Networks and Social Capital

Durable social networks provide the key concept underlying the idea of social, as distinct from human, capital. Social capital also represents a further shift away from an analytic and explanatory focus on individual attributes in favor of a focus on the emergent properties of social relationships and organization.

The importance of social networks was identifi ed by the American urban researcher Jane Jacobs in her classic work, The Life and Death of Great American Cities (1961). The idea of social capital was explicitly identified by Pierre Bourdieu (1986; see also Lin 2001) as a resource-based perspective and was taken up and given a clear theoretical formulation by James Coleman (1988, 1990). For Coleman, the concept of social capital remains strongly rooted in individuals and the pursuit of their personal interests. The work of Robert Putnam (1993, 1995), however, stimulated the rapid expansion of social capital research.

Making Democracy Work (Putnam 1993) is a detailed empirical demonstration of the positive relationship between a rich and diverse civic life represented by the presence of a variety of voluntary associational networks in Italy's northern provinces and their economic and governmental success relative to the underdevelopment of southern Italy. The high correlation of civic community and institutional performance is compelling: it not only distinguishes the highperformance regions from the low performers, it also accounts for the variations in performance within both high- and low-performing categories. The quantitative empirical analysis of current situation is reinforced by a longitudinal analysis, which demonstrates that while a strong set of associational networks reproduces civic community and generates economic development, economic modernization alone does not generate a strong civic community and does not sustain itself.

Putnam explains the mechanism by which the presence of associational networks contributes to institutional success by proposing that frequent overlapping interaction promotes generalized public trust. Unconvinced by this explanation, Rayner and Malone (2000) suggest that the presence of diversified civic networks provides a society with the capacity for complex strategy switching. Instead of merely oscillating between the state and market, or hierarchy and competition, the presence of a third, egalitarian form of social organization permits societies to build more resilient evolutionary and coping strategies for governance. Specifically they argue that:

• Hierarchies are social gardeners, experts in system maintenance so long as the garden is not disrupted by catastrophic influences from outside. When unchecked by self-organizing groups and markets, however, they are prone to become cumbersome and corrupt.

• Egalitarians are societal canaries; they provide early warning systems of external dangers as well as of internal corruption. They also tend to be repositories of local knowledge that is undervalued by hierarchies and overlooked in competitive markets. Left to themselves, they are prone to factional squabbling.

• Competition begets innovation. At their best, markets generate new ideas to resolve problems created by the solutions of previous generations to their own problems. However, unchecked by hierarchy and self-organization, they are prone to monopoly and extortion.

From this viewpoint, the success of the northern Italian provinces was due to the fact that they had all three forms of organization, not just the two (hierarchy and markets) that flourished in the South. Had the northern provinces developed its flourishing voluntary sector, but lacked either hierarchy or markets, it would probably not have fared any better than their southern counterparts. This is consistent with the approach of Nahapiet and Goshal (1998), who view social capital as a way for organizations and institutions to diversify the knowledge systems or intellectual capital on which they depend. Hence, for Rayner and Malone, social capital is necessarily a portfolio of organizational arrangements, in contrast with Putnam, for whom only the egalitarian voluntary organization constitutes the "civic realm of social capital." Szreter and Woolcock (2004) seem to confirm the broader perspective in identifying three types of social capital: bonding (ties between relatively homogeneous members), which equates to egalitarian voluntary networks; bridging (ties between members who are more socially distant), which is typical of competitive individualistic networks; and linking (ties between members of different social strata), which corresponds to hierarchical organization.

Hence, in addition to the kinds of social capital that Putnam associated with sports leagues, social clubs, and parent-teacher associations, we should recognize that social capital is a property of other kinds of networks, including commercial supply chains, commercial alliances, and other interorganizational relationships (Nahapiet 2008), of resource-oriented groups concerned with watershed management or forestry (Pretty and Ward 2001), common property regimes (Ostrom et al. 1999), and hybrid policy networks, as originally identified by Richardson and Jordan (1979), that link together actors from government, firms, and civil society.

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