Anti 'Social Capital': Civic Values versus Economic ...



Abstract

The concept of social capital proposes that societies with denser social networks tend to have more effective political institutions, be more cohesive and record stronger economic performances. However the causal foundations of this influential model have not been critically examined. Some evidence put forward in Putnam's analysis of the Italian regions is questioned. An empirical assessment of the model in relation to EU member states is carried out. Although the data fit the model, an alternative equality model is statistically stronger as well as intuitively more appealing. The reasons for the strong appeal of the social capital model despite its weaknesses are discussed.

Anti 'Social Capital': Civic Values versus Economic Equality in the EU

Introduction

The concept of social capital has brought a much needed focus on the interplay of broad societal forces[1]. Outlined by Bourdieu (1980), developed by Coleman (1988), and elaborated by Putnam (1993) in his comprehensive analysis of Italian political life, social capital refers to "features of social organization, such as trust, norms and networks, that can improve the efficiency of society by facilitating coordinated actions" (Putnam, 1993; 167). Essentially, in societies where there are dense social networks, activities requiring complex interactions are made easier. Greater trust, 'civisme', and mutual interdependence promote a more efficient, cohesive, productive and successful society. Putnam's analysis of the Italian regions found that areas with greater social capital were more likely to display superior economic performance and have a more vibrant political and civic life. More recently, in 'Bowling Alone' (2000), his celebrated analysis of patterns of interaction in the US, he struck a warning note that social capital was in decline in that country. He argued that the data from domains as diverse as membership of voluntary groups, political, religious and civic engagement, informal social ties, and general levels of trust all displayed a consistent downward trend since the 1970s. The causes for this were varied and unclear but probably included changes in family structure, suburban sprawl and the increasingly popularity of (private) electronic entertainment.

Many social scientists have enthusiastically welcomed the concept and have found in it a dynamic for research and policy. As Uslaner and Dekker note, (2001; 176) social capital may be the "all-purpose elixir for the ills of society. A heavy dose of social capital supposedly makes a society healthier and wealthier and perhaps wiser". It leads to prosperity and good government. "No wonder then that the academic and policy communities together rejoiced when a set of pioneering researchers … came up with a simple solution to the collective action problem" (ibid; 177). The concept has been employed in areas as diverse as understanding information networks among Mexican-origin secondary school students in the US (Stanton-Salazar and Dornbusch, 1995), government performance in the UK (Hall, 1999), the well-being of young children (Morrow, 1999), and economic returns on employees working in a US call-centre (Fernandez, Castilla and Moore, 2000). It has been particularly popular in the analysis of physical health, e.g. see Rose (2000) on the health of Russians, and detailed reports in The Lancet, July 2001.

Criticism of the Model

However, the concept has had its critics. It has been suggested that the data used by Putnam in his assessment of change in the US may have masked the growth of new forms of social involvement (Schudson, 1996), romanticised the quality and quantity of social involvement in the past, (Skocpol, 1996) and ignored the change in organisational practices (Valelly, 1996). Other critics have focused on the validity of his historical assumptions (Tarrow, 1996), on the terminology around the concept (Smith and Kulynch, 2002) and its predictive power (Veenstra, 2002). Putnam has responded effectively and frequently to many of these criticisms.

However there is a more fundamental way in which the merits of the social capital model must be assessed and it is one that has been relatively neglected. The entire edifice of the concept relies on particular causal foundations whose strength needs to be examined. In his study of Italy, Putnam (1993) explicitly challenged economic determinist models and posited civic development as the primary social force. “A skeptic might suspect that the civic community is merely epiphenomenal, that only economic well-being can sustain a culture of civic involvement. … [that] economics matters, not civics.” (ibid; 152). But no: for Putnam, economic development is a by-product of social capital - “civic conditions seem gradually but inexorably to have brought socioeconomic conditions into alignment” (ibid; 153). In this way, Putnam's position can be loosely associated with those of Fukuyama (1995) and Landes (1998) who propose that values take causal priority over economics; this is in opposition to theorists like Lipset (1959), Flanagan (1987) and Inglehart (1997), who in different ways assume that economic development underpins the evolution of values. Thus one can say that social capital is philosophically an idealistic rather than materialistic conception.

