Social Capital

Social capital—networks of associations and the attitudes these foster—is a resource that facilitates solutions to collective action problems. The concept of social capital has become popular across several social science disciplines, including political science, sociology, anthropology, and economics. The central idea of social capital is that relationships between people, and the norms and values these relationships create, can be productive. That is, in the same way that tools or machines (physical capital) or an individual's education and skills (human capital) can be productive, dense networks of association can facilitate production. Social capital theory posits that the topology of interpersonal relationships—as distinct from anonymous, market-based transactions—can affect societal productivity, broadly defined. For example, repeated interaction between individuals may alleviate the agency problems associated with imperfect information, moral hazard, and the external enforcement of contracts. Evidence from recent research suggests that social capital is important in explanations of such diverse macro outcomes as economic growth, government responsiveness, crime rates, and public health, as well of as micro outcomes such as individual happiness and well-being, academic achievement, and employment success.

Two of the most influential theorists of social capital are the sociologist James Coleman and the political scientist Robert Putnam. Much of the proliferation of research on the topic has been spurred by their work. For Coleman, social capital is a capital resource that comes about in relations between persons. Several different aspects of social relations can constitute social capital. These include trust, obligations and expectations, information channels, and norms and sanctions. While Coleman views social capital as consisting of several different entities, they all share the common characteristic of being elements of social structure. Thus, what sets social capital apart from other forms of capital is its focus on social structure. Unlike human capital, social capital does not inhere in individuals, nor is it found in physical infrastructure.

In his study of institutional performance in Italy, Making Democracy Work, Putnam argues [Page 612]that the presence of social capital, in the form of civic traditions, is the difference between governments that are efficient and responsive and those that are not. In later work, Putnam turned his attention to civic community in the United States, notably in the book Bowling Alone.

While Coleman's and Putnam's conceptions of social capital share many aspects, a notable difference is in the normative connotations of Putnam's work. Coleman offers a more general theory of how interpersonal relationships can be a form of capital. In this way, his work is connected to the theory of repeated games. For Putnam the focus is more explicitly on the connection between interpersonal relationships—and, importantly, the norms that arise from them—and democratic health.

One of the early criticisms of social capital, in particular of the work of Putnam, stressed that the concept need not necessarily have the positive outcomes that Putnam and others ascribed to it. Critics argued that there could also be a negative aspect to social capital, pointing out that groups as varied as the mafia, Al Qaeda, and American militia movements all possessed many of the elements of social capital that researchers claimed lead to beneficial outcomes. In part as a response to this criticism, Putnam makes a distinction between bridging and bonding social capital. The former is social capital in the form of social connections that overlap diverse communities of people, while the latter refers to social capital that serves to strengthen the connections between people who are, on some dimension, similar to one another.

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