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PADM 530

Article Review Assignment



You will write two article reviews based on the designated articles located in the Learn folder as assigned. You will assess values and conflicts of interest that emerge during the economic development process. Each article review will summarize and critique the author’s position/conclusion in at least 500 words in APA format.


Each paragraph of your review should be written using clear and concise language, and thoroughly discuss important details of the article along with the key elements which relate back to concepts within the course.

· Length of assignment: 500 Words

· Format of assignment: APA Style

· Number of citations: No less than 3

· Acceptable sources: Scholarly articles published within the last five years

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Review of Social Economy

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Is Social Capital Really Capital?

Lindon J. Robison , A. Allan Schmid & Marcelo E. Siles

To cite this article: Lindon J. Robison , A. Allan Schmid & Marcelo E. Siles (2002) Is Social Capital Really Capital?, Review of Social Economy, 60:1, 1-


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Nov 2010.

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Citing articles: 31 View citing articles Is Social Capital Really Capital?

Lindon J. Robison, A. Allan Schmid and Marcelo E. Siles Michigan State University

Abstract Social capital has emerged as a paradigm capable of bridging across various social science disciplines. However, its adoption by social scientists from different disciplines has led to multiple and often con� icting de� nitions. Besides con� icting de� nitions, some social scientists have argued that social capital lacks the properties of capital and should be called something other than capital. This paper resolves many of the problems created by con� icting de� nitions by pointing out that the differences have arisen primarily because scientists have included in the de� nition expressions of its possible uses, where it resides, and how its service capacity can be changed. This paper argues that these applications of social capital should not be included in its de� nition. This paper also defends the social capital paradigm against the claim that it lacks capital-like properties by pointing out that social capital, when de� ned as sympathy, has many important capital-like properties including transformation capacity, durability, � exibility, substitutability, opportunities for decay (maintenance), reliability, ability to create other capital forms, and investment (disinvestment) opportunities. Finally, this paper compares social capital to other forms of capital including cultural capital and human capital.

Keywords: sympathy, social capital, cultural capital, organizational capital, human capital, physical/� nancial capital, transformation capacity, durability, � exibility, substitutability, decay (maintenance), reliability, investment (disinvestment)

INTRODUCTION The term social capital has taken on so many meanings and enlisted to � ght so many battles that it is at risk of becoming the ether that � lls the universe. Commenting on the need to re� ne the de� nition of the term social capital, Castle wrote: “Unless the social capital concept is used with some degree of precision and in a comparable manner, it will come to have little value as an analytical construct.” In what follows, we suggest that social capital’s alternative de� nitions lack precision because they have included expressions of its possible


Review of Social Economy ISSN 0034 6764 print/ISSN 1470–1


2 online © 2002 The Association for Social Economics DOI: 10.1080/00346760110127074

uses, where it resides, and how its service capacity can be changed. We recommend that the de� nition be limited to what social capital is. Then, in the main part of this paper, we defend the term “social capital” as appropriate and useful to describe resources associated with interpersonal relationships involving sympathy because these relationships can claim nearly all of the properties commonly associated with other forms of capital. Other forms of social capital not linked to sympathetic relationships, while equally important, are not illuminated as well by the capital metaphor.

We can enhance communication and cooperative research across academic disciplines by limiting the de� nition of social capital. Within a particular discipline, scientists may want to focus on social capital’s applications, residence, or (dis)investment possibilities unique to their � eld of study. However, these discussions unique to a � eld of study should not be confused with the de� nition of social capital, a statement of the form A equals (is) B.

It is our hope that a properly limited social capital de� nition will save social capital from battles it should not � ght and uniforms it should not wear. The capital metaphor should be taken seriously. If what economists have learned about capital is to be useful in new applications, then its use must be limited to those social relationships that are most capital-like in character.


While there is some commonality in the meaning given to social capital in the literature, there are considerable and confusing differences. Perhaps one reason that researchers have not generally agreed on a de� nition of social capital is that the de� nitions are not limited to answering the question: what is social capital? Past de� nitions have included answers to such questions as: where does social capital reside? How can social capital be used? And how can social capital be changed? For example, one de� nition of social capital is: “. . . the expectations for action within a collectivity that affect the economic goals and goal-seeking behavior of its members, even if these expectations are not oriented toward the economic sphere” (Portes and Sensenbrenner


93). This de� nition appears to combine what social capital is (the expectations for action within a collectivity) with what social capital can be used to achieve (affect the economic goals and goal-seeking behavior of its members).

Coleman (1990) de� ned social capital as a variety of different entities having two characteristics in common; namely, some aspect of social structure and ability to facilitate certain actions of individuals who are within the structure. These entities include obligations, expectations, trust, and information � ows.



This de� nition, like the one suggested by Portes and Sensenbrenner (1993), combines what social capital is (a variety of structures) with what social capital can be used to achieve (facilitate certain actions of individual members of the group where the group is de� ned by some aspect of social structure). Coleman (1990) assumes a rational actor calculating individual advantage.

Narayan and Pritchett (1997: 3) de� ne “capital” as something accumulated which contributes to higher income or better outcomes. The “something” is only described as horizontal connections and linkages without further de� nition. Then, they describe � ve processes in which social capital changes outcomes for the better by facilitating greater cooperation (what it does).

Narayan and Pritchett argue � rst, that increased social capital improves governments. Second, increased social capital leads to increased community cooperative action and solves local “common property” problems. Heller (1996) provides a speci� c example of how horizontal solidarity contributed to the economic development of the state of Kerala in India. Third, increased social capital strengthens linkages among individuals that speeds the diffusion of innovations. Fourth, increased social capital improves the quantity and quality of information � ows and reduces transactions costs. Finally, increased social capital pools risks and allows households to pursue more risky and higher return activities. Narayan and Pritchett’s list is a helpful discussion of the possible bene� ts that may accrue from increased social capital. They do not, however, associate with social capital the essential properties of capital as de� ned by economists. Likewise, Heller speaks of the high density of civic organizations, vigor of associational life and communal and caste organizations, but little of what motivates them.

Burt (1992: 9) de� ned social capital as: friends, colleagues, and more general contacts through whom you receive opportunities to use other forms of capital. This de� nition of social capital combines a statement of where social capital resides (with friends, colleagues, and more general contacts) with what it can be used to accomplish (receive opportunities to use other forms of capital).

Another example of a de� nition that combines a statement of what social capital is with where it resides is Portes (1995: 12). He de� ned social capital as the capacity of individuals to command scarce resources by virtue of their membership in networks or broader social structures. This de� nition can be separated into a statement of what social capital is (the capacity of individuals to command scarce resources) with a statement of where social capital resides (networks or broader social structures).

Sometimes a de� nition of social capital combines statements about what gives rise to social capital with what social capital can be used to achieve. For



example, Putnam (1993) de� nes social capital as features of social organizations such as trust, norms, and networks that can improve the ef� ciency of society by facilitating coordinated actions. In this de� nition, the basis for social capital (trust and norms) can be separated from statements of what social capital can do (improve the ef� ciency of society by facilitating coordinated actions) and where social capital resides (networks).

Woolcock (1998:


) investigates social capital within the context of economic development policy. He suggests that bottom-up development depends on intra-community ties labeled “integration” and extra-community networks labeled “linkages.” Top-down development involves state-society relations labeled “synergy” and institutional coherence, competence, and capacity are called “organizational integrity.” The latter is related to what others call organizational capital. This conception involves a mixture of what capital is and where it resides. How the content of ties and networks and other institutions is illuminated by the capital metaphor is not elaborated. All understandings which coordinate action in a particular way are not capital even if they are “productive” in the broad sense of the word. Social scientists do not need another word for all institutions that further economic and social development, especially if that word implies characteristics of capital that not all institutions have.

Once social capital is deconstructed into what it is, where it resides, what it produces (how used) and how produced, it can be seen that “what it is” is conceptually weak. Can it be clari� ed by reference to capital goods? Consider a de� nition of capital generally accepted by economists. Capital is: “. . . a commodity itself used in the production of other goods and services. It is a human-made input, such as plant or equipment, created to permit increased production in the future” (Smithson 1982: 111). Capital in this sense represents an accumulation of foregone consumption, an amount saved for later use. The capital metaphor has been extended to human capital, organizational capital, and cultural capital. Human capital has many of the same properties as physical capital. Fundamentally, human capital emphasizes a surplus value and repre- sents an investment in education and skills that resides in individuals (Schultz 1961, Becker 1964). Human capital is not destroyed by use and when combined with other capital goods, it transforms inputs into outputs.

One important difference between social capital and some other forms of capital is that social capital exists in a social relationship. In contrast, human capital can reside in the individual alone. This is not to say that human capital creation is not collective. Even physical capital is in large part a collective phenomena as Veblen (1908) emphasized. It is created in such institutionalized


collectivities as corporations, universities, governments, and informal associa- tions of people wherein knowledge and visions are formed and transferred (O’Hara 1998).

Organizational capital is described in terms of where it resides: “organiza- tional relationships, particular members of organizations, the organization’s repositories of information, or some combination of the above (Tomer 1999: 1049).” Organizational capital can be combined and “embodied in workers in the form of attitudes and knowledge created through the socialization processes.”

Cultural capital includes “language and linguistic style, values, de� nitions of basic knowledge and assumptions . . .” (de Bruin 1998: 169). Cultural capital can be combined with human capital. “Embodied cultural capital can be understood as the ability, talent, style, or even speech patterns of people in a group.” These characteristics are acquired “through the socialization process and tend to be the marks that distinguish one group from another (de Bruin).”

Obligation, trust, information � ows, organization, friends, membership, culture, norms, networks, and civic engagement constitute a mixed bag that is only partially sorted out by distinguishing what social capital is, does, and where it resides. If the capital goods metaphor is to be useful to analyze social relationships, it must take seriously the transformative ability of capital to turn one thing into another. What is it about social relationships that functions as a factory and puts things in motion? Economists have primarily focused on the motive of individual utility maximization (greed, for short). If people trust each other, honor obligations, follow norms, and befriend others only to maximize their own utility, then these things are just additional commodities to be exchanged.

