Hong Kong Council of Social Service

1. Hong Kong Council of Social Service SOCIAL CAPITAL: Its Meaning, Measurement and Application to Social Work

2. Presentation Objectives • To formally introduce the concept of social capital • Distinguish the social from other forms of individual and collective capital, i.e., physical, financial, and human • Identify the various sources, dimensions and levels of social capital in economically advanced societies • Identify the value and organizing assumptions on which the concept is based • Identify the research and policy uses to which the concept has been put in other regions of the world • Discuss the implications of this concept for research and policy development in Hong Kong

3. Basic Definitions • Robert Putnam (1995:67): • Features of social organization—such as networks, norms and social trust—that facilitate coordination and cooperation for mutual benefit • World Bank (2002): • the norms and networks that enable collective action • “the institutions, relationships, and norms that shape the quality and quantity of a society’s social interactions…Social capital is not just the sum of the institutions which underpin a society—it is the glue that holds them together” (WB, 1999)

4. Brief History of the Social Capital Concept Not a new concept, but one that only recently has gained importance • First uses: • Lyda Hanifan in The Rural School Community Center (1916) and The Community Center (1920) discussed role of rural school community centers in building good will, fellowship, sympathy and social intercourse among those that “make up a social unit” • Jane Jacobs in The Death and Life of Great American Cities (1961) focused on urban life and “neighborliness” • Pierre Bourdieu in Forms of Capital (1983) focused on the utility of the concept in social theory • James S. Coleman in Social Capital in the Creation of Human Capital (1988) and Foundations of Social Theory (1990) used the concept to discuss the social context of education

5. Putnam’s Notion ofSocial Capital • It is the work of Robert Putnam that has brought the great attention to the use of the SC concept as a research and policy tool • 1993: Making Democracy Work: Civic Traditions in Modern Italy • 1995: Bowling Alone: America’s Declining Social Capital • 2000: Bowling Alone: The Collapse and Revival of American Community

6. Putnam (cont’d) In Bowling Alone (2000:288-290), Putnam identified four of the most important outcomes associated with dense, i.e., high stocks, of social capitol: • Allows citizens to resolve collective problems more easily…via increased cooperation • “greases” the wheels that allow communities to advance smoothly..via increased levels of trust and solidarity • Widens the collective awareness of the many ways in which our fates linked • Function as conduits for the flow of information that facilitates the achievement of individual and collective goals

7. Social vs. Other Types of Capital Basically, four types of “capital” are to be found in society: • Physical capital: • Refers to physical objects (e.g., plants, machinery, other equipment) • Financial capital: • Refers to money and monetary instruments (e.g., stocks, bonds) • Human capital: • Refers to properties of individuals--knowledge and skills--that are derived from education, training and experience • Social capital: • Refers to connections among people—social networks and the norms of reciprocity and trustworthiness that arise from them • The norms may be as simple as the norm of reciprocity between two friends or complex and elaborately articulated doctrines such as Islam, Christianity or Confucianism • A society of many virtuous but isolated individuals is not necessarily rich in social capital (Putnam, 2000:19)

8. Social Capital vs.Other Concepts • Civil society refers to that sphere of voluntary associations and informal networks in which individuals and groups engage in activities of public consequence • Is distinguished from the public activities of government because civil society activities are voluntary and from the private activities of markets • Provides an essential link between citizens and the state • It is an attempt to synthesize public and private good

9. Social Capital vs.Other Concepts (cont’d) • Communitarianism: emerged in the 1980s in response to the limits of liberal theory and practice • Its dominant themes are: • Individual rights need to be balanced with social responsibilities • Autonomous selves do not exist in isolation, but are shaped by the values and culture of communities • Aimless individualism contributes to normlessness, self-centeredness and motivations driven by special interests and power seeking

10. The Assumptions Of Social Capital

11. The Assumptions of Social Capital • Social cohesion is critical for societies to prosper economically and for development to be sustainable (World Bank, 1999) • Social cohesion is expressed through various networks of civic engagement • Networks of civic engagement include: • Neighborhood associations • Sports clubs • cooperatives • The more dense these networks, the more likely that members of a community will cooperate for mutual benefit • This is the case even in the face of persistent problems of collective action, e.g., tragedy of the commons, prisoner’s dilemma, etc.)

