Academic journal article Review of Social Economy

Beyond Social Capital: A Critical Approach

Academic journal article Review of Social Economy

Beyond Social Capital: A Critical Approach

Article excerpt

SOCIAL CAPITAL IN ECONOMIC RESEARCH

Social capital has been a contested notion among economists since its inception in economic literature in the mid-1990s. Its origins are in sociology, but economists have adapted it to make it consistent with economic concepts such as human capital and market failure, as we will make clear below. (1) But in their eagerness to turn it into a useful concept for empirical economic research, social capital has become a contradicting notion. First, the metaphor is argued to be simply wrong (Arrow 2000). Whereas in the case of physical and financial capital, the use of capital leads to depreciation, and accumulation generates interest, both calculable over a period of time, social capital increases with its use and declines when not employed. (2) Moreover, the benefits are often indirect and not individual but social: there is no owner of social capital--there are no property rights for it. Second, the concept is found to be utterly unclear when tied to mainstream notions of unchanging preferences, individual utility maximization, market failure and a functionalistic understanding of economic variables. In this special issue, we present a set of articles that understands social capital at the social level, as residing in human relationships. This basic characteristic of social capital does not fit the individualist methodology of mainstream economics. Characterizations of social capital as a preference for particular relations and a controllable instrument for individual utility maximization (Becker 1996; Glaeser et al. 2000), or as an effective response to market failures as an alternative to the role of the state (Dasgupta 1999) are misplaced. The contradiction between the use of the notion in mainstream economics on the one hand, and its social ontology on the other hand, also becomes clear in the definition of social capital developed by economists. For example, the World Bank defines social capital as "the institutions, the relationships, the attitudes and values that govern interactions among people and contribute to economic and social development" (World Bank 1998: 1). On the World Bank website, we find a more recent definition, which is equally functionalistic: "social capital refers to the norms and networks that enable collective action". (3) What prevails in these definitions is that social capital has economic benefits, but what is concealed is that it also may have costs, to individuals, groups, or society, which can supersede the benefits and that it has more complex impacts than generating collective action. Moreover, these definitions do not clarify what social capital is and how it comes about, implicitly assuming that there is a direct functional relationship between the "social" in the economy on the one hand, and economic variables on the other, such as personal income, gross domestic product (GDP) growth, or poverty reduction on the other hand.

Third, next to an inadequate metaphor and an unclear conceptualization of social capital, there are serious problems with the measurement of social capital. Again, the World Bank has been influential, as it has supported a large number of empirical studies, measuring social capital in developing countries through its social capital initiative (World Bank 1998; Dasgupta and Serageldin 1999; Grootaert and van Bastelaer 2002). Social capital is generally measured in economics in two ways: the level of trustfulness in a society, using survey data from the World Values Studies, and membership of associations. This approach to measurement of social capital has increasingly been criticized (see, for example, Fox 1997; Baron et al. 2000; Fine 2001; Grix 2001; van Staveren 2003). In a recent response to the critique, Bebbington et al. (2004) by and large seem to agree with the critiques of methodological individualism, instrumentalism, and lack of attention to power and social structures that distribute access to and benefits from social capital. …

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