If economics is to be broadened to work with other disciplines, other motives must be acknowledged, such as sympathy and caring. The literature has been vague about what social capital is. It speaks of ties and linkages which are suggestive, but imprecise. A “tie” could be two people having each other’s phone number or being in love. Just what is doing the transforming surely makes a difference to what happens next. Sympathy sets in motion one-way goods movements which are not necessarily calculated with the expectation of a return. Sociologists and psychologists emphasize that much behavior following norms and obligations is not strictly calculated, but is learned in socialization and partly unconscious reinforcement. Interacting individuals shape and are shaped by these cultural processes.

A de� nition of social capital consistent with the Smithson de� nition generally accepted by economists would substitute for “commodity” the word


sympathy.1 It would emphasize motive as the foundation of what social capital is.

Social capital is a person’s or group’s sympathy toward another person or group that may produce a potential bene� t, advantage, and preferential treatment for another person or group of persons beyond that expected in an exchange relationship.

This de� nition separates what it is (sympathy) from what it does (potential bene� t) and focuses on the transformative capacity of capital residing (em- bodied) in human relationships. What it is constitutes a motive that differs from greed. Adam Smith, who wrote The Wealth of Nations, foreshadowed the concept of social capital when he employed sympathy to differentiate social preferences. Smith (1976: 219) wrote:

Every man feels his own pleasures and his own pains more sensibly than those of other people . . . After himself, the members of his own family, those who usually live in the same house with him, his parents, his children, his brothers and sisters, are naturally the objects of his warmest affection.

Social capital involves a social relationship of a provider and a recipient. The provider of sympathy may be (1) an individual; (2) all members of a category such as an age, gender, racial, or alumni group acting individually on the basis of social custom and not necessarily aware that others are doing the same; or (3) it may be generated explicitly by the conscious interaction of people in an organization. The following are examples of each: (1) a mother is sympathetic and gives preferential treatment to her child; (2) graduates of a certain school are sympathetic toward all other grads of the same school and give them preferential treatment; and (3) a number of people feel sympathy for starving children and contribute to a scholarship fund administered by a foundation for the bene� t of quali� ed applicants, or church members are sympathetic to all human kind and make a Christmas offering and the church board decides on the recipients.

Likewise, the recipient (object of the sympathy) may be (1) an individual (e.g., a child); (2) all or some members of a categorical group (e.g., graduates); or (3) some categorical group may be the ultimate recipient, but the intervening recipient may be an organization which in turn has a process for deciding which particular individuals qualify for the offered bene� ts. A collective decision may be required by the recipients to apply for or accept the bene� ts of others’ sympathy. In the latter case, an organization provides the link between

1 Sympathy as used here is consistent with the de� nition found in Webster’s Ninth Collegiate Dictionary; namely, sympathy is an af� nity, association, or relationship between persons or things wherein whatever affects one similarly affects the other.


individual sympathetic donors and individual recipients. In the mind of the provider, the organization may constitute a symbolized representation of the ultimate recipients (e.g., Boys Town or CARE). In the latter case, the hungry child has social capital from their relationship to sympathetic donors (who may not be known to the child), and CARE is only the administrative conduit for preferential treatment.


Economists use the word capital in two quite different ways. They speak of � nancial capital and capital goods as in the Smithson de� nition above. Financial capital is the symbols and rights associated with credit and money. For example, when a person receives a loan from a bank, money is created which gives the recipient the power to direct real resources. In this regard, � nancial capital is a social relationship and functions as any other institutions to structure opportun- ities. In this sense, any of the varieties of social, organizational, and cultural capital are similar to � nancial capital. But, if our purpose is to say that all the social sciences are interested in human relationships, i.e., institutions, we don’t need the new word “social capital.” So, in what follows, we shall limit ourselves to exploring the usefulness of the capital goods concept.

Not everyone accepts the metaphor of capital goods to describe relationships of sympathy that may produce potential bene� ts.2 Re� ecting on a social capital workshop sponsored by the World Bank, economist and Nobel laureate Kenneth Arrow (1999) urged abandonment of the metaphor of capital and the term “social capital.” He emphasized that the term “capital” implied a deliberate sacri� ce in the present for future bene� ts that he claimed was inappropriate to describe social networks organized for reasons other than economic value for the participants. As will be seen below, however, social capital may indeed involve a saving and investment today to obtain future bene� ts and Arrow’s objection seems misplaced.

In the same World Bank conference described earlier, Robert Solow (1999) criticized social capital as an attempt to gain conviction from a bad analogy. He argued that “capital” stands for a stock of produced or natural factors of production that can be expected to yield productive services for some time.

2 Woolcock (1998) has identi� ed several other names for a concept similar to social capital including “intangible assets” (Veblen 1908); “social energy” (Hirschman 1958); “social capability” (Ohkawa and Rosovsky 1973); “sociability” (Hirschman); and “moral resources” (Hirschman), to name a few. See also Durlauf (1999).


Baron and Hannon (1994) raise another objection to the metaphor of social capital. They argue that to qualify as “capital”’ an entity must possess an opportunity cost, something that social capital lacks. Woolcock (1998:46) responded to this objection: “. . . much of one’s social capital stems from an inherited endowment over which one has little in� uence—but it is also the case that people can and do make deliberate, hence costly, efforts to increase their social capital . . .” The point can be illustrated by a homely example. Imagine a person who has been spending each day harvesting apples by hand. Apples are the person’s only food supply. To have time to build an apple picking machine, the person must save by eating fewer of the harvested apples today in order to eat tomorrow while creating the capital good. Similarly, the person can eat fewer apples today in order to give them to a friend and thus create a stock of social capital that is capable of producing emotional and physical goods in the future. Foregone consumption today creates capital for tomorrow.

The social capital metaphor may suffer because economists and sociologists typically use the term “capital” in slightly different ways. Quoting again from Castle (1998: 625): “Capital in any form quali� es as capital only if it makes humans more productive when they use it in combination with other forms of capital. Sociologists may refer to social capital as ‘bad’ or ‘good’ depending on whether it is useful to humans in a given context. The economist probably would not refer to a ‘bad’ social arrangement as social capital, although it might qualify as an economic institution.” In this regard, requiring capital to be used for productive compared to destructive purposes is not helpful. Most productive processes involving capital produce both goods and bads. A plant may produce steel (a good) and smoke (a bad). Would you say the plant is not capital because it produces smoke along with steel?

Regardless of whether one agrees or disagrees with the objections to the metaphor of capital and the term social capital, Arrow’s recommendation that the term social capital be abandoned comes too late. The calves are out of the barn and into green pastures and not likely to return soon. The term social capital is now � rmly entrenched in the language of social scientists. Thus, for now and for some considerable time in the future, the term “social capital” will be in common use among most social scientists, if not most economists, and the task will be to make the most of it.


With the term social capital � rmly entrenched in the social sciences, it may be appropriate to ask: what does social capital or sympathetic relationships have in common with capital goods? To answer this question: “is social capital really


capital?” several properties of capital are examined next and compared with properties of social capital as de� ned earlier in this paper.

The essential properties of physical capital goods are: transformation capacity, durability, � exibility, substitutability, decay, reliability, ability to create one capital form from another, opportunities for (dis)investment, and alienability. In what follows, we intend to point out that social capital, as de� ned in this paper, shares all of these essential capital-like properties.

Transformation Capacity

Transformation capacity relates to the essential characteristics of capital goods; i.e., goods to make goods by transforming inputs into outputs and is itself not necessarily transformed. Capital goods, like factories and machines, transform raw material inputs into other forms including both consumption goods or additional capital goods. Of course, a capital good’s service potential depends on the presence of other inputs. Examples of physical capital include heating plants with their potential to produce heat from coal; cars, buses, and planes with their potential to provide travel services; surgical equipment with its potential to supply medical services; and housing with its potential to provide shelter services. This conceptual separation of capital from its service � ows and other resources required in the transformation processes allows us to ask what are the processes that transform the inputs into outputs, and how do capital and nondurable inputs substitute and complement each other in the production of services and goods? These are the questions and perspective provided by apt use of the capital metaphor.

Social capital, like other forms of capital, requires not only sympathetic relationships but other inputs to provide preferential treatment and bene� ts. Social capital can be combined with other inputs to provide services that meet human needs in four essential areas of human experience: economic services, social services, validation services, and information services. A description of human needs and the importance of relationships in meeting these needs is a subject for long discussions. The main point emphasized here is that human relationships are required to meet our most basic emotional needs. Human relationships can be prized in themselves and directly utilized much as a refrigerator or other durable good are used by a consumer. Or, relationships can be used to produce other goods much as a machine is used to produce consumer goods. Thus, the services can be both immediate and in the future. Consider the following four service categories supplied by social capital.

(1) Economic services provided directly by social capital are distinguished from economic services motivated by sel� sh preferences. Social capital that


meets economic needs requires feelings of caring or sympathy that transform and vicariously link the consumption of one person to the utility of another. Obligation, norms, and rule following cannot do this. (2) The social needs to experience caring and regard from others and for others is at the root of human nature and requires sympathetic personal relationships. Again, obligation and norm following cannot produce this good. (3) The need to be validated is also a foundation need that is ful� lled through interpersonal experience. Only communication from those you respect and who respect you can provide supportive feedback to one’s self-image. Apparently similar feedback seen as motivated by obligation and habit or ingratiation with expectation of future favors does not provide the same transformation. (4) Finally, there is the need to see yourself through the eyes of others and to receive encouragement, moral support, and acceptance.

It is sympathetic relationships that have capital’s transformative potential to provide economic, social, validation, and re� ective services. This capacity is its main characteristic that identi� es it as a form of capital. The capital metaphor provides less insight to understanding the role of other kinds of social relationships. This is not to say that other forms are less important, just that the capital metaphor is less useful there.


Durability associated with physical capital refers to capital’s ability to retain its identity after and during the process of providing services. A tractor, after delivering pulling services, is still recognized as a tractor with potential to pull and provide transportation. A cow, after producing offspring and milk, is still recognized as a cow with milk and offspring producing potential. In contrast to durables are expendables that lose their identity during their provision of services. For example, seed and fuel are most of the time considered expendables because while providing growing and energy services, they lose their identity. Seeds become plants and fuel becomes energy and neither expendable is recognized for what it was before it provided services.

Social capital possesses different degrees of durability. There may be weak af� nity ties capable of producing only a limited amount of services before disintegrating. A causal friend may be willing to provide free transportation a few times but then later be unresponsive to requests. Some forms of social capital are durable almost to the point of being indestructible. These extremely durable forms of social capital are often associated with family connections that remain unchanged even when repeated service extractions are made. (How


many dinner and laundry services can children expect before further services are refused by their parents?)