One of the strongest and most specific pieces of evidence advanced by Putnam in making the case for the primacy of civic over economic forces is presented in chapter five of his study of Italian society. In 1901, Calabria was more industrialised than Emilia-Romagna. However Emilia-Romagna was "blessed … with virtually the most civic culture in all of Italy" (ibid; 154) while Calabria was feudal and had high levels of alienation. By the 1980s, Emilia-Romagna was one of the wealthiest regions in Italy while Calabria was one of the poorest, the result it is implied, of low levels of social capital in Calabria. Can the reader accept that the civic culture of Emilia-Romagna enabled its rapid economic development by the late 1980s ? An economic map of regions of the European Union provided by the Rowntree Foundation Inquiry into Income and Wealth (Hills, 1995, vol. 2; 75) based on 1990 data shows that "the richest parts of Europe are mostly in the central core of southern Germany and northern Italy and there is a general tendency for regional incomes to fall as distances from the Alps increase" (ibid; 74). In other words, it appears as though economic development in Western Europe in the last century was heavily contingent on straightforward geographical factors and that proximity to a core productive area was crucial in the economic advances of the regions of a number of contiguous states. Certainly Emilia-Romagna and Lombardia of northern Italy are included among the very wealthiest areas of Europe (measured in GDP at PPP) but so too are Baden-Wurttemburg, Bayern and Hessen in Germany. It needs to be clarified if the same civic-based explanation holds true for the pattern of German economic development. The Congress of Vienna restored most German princes to their territories in Metternich's repressive post-Napoleonic plan for non-Prussian Germany (see Sagarra, 2001, p. 20-22) comprising most of contemporary Baden-Wurttemburg, Bayern and Hessen. It stretches the social capital explanation into strange gymnastic forms to suggest that these conservative constitutional monarchies also brought into being the kinds of high levels of social capital and positive civic values, as did allegedly the Italian communal republics, triggering economic development.

The European Union - A Case Study

In order to assess the adequacy of the social capital model, the states of the European Union (EU) will be assessed across a number of variables. Thus, just as Putnam sought to use cross-sectional data relating to its twenty regions to make inferences about the evolution of Italian regions, data from the EU's fifteen current members will be examined to see whether similar inferences can be drawn about European patterns of social development. Specifically, the core causal argument, that levels of social capital ultimately shape economic forces, will be assessed. In this paper, the economic force of primary interest is that of economic equality. Equality can be used as a proxy generally for economic development since it is known from economics that growth and equality are highly related (a variant of Kuznet's law). Inglehart (1987; 1291) has also demonstrated the strong positive relationship between GNP and economic equality across many countries. However, equality is also preferred over other measures of economic development because of the growing belief of some researchers that it may not be simply an epiphenomenon of other factors but may have major causal implications (see further discussion below).

The statistical section of the European Union, Eurostat, gathers detailed and comprehensive information on the fifteen current member states of the EU. Treating these states as separate units for analysis, the evidence in favour of a social capital model can be examined. In figure 1a below, the correlation data for a variable path from social capital to two forms of satisfaction are displayed.

Fig. 1a ABOUT HERE

The social capital measure for each society is based on the 1998 Eurobarometer (49) which asked representative samples of respondents in each member state of the EU about membership of a number of different types of organisations (sporting, religious, political, etc.). The measure used per sample is average number of organisational memberships per person. The 'Transparency' variable is based on the assessment of the perception of corruption in each society by Transparency International in 1997 (based in turn on the perceptions of nationally-based journalists). As predicted by the social capital model, 'Transparency' (or more specifically a perceived absence of corruption) strongly and positively correlated with levels of social capital in each society. Social capital, as suggested by its advocates, also is strongly related to higher economic productivity; hence societies with higher levels of social capital spend more on their research and development (R&D) on an annual basis (figures from Eurostat, the EU statistical service). In turn, both Transparency (the absence of corruption) and spending on R&D shape economic factors including levels of economic equality (which are higher in wealthier societies); economic equality is calculated as the ratio between the proportion of national income going to the poorest 10% and richest 10% of population (figures for 1998 from Eurostat). The link between equality and social capital was also noted by Putnam (1993; 224) in his study of the Italian regions - "income distribution … is more egalitarian in civic regions, r = 0.81". Finally general social satisfaction (as assessed by Eurobarometer in 1998 and measured in a simple four point scale ranging from 'very satisfied' to 'not at all satisfied') as well as satisfaction with work (from Eurobarometer data in 1997) are both higher in more egalitarian societies.

