social capital 2011

7/27/2019 Social Capital 2011

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Social Capital


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Class Exercise:The Open Source Movement

Consider the GNU/Linux movement as an example ofcooperative, collective action

How and why did it arise? That too in a high-tech,

high-rewards environment.What are the motivations of its participants?

What factors affect its success or failure?

What are its implications for economic markets?

Can such virtual communities be successful andcreate social capital?

Are there limits to what such communities can do?


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Humans and Society


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Meditation 17

Nuc lento sonitu dicunt, morieris.

Now this bell tolling softly for another, says to me, Thou must die.

...No man is an island, entire of itself;

every man is a piece of the continent, a part of the main.

If a clod be washed away by the sea, Europe is the less,

as well as if a promontory were,as well as if a manor of thy friend's or of thine own were.

Any man's death diminishes me, because I am involved in mankind;

and therefore never send to know for whom the bell tolls;

it tolls for thee...

John Donne,

Devotions Upon Emergent Occasions 1624


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Quotes for ThoughtMargaret Thatcher: Theres no such thing as society

Albert Hirschman: the ideological justification of thepursuit of individual interest and personal satisfactionundermines the essential elements of community andpublic life, such as cooperation, concern for thewelfare of others, and voluntary contribution of onesown personal resources to help create benefits for thecommunity.

Hannah Arendt: Being fully human involves threetypes of human action: family life, work, and vivaactiva or public life, in which we collectively createcivil spheres.


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The Market vs The Polis:Deborah Stone

Critique of The Rationality Project

Standard economic analysis of people andsociety too limiting and misleading

People are not just self-interest maximizingindividuals, aiming for efficiency all the time

People do not interact with other people inmarket contexts alone

People are part of communitiesTherefore, they are living and acting in a Polis

(Aristotles democratic city-state)


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Community & Public InterestMembership of community is primary political issue

Membership in a community defines social,economic and political rights; And responsibilities

Communities have a collective will

Public interest:

Individual interests held in common

Goals on which there is consensus

Things good for community as community Defining public interest is often loaded with conflict


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Influence

People in society do not think & act like atoms;they are subject to influence and persuasion

They care about what others think and do

Our thoughts and actions are affected byeducation, persuasion, socialization

Influence collective behavior; bandwagoneffects, fads, panics

Influence can morph into coercionPeople find it hard to dissent from mainstream


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Cooperation

In polis, cooperation as key as competition

Politics involves seeking allies and building

coalitions to compete with opponentsAny time you go beyond two people

Cooperation is essential to power

Nazi orders executed by cooperative prisoners

Compare Markets: cooperation is negative

Collusion, oligarchy, price-fixing, insider trading

In polis, cooperation is positive, & is the norm


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GroupsGroups and organizations are the

building blocks of the polis People belong to groups, even if not explicitly

Policy making also involves how groups areformed and re-formed to achieve public goals

Groups are important because decisions in thepolis are collective

Peoples actions are affected by roles,procedures, and audiences of group &organizational settings


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Information

In a rational world, information is complete,perfect and available to everyone

In the polis, information is

InterpretiveTherefore politics all about controlling interpretation

IncompleteFull context of Advani speech on Jinnah in Pakistan

Strategically withheld or manipulatedTherefore, Freedom of Information Bills

Media, not necessarily helpful, due to its biases


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Passion

In market, economic resources governed bylaws of matter; resources are finite, scarce,consumed

In polis, laws of passion operateBehave more like emotions than matter

Passion feeds on itself

Compassion, patriotism, solidarity grow with use

Whole is greater than sum of its parts

Things can mean many things at once

Can turn negative as well?


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THE MYTH OF INDIVIDUALISM:Wayne E. Baker

The cultural belief that everyone succeeds orfails on the basis of individual efforts andabilities.

This fiction is that society consists of a set ofindependent individuals, each of whom actsto achieve goals that are independentlyarrived at, and that the functioning of the

social system consists of the combination ofthese actions of independent individuals.


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Networks are the Reality

Success is social: It depends on ourrelationships with others.

All the ingredients of success that wecustomarily think of as individualnatural talent, intelligence, education,effort, and luckare intricately

intertwined with networks.