Capital whose service potential is nearly indestructible is called endurables. Endurables are little affected by time or use. A � ne jeweled watch may keep time for generations. Land, for example, has its service potential nearly unaffected by reasonable use. So it is with social capital. Social capital that resides in family members may be nearly indestructible, an endurable, while social capital embedded with friends with whom you attend sporting events may be of limited durability and needs continual maintenance.

How does the capital goods attribute of durability facilitate analysis of social capital? It focuses attention on making continuous use of such capital; e.g., keep the factory going night and day. It calls attention to the possibility of economies of scale (volume) once the initial investment is made. It suggests that the return to a relatively expensive durable be compared to a cheaper, but expendable, form of social capital.


Flexibility refers to the range and number of services available from a capital source. Some capital forms are designed for a speci� c use and not applicable to others. In this category, one might think of a specialized medical instrument used to remove cataracts. Or, one might think of keys that only work in one lock. Capital forms whose services can only be used to meet highly specialized needs are called in� exible capital forms. In contrast to in� exible capital forms are � exible capital forms whose services can be used to provide a wide range of services. For example, electric ranges are used mostly for cooking services, but in emergencies may be used to provide heating services in the con� ned space in which they are located. While cars provide transportation services, they can also be used to pull trailers, carry groceries, and provide shelter from the elements. Cars not only may be used to produce a wide range of services, but the rate at which transportation services may be varied often ranges from nearly zero to 120 miles per hour.

Like physical capital, social capital may be either � exible or in� exible. Some forms of social capital, such as might be available from a sibling, can be used to obtain a kidney donation, � nancial resources such as loans, transportation, information, favorable reviews, support for awards, and companionship on otherwise lonely occasions. One would not expect such a range of services from the bank teller who greets you by name when you conduct your � nancial business. The teller might provide some preferential treatment, but these would


likely be related to the services she or he does in the routine course of her/his work at the bank.

Substitutes and Complements

The economic way of thinking asks about complements and substitutes. Tractors provide pulling services in most developed countries, but animals may substitute for these services in many less developed agricultural settings. Barns and silos provide storage services, but trees and tents may substitute for these services in emergencies. Tractors and plows are complements. Each one enhances the productivity of the other.

Sympathy is a substitute for monitoring. A person who has sympathy for you will not be opportunistic. Commitment and obligation are also substitutes for monitoring costs. Worker cooperatives can reduce monitoring costs if self- determination enables employees to identify with the corporation and then avoid shirking (Lutz 1997).

Sympathy can substitute for greed and obligation and the several motives are often mixed in practice. But, greed and obligation are not substitutes for sympathy in providing validation or creating utility for Alpha from Beta’s consumption; i.e., in providing emotional services. Sympathy is not expected to be found alone, but rather in complementary combinations with motives of self- seeking and ful� lling obligations.

Decay (Maintenance)

Decay (maintenance) refers to the manner in which the service capacity of durables is reduced (maintained). Physical capital’s service potential decays mostly through use, the passage of time, and the absence of maintenance. Wear is a natural feature of nearly all forms of physical capital. One might think of a barn that provides storage services. The service capacity of the barn is related to the physical dimension of the facility and the condition of the structure. In this instance, the barn’s decay depends on the passage of time and the application of maintenance rather than use, since its decay is unrelated to the number of objects stored. On the other hand, the increasing number and frequency of engine revolutions directly alters the potential of many mechanical durables whose decay depends on use. Finally, some durable’s service capacity varies little with time or use, like paintings in a museum (if properly maintained), while other durables, such as paper cups, may have rapid decay functions.

Social capital, like physical capital, is subject to decay from use, the passage of time, and lack of maintenance. One might develop social capital within a


neighborhood that provides valuable services. But when a member of the community moves, at � rst there are efforts to maintain contact, but eventually the lack of maintenance in the form of face-to-face contacts soon diminishes the strength of the ties and the potential to extract services. In other cases, in endurable relationships such as might exist between family members, the passage of time and the absence of regular face-to-face contacts does very little to diminish the social capital service potential. Finally, sometimes the too frequent request for services may exhaust one’s social capital or potential to receive preferential treatment. On the other hand, some social capital may require use to be sustained. A friend who is never called on for help may feel ignored and become less friendly.


Reliability concerns the predictability of capital’s service delivery. Will it perform as expected (as it did previously)? Dependability has two dimensions. These two dimensions include longevity and intensity. For example, a light bulb provides lighting services at a particular intensity. Its reliability mostly deals with its longevity—how often will the light bulb light up? Its wattage intensity, however, is not generally in question. The longevity of light bulbs is particularly important for traf� c lights and lights in other sensitive areas.

Professional football players may also be considered to have a form of capital (human capital). One important quality of a skilled football player is his intensity in a particular game. A player whose intensity is widely variable is less valuable than one who continues to provide predictable levels of high performance each game.

Unpredictability of intensity or duration usually reduces the value of capital. Moreover, capital forms that are reliable are generally recognized and rewarded in the marketplace. Diehard batteries and Honda cars are generally recognized and rewarded for their reliability.

Social capital clearly has a reliability dimension. Some social capital invested in close friends and family members is highly reliable and its performance predictable. Other forms of social capital may be situationally dependent. For example, a person who has achieved some new signi� cant success may become more sympathetic and more willing to provide preferential treatment than previously. Sometimes a relationship “gone bad” may unexpectedly end one’s social capital or make it � uctuate unpredictably. In any case, conversations that begin by asking: “can we ask Jane or Jon for a favor?” are recognizing that social capital has a reliability dimension.



Ability to Create Other Capital

Ability to create other capital forms refers to capital’s ability to be used to create the same or different kinds of capital. For example, metal presses are used to create metal products for consumption or to create parts for still other metal presses or used to create new forms of capital such as a lathe. We recognize, however, that what is created is distinct from the original capital used in the creation process. Likewise, social capital can be used to strengthen existing levels of social capital or be used to create new forms of social capital. For example, person A might have social capital with person B who introduces him/ her to person C. Then, because of their friendship with B, persons A and C develop social capital. These persons may be in corporations, education, or government as well as in families or communities. Sympathy motivates preferential treatment, which in turn may create more sympathy. Sympathy may deepen to empathy and caring to loving.

Social capital, like other forms of physical capital, can also be used to create forms of capital different from itself. For example, at some point in time publicly elected of� cials approved the Morrill Act that resulted in the creation of the Land Grant Universities. Those responsible for creating the Land Grant System were undoubtedly in� uenced in their action by sympathy for others. However, what they created was something different from social capital. What they created was an institution with resources, rights, and responsibilities and the ability to grant preferential treatment to many in- dividuals. In addition, it became a setting in which much social capital has been and will be created; e.g., students forming bonds of friendship. Yet, saying that social capital is embedded in the university would not be correct though its resources and rules create advantages and disadvantages for individuals. Social capital continues to reside in networks of individuals, individuals who are capable of caring and experiencing vicarious sensing of another person’s well- being. Sympathy makes it easier to accept the property claims of others as legitimate.

Sometimes sympathetic individuals develop feelings of attachment toward an object whose signi� cance increases because of social capital among these individuals. For example, a picture of a friend has special meaning because of social capital while the picture of someone unknown has little signi� cance. Yet, we would be careful to say that the picture has attachment value, not social capital. Some individuals may have special experiences with hospitals, service groups, and religious or ethnic organizations for which they develop attachment values. They may endow these with funds or other resources to help them in their missions. Nevertheless, the hospitals, service groups, and religious or


ethnic organizations are not endowed with social capital, although the charitable act may create social capital in some individuals.

A collection of students may initially form because of a common sel� sh interest in a subject matter leading them to register for the same class. Then, because of group projects and synergistic group studies, the class members may develop social capital for each other that may also meet some sociability needs. Another group may form around a common interest in an activity to meet a sociability need. For example, one such group may organize to play bridge. However, this group may strengthen its ties and its social capital by agreeing to form an investment club. Now their group meets their needs not only for sociability but also provides a useful activity (investing) that may further their economic interests (earning returns on their investments). Most service clubs, such as Rotary or Kiwanis, organize not only to meet their social needs but to provide service to their communities. It is unlikely that these clubs would prosper if their only purpose was to advance their social needs.

Investment (Disinvestment) Opportunities

Investment (disinvestment) opportunities refer to one’s ability to create new capital (or destroy existing capital). Alienation of existing social capital will be discussed in a separate section below. Investment (disinvestment) opportunities associated with new physical capital are generally recognized. Inputs of cement and steel are combined to make a building. Like physical capital formation, one can invest in getting closer. One can combine inputs like gifts, entertaining, and communication to produce sympathy by others for you. Social capital is produced in a similar way that a machine is produced, by combining inputs (in a production function). The capital metaphor helps to conceptualize this production process. Social capital is created through acts of service, gifts, mutually bene� cial interactions, and discovered and created kernels of com- monalities. Kernels of commonality may be shared traits, qualities, life-styles, beliefs, and values which often distinguish “us” from “them.”

Is there a contradiction between individual or collective investment in social capital that implies calculation and the emotive non-calculating response of persons for persons? Alpha can consciously try to get closer to Beta and acquire social capital. If A is aware of it and calculates her response, we have the usual process of exchange. But, if B is unaware of A’s intent (or A is not really consciously trying to create social capital), there are elements of emotion and the dynamic is in part unconscious. Social scientists, labor mediators, and politicians may consciously create an environment in which the emotive elements are directed in a certain way even if the participants are partly or



wholly non-calculating in their response. While the source of sympathy may be emotive and non-calculating, it can lead to calculation of how to be of most use to the recipient of one’s sympathy.

The investment (disinvestment) processes used to create (destroy) social capital vary in intensity and durability. The intensity of the social capital investment depends on the intensity of the human relation experience and is related to communication. Intense communication would be face-to-face contacts that occur on a regular basis. Less intense communications are those that occur periodically through a medium. Communication by phone, mail, e- mail, and messages passed through a third party illustrate this later form of communication. The intensity of communication may also depend on the relationship between those communicating. Face-to-face communication between strangers is likely less intense than face-to-face communication between a husband and wife, a priest and penitent, and a parent and child. Finally, the intensity of social relations may be a function of the purpose for the communication. When the purpose of the communication is to produce, i.e., enhance one’s economic position, validate or be validated, to exchange information, or to express caring, the intensity of the communication is different.