Thus one is offered a logically consistent model in which certain measures relating to EU countries are strongly associated. However, returning to the issue of causality, is it plausible that the primary force in the relationship of these variables should be social capital, the density of social networks ? Such a position runs counter to related research findings. Wilkinson (1996) has pointed out for example with regard to the relationship between individuals' physical and mental well-being and economic events, that the debate has clearly identified the economy as the primary force; "were the unemployed less healthy because unemployment damages health or was it just that unhealthy people were more likely to become unemployed ? … Only when evidence from factory closures studies - causing unselective unemployment - became available, was it shown conclusively that health really did deteriorate as a consequence of unemployment" (1996; 177-178, emphasis in original). Studies again and again highlight specifically that levels of social capital are a function of economic circumstance. Burgoyne's (1985) analysis of the impact of unemployment demonstrated that social life was curtailed and circles of friends grew smaller. Classic research by Lazarsfeld, Jahoda and Zeisel (1933), cited in Paugam and Russell (2000), suggests a similar pattern. In their study of the Austrian town of Marienthal, they found that after the closure of the main employer in the town, the activity of clubs and associations declined rapidly. Even though unemployed people had more time on their hands, they were more lethargic about becoming involved with dramatic, cultural and sporting organisations. Thus, it was an economic disaster (or 'actual' capital) that impacted on social capital, not vice versa. While more recent research by Paugam and Russell (2000) suggests that isolation by an economic event like unemployment may be mediated by social capital, the position is at best that - that social capital may mediate economic reality, not determine it.

The Case for Equality

Wilkinson (1996) highlights the salience of equality as one of the key economic forces in shaping social life and is critical of Putnam's interpretation; "[Putnam] clearly sees bridging social cleavages as a function of social capital. Given that social cleavages would be easier to bridge if they were smaller, this contrasts rather starkly with the lack of attention he gives to the influence of income distribution on social cohesion" (p. 221). Thus Wilkinson proposes equality as the commanding force in determining the nature of social interactions. He argues that more egalitarian societies tend to be more cohesive, have more legitimacy, greater trust, mentally and physically healthier populations and indeed, social capital. A specific link between work satisfaction and equality was also suggested by the economist Scitovsky (1976; 89). He proposed that in very unequal societies, the rich can easily pay the relatively very poor to do mundane and boring work such as cleaning and domestic duties whereas in egalitarian societies, this occurred far less easily and frequently. In other words, work in more egalitarian societies should be less tedious and more interesting and ultimately more satisfying. In an influential article, Inglehart (1987), taking a wider, cross-cultural perspective, observed the curvilinear positive relationship between economic development and economic equality both of which are then linked to positive change towards more civic and work-related values and attitudes among populations.

Thus, it is reasonable to look again at the inter-relationships of variables in the EU case study but to place economic factors, specifically economic equality as the primary determining force. In figure 1b, an alternative correlational path is presented.

Figure 1b ABOUT HERE

In the scenario of figure 1b, higher levels of economic equality mean (following Scitovsky) that it is relatively more expensive to hire or employ others. Therefore more is spent attempting to automate work, as indicated by the strong correlation between Equality and R&D spending (based on Eurostat figures for the proportion of GDP spent in 1998 on Research and Development). Greater equality also means that work is more challenging and interesting for those who have it in more egalitarian societies, hence the link to higher levels of work satisfaction (from Eurobarometer data in 1997). In turn, work place satisfaction is linked to greater levels of social capital - as noted in the studies above, where people lack stable, satisfying employment, they are less likely to get involved in social life, clubs and associations. There is also a separate path linking equality to transparency - where economic power is relatively equally shared in a society, then one must surmise that political power is also more likely to be equally shared and the potentially corrupt practices of elites are more difficult to conceal or legitimise. In societies that are transparent and egalitarian, people have a greater incentive to join popular organisations, participate more broadly and anticipate greater transparency within these associations. Ultimately, societies that are participatory, egalitarian, transparent and populated by more stimulated work forces are happier ones.

Of course, the sole difference between figures 1a and 1b is that the order of the causal sequence has been varied. Other possible permutations might be suggested (the entire correlation matrix is available in appendix 1). The identification of causality in social development is clearly a complex matter (see Dahl, 1999). However, that does not mean that debates over first principles are sterile. Blalock (1964) has provided one of the best treatments of the issue of causality and suggested that while it may be impossible to prove definitively, the causal principle is a "highly useful theoretical tool" (p. 12) for social scientists. When a whole series of social measures overlap with one another, inevitably a plurality of models offer themselves as seductive explanations. The partisan for social capital model may protest that the array of strong correlations between the measure and other positive social attributes must imply that these relationships are more fundamental than mere by-products. And indeed in table 1a below, in the columns to the left, the EU-derived data generates an impressive set of strong relationships between the elementary measure of social capital and a diverse set of variables.