12. The Assumptions of Social Capital (cont’d) • Networks of civic engagement foster social cohesion (and economic success) by: • Fostering sturdy norms of generalized reciprocity by creating expectations that favors given now will be returned later • Facilitating coordination and communication and, thus, create channels through which information about the trustworthiness of other individuals and groups can flow, be test and verified • Embodying past success at collaboration, which can serve as a cultural template for future collaboration on other kinds of problems • Increasing the potential risk to those who act opportunistically that they will not share in the benefits of current and future transactions

13. The Assumptions of Social Capital (cont’d) • Thus, social capital is understood to be an essential ingredient in not only building strong societies but in building strong economies as well • 2 farmers exchanging tools can get more work done with less physical capital • Rotating credit associations can generate pools of financial capital for increased entrepreneurial activity • Job searchers can be more efficient if information is embedded in social networks • Social capital also tends to cumulate when it is used, and be depleted when not and, thus, creating the possibility of both virtuous and vicious cycles that manifest themselves in highly civic and uncivic communities

14. The Assumptions of Social Capital (cont’d) Thus, the high levels of social interaction associated with social capital enable people to: • build communities • commit themselves to each other • knit the social fabric (Beem, 1999:20)

15. Sources of Social Capital

16. Sources of Social Capital(World Bank, 2002) A number of key sources of social capital are to be found in every community, albeit in differing amounts and at differing levels • Families • Communities • Firms • Civil society • The public sector • Ethnicity • Gender

17. Sources of Social Capital:Families • Functions as the first building block in the generation of social capital for the larger society, i.e., as the first and most stable source of economic and social welfare for its members (a social “safety net” of sorts) • In generating social capital, families: • Function on the basis of norms of trust, reciprocity, mutual aid, exchange and, typically, altruism—all norms that are essential to the development of social capital • Model patterns of cooperative social interaction with others in the community that are carried forward by their children into future generations • Make substantial emotional, physical and financial investments in the human capital development of their children • Serve as sources of financial and human capital in contributing to the development of entrepreneurs, i.e., via gifts, loans, grants, or the provision of free or inexpensive labor (Geertz, 1962)

18. Sources of Social Capital:Families (cont’d) • BUT especially dense family networks can undermine the establishment of both fiscal and social capital by imposing barriers to integration within external networks • High levels of internal trust may generate distrust of non-family members and institutions, thereby, preventing the development of potentially productive relationships • These types of family patterns are especially common in communities where the rule of law is weak (Gambetta, 1993; Milner, 1994) • Dense kinship networks may place heavy obligations on entrepreneurs that divert economic and other resources away from current or potential investments

19. Sources of Social Capital:Communities • Communities provide the context within which neighbors, friends and a broad range of formal and informal groups come together in the pursuit of common purposes • Arts and cultural groups • Civic associations • Burial societies • Community centers • Ethnically- or regionally-based associations • Social capital at the community level increases with increases with frequency of interaction • Leads to improved coordination and communication which, in turn, facilitates increased mutual trust and willingness to cooperate in future activities or in new area • These networks of community interaction benefit not only those directly involved in the interactions, but the community-as-a-whole (Narayan & Pritchett, 1997)

20. Sources of Social Capital:Communities (cont’d) • For the poor, social capital can be used as a substitute for physical and financial capital and, in some cases, for human capital (Collier, 1998) • Narayan & Pritchett (1997) study of social capital in 87 villages in Tanzania found that: • social capital is indeed both “capital” (in that it raises incomes) and • “social” (in that household incomes depend on village, not just household, social capital) • Danger: members of a community who do not comply with group or community norms may be ousted from the community or, at a minimum, blocked from participating fully in the social benefits of that community • New arrivals • Members of minority groups