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Getting a Job

Getting a job is one of the best-known uses of networks. The vast majority of people dont find jobs through

advertisements, headhunters, electronic bulletin boards(like monster.com), or other formal methods.

These methods work, of course, and you should neverneglect them.

But more people find jobs through personal contactsthan by any other means.

(The reverse is also true: most employers find goodpeople by tapping networks of personal contacts. In

fact, some companies institute organized programs toencourage workers to refer their contacts to thecompany


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Venture Capital

Seventy-five percent of start-ups and new businessesfind and secure financing through the informalinvesting grapevinethe social networks of capitalseekers and investors.

Capital seekers and providers find each other viafriends, colleagues, acquaintances, and well-connectedbusiness associates such as attorneys, insuranceagents, and accountants.

This informal capital market is estimated to be so

large that the amount of capital it provides is muchgreater than the financing supplied via the professionalventure capital market.


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High Finance

Social networks play a major role in decisions topurchase the stock of giant companies, too, such asthose traded on the New York Stock Exchange.

Polls of investors reveal that most institutional and

individual investors decide to buy based on informationfrom a friend or business associate, or because theyknow someone who bought the stock.

Contrary to popular wisdom, few investors makedecisions using such impersonal techniques as

sophisticated technical analysis of a companysfundamentals.


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Connectedness Enhances Healthand Longevity!

To gain the benefits of connection, it didnt matterwhat kind of connection a person had. For example,you could live alone, but have frequent contact withfriends or relatives, and be protected.

Or you could belong to various voluntaryorganizations, but not participate in any religiousactivity, and still be protected.

Or your connection could come from church andfamily, but not from any volunteer organization,

and you would still be protected. The key to gaining the benefits of connection was

to have several kinds of connection, but the kindscould vary from person to person


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Paradoxically

Better networks improve wealth, health, andhappiness. Individuals andorganizations reapthe benefits of better networks. Thats goodnews.

The even better news is that all of us canlearn how to build better networks.

But theres a catch. If we create networkswith the sole intention ofgetting something,we wont succeed.

We cantpursue the benefits of networks; thebenefits ensue from investments inmeaningful activities and relationships.


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Bourdieu: Social Class Matters

Social networks, can produce or reproduceinequality.

Upper layers of society have higher levels of

social capital, especially throughassociational networks (formal social capital)

Countries with high levels of inequalitymagnified these differences between classes,giving the upper classes further advantages

(The CAT and IIM are open, competitiveways of joining upper class networks!)


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In terms the TV generation cangrasp

http://www.youtube.com/watch?v=1tPQ-xOLSSE
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SOCIAL CAPITAL AND NATIONS


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Institution Building in Iraq

Robert Putnam: The US approach to reconstructing Iraq is

fundamentally flawed.

You can hand out largessebuild bridges, roads andschoolsbut you cannot build democracy easily byimposing it from above.

For democracy to flourish, people need to feel thatthey have been involved in creating it.

You need to create Social Capital.

Without social capital, societies fall apart, even ifthe roads are smooth and the trains run on time.


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Social capital theory suggests that ordinary Iraqis need tofeel not only that they are the ones making decisions but thatthey are the ones who actually carry them out.

Unfortunately, the US has centralized decision making.

US should have waited for the Iraqi people to rebuildconnections among themselves and to then make decisionsabout what they want and whereshould have waited forsocial capital to arise organically, through legitimate

democratic processes. Sadly for Iraq, though external agents have a tough time

helping social capital grow, they can cause social capital todecline. Both Saddam Hussein's divisive rule and the chaosfollowing the U.S. invasion have increased the distrust

ordinary Iraqis have for one another, lowering social capital.


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Putnam on Social Capital

Social capital refers to:

how responsible people in a community feel for each other.

how closely people in the community are interconnected.

People tend to obey the rules not because they areworried about cops but because they have obligations toother people.

"In the U.S., tax compliance is powerfully predicted by thelevel of social capital in a community.

Levels of social capital predict everything from the qualityof schools and local government, to the risk a country willgo down in corruption or blow up in civil war.


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Summarizing Social CapitalDeborah Stone

Relations of influence and loyalty, norms of altruismand participation, and a past tradition of organizedcooperative efforts constitute a form of capital.

