Academic journal article
By Dolfsma, Wilfred; Dannreuther, Charlie
Journal of Economic Issues , Vol. 37, No. 2
[B]oundaries of the mind and habit are harder to take down [than boundaries between states].
The World Bank is prime among the organizations formulating and implementing economic policy around the world. In recent years it and others have placed great emphasis in its analysis of poverty and inequality on the concept of social capital. Social capital, inequality, and globalization are three concepts that interrelate, but they are contested as well. In combination, the three may have more than just heuristic value. They point to some important aspects of the process of globalization and the misgivings that some groups of people have about it. In particular, the combination of the three concepts--globalization, social capital, and inequality--point to the fact that how you analyze and judge currents in the economy of today depends crucially on how you understand individual behavior and its relation to different groups or communities. In this contribution we aim to bring out the contested nature of the concepts of globalization, social capital, and inequality. By introducing and developing the concept of "boundary," we better understand the relation between the individual and his or her community, which allows one to analyze globalization and its doings better than was hitherto the case. While others (most notably Fine 2001) have criticized the World Bank's use of the concept of social capital, we suggest steps to develop concepts that will also be relevant for policy purposes.
Globalization, social capital, and inequality are not concepts that have clear, undisputed meanings. For substantive as well as for ideological reasons, they are contested (see Dannreuther and Dolfsma 2003). Globalization is perceived in three ways. The shallow way, perceiving globalization as an external force with clear, uni-directional effects on economy and society, is not supported much any more in academia. A second perception of globalization stresses the persistence of the social, of society. In this argument, the different styles of capitalism are discussed; the role of government is seen as a reactive one. Relations in society do not change due to economic developments. A third, and most persuasive one, stresses interactions between societal developments and changes in the (international) economy.
Some quarters mention globalization as a cause of inequality. In contrast to the concepts of globalization and social capital, the contested nature of the idea of inequality has been discussed longer. Any perception of inequality is imbued with assumptions and hopes of the world. The contested nature of the concept is reflected in the "100 ways of seeing an unequal world" (Sutcliffe 2001). Intuitively, the concept of inequality seems clear but in fact as observed by Amartya Sen (1973, 5) is often "much less precise and may correspond to incomplete quasi-ordering" struggling between objective and normative assumptions.
Over the past decade or so, the World Bank has come around to addressing the issues of inequality and its supposed relation with globalization. Using the newly popular notion of "social capital," it has started a project that looks at inequality in the global economy. It claims that "increasing evidence shows that social cohesion-social capital-is critical for poverty alleviation and sustainable human and economic development.
We examine the way in which social capital is defined and analyzed by the World Bank and to what policy advice it has given rise. Our claim is that in defining social capital the WB has stuck close to the mainstream economic core that usually characterizes its work. (1) We argue more in particular that the conceptualization of the subject is inadequate and that it has a romantic view of society, one that ignores boundaries. As a result the kind of policy that the WB proposes, drawing on its work on social capital, is not much different from other policy it has proposed, nor very surprising or concrete. …