21. Sources of Social Capital:Firms • According to Fukuyama (1995) “virtually all economic activity…is carried out not by individuals but by organizations that require a high degree of social cooperation” • Thus, building and sustaining organizations, such as firms, requires a high level of trust and a common sense of purpose, i.e., “social capital” • Social capital development at the firm levels works in a variety of ways: • Better knowledge sharing • Reduced transaction costs (including costs associated with negotiation and enforcement, imperfect information and layers of unnecessary bureaucracy) • Lower turnover rates (and, hence, lower severance, recruitment and training costs) • Greater coherence of action due to organizational stability and shared understanding (Cohen & Prusak, 2001:10)

22. Sources of Social Capital:Firms (cont’d) • Rather, effective firms depend on norms of reciprocity and interdependent relationships to enforce their decisions and actions • Promoting greater coordination among individuals and between departments • Strengthening teamwork • Building within (HKCSS) and across sector partnerships with other organizations (public-private commissions) that contribute to the effectiveness of one’s own • Such norms increase the competitive edge and profitability of successfully organized firms

23. Sources of Social Capital:Firms (cont’d) • Like other social units, though, firms also can have a negative effect on the development of social capital when: • Levels of trust become confining, such as in a family firm • Corruption within (ENRON) and between firms (ENRON and Anderson Accounting) and between firms and government (ENRON and “soft” political contributions) • Emergence of cartels that block competition and free trade and, thereby, inhibit innovation (e.g., Microsoft)

24. Sources of Social Capital:Civil Society • Civil society consists of formal and informal groups and organizations that act independently of the state and market to promote diverse interests in society • These activities are essentially voluntary in nature and, as such, serve to integrate private sector activities with those of the public sector, albeit such activities may sometimes be confrontational in nature • NGOs are essential to the development of social capital in that civil society organizations: • provides opportunities for participation and • gives voice to those who may be locked out of more formal avenues to affect change

25. Sources of Social Capital:Civil Society (cont’d) • The public sector—i.e., the state—both recognizes and encourages the development of civil society institutions via: • Formal recognition (e.g., registration, incorporation) • Tax exemptions • Encouraging the development of private philanthropy • Subsidies • Like other social institutions, though, a danger exists that civil society organizations can become overly inclusive and, therefore, exclusive of those who do not easily “fit” within its norms

26. Sources of Social Capital:The Public Sector • The state and its institutions is central to the function and welfare of any society • Considerable evidence exists that links the type and effectiveness of a country’s public sector to society’s level of social cohesion—including the definition of civic duty and level of commitment to it (Esping-Andersen, 1994; Putnam, 1993) • Social capital promotes government accountability and legitimacy and, thus, “good governance” • It also improves the provisi9on of public goods and services • Corruption in the public sector interferes with both good governance and the development of social capital

27. Other Sources of Social Capital Two additional sources of social capital have been identified: • Ethnicity • can serve as a “social glue” that keeps together people of the same ethnicity, race, religion, etc. • Gender • Has been shown to be a key variable in bringing and keeping women together in a variety of social and economic context • Credit banks • Micro-enterprise development • Child care

28. Networks Of Trust in Social Capital

29. Fukuyama’s Networks of Trust (1999) Uses the concept of “radius of trust” to illustrate the existence of social capital between and among various groups of people • All groups embodying social capital have a certain radius of trust, the circle of people among whom cooperative norms are operative • If a group’s social capital produces positive externalities, the radius of trust can be larger than the group itself • It is also possible for the radius of trust to be smaller than the member of the group (as in large organizations that foster cooperative norms only among the group’s leadership or permanent staff) • A modern society can be thought of as a series of concentric and overlapping radii of trust

31. The Dimensions/ Levels Of Social Capital

32. The Dimensions of Social Capital • Two basic types of social capital and though to exist: • “Bonding” capital • “Bridging” capital • Both forms of social capital are essential to the success of societies, albeit in different ways • Each form also has inherent within it certain limitations