Existing capital may be transferred from its creator to others by gift, inheritance, sale, or rental. One may inherit some forms of capital goods such as factories and houses. Indeed, most families have determined an inheritance plan to pass on its capital to heirs upon the death of the capital’s owners. Like physical capital, one may inherit social capital created by one’s family members or friends. For example, friends of my parents may become my friends because of the efforts of my parents. A baby is born into a particular social structure and in particular to a family and may immediately “own” social capital. This capital is inherited because the parents identify the child as belonging to them. Despite many service withdrawals, social capital bene� ts accrue to the young child without any effort. But, as the child ages, he/she must invest to maintain the social capital.

Physical capital goods can be rented or purchased from their original creators or subsequent owners. But, since existing social capital is a relationship, it cannot be transferred by its bene� ciary without the consent of the benefactor(s). In that sense, it is misleading to speak of owning social capital. Alienation is not essential to the de� nition of capital or we could not speak of human capital. Human capital is embodied in a person and cannot be alienated separately from


the person. I can teach others my skill for a fee, but I cannot transfer it directly to another by ceasing to use it as in the case of a factory.

In summary, when we say there are different forms of social capital or that social capital has changed, what do we mean? We mean that some social capital can be used for economic advantages, some for social ful� llment, some for validation, and some for information. When we say it has changed, we may mean that social capital’s service potential, � exibility, ethical use, decay pattern, reliability, or its ability to create other capital forms has changed.


Reference has already been made to the complementarity and partial sub- stitutability of capital goods, social capital, cultural capital, and organizational capital. Some further elaboration may be useful. In some cultures, parents teach their children to return lost objects and always to tell the truth. In addition, because of the parents’ social capital with their children and the reinforcement from the community, the children may also adopt the values of returning lost objects and always telling the truth. Visitors to this culture might � nd this form of cultural capital particularly helpful in setting up a business and if pressed could even place a dollar value on the cultural capital to which they have access.

It is useful to distinguish these learned and internalized behavioral norms from social capital. A person can return lost objects from a learned sense of commitment without any (or much) sympathy with the owner. Amartya Sen (1982) distinguishes sympathy from commitment. The person enmeshed in cultural capital may not even consider alternative behavior and be little in� uenced by thoughts of what would happen if the norm were not im- plemented. (See also Minkler 1999.) Behavior contrary to the norm would destroy the person’s image of their ideal self. When cultural capital is widely shared, it increases the opportunities for reinforcement and the generality of bene� ts or what Fukuyama (1995) calls the “radius of spontaneous cooperation.”

When groups of individuals form certain cultural norms accepted by the population, that is they have cultural capital, these may sometimes substitute for personalized social capital. When a person has access to cultural capital that gives him/her honest answers and the return of lost objects, the person may not need to depend on personalized forms of social capital to gain access to reliable information and lost objects. When these facilitating cultural norms are absent, individuals may need to depend on more personalized forms of social capital.



The same honest behavior might also be produced by formal legal institutions and sanctions. Again, this might be valuable to those contemplating investment is a business. In addition, the nation-state is not the only source of governance. Organizations make rules which apply to their members/employees. Some become learned habits in which case we speak of business culture, and some are honored because of sanctions within the organization including expulsion.

Cultural capital and organizational capital may also provide the experienced kernels of commonality essential for the development of social capital. Agreement on cultural values and norms suggests an absence of con� ict between persons in a relationship. Beginning with an agreement on cultural norms and values, cultural capital may provide the opportunities to � nd other kernels of commonality and develop synergistic activities which increase sympathy and individual and collective investments in social capital. Class, gender, and race constitute af� nity groups and kernels of commonality— sometimes for good and sometimes for disadvantage (Egerton 1997).

The main point here, however, is that social capital can be used to create more of itself and create still different forms of capital, including cultural and organizational. In addition, social capital and other forms of capital can substitute for and complement each other in varying degrees.


The capital metaphor is not needed to show that institutions make a difference, and little will be gained by calling all institutions capital. Our purpose in this essay is not to assert guardianship of the term “social capital.” We have our preferred de� nition which places social capital within a particular group of social relationships which are emotive. The main purpose of the essay is to explore the utility of the capital metaphor by asking if social capital has the following features of physical capital: transformative capacity, durability, � exibility, substitutability, decay, reliability, capacity for investment and disinvestment, and ability to create other forms of capital. The capital metaphor seems to have the most suggestive power when applied to sympathetic relationships. This is particularly the case with respect to transformative capacity—that which puts things into motion. Only sympathy, for example, can transform one person’s consumption into the utility of another.

We offer several distinctions which may facilitate study of where social capital comes from and what it does. These include the following: separation of the source or motive of social capital from its services (what it does) and where it resides; separation of the motive capacity of sympathy from that of


commitment (cultural capital and norms) and from formal legal institutions; and separation of the motive derived from sympathy from the motive of narrow self- enhancement.

How the capital metaphor is conceptualized will impact empirical measure- ment. Most surveys, to date, have focused on intermediate or � nal products rather than on what motivates and drives production. For example, the World Values Study asks if people trust others or the government. See Knack and Keefer (1997) and also Sudarsky (1999). There has been little investigation of where trust comes from. Trust could simply be the result of previous non- opportunistic behavior by others or it could be based on af� nity. There are various surveys of membership in organizational and civic participation (outcomes), but again little attention to the driving force behind participation. Getting serious about the capital goods metaphor would suggest digging into motivation behind trust and participation (Schmid 2000).

We close with our preferred de� nition of social capital which calls attention to a heretofore much neglected motive for behavior:

Social capital is a person’s or group’s sympathy toward another person or group that may produce a potential bene� t, advantage, and preferential treatment for another person or group of persons beyond that expected in an exchange relationship.


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The myth of social capital in community development

James DeFilippis

To cite this article: James DeFilippis (2001) The myth of social capital in community development, Housing Policy Debate, 12:4, 781-806, DOI: 10.1080/10511482.2001.9521429

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The Myth of Social Capital in Community Development

James DeFilippis King’s College, London


This article argues that contemporary interest in social capital by community develop- ment theorists, funders, and practitioners is misguided and needs to be thoroughly re- thought. It argues that social capital, as understood by Robert Putnam and people in- fluenced by his work, is a fundamentally flawed concept because it fails to understand issues of power in the production of communities and because it is divorced from eco- nomic capital. Therefore, community development practice based on this understanding of social capital is, and will continue to be, similarly flawed.

The article further argues that instead of Putnam’s understanding of social capital, community development practice would be better served by returning to the way the concept was used by Glenn Loury and Pierre Bourdieu and concludes with a discussion of how these alternative theories of social capital can be realized in community devel- opment practice.

Keywords: Development/revitalization; Urban environment


The extremely rapid rise of social capital is one of the dominant trends in American social science and public policy over the past decade, and this is particularly true of work in housing and community development. This was obvious at the spring 1999 meeting of the Urban Affairs Asso- ciation in Louisville, KY. Social capital was the organizing theme of the conference, and emphasis was placed on how social capital can be gener- ated in low-income communities in the United States. If the meeting was any indication, social capital had, in only about half a decade, be- come one of the principal concerns of community development practi- tioners and researchers. Shortly thereafter, two students walked into their high school in the affluent suburb of Littleton, CO, and began shooting their classmates. This tragic event sparked debates in Ameri- can public life, among them the issue of the isolation and alienation of much of suburban life (Hamilton 1999; Schiff 1999).

Of course, this was not a new criticism to be lodged against the suburbs; people have been making it for quite some time (Friedan 1963; Jackson 1985; Langdon 1994; Wood 1958). But, the feeling of isolation in afflu- ent suburbs (which are now only a segment of the much more race- and class-diverse suburban world) took on new strength in the 1990s and

Housing Policy Debate · Volume 12, Issue 4 781 © Fannie Mae Foundation 2001. All Rights Reserved. 781

resulted in, among other things, the rapid growth of both the cohousing and New Urbanist movements (Hanson 1996; Katz 1994; Knack 1996; McCamant and Durrett 1988; Muschamp 1996; Talen 1999).

But, this sense of isolation presents a problem. If people who are afflu- ent in the United States are struggling with social disconnectedness and isolation, why are people who are concerned with economic develop- ment in low-income areas emphasizing the importance of social connec- tions and networks as a way of moving low-income people and commu- nities out of poverty? There seems, in short, to be disjuncture between, on the one hand, the experiences of the affluent and, on the other, the prescriptions for the poor in American life. This disjuncture, in and of itself, should lead people to question the utility of the social capital framework in community economic development.

This article will discuss the meanings and uses of social capital and argue that its recently acquired privileged position in community eco- nomic development is misguided. To be specific, however, this article is not an argument that social capital does not matter or that it is not an important component in the production and reproduction of individual success and class status. Instead, the argument is that we need to be very careful about how we define and use the term social capital. Social capital is an “elastic term” (Moore Lappe and Du Bois 1997, 119), with a variety of meanings. But the understanding of social capital that has become incorporated into community development theory and practice is the social capital of Robert Putnam (1993a, 1993b, 1995, 1996, 1998, 2000), in which the term is both combined with notions of civil society and assumed to be a principal engine of economic growth and democra- tic government. Putnam’s arguments, however, are deeply flawed and have little empirical or theoretical support, so community development work informed by his framework will be similarly flawed and misguid- ed. Before making these arguments, however, this article will briefly discuss the concept of social capital and how it has evolved through its use by Loury (1977), Bourdieu (1985), Coleman (1988) and then, ulti- mately, Putnam (1993a, 1993b, 1995, 1996, 2000) and his followers.