Communities are best able to overcome the barriersto collective action when they have a large stockpileof these attitudes, norms and existing groups.

A widespread sense of trust comes from shared

experiences with other members of the communityand encourages people to participate in collectiveefforts.


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Norms of reciprocity, of give and take andresponsibility for the well-being of others,encourage civic engagement as well.

And lastly, if a community has a dense network ofvoluntary associations, these serve as channels ofparticipation for the collective good, so that ahistory of civic engagement builds on itself.

All of these factors create social capital, which,like physical assets or material wealth, can beused to harness individual energies for thecommon good.


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Social Capital Works Through Multiple Channels

a. Information flows (e.g. learning about jobs, aboutelection candidates, exchanging ideas, etc.) depend onsocial capital

b. Reciprocity norms (mutual aid) rely on social networks.

Bonding networks that connect folks who are similarsustain particularized (in-group) reciprocity strongties and emotional support.

Bridging networks that connect individuals who arediverse sustain generalized reciprocity weak ties.

c. Collective action depends upon social networks (e.g.,role of the black church in the civic rights movement)

d. Broader identities & solidarity are encouraged by socialnetworks that help translate an "I" into a We" mindset.


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Some Intellectual History

From David Halperns SocialCapital


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Durkheim (1893)

A nation can be maintained only if, between the stateand the individual, there is interposed a whole seriesof secondary groups near enough to the individuals toattract them strongly in their sphere of action and drag

them, in this way, into the general torrent of civic life Societies with high levels of social cohesion and

solidarity have less suicide than those with socialdislocation and loose social bonds.

Society can support individuals through mutual moral

support, which instead of throwing the individual onhis own resources, leads him to share in the collectiveenergy and supports his own when exhausted


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Bourdieu

Social capital is the sum of the resources,actual or virtual, that accrue to an individualor a group by virtue of possessing a durable

network of more or less institutionalisedrelationships of mutual acquaintance andrecognition. Acknowledging that capital cantake a variety of forms is indispensable to

explain the structure and dynamics ofdifferentiated societies

Capital: economic, cultural, and social


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Coleman

Like other forms of capital, socialcapital is productive, making possiblethe achievement of certain ends that

in its absence would not be possible


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Social Capital and Democracy

Democracyrequires organized competitionfor power.

Civility (mutual respect) required for

democracy is learnt in associationalnetworks. (Walzer)

Association leads to trust, which in turnaids cooperation.

A strong active civil society is also neededto make democracy work (need to allow forcivilized dissent and plurality of views).


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Insights

Stocks of social capital, such as trust,

norms, and networks, tend to be self-reinforcing and cumulative. Successful

collaboration in one endeavour buildsconnections and trust social assetsthat facilitate future collaboration inother, unrelated tasks. As withconventional capital, those who havesocial capital tend to accumulate more.


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Social capital can lead to exclusive in-groups Racist and casteist exclusion

Old boys clubs and glass ceilings

Family values & social norms can hinder growth Womens participation in society and work may be

blocked by tradition, norms, religion.

Free speech and creativity may be curbed by thepressure to conform.

Social capital can be built using hatred, where acommunity is united by demonizing the other.Can lead to horrible effects. Holocaust & Hitler; the banality of evil.

Caveat: -ve Aspects of Social Capital


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How Putnam Rediscovered Social Capital

"You tell me how many choral societies thereare in an Italian region, and I will tell youplus or minus three days how long it will take

you to get your health bills reimbursed by itsregional government." (Robert Putnam,Interview, 1995)
http://muse.jhu.edu/demo/journal_of_democracy/v006/putnam.interview.htmlhttp://muse.jhu.edu/demo/journal_of_democracy/v006/putnam.interview.html


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What Makes Some Regions MoreEconomically Vibrant than Others?

What makes regional governments in NorthernItaly more effective than others in the South?

Answer: Not budgets or policy frameworks

Key factor: Vibrancy of associational life andthe level of trust between strangers

High social capital: participation in horizontalassociations (e.g., choral society); high trust

Low social capital: vertical or hierarchicalsocial organization dominant; power &patronage; high distrust; reliance on family


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So, for Putnam, Social Capital

Has Three Components

Moral obligations and norms (cooperation)

Social values (especially generalized trust)

Social networks (esp. voluntary associations) If a region has a well-functioning economic

system and a high level of politicalintegration, these are the result of the

regions successful accumulation of socialcapital


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Fukuyama: Implications for CountriesEconomic Evolution

Most economic activity is carried out by organizationsthat require a high degree of social cooperation.

