Social Capital and Development

1
Social Capital and Development

• Norman Uphoff, Cornell University
• Open Research Center (ORC),
• Ryokoku University,
• Kyoto, July 26, 2003

2
What Is Social Capital?

• Social Capital is currently a fashionable concept
  in social science and in development agencies
• For many years, I avoided the concept because of
  its ambiguities and imprecisions
• After doing an analysis, with Anirudh Krishna, of
  Social Capital in the Indian State of Rajasthan
  where we evaluated its contribution to improving
  watershed management, and after I rethought my
  own work with Sri Lankan colleagues in
  introducing participatory management in the Gal
  Oya irrigation system, I think it has merit

3
What Is Social Capital?

• To be useful, Social Capital needs to be
  understood in terms of what it is -- not just
  considering examples or similarities
• Social Capital should be understood within given
  cultural and institutional contexts, not
  presented as having universal content -- it can
  have universal relevance, but not always the same
  substance
• Social Capital is not the same thing as its
  consequences -- we need to distinguish between
  causes and effects

4
Conceptualizing Social Capital

• What are the basic features of capital in
  general?
• Capital is now considered as more than physical
  capital -- more than machines, infrastructure,
  etc.
• 1) Does capital require investment? No
  Natural resources are inherited, not created
• 2) Does capital always have depletion from use?
  No Renewable natural resources are maintained
  when used within certain limits -- at sustainable
  rates Human resources can be improved through
  use
• While investment and depletion are important
  issues, they are not defining criteria for
  capital

5
Conceptualizing Social Capital

• To speak in general terms, CAPITAL ASSETS,
  things that are valued for their productive
  potentials
• ASSETS yield a stream of benefits over time
• CAPITAL a STOCK, while Benefits a FLOW
• Income or benefit streams results from Capital
• All forms of Capital produce some flow of
  benefits they may require investment, and may be
  depleted
• Both Capital Resources increase PRODUCTIVITY
• But Capital ? Resources -- since latter are used
  up in the production process Capital can be
  accumulated

6
Main Kinds of Capital

• PHYSICAL capital INFRASTRUCTURE such as road
  network and telecommunication system, power
  generation and distribution FACILITIES for
  production, e.g., factories, machines, etc.
• FINANCIAL capital stocks, bonds, money, etc.
• NATURAL capital petroleum, minerals, forests,
  fisheries, soil, flora and fauna, microbes, etc.
• HUMAN capital labor power, talent, creativity
• SOCIAL capital factors that contribute to
  mutually beneficial collective action (MBCA)

7
Main Kinds of Capital

• Different kinds of capital can be accumulated --
  i.e., increased by purposeful actions
• All kinds of capital can be diminished through
  certain actions or circumstances
• All yield certain flows of benefits, and
  resources can be reinvested to augment capital
  stock or to replenish this stock
• Sustainable development development that
  enhances capital stocks rather than depletes them

8
Subcategories of Capital

• FINANCIAL Capital -- fixed vs. liquid assets
• PHYSICAL Capital -- infrastructure vs. directly
  productive assets (yielding final products G/S)
• NATURAL Capital -- renewable vs. non-renewable
• HUMAN Capital -- skilled vs. unskilled labor
• SOCIAL Capital -- structural forms that
  facilitate mutually beneficial collective action
  (MBCA) with lower transaction costs vs. cognitive
  forms that predispose people toward MBCA -- same
  difference as able vs. willing -- both are
  important

9
Mutually Beneficial Collective Action (MBCA)

• Why define the income stream (flow of benefits)
  from Social Capital in this way?
• Collective Action can produce benefits that
  individual uses of other forms of capital cannot
• So those things that enable or encourage people
  to cooperate produce streams of benefit worth
  considering and promoting in their own right
• Concern with mutual benefit derives from the
  concept of what is social (word derives from
  the Latin word for friend, implying
  friendship)

