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 definingcriteria 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 household’s 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 Kumimembers 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