The ability to form organizations depends oninstitutions like property rights, contracts, and asystem of commercial law.

It also requires a high degree of trust in strangers. US, Germany and Japan have high associational

activity, hence high social cooperation and trust Thus they are characterized by corporate forms of

businessideal for modern business success

Taiwan, Italy and Francecountries with low socialtrusthave more family firms Countries with very low levels of social trust and

ineffective institutions, like Russia, do not nurturefree market capitalism


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How to Nurture Social Capital?

Start with children!

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Hows America Doing In Terms OfSocial Capital?


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De Tocquevilles Travels in early USA

Alexis De Tocqueville: French visitor to USA in 1876

Americans are forever forming associations of all sorts

Involvement in public affairs brings the individual out ofsocial isolation, redirecting his personal interest into

causes for the general good. It leads the individual to become involved in creating

social capital.

Social capital, a participatory culture, and a belief inequality makes American democracy work

Opposite of civic participation is the pursuit of privatefinancial interests.

Argues that immersing oneself in commercial marketsdiminishes the individuals role as a "citizen".


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Putnams Findings: Americans vote less and participate in civic affairs less

Volunteering: womens groups, Scouts, Red Cross, down

Family also on the decline

Countertrends

Church membership up

Membership in Tertiary organizations up (cheque bookmembership; no interaction with other members)

Professionalization of the third sector NGOs

Support group membership up Other findings: Trust

Trust in people down

Trust in government down


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Causes

Movement of women into the workforce Less volunteering

Mobility and migration

People less rooted Demographic transformations and effect of

changes in economic organization Supermarkets, Internet shopping dont enable

meaningful relationships

Technological transformation of leisure People spending time in front of the TV rather

than hanging out with neighbours


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Implications and Prescriptions

Putnam: warns that Americas stock of social capitalthe very fabric of our connections with each other, hasplummeted, impoverishing our lives and communities.This is worrisome.

He quotes many studies (e.g., North vs South Italy)that show a correlation between high levels of civicculture, comfortable lifestyles and positive economicoutcomes.

He claims that the interactions which create socialcapital are most likely to occur in egalitariancommunities where people voluntarily contribute timeand effort and receive positive reinforcement.

If peoples interactions in society are declining, & theyare bowling alone, bad for American democracy


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Post 9/11

Social Capital grew in the USA This is a pattern among countries at warwars

strengthen feeling of solidarity and communitybonding

Peoples interest in public affairs grew Among young from 8 to 35 percent

Increase in confidence in government From 44 to 51 percent in re federal govt Trust increased 19 percent in local govt

Trust increased 14 percent in police But!

Trust in Arabs & immigrants fell by 11 percent


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The Internet and Social Capital


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The Internet & Social Capital

The Internet transforms social capital

Facilitates spatially dispersed communitiesof shared interest

The Internet diminishes social capital Draws people away from family, friends

Reduces involvement in local community

The Internet supplements social capital Another means of communication

Increases existing social contact


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And Internet Hinders Social Capital?

The Internet may be diverting people fromtrue community because online interactionsare inherently inferior to face-to-face andeven phone interactions

Internet accelerating move from all-encompassing, socially controllingcommunities to individualized, fragmentedpersonal communities

When Internet engages people in asocial

activities, more than TV, its immersivenesscan turn people away from community,organizational and political involvement, anddomestic life


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Facebook and Maintained Capital

Social networking sites likeFacebook are enhancingthe ability of people tostay in touch with

communities to which theypreviously belonged

This helps maintain stocksof social capital built overtime, but affected byphysical mobility andmigration


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Social Capitals Implications for India

A h h V h C l


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Ashutosh Varshney on CommunalViolence and Social Capital

Studies pairs of similar Indian cities (minority %)

One set has communal riots; other does not. Why?