What is social capital?1

While time and space constraints do not permit a thorough description of the enormous literature on social capital that has emerged in the past seven or so years (Chupp 1999; Fine 2001; Foley and Edwards 1997, 1998; Portes 1998; Wills 2000), it is important to briefly describe the dif- ferent meanings given to the term. It is unclear who first used the term, but an important early use came from Loury (1977) in a book chapter

782 James DeFilippis

1 This section borrows heavily from Portes’s presidential address to the American Soci- ological Association (1998).

that criticized the narrowly individualistic and atomistic understanding of human capital in neoclassical economic theory. He wrote:

The social context within which individual maturation occurs strongly conditions what otherwise equally competent individuals can achieve. This implies that absolute equality of opportunity, where an individual’s chance to succeed depends only on his or her innate capabilities, is an ideal that cannot be achieved.…An individual’s social origin has an obvious and important effect on the amount of resources that is ultimately invested in his or her development. It may thus be useful to employ a concept of “social capital” to repre- sent the consequences of social position in facilitating acquisition of the standard human capital characteristics. (Loury 1977, 176)

Loury was unquestionably right in this assessment, and certainly some- one growing up in East New York, Brooklyn, or the South Side of Chica- go is not starting from the same position as someone growing up in Greenwich, CT, or Glencoe, IL. This is stating the obvious. But Loury needed to make the argument because this apparently self-evident state- ment of reality was clearly not self-evident to human capital theorists who, following Becker (1957, 1964), had come to dominate labor theo- ries in American economics. Human capital formation, instead of being understood as the inherently social process that it is—for example, no one goes to school in isolation from the context in which that school is located, administered, or funded—had come to be almost completely about individual achievement or lack of it.

A concurrently developed theory of social capital came from French sociologist Pierre Bourdieu (1985),2 who is relatively underused in the current literature on social capital in community development. This is unfortunate because his is probably the most theoretically useful and sophisticated attempt to deal with the issue. Bourdieu’s (1985) use of the term social capital is an explicit attempt to understand the produc- tion of classes and class divisions. Social capital, while being constituted by social networks and relationships, is never disconnected from capital. Capital, for Bourdieu (1985), is simultaneously both economic and a set of power relations that constitute a variety of realms and social inter- actions normally thought of as noneconomic. Two key components of his work have been lost in current discussions of social capital. First, the production, and reproduction, of capital is a process that is inherently about power. In fact, Bourdieu’s (1985) conception of capital is such that he almost conceives of capital and power as synonymous. Second, since his interest is in the social production of classes, he distinguishes be- tween the social networks that an individual is embedded in, and out of which social capital precipitates (or emerges), and the outcomes of those social relationships. That is, social networks should not simply be equat- ed to the products of those social relationships, for doing so would ren-

The Myth of Social Capital in Community Development 783

2 Similarly, this section draws heavily on the work of Fine (1998, 1999, 2001).

der invisible social networks that might be very dense but nonetheless unable to generate resources because of lack of access.

Despite these earlier efforts, the person who brought social capital into the mainstream in the American social sciences was clearly James Coleman (1988), who argued:

Social capital is defined by its function. It is not a single entity but a variety of different entities, with two elements in common: they all consist of some aspect of social structures, and they facilitate cer- tain actions of actors…within the structure. Like other forms of cap- ital, social capital is productive, making possible the achievement of certain ends that in its absence would not be possible. Like physical and human capital, social capital is not completely fungible but may be specific to certain activities. A given form of social capital that is valuable in facilitating certain actions may be useless or even harm- ful for others. Unlike other forms of capital, social capital inheres in the structure of relations between actors and among actors. (S98)

With this rather “fuzzy” definition (Markusen 1999; Portes 1998), Cole- man (1988) then defines different sets of actions, outcomes, and rela- tionships as social capital. Social capital for him is inherently functional, and social capital is whatever allows people or institutions to act. Social capital is therefore not a mechanism, a thing, or an outcome, but simul- taneously any or all of them. Portes (1998) sees this as a vital step in the evolution and proliferation of the idea of social capital and states: “Coleman himself started that proliferation by including under the term some of the mechanisms that generated social capital; the consequences of its possession; and the ‘appropriable’ social organization that provided the context for both sources and effects to materialize” (5). Finally, social capital, for Coleman (1988), is normatively and morally neutral. That is, it is neither desirable nor undesirable; it simply allows actions to take place by providing the needed resources.

Putnam and the proliferation of social capital theory

Although Coleman’s 1988 work brought social capital into use in the social sciences, the principal source of the idea for community develop- ment practitioners and researchers is Robert Putnam (1993a, 1993b, 1995, 1996, 2000). With his work, social capital is thoroughly redefined and becomes extremely influential in development studies, both in the United States (Gittell and Vidal 1998; Lang and Hornburg 1998; Miller 1997; Moore Lappe and Du Bois 1997; Schulgasser 1999; Servon 1999; Temkin and Rohe 1998; Wallis 1998; Wallis, Crocker, and Schechter 1998; Wilson 1997) and internationally. In fact, to many people in the World Bank, social capital has become “the missing link” in global eco- nomic development (Harriss and de Renzio 1997). Describing the impact of Putnam’s social capital on community development, Chupp bluntly

784 James DeFilippis

states, “In the debate over poor neighborhoods and the ills of society as a whole, social capital has become something of a wonder drug” (1999, 2). Further, Putnam’s redefinition of social capital is almost as dramatic as the widespread impact of his argument, and it therefore requires considerable discussion here. This article argues that with Putnam’s re- definition, social capital ceases to be a useful framework for local or community economic development.

There are several key transitions that occur when Putnam first uses the term social capital in Making Democracy Work (1993a), his book on Italian politics. And while he has expanded and developed his views since then, he has not fundamentally altered them. First, social capital is transformed from something realized by individuals to something possessed (or not possessed) by either individuals or groups of people in regions, communities, cities, countries, or continents. Second, it is conflated with civil society, or more accurately, with a particular neo- Tocquevillean view of civil society. Thus, voluntary, nongovernment asso- ciations, based on trust, become the institutions through which social capital is generated. Third, it becomes primarily a normatively good thing and is given credit for (a) promoting good, democratic government and (b) generating and sustaining economic growth and development. Finally, when Putnam brings this framework to the American context, he does so by making the argument that social capital and civil society are declining in the United States and have been since the mid-1960s (1993b, 1995, 1996, 2000) and that this trend portends long-term eco- nomic and political trouble. These issues will be addressed in turn, before turning to the problems with them and their applications in community development efforts.

Loury (1977), Bourdieu (1985), and Coleman (1988) all argued that social capital is not embodied in any particular person, but rather is embedded in people’s social relationships. At the same time, however, they also stated that social capital was realized by individuals. Putnam, converse- ly, has argued that social capital is a resource that individuals or groups of people possess or fail to possess (Portes 1998; Portes and Landolt 1996). At the outset of his first article on the issue, he states, “Working together is easier in a community blessed with a substantial stock of social capital” (Putnam 1993b, 36). Communities, not people, possess “stocks” of social capital. He has since made this transition from the in- dividual to the larger group more explicit and states, “Social capital can thus be simultaneously a ‘private good’ and a ‘public good’ ” (Putnam 2000, 20). What is important to note is that despite his emphasis on social networks and his moving social capital from the scale of the in- dividual to the scale of the group, Putnam measures social capital with a form of methodological individualism (Skocpol 1996). In his research on social capital in the United States, Putnam (1995, 1996, 2000) uses social survey data to observe the level of social involvement of individ- uals and then simply aggregates up from there to whatever scale is

The Myth of Social Capital in Community Development 785

being observed. While this might seem a trivial observation, it is, as will be demonstrated later, key to his, and his followers’, understanding of “community.”

Coleman’s (1988) definition, by its lack of clarity, left the door open for a variety of sources of social capital, and Putnam uses that vagueness to seize on trust-based voluntary associations (one of the several exam- ples Coleman offers), and his understanding of them as the constituents of civil society, as the key source of social capital for communities, re- gions, and so on. Putnam argues that “social capital refers to the norms and networks of civil society that lubricate cooperative action among both citizens and their institutions” (1998, v; emphasis in the original). Social capital and civil society therefore become conflated, and the two are almost synonymous. This transition has dramatic implications for the political and theoretical understandings of social capital.

This view of social capital and civil society, unlike Coleman’s (1988), Loury’s (1977), and Bourdieu’s (1985), is one in which they are largely assumed to be a normatively good thing. While Putnam certainly rec- ognizes that there are potentially “negative” forms of social capital, the overwhelming balance of his work is about its benefits. And he argues that they are, in fact, necessary for the functioning of both a responsive democratic government and the economic growth and well-being of places. He states:

An impressive and growing body of research suggests that civic con- nections help make us healthy, wealthy and wise. Living without social capital is not easy, whether one is a villager in southern Italy or a poor person in the American inner city or a well-heeled entre- preneur in a high-tech industrial district. (Putnam 2000, 287)

This understanding of civil society and social capital has its roots in Putnam’s reading of Alexis de Tocqueville’s (1835) view of civil society and democracy, and it is therefore necessary to take a moment to dis- cuss this perspective. De Tocqueville visited the United States in the 1830s and believed that one of the defining components of Democracy in America (1835) was the propensity of Americans to create and join voluntary associations that were in the domains of neither the state nor the market. Putnam acknowledges his debt to de Tocqueville and states, “Recently, American social scientists of a neo-Tocquevillean bent have unearthed a wide range of empirical evidence that the quality of public life and the performance of social institutions are indeed power- fully influenced by norms and networks of civic engagement” (1995, 66). His reading of de Tocqueville strongly suggests that networks of trust and voluntary associations are “win-win” sets of relationships in which everyone involved benefits. This is evident in his basic definition of the idea. He states, “Social capital refers to connections among individuals— social networks and the norms of reciprocity and trustworthiness that arise from them. In that sense social capital is closely related to what

786 James DeFilippis

some have called ‘civic virtue’ ” (Putnam 2000, 19). Voluntary associa- tions, therefore, are not confrontational encounters based on vested in- terests, but rather “features of social life—networks, norms, and trust— that enable participants to come together to pursue shared objectives” (Putnam 1996, 34; emphasis added). Bowling leagues, PTAs, Elks Clubs, church groups, and trade unions (Putnam 1995) are therefore theoreti- cally, politically, and morally comparable. Even though he examines them individually in his recent book (Putnam 2000), they all perform very similar functions.

But, the benefits of social capital and civil society extend beyond simply promoting and supporting democratic institutions of government to generating and sustaining economic growth. Putnam argues, “Studies of the rapidly growing economies of East Asia almost always emphasize the importance of dense social networks, so that these economies are sometimes said to represent a new brand of ‘network capitalism’” (1993a, 38). At his boldest (referring to the Italian case), he states, “These com- munities did not become civic simply because they were rich. The his- torical record suggests precisely the opposite: They have become rich because they were civic.…Development economists take note: civics matters” (1993a, 37). And most recently he states, “Where trust and social networks flourish, individuals, firms, neighborhoods and even nations prosper” (Putnam 2000, 319). It is this understanding of social capital—that it is central to the economic development of communities and regions and nations—which has inspired its rapid incorporation into the community economic development literature in the United States and the underdeveloped world.