Tables 1a & 1b ABOUT HERE

However when the level of economic equality of each society is controlled for, via partial correlation, it can be seen in the right hand column that the social capital measure is greatly weakened in its relationship with all these positive social measures. In table 1b above, it can be seen that equality has a stronger relationship with most of these variables and while certainly weakened when social capital is controlled for, its relationships are nonetheless stronger in more cases than when the situation is reversed. Similarly in table 2 below, a multiple regression analysis including economic equality explains more variance in social satisfaction than the same set of variables does where social capital is substituted for economic equality.

Table 2 ABOUT HERE

Discussion - The Strange Appeal of Social Capital

That certain social attributes, relating to economic, political and civic values tend to co-vary is widely known but the social capital model has usefully raised the profile of this insight once more. However the core assumptions in the model are worrying. The evidence in favour of social capital as causal in a series of positive social relationships is very flimsy. The evidence from Putnam's Italian study does not by itself convince. The use of more recent data treating the member states of the EU as the basic units of analysis also fails to favour the social capital model over the social equality model. Indeed apart from statistically outperforming the social capital model, the economic equality explanation is more economical (aptly), direct and plausible and overlaps with evidence drawn from the sociology of health, social psychology, political science as well as from thoughtful philosophical arguments, in particular the influential work of Rawls, (1971).

The question then must be why the model has become so popular. It has been promoted by the World Bank and the International Monetary Fund (IMF), see Whitehead and Diderichsen (2001). It has galvanised and inspired the work of many academic researchers. And as Putnam commented on the reaction to an earlier paper (1995) outlining the ideas developed more fully in Bowling Alone, the mass media response has been very favourable; "I was invited to Camp David, lionized by talk-show hosts, and (the secular equivalent of canonization in contemporary America) pictured with my wife on the pages of People" (2000; 506). Why social capital instead of social equality ? It may well be that it is because social capital promises so much in return for so little. As its enthusiasts remark, "social capital is a relatively quick fix … [but] is an undemanding master … almost any form of social interaction will help solve collective action problems" (Dekker and Uslaner, 2001; 178). Putnam wrote that the sceptic may be drawn to models of economic determinism over social capital. However both the cynic and the idealist are doubtless drawn to the social capital model - it suggests that difficult social problems can be overcome, if we only communicate and ultimately trust each other more. It conveys an inoffensive and folksy message of convenience. Social amelioration, it appears, does not require radical and fundamental economic transformation. The difficult task of challenging powerful vested interests to redistribute economic wealth can be avoided in building cohesive societies. Rather, an active interest in their local football club will suffice to turn 'ghetto moms' into 'soccer moms'. Vibrant bird-watching associations, busy rotary clubs and regular philatelic conventions will start the wheels of progress rolling. This is not a caricature of the position; in Bowling Alone, these are precisely the sorts of measures set forth for 'renewing the stock of social capital'.

References

Blalock, H.M. (1964) Causal Inferences in Nonexperimental Research. Chapel Hill, University of North Carolina Press.

Bourdieu, P. (1980) Le capital social, Acte de al recherche en sciences sociales, 31, 2-3.

Burgoyne, J. (1985) Unemployment and Married Life, Unemployment Bulletin 18, 7-10.

Coleman, J.S. (1988) Social Capital in the Creation of Human Capital, American Journal of Sociology, 94, (Supplement), S95-S120.

Dahl, R.A. (1999) On Democracy. New Haven, Yale University Press.

Eurobarometer data from German Social Science Infrastructure Service (GESIS) .

Eurostat data from Eurostat (EU Commission) at comm/eurostat

Fernandez, R.M., Castilla, E.J. and Moore, P. (2000), Social Capital at Work: Networks and Employment at a Phone Center, American Journal of Sociology, 105, 1288-1356.

Fukayama, F. (1995) Trust: Social Virtues and the Creation of Prosperity. New York: Free Press.

Flanagan, S. [in debate with R. Inglehart] (1987) Value Change in Industrial Societies, American Political Science Review, 81, 1289-1319.

Hall, P. (1999) Social Capital in Britain, British Journal of Political Science, 29, 417-461.

Hills, J. (1995) Inquiry into Income and Wealth, vol. 2. York: Joseph Rowntree Foundation.

Landes, D.S. (1998) The Wealth and Poverty of Nations. New York: W.W. Norton.

Lazarsfeld, P., Jahoda, M., and Ziesel, H. (1933) Marienthal: The Sociology of an Unemployed Community. London, Tavistock.

