PCDForum Column #76,  Release Date March 6, 1995

by Robert D. Putnam

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

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

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

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

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

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

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

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

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

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

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

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

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

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