Putnam became famous, however, not simply as a neo-Tocquevillean, but as someone who documented the decline in civil society and social capital in the United States. His thesis has been much discussed, so it need not be dealt with in any detail here. Briefly, he has argued (Putnam 1995, 1996, 2000) that the United States has witnessed a withdrawal from civil society and a decline in social capital. He argues that the de- cline of social capital is a generational process in which people who were born in the 1910s and 1920s were (and are) more civicly engaged than their counterparts who were born from the 1930s on. He accordingly dates this withdrawal as having begun in the early to mid-1960s.

Putnam’s followers in community development3

Putnam and his arguments have rapidly become central to the research and practice of community development in the United States. One of the striking things about this explosion of research and practice around his view of social capital and civil society is how it has largely ignored

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3 The phrase “Putnam’s followers” is borrowed from Gittell and Vidal (1998).

an enormous volume of research and literature by academics (Edwards and Foley 1997, 1998; Fine 1998, 1999, 2000; Foley and Edwards 1997, 1998; Galston 1996; Portes 1998; Portes and Landolt 1996; Schudson 1996; Skocpol 1996), people in the popular press (Lemann 1996; Pollitt 1996), and activists (Bowles 1999; Durlauf 1999) who have criticized almost every component of these arguments. Instead, much work in community development is broadly accepting of Putnam’s arguments about the importance of social capital, understood as voluntary associ- ations and civic trust, in the promotion of economic growth and prosper- ity. In fact, to some researchers, Putnam’s views have become almost axiomatic, and in the first sentence in her article on social capital Wil- son unambiguously states: “Social capital creates local economic pros- perity” (1997, 745). In their introduction to a special issue of Housing Policy Debate devoted solely to social capital, Lang and Hornburg (1998) reiterate Putnam’s arguments and state:

Political scientist Robert Putnam expanded and ultimately popular- ized the concept of social capital. Putnam originally applied the idea to a study of Italian regional governments. He showed that the key element underlying the difference between Tuscany’s successful re- gional government and Sicily’s failed one was the degree of “civic en- gagement.”…Putnam also argued that social capital is connected to economic development. Tuscany’s high level of social capital elevates its standard of living. It provides the region a social environment in which productive cooperation in all spheres of civic life is possible. Thus, social capital promotes economic growth. (3; emphasis added)

Similarly, when the Urban Affairs Association held its annual conference in 1999, it was titled “The Social Reconstruction of the City: Social Cap- ital and Community Building.” This is certainly not to suggest that everyone at the meetings accepted Putnam’s arguments, but rather to observe that his work provided the very framework and context for dis- cussions. Foundations have similarly incorporated Putnam’s arguments into their work, and both the Local Initiatives Support Corporation (LISC) and the Mott Foundation have made the construction of social capital a central component of their antipoverty and community devel- opment frameworks. (See Gittell and Vidal [1998] and Wallis, Crocker, and Schechter [1998] respectively, for thorough discussions of these two funding initiatives.) In the case of LISC, this has yielded a perspective on community development organizing that stresses “nonconfrontation- al” methods, and an incorporation of Michael Eichler’s framework of “consensus organizing” (Gittell and Vidal 1998, 2). Given that social cap- ital is being understood as both a set of win-win relationships based on mutual interest and a promoter of economic prosperity and development, this is a logical way for community organizers and community develop- ment practitioners to operate. Thus, Putnam’s view of social capital and voluntary civic associations is being played out in the streets of Ameri- can cities. The problem with all of this is that social capital, as Putnam

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has defined and operationalized it, does not necessarily promote com- munity economic development (or, for that matter, democratic govern- ment).

The problems with Putnam and his followers

Returning to the way Putnam transformed the idea of social capital, I will now present the theoretical and empirical flaws in his analysis and argue that if we are to use the notion of social capital in community development we would be much better served by returning to how it was understood by Loury (1977) or Bourdieu (1985). I will go through Putnam’s transformations of social capital in the same order that they were presented.

Individuals, communities, and power

First, Putnam defines social capital as something that is possessed, or not possessed, by individuals, communities, cities, nations, etc. He and his followers then measure its existence by simply taking individual attributes and aggregating up to the scale being measured. There are two problems with this argument and its associated methodology. First, places are not things. A community cannot possess anything. An institu- tion or an individual can possess something, but a community cannot. Instead, communities are products of complicated sets of social, politi- cal, cultural, and economic relationships (DeFilippis 1999; Massey 1994). Communities are outcomes, not actors. They are, however, outcomes that affect and constrain future possibilities. Communities unquestion- ably matter, but they are not actors that exhibit any form of agency. This might seem like a semantic argument, but this first problem leads to the second one. That is, no place (a community, a region, or whatever) is solely a function of the internal attributes of the people living and work- ing there. If communities are outcomes, they are not simply outcomes of the characteristics of those within them, they are also outcomes of a complex set of power-laden relationships—both internally, within the communities, and externally, between actors in the communities and the rest of the world. Citibank (for instance) and its lending practices, state governments and their education financing policies, and communities in other countries with soon-to-be emigrants are all very real examples of how America’s urban communities are products of a whole host of relations that extend geographically well beyond the place of the com- munity. These relations are often contentious (school funding issues is a classic example) and are always imbued with issues of power. Only by ignoring these vitally important, power-laden connections can we as- sume that communities are the products of the attributes of the individ- uals who live and work in them. Similarly, only by ignoring these con-

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nections can we assume that we can move from the level of the individ- ual to the level of community (or city, or region) or that individual gains and profits are the same as group, or community, gains and profits.

Putnam does try to get at this reality with his concept of “bridging capital” (1995, 1996, 2000), which has been generally accepted within the community development work that has followed him. But once we accept the complexity of the internal and external relationships that produce a community, we clearly need something more than bridging capital as the means to economic development. For instance, individuals in exurban gated communities of Orange County, CA, and indeed in much of the rest of the country are largely devoid of bridging capital (at the community level). As Putnam himself states in his brief discussion of gated communities, “Not only are canvassing politicians and Girl Scouts selling cookies excluded from exclusive communities, but the af- fluent residents themselves also appear to have a surprisingly low rate of civic engagement and neighborliness even within their boundaries” (2000, 210). The importance of this example is that not only are these communities disconnected, but they are also usually exceedingly wealthy. The relationships that produce gated communities are based on the protection of their affluence through their class- and race-based social and geographic isolation from much, if not most, of the metropol- itan areas around them. It is not connections that partially produce and reproduce their wealth, but exactly the opposite: isolation. Connections, or “bridges” do not, of themselves, make the people in any place rich or poor. The important question is, Who controls the terms of any relation- ships or connections (or lack of connections)? “Bridging capital” is really needed only if a community’s residents are poor and therefore on the losing end of a set of power relations. What needs to change are those power relations, not the level of connections.

Social capital and civil society

The second transition that Putnam makes is to confuse social capital with a particular neo-Tocquevillean reading of civil society. This transi- tion has two important implications for community development prac- tice. First, this reading of civil society assumes that social capital and civil society are almost always good things that enable people to act to- ward their shared interests and goals, based on the trust, norms, and values that develop through their associations. But this is, at best, a highly selective reading of civil society. Putnam bases his understand- ing of civil society on the popular simplification of the views de Tocque- ville expressed in 1835 in Democracy in America. But de Tocqueville’s view of civil society is both much more complex than Putnam and his followers acknowledge, and further, it is but one in a very long, and high- ly contested, history of debate about civil society in Western thought. As Foley and Edwards correctly observe:

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Tocqueville argues that America’s associational life springs from the twin social and political conditions of the new nation—and those conditions are, in his eyes and those of his intended audi- ence, inherently problematic. The social condition, the relatively egalitarian character of American society, plays an explicit role in Tocqueville’s account of the genesis of American associationism. The political freedoms Americans enjoy play a generally supporting role, but an essential one. American egalitarianism poses serious prob- lems for public life to de Tocqueville’s mind…a general leveling promotes mediocrity and conformism.…Associations arise to fill these deficiencies. (1997, 554)

De Tocqueville’s voluntary associations arose as win-win situations pre- cisely because the interests of the people involved were shared. De Toc- queville visited the United States before the emergence of industrial capitalism and the classes it created. Also, there is little doubt that if slaves had been allowed to participate in such associations (which they clearly were not), then the image of voluntary associations would be a very different one indeed. Putnam’s view is possible only if you erase the very real material interests that divide us (and even then, it is still questionable) and create a vision of civil society as solely constituted by people and groups with mutual interests. That is why Putnam lumps trade unions together with PTAs and church groups and views them as comparable (1993b, 1995, 1996). If he had included local Chambers of Commerce with local unions, the implausibility of his argument would have been even clearer. This understanding of voluntary associations as win-win relationships also allows him to ignore the power relations that play such an important role in intergroup relations. Simply put, certain social networks are in greater positions of power than others, and they can therefore yield much more substantial returns to their members when those networks are engaged in social or political conflict. Given that people in low-income areas are marginalized in the Ameri- can political economy, this is a substantial omission—and limiting fac- tor—in the potential uses of Putnam’s social capital framework in com- munity organizing and development.

The second important aspect of conflating social capital with civil society is that it divorces social capital from capital itself. But for social capital to have any meaning, it must remain connected to the production and reproduction of capital in society. This is striking because it is the role of social capital in community economic development that should be of the greatest importance to community development practitioners. Com- munity development is about many things, but central to them must be the economic security and progress of people in low-income communities and the economic development of the communities themselves. But given Putnam’s separation of social capital from economics, it is not surpris- ing that the economic impact of Putnam’s social capital is so difficult to observe and measure. This is because it might not even exist.

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Social capital and economic growth

Putnam argues that social capital and civil society (comprised of volun- tary associations) promote economic growth (1993a, 1993b, 1995, 1996, 1998, 2000). But there is little theoretical or empirical support for this assertion. His own examples, aside from Italy, which is beyond the scope of this article (his interpretation of Italian politics and economics has been called into question by other specialists on Italy; see Goldberg [1996], Harriss and de Renzio [1997], Sabetti [1996], and Tarrow [1996] for summaries of these criticisms), betray the problems in his own argu- ment. Putnam uses the examples of immigrant enclaves in American cities, the “network capitalism” of East and Southeast Asia, and the “ero- sion of social capital” (Putnam 1993b, 39) in our inner cities as examples that social capital generates economic growth (or, inversely, that the lack of social capital arrests economic growth). The first two of these will be addressed now, and the third shortly.

