be about deep ‘value’ questions like the nature of God or justice, but they also encompass secular norms like professional standards and codes of behaviour.” (Fukuyama, 1995: p26).

Other writers have defined trust in other ways. All discussion on social capital includes the notion of trust.

4. Social Norms.
Social norms provide a form of informal social control that remove the need for more formal, institutionalised legal sanctions. Social norms are generally unwritten but commonly understood formula. They determine what patterns of behaviour are expected in a given social context, and define what forms of behaviour are valued or socially approved.

Some people argue that where social capital is high, there is little crime, and little need for formal policing.

On the other hand, where there is a low level of trust and few social norms, people will cooperate in joint action only under formal rules and regulations These have to be negotiated, agreed to, litigated and enforced, sometimes by coercive means, leading to expensive legal transaction costs (Fukyama, 1995).

5. The Commons
The combined effect of trust, networks, norms and reciprocity creates a strong community, with shared ownership over resources known as ‘the commons’. As long as community is strong, it removes the problem of the opportunist who would use the community resource without contributing to it.

The commons refers to the creation of pooled community resources, owned by no-one, used by all. The short term self interest of each, if unchecked, would render the common resource overused, and in the long term it would be destroyed. Only where there is a strong ethos of trust, mutuality and effective informal social sanctions against "free-riders" can the commons be maintained indefinitely and to the mutual advantage of all (Putnam, 1993).

6. Proactivity
Implicit in several of the ideas above is a sense of personal and collective efficacy. The development of social capital requires the active and willing engagement of citizens within a participative community. This is quite different from the receipt of services, or even of human rights to the receipt of services, though these are unquestionably important. Social capital refers to people as creators, not as victims.

Source for above: Based on extracts from “Social Capital: Family Support Services and Neighbourhood and Community Centres in NSW” Paul Bullen and Jenny Onyx, April 1999

Defining Social Capital

While the themes above are consistently mentioned throughout the literature on social capital there are many definitions of social capital.

One definition is:
Social capital is the sum of the resources, actual or virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalised relationships of mutual acquaintance and recognition (Bourdieu and Wacquant, 1992).

There are many other definitions. Wendy Stone and Jody Hughes in “What role for social capital in family policy - and how does it measure up?” (July 2000) state:

Social capital can be understood quite simply as networks of social relations characterised by norms of trust and reciprocity. The essence of social capital is quality social relations....Thus, social capital can be understood as a resource to collective action, which may lead to a broad range of outcomes, of varying social scale.

Ongoing dialogue

There will be ongoing discussions within the academic community and the wider community about how to define social capital.

A useful paper which summarises much of the academic debate about defining social capital is Ian Winter’s “Major themes and debates in the social capital literature: The Australian connection” which is Chapter 2 in Social capital and public policy in Australia (Australian Institute of Family Studies, 2000).

Further reading and resources

Further definitions

Bonding social capital

"Bonding social capital refers to the links between like-minded people, or the reinforcement of homogeneity. It builds strong ties, but can also result in higher walls excluding those who do not qualify, American college fraternities being a prominent example of such bonding." (Schuller, Baron, & Field, 2000)

Bridging social capital

"Bridging social capital … refers to the building of connections between heterogeneous groups; these are likely to be more fragile, but more likely also to foster social inclusion." (Schuller, Baron, & Field, 2000)

Schuller, T., Baron, S. & Field, J. (2000). Social capital: A review and critic. In S. Baron, J. Field, & T. Schuller (Eds.). Social Capital. Oxford: Oxford University Press.