Social capital

Social capital refers to the capital captured though social relationships and the networks they produce. Relationships have value whether they occur in economic, political, labor or community based social networks. Individuals and social networks engage in relationships that are able interact in order to produce profit. The profit involved with social capital may range from the value placed upon a personal reference for entry to employment or school to members of a community working on a common project.

Definitions

There are many inter-related definitions of social capital, but a general definition defines Social Capital as an “investment in social relations with expected returns in the marketplace” . This definition is consistent with the various renditions by scholars like Bourdieu, Lin, Coleman, Flap, Burt, Putnam, Erickson, Portes and others who have contributed to the social capital discussion.

The term 'social capital' was introduced by Hanifan in 1920 when he defined social capital as “those tangible assets… namely good will, fellowship, sympathy and social intercourse among the individual and families who make up a social unit” . The sociologist James Colman credits the term to economist Glenn Loury with the concept explained social capital as a set of designated intangible resources in families and communities that help to promote the social development of young people. The sociologist Pierrer Bourdieu defined the concept as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition” ]. He pointed out that “Social capital is the sum of the resources, actual and virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintances and recognition” . James Coleman defined social capital “as a variety of entities with two elements in common: They all consist of some aspect of social structure, and they facilitate certain action of actors-whether persons or corporate actors-within the structure” . To be capital a social structure must serve a function for individuals engaged in an activity. The actors exercise control over the resources in which they have an interest and at least partial control of others involved. Social relations are important to facilitating this action by the actors.

Related concepts

The concept involved in Social Capital can be related to similar concepts that are drawn from the works of James Madison (The Federalist Papers) and Alexis de Tocqueville (Democracy in America) and their concepts of Civil Society. The relationship between Civil Society and Social Capital was popularized by Robert Putnam with his works on voluntary organization in democratic societies. He argued that social associations and the degree of participation indicate the extent of social capital in a society. Those communities with good government have a high level of volunteer participation in the community, while those communities with weak ineffective governments have low levels of volunteer participation. These associations and participation promote and enhance the collective norms and trust within a community which is central to the collective well-being.

The components of social capital

The organizational components

Although they are inter-related, it is customary to distinguish the influences of the social organization of a community upon the social acts of its members from those of their individual attitudes. A community’s social capital is considered to be determined as much by the collective traditions, beliefs and value systems that are part of its culture, as by the cognitive characteristics and perceptions of its members. Similarly, the collectively-determined rules embodied in a community’s institutions, are considered to be as necessary to the development of social capital as the impulses and constraints created by the psychological drives that are experienced by its members. The institutions that contribute to social capital range from the state apparatus of law-making and enforcement to the patterns of mutual obligation that are created by interpersonal networks such as social clubs and residents’ associations.

The cognitive components

External influences are the principal components of people's social attitudes but there is evidence to suggest that significant components come from the innate or “hard-wired” characteristics of the human brain. Neuroeconomics experiments have revealed an association between the possession of a particular hormone and a propensity to trust others