First, Putnam is certainly right that social ties based on trust and networks among immigrants have helped them prosper in the United States. That has been a feature of the immigrant experience for quite some time. But again, because he views communities as coherent wholes, internally defined and detached from other sets of communities, he fails to see the impact of these networks in any larger context. Cole- man’s (1988) often cited example, which Putnam and his followers draw on, is that of the diamond industry in New York and how market trans- actions involving large quantities of jewels are facilitated by the social networks of trust within the Jewish community that controls the indus- try. Aside from the complete denial of the exploitation that takes place within ethnic enclave economies (Waldinger 1986), the problem with this, and every other enclave like it, is that it completely closes off the market, and access to the market, to anyone who is not part of the ethnic group creating the enclave. A brilliant, hard-working, innovative Irish Catholic immigrant (for instance) who wanted to enter the dia- mond trade in New York City would have an exceptionally difficult time doing so. Or to move from the hypothetical to the real, as a result of large flows of capital into the real estate market in New York, Harlem has been experiencing substantial development in recent years. This should be a good thing and beneficial to black contractors and workers in the community. The reality, however, is that the construction industry in New York is controlled by an immigrant enclave (in this case Italians), and so the contracting firms and their employees in Harlem have been largely excluded from the dollars and jobs that this investment has brought (Siegal 2000).

The response to this example could be that Harlem contractors simply need to be better connected or have more substantial stocks of “bridging capital,” but that would miss the point, which is this: If social capital as sets of networks means anything, it means that some people will be

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connected and others will not. Simply put, if there is one job, and every- one is connected to the same networks and realizes the same benefits of social capital, then you cease to have the kinds of networks that Put- nam and Coleman are talking about. Instead you have the pure market of Adam Smith’s theorizations. If everyone is connected, then everyone by definition would lose the benefits of those connections because they would no longer gain capital from them (in this case, the job). Putnam observes, “It is no accident that one of the pervasive strategems of ambi- tious yuppies is ‘networking’ ” (1993b, 38). But what he fails to realize is that yuppies network precisely to get ahead of everyone else. If they shared the fruits of their networking with others, they would cease to be ambitious and become charitable instead. They would, in fact, not only be acting charitably, but acting against their own self-interest. This is one of the primary reasons why it is simply untenable to move from the level of the individual to the level of community in issues of econom- ics. For social capital to make sense as a concept in a market economy, then networks, formal or informal, must operate in the competitive realm of market relations. And while the individuals in such a network might share common interests that allow them to act as a network, these networks, because of the competitive nature of capitalism, cannot be extended to everyone in society. Max Weber, the influential sociologist and political economist, wrote at length in 1925 on the role of social networks in economics in The Theory of Social and Economic Organi- zation and is instructive on this point. He stated:

[A relationship] is especially likely to be closed, for rational reasons, in the following type of situation: a social relationship may provide the parties to it with opportunities for satisfaction of various inter- ests, whether the satisfactions be spiritual or material.…If the par- ticipants expect the admission of others will lead to an improvement of their situation…their interest will be in keeping the relationship open. If, on the other hand, their expectations are of improving their position by monopolistic tactics, their interest is in a closed relation- ship. (Weber 1993 edition, 139–40)

If the social capital in question is a network that helps people find employment (or get into the right prep school, or whatever), it would clearly be in the interest of those realizing and appropriating the social capital (the job or place in the school) to keep the network as closed as possible. This is precisely what the ethnic enclave economies have dem- onstrated. To have any value as a term, social capital must retain a connection to economic capital, and it must therefore be premised on the ability of certain people to realize it at the expense of others. While economics is not a zero-sum game, it is also not simply a set of win-win relationships.

But the economic shortcomings of social capital extend beyond its nec- essary exclusions and into the realm of economic unsustainability. Putnam consistently celebrates in his articles the emergence of “network

The Myth of Social Capital in Community Development 793

capitalism” in East and Southeast Asia and argues that these countries demonstrate the validity of his point that networks of trust and mutual interest generate economic growth (1993b, 1995, 1996, 1998). The prob- lem with this example is that by the middle of 1997, the East Asian and Southeast Asian economies had collapsed, and by the end of 1997, much of the economic world had decided that the cause of the collapse was “crony capitalism” (“How Far Is Down?” 1997; “A Lorry-Load of Trouble in Asia” 1997; “Asia and the Abyss” 1997).

In short, the networks of trust and mutual cooperation in Asia that Put- nam is so supportive of were taken to their logical conclusion of irra- tional economic actions inspired by economic decisions that were made with a logic other than economics at heart. This is probably why in his recent book Putnam (2000) no longer points to this example. And this is precisely why Adam Smith in his 1776 Wealth of Nations argued so strongly against the kinds of social networks among economic actors that Putnam and his followers now celebrate. Smith argued that such relationships were akin to monopolization and would necessarily gen- erate a group whose “interest is, in this respect, directly opposite to that of the great body of the people” (1993 edition, 307). In fact, he argued that too much trust between economic actors was a recipe for economy- stifling cartels and monopolizations—a prediction that seems to have been borne out by the experience in Asia. Similar concerns were again voiced by Weber in 1925, but his criticisms went beyond simple exclu- sions and monopolizations to stress that such trust-based networks further distort and hamper growth within the economy by inviting free- riders from within the relationships not to work as hard as they might, or have to, if they were not connected.

But, the biggest flaw in Putnam’s argument comes not from East Asia or the theories of political economists, but from the empirical realities of American life. Three components of Putnam’s arguments with regard to social capital and economic prosperity are important here: first, that social capital promotes economic growth; second, that social capital is declining in the United States and has been since the early to mid- 1960s; third, that inner-city areas lack social capital, which is one of the principal reasons they are poor. I will address these arguments in turn.

In perhaps the most thorough cross-country empirical examination of the relationship between social capital and national economic wealth— one that Putnam cites as supporting his argument—Knack and Keefer (1997) find a statistically significant positive relationship between lev- els of trust in a society and rates of economic growth. This is not sur- prising, since trust at the level of the society should limit the costs of economic transactions within any given society. Important for this dis- cussion, however, they also found that “associational activity is not cor- related with economic performance” (Knack and Keefer 1997, 1252)

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and that “promoting horizontal associations through encouraging the formation of and participation in groups may be counterproductive, according to our findings” (Knack and Keefer 1997, 1284).

Within the United States, the evidence is not any more convincing. In his recent book, Putnam (2000) constructs a “Comprehensive Social Capital Index” in which each state is ranked along a spectrum of very high to very low in terms of social capital. Of the 10 states he ranks as having the highest social capital in the country, only 3 have a per capita income higher than the per capita income for the entire country (U.S. Bureau of the Census 2000). Also, the mean per capita income of those 10 states is only 93.9 percent of the country’s per capita income. Clearly, there are many explanations for why these states are significantly poor- er than the nation as a whole, and it is definitely not the argument here that social capital hinders economic prosperity. But if social capital is important in promoting economic prosperity, then surely the data would look different from this.

The decline of social capital?

Moving on to the second argument, that social capital is declining in the United States, the question asked here is, What segments of the popu- lation is this most true for? After sifting the evidence, Putnam unam- biguously states, “The central fact is that by virtually all measures of civic disengagement and all measures of socioeconomic status, the trends are very similar at all levels” (2000, 194). But if this is true, the question becomes, Why are the American elites, who have gone through 35 years of civic disengagement, doing so incredibly well financially? Where is the economic impact of their disengagement? Affluent and professional Americans have enjoyed a virtually unprecedented period of prolonged prosperity, and the current gap in wealth between rich and poor is greater than it has been since before the Great Depression. Putnam’s theory just does not make sense in, let alone explain, this reality.

Aside from the incredible growth in the wealth of rich people and the stagnation in the wealth of poor people—even though both groups have had their social capital decline by comparable amounts—Putnam’s argu- ments still run afoul of basic empirical realities in the United States. That is, social capital is supposed to have declined for 35 years. Where is the economic impact? It has been 35 years. Given how rapidly invest- ment decisions are made and economic transformations take place (35 years ago almost nobody had heard of deindustrialization or Silicon Valley), that is certainly more than enough time for us to have seen an impact of this declining stock of social capital. Can any evidence of a relative economic decline of the United States be found? Can people convincingly argue that the past 20 years have been poor ones for the

The Myth of Social Capital in Community Development 795

American economy overall? Ultimately, if Putnam is right about the decline in social capital, then he is wrong about the role of social capital in economic development.

But moving from American society in general to community develop- ment in particular, Putnam’s second assertion is as follows:

Although most poor Americans do not reside in the inner city, there is something qualitatively different about the social and economic isolation experienced by the chronically poor blacks and Latinos who do. Joblessness, inadequate education, and poor health clearly trun- cate the opportunities of ghetto residents. Yet so do profound defi- ciencies in social capital. (1993b, 39)

But do inner cities lack social capital in the sense that Putnam means? The answer to this question is somewhat mixed and is not as easily answered as is often assumed. There seems to be a perception in Amer- ican policy circles and white popular culture that inner-city, nonwhite neighborhoods are bereft of values, norms, morals, trust, and relation- ships. This perception is usually justified with a passing reference to the work of Wilson (1987), but it is a very particular segment of his work that is being referenced and a very narrow reading of him and his much more substantial project. This has been as true in the debate about social capital as in many other debates about public policy, despite the fact that there is only limited justification for this view. As Portney and Berry put it:

The debate about social capital and civic engagement largely con- centrates on White, middle-class America. Virtually none of the de- bate and, as far as we can find, no empirical analysis considers whether poor people, people of minority racial or ethnic status, and people in inner cities have also experienced the trends in civic engagement. (1997, 633)

When it comes to trust-based relations, ethnographic research (Ander- son 1999; Stack 1974; Sullivan 1997; Wood 1997) strongly suggests that these are present in inner cities. Anderson describes some of these trust- based relations in his most recent book and terms them “the irregular economy.” He observes:

The irregular economy may be characterized as a barter system, which works by an exchange of favors. For example, an individual will repair a neighbor’s car on the weekend, or help paint someone’s steps, or perform a plumbing job, or style someone’s hair, but take no money for it; rather, the person will wait to be paid back with a favor in the future. (Anderson 1999, 318)

It is interesting to note that for Anderson, these trust-based “irregular economy” activities exist because of the failure of the people and the com- munity to function properly economically. It is unclear, at best, whether

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such informal trust-based bartering would coexist with economic devel- opment or that comparable relationships exist in already wealthy com- munities. In this sense, there is even the possibility that economic growth and development might promote the destruction of trust-based noncommodified relationships, as the communities become more im- mersed in the commodity relations central to the capitalist economy. But Anderson’s (1999) ethnographic observations are not isolated, and in making this point more generally, Portes states, “Sociologists know that everyday survival in poor urban communities frequently depends on close interactions with kin and friends in similar situations. The problem is that such ties seldom reach beyond the inner city” (1998, 13–14). The problem in inner cities, therefore, is not that there is a lack of trust- based social networks and mutual support, but rather that these net- works and support are unable to generate capital. At the same time, however, aggregate data suggest that residents in inner-city areas do tend to lack trust in either society at large or in people they do not know (Putnam does a good job of compiling these data [2000]). But these ag- gregate data do not contradict the ethnographic data indicating that trust in already existing social networks is present in inner cities.