10
First Kind of Social Capital

• STRUCTURAL Social Capital derives from networks
  of relationships among persons that are
  maintained for mutual benefit
• The main forms of Structural Social Capital are
• ROLES
• RULES
• PRECEDENTS, and
• PROCEDURES
• that facilitate mutually beneficial collective
  action

11
Structural Social Capital

• These forms of Social Capital can be added to or
  revised or improved so as to facilitate MBCA
• Roles can be created
• Rules can be formulated
• Precedents can be set by certain decisions
• Procedures can be established
• These can become more or less effective for
  facilitating MBCA, by lowering or raising
  transaction costs
• They can be invested in, and they can be
  depreciated or diminished

12
Second Kind of Social Capital

• Cognitive Social Capital comes from shared ways
  of thinking and evaluating among persons, leading
  to MBCA for mutual benefit
• The main forms of Cognitive Social Capital are
• NORMS
• VALUES
• ATTITUDES, and
• BELIEFS
• that predispose people to engage in and to
  sustain mutually beneficial collective action

13
These Kinds of Social Capital

• Are INTERACTIVE -- mutually reinforcing each
  other, not separate or simply parallel
• However, they are analytically distinguishable
  as seen from a simple example (thought
  experiment)
• Imagine a rural community in Japan or anywhere
  else, where a house burns down during the night
• What happens the next morning?
• If little or no social capital, the household
  must begin putting its property and life back
  together all by itself, with no assistance
  from others

14
Where There Is Social Capital

• ROLES -- Village headman, Emergency Committee
• RULES -- Temporary exemption from taxation?
• PRECEDENTS -- Each household contributes
  something to restoring the house and its goods?
• PROCEDURES -- How resources will be given?
• These can get the households rehabilitation
  started quickly and efficiently -- no need for
  meetings or consultations -- relief work starts
  automatically
• What if there is no Structural Social Capital?

15
With Cognitive Social Capital

• Can get MBCA without Structural Social Capital
• NORMS -- Reciprocity, e.g. -- assistance should
  be rendered, and reciprocated, whenever it is
  needed
• VALUES -- Generosity toward others in need is a
  virtue, to be respected and praised
• ATTITUDES -- Trust assisting neighbors builds
  community solidarity, which is good for everyone
• BELIEFS -- There but for the grace of God go I
• Villages could contribute materials and other aid
  on an ad hoc basis, but it would be less efficient

16
Incomplete Social Capital?

• Can there be just Cognitive Social Capital
  without Structural Social Capital? Or vice versa?
• Possible, but unlikely -- Structural Social
  Capital gives effect to Cognitive Social Capital
  and Cognitive Social Capital underlies Structural
  Social Capital
• Analytically these forms can be distinguished
  can have investment in Cognitive Social
  Capital, and depletion of Cognitive Social
  Capital, just as with Structural Social Capital
• But in practice, the two forms always INTERACT

17
Example from Cambodia

• Survey of the situation of the rural elderly
  population during reconstruction (for HelpAge, UK
  NGO)
• Elderly Khmers reported a local tradition
  (institution) that they did not particularly
  appreciate
• Whenever villagers became involved in
  disagreement that could lead to conflict, they
  should identify the oldest person around and ask
  him/her to mediate the conflict, to avoid
  possibility of violence
• Elderly Khmer were very uncomfortable doing this
  because rural society was now more violence-prone

18
Example from Cambodia

• What were the elements of Social Capital here?
• ROLE Dispute mediator, to be filled
  automatically by oldest person available who
  should hear the dispute and give an impartial
  judgment
• Various RULES, PRECEDENTS, PROCEDURES were
  understood to apply to this process
• NORM AND VALUE Avoidance of conflict
• ATTITUDES AND BELIEFS Respect for age
• RESULT Mutually beneficial collective action,
  which had survived the disruption of Khmer Rouge
  rule

19
Example from Japan

• Ancient form of Social Capital the Kumi
• Groupings of about 10 households,
• with a designated (rotating) chairman
• (male head of household)
• Collective responsibility for actions of Kumi
  members
• Designed as instrument for control from above --
  served as instrument for collective action from
  below
• Self-help, protection, insurance against
  disaster, resource mobilization, etc. SOCIAL
  CAPITAL

