PCDForum Column #76,  Release Date March 6, 1995

by Robert D. Putnam

Similar to the notions of physical and human capital, the term social capital
refers to features of social organization such as networks, norms, and trust
that increase a society’s productive potential. Though largely neglected in
discussions of public policy, social capital substantially enhances returns to
investments in physical and human capital, as demonstrated by a study I
conducted with several colleagues over twenty years on regional government in
Italy. The implications for social and economic policy are far reaching.

Beginning in 1970, Italians established a nationwide set of potentially powerful
regional governments. They were virtually identical in form, but the social,
economic, political, and cultural contexts in which they were implanted differed
dramatically ranging from the pre-industrial to the post-industrial and from the
inertly feudal to the frenetically modern.

Some of the new governments proved to be dismal failures inefficient and
corrupt. Others have been remarkably successful creating innovative day care
programs and job training centers, promoting investment and economic
development, pioneering environmental standards and family clinics. These
managed the public’s business efficiently and satisfied their constituents.

Contrary to our expectation, we were unable to explain the differences on the
basis of such obvious factors as party politics, affluence, or population
movements. Instead, the best predictor is one that Alexis de Tocquevile might
have expected. Strong traditions of civic engagement voter turnout, newspaper
readership, membership in choral societies and literary circles, Lions Clubs,
and soccer clubs were the hallmarks of a successful region.

In regions with many active community organizations citizens are engaged by
public issues. They trust one another to act fairly and obey the law. Leaders
are relatively honest and committed to equality. Social and political networks
are organized horizontally, not hierarchically. These "civic communities"
value solidarity, civic participation, and integrity. Here, democracy works.

At the other pole are "uncivic" regions, where the very concept of
citizen is stunted. Engagement in social and cultural associations is meager.
From the point of view of the inhabitants, public affairs is somebody else’s
business the "bosses," the "politicians" but not theirs.
Laws, almost everyone agrees, are made to be broken, but fearing others’
lawlessness, everyone demands sterner discipline. Trapped in these interlocking
vicious circles, nearly everyone feels powerless, exploited, and unhappy. Not
surprisingly, representative government here is less effective than in more
civic communities.

The historical record strongly suggests that the successful communities became
rich because they were civic, not the other way around. The social capital
embodied in norms and networks of civic engagement seems to be a precondition
for economic development as well as for effective government. Civics matter.

Networks of civic engagement foster sturdy norms of generalized reciprocity:
I’ll do this for you now, in the expectation that down the road you or someone
else will return the favor. A society that relies on generalized reciprocity is
more efficient than a distrustful society. Networks of civic engagement
facilitate coordination and communication and amplify information about the
trustworthiness of other individuals. Incentives for opportunism and malfeasance
are reduced.

Networks of civic engagement also embody past success at collaboration, which
can serve as a cultural template for future collaboration. The civic traditions
of north-central Italy provide a historical repertoire of forms of cooperation
that, having proven their worth in the past, are available to citizens for
addressing new problems that require collective action.

Unlike conventional capital, social capital is a public good, that is, it is not
the private property of those who benefit from it. Thus, like other public
goods, from clean air to safe streets, social capital tends to be under-provided
by private agents. Most often the ties, norms and trust that constitute social
capital are created as a by-product of other social activities and then
transferred from one social setting to another.

Classic liberal social policy is designed to enhance the opportunities of
individuals. If social capital is important, this emphasis is partially
misplaced. Instead we must focus on community development, allowing space for
religious organizations, choral societies, and Little Leagues. Government
policies, whatever their intended effects, should be vetted for their indirect
effects on social capital.

From agricultural extension services to tax exemptions for community
organizations, governments have often promoted investment in social capital.
They must renew that effort now.

Robert D. Putnam is Gurney Professor of Political Science at Harvard University,
Cambridge, MA, U.S.A. 02138. This column was prepared by The People-Centered
Development Forum based on his article "The Prosperous Community: Social
Capital and Public Affairs," The American Prospect, No. 13, Spring 1993.

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