Lipset, S.M. (1959) Some Social Requisites of Democracy, American Political Science Review, 53, 69-105.

Inglehart, R. (1997) Modernization and Postmodernization. Princeton, NJ, Princeton University Press.

Morrow, V. (1999) Conceptualising Social Capital in Relation to the Well-being of Children and Young People: A Critical Review, The Sociological Review, 47, 744-765.

Paugam, S. and Russell, H. (2000) 'The Effects of Employment Precarity and Unemployment on Social Isolation' in D. Gallie and S. Paugam (eds) Welfare Regimes and the Experiences of Unemployment in Europe. Oxford, Oxford University Press.

Putnam, R.D. (with R. Leonardi and R.Y. Nanetti) (1993) Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ, Princeton University Press.

Putnam, R.D. (1995), Bowling Alone: America's Declining Social Capital, Journal of Democracy, 1, 65-78.

Putnam, R.D. (2000) Bowling Alone: The Collapse and Revival of American Community. New York, Simon & Schuster.

Rawls, J. (1971) A Theory of Justice. Cambridge, Mass., Harvard University Press.

Rose, R. (2000) How much does Social Capital add to Individual Health ? A Survey Study of Russians, Social Science and Medicine, 51, 1421-1435.

Sagarra, E. (2001) Germany in the Nineteenth Century: History and Literature. New York, Peter Lang.

Schudson, M. (1996) What if Civic Life Didn't Die ?, The American Prospect, 7, online journal at .

Scitovsky, T. (1976) The Joyless Economy: An Inquiry into Human Satisfaction and Consumer Dissatisfaction. Oxford, Oxford University Press.

Skocpol, T. (1996) Unravelling from Above, The American Prospect, 7, online journal at .

Smith, S.M. and Kulynch (2002), It May be Social but Why is it Capital ? The Social Construction of Social Capital and the Politics of Language, Politics and Society, 30, 149-186.

Stanton-Salazar, R.D. and Dornbusch, S.M. (1995), Social Capital and the Reproduction of Inequality: Information Networks among Mexican-origin High School Students, Sociology of Education, 68, 116-135.

Tarrow, S. (1996) Making Social Science Work across Space and Time: A Critical Reflection on Robert Putnam's Making Democracy Work, The American Political Science Review, 90, 389-397.

Transparency International's 2001 Corruption Perception Index at http:// cpi/2001/cpi2001.html

Uslaner, E.M and Dekker, P. (2001) 'The 'social' in Social Capital', in P. Dekker and E.M. Uslaner (eds) Social Capital and Participation in Everyday Life. London, Routledge/ECPR Studies in European Political Science.

Valelly, R. (1996) Couch-potato Democracy, The American Prospect, 7, online journal at .

Veenstra, G. (2002) Social Capital and Health (plus Wealth, Income Equality and Regional Health Governance), Social Science and Medicine, 54, 849-868.

Whitehead, M. and Diderichsen, F. (2001) Social Capital and Health: Tip-toeing Through the Minefield of Evidence, The Lancet, 358, 165.

Wilkinson, R.G. (1996) Unhealthy Societies: The Afflictions of Inequality. London, Routledge.

Figure 1a - A possible path connecting social capital to work and social satisfaction for fifteen EU states (but social capital and work satisfaction data only available for 13 of these states). All data from 1998 except for transparency and work satisfaction (1997 data).

R&D

r = 0.72 r = 0.80

Social Work Satisfaction

Capital r = 0.80

r = 0.77 Economic

Transparency Equality Social Satisfaction

r = 0.78 r = 0.77

Background historical,

geographical and

political factors.

Figure 1b - Another possible path connecting economic equality to social satisfaction for fifteen EU states (but social capital and work satisfaction data only available for 13 of these states). All data from 1998 except for transparency and work satisfaction (1997 data).

r = 0.71

R&D Work

Satisfaction

r = 0.80 r = 0.68

Economic

Equality

r = 0.78 Social

Transparency Capital Social Satisfaction

r = 0.77 r = 0.80

Background historical,

geographical and

political factors.

Table 1a - The association between social capital and a number of other variables both directly and controlling for economic equality. Data drawn from13 EU member states, 1997/8 but social capital and work satisfaction only measured in 13 states.

|Variable |Correlation with Social Capital |Sig. |Partial Correlation (Controlling for |Sig. |

| |(Pearson's r) | |Economic Equality) | |

|Economic Equality |0.74 | ................
................

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