20
Example from Japan

• STRUCTURAL SOCIAL CAPITAL
• Roles -- Kumi leader, and Kumi member -- created
  mutual expectations, coordinated efforts
• Rules -- governing behavior, contributions, etc
• Precedents and Procedures-- local problem-solving
• COGNITIVE SOCIAL CAPITAL
• Norms -- reciprocity, cooperative behavior
• Values -- solidarity, peaceful resolution of
  conflict
• Attitudes and Beliefs -- mutual self-help

21
Example from Nepal

• Chhattis Mauja traditional irrigation system
  (terai)
• Roles -- elected chairman and secretary, branch
  associations and chairmen, messengers,
  technicians
• Rules, Precedents and Procedures -- annual
  meeting, resource contributions, fines,
  schedules, etc.
• COGNITIVE SOCIAL CAPITAL
• Norms -- per person contributions (all equal
  voice)
• Values -- efficient distribution, technical
  solutions
• Attitudes and Beliefs -- no caste or ethnic
  advantage

22
Example from Sri Lanka

• GAL OYA IRRIGATION PROJECT -- introduction of
  participatory irrigation management, 1981-85
• STRUCTURAL SOCIAL CAPITAL
• Roles -- Farmer-Representative and members of
  farmer organizations multi-level structure
• Rules -- regulating water distribution, etc.
• Precedents and Procedures-- preventive
  maintenance
• COGNITIVE SOCIAL CAPITAL
• Norms -- equitable sharing of water,
  participation
• Values -- solidarity, resolutions of conflict,
  etc.

23
What To Do about Social Capital?

• RECOGNIZE Social Capital for what it is -- an
  ASSET that is valuable and worthy of appreciation
• PRESERVE/CONSERVE Social Capital where it exists,
  reinforcing institutions and thinking that are
  supportive of mutually-beneficial collective
  action
• INVEST in Social Capital to increase its stock --
  (a) in institutions (roles, rules,
  precedents and procedures) and (b) in shared
  thinking (norms, values, attitudes and beliefs)
  that facilitate MBCA or are conducive to MBCA

24
Who Can Support Social Capital?

• ACADEMICS can do research and evaluation to
  improve understanding of Social Capital (their
  own understanding and that of others)
• OFFICIALS can learn more about Social Capital and
  can work with it and reinforce it by ensuring its
  effectiveness
• POLICY MAKERS can invest in institutions and can
  set good examples for MBCA, acting for common
  interest, demonstrating benefit from collective
  action
• INDIVIDUALS can make their own investments

25
How to Invest in Institutions?

• Identify opportunities (gaps) for building up
  institutional capacity -- four basic functions
• Decision-making
• Resource mobilization and management
• Communication and coordination
• Conflict resolution
• Each of these is facilitated by ROLES, RULES,
  PRECEDENTS and PROCEDURES
• Each can be reinforced by appropriate NORMS,
  VALUES, ATTITUDES and BELIEFS

26
How to Invest in Shared Thinking?

• National, regional and local political
  leadership
• Set good examples of action for common interests
• Articulate the values, norms, attitudes and
  beliefs that are supportive of MBCA
• Encourage demonstrations of solidarity, trust
  etc.
• These should be reinforced by religious,
  educational, civic, business and other leaders
  acting similarly
• Individuals and local groups
• Demonstrate merits of MBCA by visible practice
• Promote discussions and articulation of norms,
  etc.

27
What Is the Future of Social Capital?

• Social Capital depends on the actions and
  thinking of both leaders and members of the
  public
• Japan has long been regarded as rich in Social
  Capital although the concept has been poorly
  understood
• Other countries have often been well-endowed with
  Social Capital, but their stocks of this asset
  are now often declining, as the norm of
  individualism increases
• Social Capital is only one form of capital, but
  it a very productive and cost-effective asset for
  development
• No need to lose it, and many good reasons to
  increase it