intrust

Social capital consists of the stock of active connections among people: the trust, mutual understanding, and shared values and behaviours that bind the members of human networks and communities and make cooperative action possible. (Cohen and Prusak 2001)¹

The term social capital is slippery. Currently, promoted by the work of Robert Putnam, the term is often interpreted as civic virtue. In Putnam’s best selling, Bowling Alone, he systematically takes stock of the state of social capital in America, and finds it depressingly on the decline. The catchy title of his book refers to the slump in bowling league participation. Bowling is apparently the most popular competitive sport in the United States, and though bowling itself has not declined as an activity, organized competition in leagues has done so drastically. Bowling is just one of hundreds of Putnam’s examples of how Americans are less apt to get together in organized gatherings – becoming increasingly disconnected as traditional social structures disintegrate.

In Europe we are more familiar with the work of Pierre Bourdieu², who originally saw social capital as an individual or her family’s investment in non-material resources needed to gain entrance to a social network, which “... are not a natural given and must be constructed through investment strategies oriented to the institutionalization of group relations, usable as a reliable source of other benefits.³

A common denominator when considering social capital is that there is no direct conversion to tangible measurements in Euros, Dollars and Yen. An individual, firm or country might have X amount of money in the bank or a positive trade balance, and this is something we can put on the ledger books, but if these same organisms have stocks of social capital, if we can even agree on what they are, how do we use them to balance the books.

I find it odd that the institution of law is left out as a prime ingredient of social capital. I suppose that law is considered too formal, and that it should belong to some other category of capital – institutional or legal or political. But the influence of law on societal interaction, in all but the most totalitarian of systems must share its impact with the of influence of norms, and who is to say exactly where the one leaves off and the other begins? And how could this be measured?

Nor do the definers of social capital choose to include the externalities of technology, the socially cohesive factors of advertising, loyalty programs and branding, fashion and collective cultural consumption, standardization, or for that matter the four Cs of information technology summarized at the beginning of this essay. Perhaps they too all have their own capital rubric? But then how would we collectively speak of them?

Fukuyama has a point when he say that many [definitions] refer to manifestations of social capital rather than to social capital itself. By his definition, social capital is an informal norm that promotes cooperation between two or more individuals. [...] that must be instantiated in an actual human relationship. [...] trust, networks, civil society, and the like which have been associated with social capital are all epiphenominal, arising as a result of social capital but not constituting social capital itself. ⁴

I maintain that social capital is that which reduces friction between interacting parties, through the enhancement of trust. Social capital reduces transaction costs. It enables, simplifies, makes more effective, and extends the range of interactions and transaction between people, firms, and rulers/administrators. In the interest of reducing transaction costs, all channels of social capital are in competition with each other, as are various forms of governance and economic activity. In the long run whoever and whatever promotes the most trust wins. In the mould of legal positivism, it is not dependent upon moral or political correctness, and not a matter of virtue at all.

The philosopher John Searle speaks of “collective intentionality” which beyond engagement in collective behaviour, entails the sharing of intentional states, such as beliefs and desires. He believes that this collective intentionality is biologically innate in some species . He points out that it takes no cultural apparatus or convention, or even language for animals to move together in a pack or hunt together. Perhaps it is this innate propensity for sharing beliefs and behaviour that is the root of all social capital.⁵

In the Social Construction of Reality, Peter Berger and Tomas Luckmann describe the interaction of two individuals de novo: they come from social worlds that have been historically produced in segregation from each other. As they interact, typifications will be produced.

A watches B perform. [She] attributes motives to B’s actions and seeing the actions recur, typifies the motives as recurrent. [...] From the beginning, both A and B assume this reciprocity of typification. In the course of their interaction these typifications will be expressed in specific patterns of conduct. That is, A and B will begin to play roles vis-á-vis each other. [...] it is clear that institutionalization is already present in nucleo.

The most important gain in this development, according to Berger and Luckmann, is that each will be able to predict the other’s actions. Concomitantly, the interaction of both becomes predictable. [...] They save time and effort, not only in whatever external tasks they might be engaged in separately or jointly, but in terms of their respective psychological economies.

Berger and Luckmann mean that these individuals are creating (through habitualization) a Background, comparable to the Contextual Frameworks of communication described earlier in this essay, Bourdieu’s Habitus and Habermas/Schutz Lifeworlds⁶. The background relieves tension, saves time and effort and stabilizes interactions, as each participant is able to predict the others actions. “...a social world will be in [the] process of construction, containing within it the roots of expanding institutional order.”

These typifications and habitualizations are, of course, the origins of trust. As Berger and Luckmann’s two individuals reproduce and multiply, eventually spawning a society, institutional order will materialize, and their personal trust will evolve into a multifaceted flora of tools. Trust will become mechanised, as technologies of locking, enclosing, and hiding proliferate. Trust will be legalized, as kings and polities refine the distribution of coercive force, and under political panoply individuals seek redress for broken promises. Trust will be normalized through custom, culture, and trade. And trust will be collectively emotionalized, via advertising, branding and public relations. Collectively these channels promote predictability in human interaction. This is the full extent of social capital. Its distribution in society is not uniform.

Trust is essential to the flow of information, the interaction of dW3. All possible channels of trust will unceasingly be in competition with each other in a bid to reduce transaction costs. Diverse cultures, traditions and the various forms of social capital in their widest perspective will adapt to technology in unforeseeable ways, constantly reforming and creating new channels of trust with new opportunities and pit falls.