Social Capital, Karl Polanyi, and American Social and Institutional Economics

By Carroll, Michael C.; Stanfield, James Ronald | Journal of Economic Issues, June 2003 | Go to article overview

Social Capital, Karl Polanyi, and American Social and Institutional Economics


Carroll, Michael C., Stanfield, James Ronald, Journal of Economic Issues


Over the past decade there has been a surge of literature on so-called "social capital" (3K). It is unfortunate that the term social capital has been selected to describe the rich, complex set of social networks under investigation (Robison et al.). Though we have doubts about the terminology, we agree with L. J. Robison et al. that the term is firmly established and here to stay. This misnomer may explain why the parallel literature of social economics has been neglected in the popular discussion of SK. There have been fledgling attempts to synthesize works, but it is still underdeveloped. The contributions of the Karl Polanyi group are rarely formally recognized. Further, the long-standing interest in the placement of the economy within society as represented by the work of the Association of Social Economics (ASE) and the Association for Evolutionary Economics (AFEE) is neglected. The authors hope that this paper will be part of, or initiate, an effort to examine explicitly these relationships and, in so d oing, to increase the visibility of the work of the Polanyi, ASE, and AFEE groups by linking them to current 3K discourse. The authors wish to emphasize that there is no intent to disparage current SK literature because it neglects the writings of social and institutional economists. Although we would like to see more attention to this economic literature, even that is not the major concern. The major concern is that pooling the intellectual efforts of the various groups may be beneficial to the examination of the complex issues involved in "3K."

This paper examines the SK concept and the manner in which it has been applied to economic development and change. The paper asserts the importance of Polanyi's conception of the place of economy in society to the concerns raised by the SK literature. The first section briefly traces the origins of SK theory. It finds that although the origins of SK theory can be traced to the eighteenth and nineteenth centuries, the contemporary strain of the literature flows primarily from the work of Pieire Bourdieu, James Coleman, and Robert Putnam. The second section explores the logical linkages to the American institutionalist school' and synthesizes the relevant attributes of SK. The final section explores the often-neglected negative dimensions of SK.

The Origins of Contemporary Social Capital Theory

Social capital, loosely referring to social networks and the institutionalized behaviors that result, has become something of a panacea in recent years. The World Bank now credits SK with everything from increasing economic and political efficiency to reducing the frequency of teenage pregnancy and the common cold (World Bank 2002). Social capital research is commonly seen in the literature of sociology, political science, philosophy, and economic anthropology. It has recently made its way into policy-oriented journals and is often featured in the popular press.

Despite the current popularity, SK is not a new concept. The fundamental tenets of SK can be traced to social theorists of the eighteenth and nineteenth centuries. Alejandro Portes has accredited the origins of classical SK theory to Emile Durkheim and Karl Marx. That "the involvement and participation in groups can have positive consequences for the individuals and the community is a stable notion," he has argued, "dating back to Durkheim's emphasis on group life as an antidote to anomie and self-destruction and to Marx's distinction between an atomized class-in-itself and the mobilized and effective class-for-itself' (2000, 44). Marx's vision of a rekindled community life in post-capitalist society could only come to fruition by a massive increase in what is being called "SK." Durkheim's concern about anomie resulting from rapid social change was in some ways the opposite of Marx's vision of radical social change, but it should be noted that Marx's emphasis on the one-dimensional econocentric culture of cap italism foreshadowed Polanyi's articulation of the powerful notion of the disembedded economy. …

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