Regarding the existence of community-level organizations, inner-city areas contain large numbers of these as well. Specifically with regard to community development, the number of community development corpo- rations (CDCs) in American inner cities has actually exploded in the past 30 years, beginning, ironically, shortly after the time when Putnam marks the start of the decline of civic engagement. While the number of CDCs in the late 1960s and early 1970s (most created by the Office of Economic Opportunity) was measured in the dozens, by 1999 there were over 3,600 of them nationwide (National Congress for Community Economic Development 1999). Although it can be argued that many of these CDCs were not the product of grassroots action at the community level and were instead created from without, this does not diminish their existence as nongovernment, not-for-profit organizations located within low-income communities. The more important problem is that the ability of most of these community-based organizations to generate long-term economic growth for their communities has been rather lim- ited (Lenz 1988; Stoecker 1997). And while the reasons are complex and require a much more thorough discussion than is possible here, it is also clear from this experience that simply creating community-based organizations in inner-city neighborhoods does not, by itself, generate economic prosperity or even economic security for the residents.

In perhaps the most comprehensive quantitative effort to measure the impact of Putnam’s social capital on the long-term stability of urban neighborhoods, Temkin and Rohe (1998) found that “the extent to which neighborhood residents volunteer in neighborhood organizations or other groups did not have a significant effect on neighborhood stabil- ity” (85). This is a striking conclusion, but it does not prevent them from

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observing that “neighborhoods with higher levels of social capital…are more likely to remain stable over time” (Temkin and Rohe 1998, 84). But if one reads closely, it becomes clear that the dependent variables and independent variables are measuring the same thing, so it is no wonder that Temkin and Rohe have found a statistical correlation. They state, “Both loyalty and attachment to neighborhood are higher in neigh- borhoods that remain stable over time. Similarly, neighborhoods where a higher proportion of residents believe they live in a good place tend to remain stable” (Temkin and Rohe 1998, 84). This is a fair conclusion, but it seems to say very little.

Even more striking is that the demonstration project for LISC’s non- confrontational consensus organizing in the Monangahela Valley in Pittsburgh was viewed a success by LISC and by Gittell and Vidal (1998) because within 10 years it had (1) created 17 new CDCs, (2) sustained resident volunteer commitment, and (3) garnered increased support from the metropolitan area’s larger community. Gittell and Vidal then state, “These commitments are particularly impressive given the limited physical and economic improvement in the valley to date” (1998, 3–4). But if there has been little economic improvement over the course of a decade, then why is the demonstration considered a success that LISC and other foundations should replicate? Surely social capital is meant to be a means to the end of economic security and development, not an end in and of itself.

Inner cities, therefore, do lack social capital, but not the social capital that Putnam is talking about—which does exist, albeit rather uneven- ly—but social capital as Bourdieu (1985) and Loury (1977) used the term. Part of the problem is that because of Coleman’s (1988) definition, we have confused the level of social networks with their ability to gen- erate capital. We therefore render invisible social networks unable to generate capital. But the question remains, How can we rectify the cur- rently inequitable distribution of social capital (in Bourdieu’s [1985] and Loury’s [1977] sense) in American society? In attempting to answer this question, I will now turn to the policy implications of the discussion thus far.

Toward a new understanding of social capital and community development

Social capital must be reconnected to economic capital for the term to have any meaning. Otherwise, we are not talking about capital at all. Loury’s original use of the concept (1977) was part of his effort to dem- onstrate that the idea of equal opportunity was an impossibility. He was right. When his definition is combined with Bourdieu’s (1985) under- standing of capital as essentially about power, we can begin to approach

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policy and organizing efforts designed to rectify, or at least, mitigate, the inequities in access to this form of capital. We need to create social net- works that allow individuals to realize capital, while simultaneously allowing these networks to realize the power needed to attract and con- trol that capital (for the benefit of those in the networks). That is, while we need to create social networks to allow individuals to realize capital, those networks must ensure that the groups of people involved retain some control over the capital. Only in doing this can individual gains and interests be assumed to be synonymous with group gains and in- terests. Fortunately, such networks, and the organizations that are their focal points, already exist within the community development move- ment and need not be created from scratch. They are, however, rather limited in number and are small, often peripheral components of the much broader and more diverse movement. The utility of social capital is that it provides a framework for supporting and prioritizing these efforts over other parts of the community development field.

Community land trusts (CLTs) are a particularly useful way to use a community organization both to have the power to control investment capital and to allow individuals to realize capital (in the form of home equity) (Davis 1991; Krinsky and Hovde 1996; Soifer 1990). In a CLT, the community group owns and controls the land in trust, and all land use decisions are made by the organization. Residents in a CLT own their own housing units (unless they are in a mutual housing associa- tion [MHA] or cooperative, which is not normally the case) and there- fore obtain the equity they build up in their units through their invest- ments and improvements. If residents choose to leave, the land trust has the right of first refusal, and the resale of their unit is limited, so that it remains affordable (to the benefit of the community), but the individual is able to realize his or her own investments (to the individ- ual’s benefit).

In an MHA, the association owns the land and the units, but individual residents are able to realize some equity because of the interest gained on the initial deposit required for residency (which is usually between $1,000 and $2,500 and is often borrowed from the association and paid back slowly over time) (Krinsky and Hovde 1996; Neighborhood Rein- vestment Corporation 1995; Peterman and Young 1991). Residents in an MHA are also much more interconnected than residents in a CLT, most CDCs, or public housing because of the substantial number of involun- tary social interactions that come from the work and governance com- ponents of residency. MHAs are also a bit more mixed income than many other kinds of affordable housing, and thus the networks through which employment might be found (for instance) cut across class lines. Simi- larly, in a limited-equity housing cooperative, residents buy shares and are thus able to accumulate equity. At the same time, however, the coop- erative has the right of first refusal when a resident chooses to move,

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and the resale price is strictly limited, so as to maintain the units’ affordability for the community as a whole (Leavitt and Saegert 1990; Stone 1993).

Beyond the realm of housing, microenterprise lending circles are an ex- cellent example of how organizations can act as focal points for social networks to come together and have the power to make lending deci- sions, and to allow individual members to realize capital from those net- works (McLenighan and Pogge 1991; Servon 1999). In a microenterprise lending program, borrowers tend to operate in borrowing circles that re- place the more mainstream evaluations of creditworthiness with both peer pressure and character-based lending. Loan decisions are made by members of the borrowing circles, and the loans are used by individual members to create and expand forms of self-employment and microbusi- nesses. Individuals are thus able to realize capital through social net- works, but the power to control capital is realized by the networks themselves.

Finally, in community development credit unions (CDCUs), individuals are able to use their membership to gain access to capital they would likely otherwise not be able to get (DeFilippis 2000; Tholin and Pogge 1991; Williams 1997), while enabling the CDCU, and often its sponsor- ing organization, to have more control and power over the flow of invest- ment capital into the community. In the context of social capital, how- ever, CDCUs do have a drawback in that the level of social interaction between members, and therefore the social networking that exists be- tween them, is somewhat limited. This is particularly true for the larger, often more established CDCUs. Thus the CDCU, as the focal point for the social networks, often subsumes those networks, and interactions are between individual members and the CDCU.

Conclusion: Social capital, power, and the implications for policy and organizing

Despite the provocative title of this article, I am not arguing here that social capital does not matter in community development. Rather, I argue that with the privileging of Putnam’s interpretations of social capital, the term has lost its potential utility for the community development movement. In Putnam’s understanding of the term, social capital becomes divorced from capital (in the literal, economic sense), stripped of power relations, and imbued with the assumption that social net- works are win-win relationships and that individual gains, interests, and profits are synonymous with group gains, interests, and profits.

Putnam’s framework is fundamentally economically flawed—which is not surprising given that he separates social capital from economic capital—and it enjoys limited support from either theories of political

800 James DeFilippis

economy or the empirical realities of the United States. Also, Putnam’s understanding, with its lack of power and conflict, has led to a misguided embrace of Eichler’s consensus organizing and nonconfrontational orga- nizing (Gittell and Vidal 1998). But this begs the following question: Why would those who benefit from the current structures that produce and distribute social capital willingly turn over their privileged access to it? We would not expect rich people to willingly turn over their mutual fund portfolios or, less hypothetically, embrace poor and nonwhite stu- dents in their schools without a confrontation. Why should we expect that this form of capital would somehow be different from the others? People who realize capital through their networks of social capital do so precisely because others are excluded.

Rather than assuming that social networks and relationships are win- win endeavors and that low-income people and areas are socially dis- connected, we need to construct social networks that are truly win-win relationships for people in low-income areas, while building on already existing social networks and relationships. And we need to do so in ways that allow those networks to realize greater control and power over the flows of capital that play such an important role in shaping and pro- ducing American cities. Inner-city neighborhoods have social networks and trust between members of those networks, and they possess many nongovernment, community-based organizations. What they lack is power and the capital that partially constitutes that power. They are not likely to realize either without confrontation or within a Putnam- inspired framework of community development.


James DeFilippis is Lecturer in the Department of Geography at King’s College, London.


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