33. BondingSocial Capital • Tends to be more inward looking, i.e, focused on strengthening already existing or more “natural” social relationships • Racial/ethnic organizations and associations • Religious associations • Gender-based groups • Regional-based groups • Thus, bonding social capital strengthens norms of reciprocity and solidarity among people who already have a high level of trust between and among themselves • BUT, bonding social capital tends to be exclusive and, therefore, can undermine integrative goals associated with the larger society

34. BridgingSocial Capital • Bridging social capital is more outward looking • Promotes social interaction and associations between heterogeneous groups of people, i.e., between people and groups across the usual social divides • If bonding social capital provides a type of superglue between highly trusted individuals and groups, then, bridging social capital serves as a “WD-40” (reduces friction and increases movement) between unrelated and, often, unknown groups of people

35. Horizontal Vs. Vertical Social Capital

36. “Vertical” vs. “Horizontal”Social Capital • Social capital develops in response to complex interactions that occur in the context of “horizontal” and “vertical” associations • Each type of association either inhibits or promotes certain forms of interaction between people and, thus, to the development of social capital

37. Vertical vs. HorizontalSocial Capital (cont’d) • Horizontally organized networks are believed to assist social capital • Achieved mostly through their face-to-face interactions and facilitation of development of mutual trust • Reinforces community sense of identity and common purpose • Can become exclusive and, thus, inhibit the “bridging” function between various groups that are essential to the formation of social capital • Vertically organized networks are believed to inhibit its formation • However, according to Putnam, “a vertical network, no matter how dense and no matter how important to its participants, cannot sustain social trust and cooperation” (Putnam et al., 1993:1733-174)

38. Macro Vs. Micro Social Capital

39. MacroSocial Capital • Refers to the institutional context win which organizations operate • Includes formal relationships and structures such as: • Rules • Legal frameworks • The political regime • The level of decentralization • The level of participation in the policy formulation process

40. MicroSocial Capital • Refers to the potential contribution that horizontal organizations and social networks make to development • Micro level social capital is further divided into two subtypes of social capital (Uphoff, 1996): • Cognitive • Structural

41. Micro Level Cognitive Social Capital • Includes: • Values • Beliefs • Attitudes • Behavior • Social norms

42. Micro Level StructuralSocial Capital • Includes the composition and practices of local level formal and informal institutions that serve as instruments of community development • Structural social capital is built through horizontal organizations and networks that have: • collective and transparent decision making processes • accountable leaders • practices of collective action and mutual responsibility (Bain & Hicks, 1998)

43. Krishna & Shrader, 1999

44. A 2 x 2 Matrix ofLevels of Social Capital

45. How Social Capital Works

46. How Social Capital Works Social capital develops through a variety of channels: • Information flows, e.g., • Learning about jobs, learning about candidates running for office, exchanging ideas in meetings, etc.) • Norms of reciprocity (mutual aid), e.g., • Bonding networks that connect people who are similar and sustain particularlized (in-group) activity • Bridging networks that connect individuals who are diverse • Collective active, e.g., • The role regional associations among groups of migrants • Broader identity and sense of solidarity

47. The Benefits/Costs Of Social Capital

48. The Economic Benefits of High Social Capital (OECD, 2001) • Higher economic growth • Social networks help people find jobs • Trust encourages more effective use of credit • Cooperative attitudes within firms are linked to output and profitability • Regional clusters of innovative industries depend on local social networks to spread and share tacit knowledge

49. The Social Benefits ofHigh Stocks of SC (OECD, 2001) • Enhanced child development (including lower rates of child abuse and neglect) via higher levels of trust and norms of reciprocity within the child’s family, school, community, etc. (Putnam, 2000:296-306) • Cleaner public spaces • Friendlier people • Safer streets • Lower crime • Better health, including mental health • High educational achievement • Improved government and public governance

50. The “Down Side” toSocial Capital • Most of the downside are associated with horizontal social capital, i.e., relationships that lead to exclusivity and subordination of “out groups” rather than inclusivity • The emergence of tribes, clans, religious associations, etc. that reward insiders and discriminate against outsiders • Very powerful horizontally organized social capital can be used to persecute those on the “outside: • Ku Klux Klan • Review Fukuyama’s “Networks of Trust”