Ahmedabad vs Surat; Hyderabad vs Lucknow

Key are Intercommunal Interactions & Networks

Intercommunal Interaction:

Quotidian or everyday interaction, e.g., shops

Associational interaction, e.g., civic networks

Associational Interaction Key to Defusing Tension Integrated civic groups quash rumors & prevent riots

Can construct politically: Gandhi, Congress big tent


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Social Capital at the Grassroots Railway Porters in Dadar

Drawn mainly from certain villages in Maharashtra

Entry into profession mainly on kinship links

Create rules and norms of cooperation

Create cooperative society for social & financialsupport, especially for emergencies

Draw on village as insurance & medical support

Social capital larger in villages?

Familial networks act as support system Can be conservative; against change or risk taking


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Social Capital in the Slums

Slum Clearance Policy Involves Relocation When slum populations are displaced, social

networks are ruptured.

Social networks are linked to group identity, safety,solidarity, livelihood and survival and formed on thebasis of caste, religion, neighbourhood and livelihood.

We always lived with our people, people that belonged toour caste, religion, region, it was almost like living with a

joint family. Now it has changed after coming here. We areso many of us living together that belong to differentcastes, religion, region and even slums. (Focus groupparticipant at a rehabilitation site).


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So Social Capital, Good or Bad?

Positive impacts of social networks in slums:

Social safety nets of urban poor. Gives sense ofbelonging in a hostile city where many are migrants.

Social networks amongst women influences work,activities, community and political participation.

Helps dwellers better negotiate with local authorities.

Negative impacts:

Social networks remain influenced by caste, religion,language and space (proximity dictates membership).

Networks are often small, fragmented and lead toexclusion: hard to enter as an outsider.


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Social Capital and Merit

Indias urban middle classes have extensivesocial networks

These confer an economic advantage overothers

Their less able children are still able to findgood jobs whereas less well connectedworking class children must rely on theirabilities to help them stand out and succeed

Background and Social Class matter notjust Merit

S i l C it l I li ti f


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Social Capital Implications forBusiness


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Coase, the Firm, & Social Capital

Economic advantages in bringing together groupof people with complementary skills and divisionof labourCoase: The Theory of the Firm

Minimizes transaction costs, contracts,

bargaining Firm as an example of bonding social capital.

Individuals develop shared norms (corporateculture, mission).

Sanctions ensure conformance Links b/w firms & trading partners also important


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Building Silicon Valley

Bonding inside firms and bridging across firmsfacilitates economic growth, e.g., Silicon Valley

May need an existing network of expertise, e.g., auniversity, as a base (Cambridge, UK Science Park)

Tacit knowledge exchange, Co-opetition Route 128, near Boston, failed to let go of

traditional norms of hierarchy, secrecy, self-sufficiency, territoriality, compared to Silicon Valley

Policy Implication: Invest not just in science &technology, invest also in social capital formation inthese sectors


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Social Capital in Business

In the business context, social capitalrefers to the relationships that makebusinesses work effectively

Social capital may be under threatbecause of:

Volatility and virtuality

Inadequacy of managers in understandingand promoting social capital


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Building Social Capital

Making Connections

A real commitment to retention

Promoting from within

Giving people time and space to bond inperson

Facilitate personal conversations

Fostering durable networks


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Enabling Trust Trust thrives where managers give

employees no reason to distrust

Transparency Confidence in rule of law

Show trust trust begets trust Trust employees judgement

Send clear signals that employees are valued Reward trust


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Fostering Cooperation

Give people a common sense of purpose

Reward cooperation with incentives

Establish rules for cooperation

Hire for cooperation


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1. Lead with credibility & caring

2. Invest in frontline leadership

3. Hire & train for relational competence

4. Use conflicts to build relationships5. Bridge the work/family divide

6. Create boundary spanners

7. Measure performance broadly

8. Keep jobs flexible at the boundaries

9. Make unions your partners10. Build relationships with suppliers

Relat ional Coo rdinat ion

Shared goals, knowledge,

mutual respect

Frequent, timely, problem-solving

communication

Qual i ty Perform ance Eff ic iency Perform ance

Southwest

Airlines

Source: Gittell, 2004

Celebrating a Culture of Caring


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Celebrating a Culture of Caringat Southwest Airlines

http://www.youtube.com/watch?v=VOkwtB5SLVY
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social capital 2011

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