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The term social capital has gained popularity among the population in the last one decade. There have been debates about social capital both locally and internationally for quite some time. Social capital means the institutions, norms and relationships that influence the quantity and quality of the community’s social interaction. Consistent evidence points to the fact that social cohesion is crucial for to develop economically. Social capital does not just meant the institutions that bind the society together but also means the means that integrate the society. In as much as the philosophy of social capital has been interpreted differently in various quotas, it refers to materialization of communal resources rather than to communal assets itself. This paper seeks to demystify social capital by comparing different definitions of the term (Lin, N. 2002, P 32).
Social capital can be defined as an instantiated casual custom that upholds corporation between two or more persons. It is a loose corporation between two or more parties that has no legal backing. The standards that represent social capital may range from a number of believes founded in either the bible or Confucianism. Social capital thrives well in environments that promote cohesion and integration. Unlike in the west, social capital has been instrumental in other societies. In Africa for instance, most economic gains have been realized because of the concept of social capital.
Looking at how economic matters are managed in the west, the idea of social capital is yet to be realized among the population. The absence of strong social clubs and strong preference for individuals are the main forces against social capital in the United States. In order for the society to benefit from social capital, a number of factors need to be considered. The first factor is people participation in the network. Networks are a key component in building strong relationships. There should be a dense network of relationships between individuals and groups in society. It is fascinating to note that aspect of a strong network is not well enforced in the American and other western states.
This is because most western states especially the United States favored capitalism as the driving force of their economies. Capitalism is the opposite social capital, meaning that if the society favors capitalism, then the concept of social capital will be neglected. In most countries that were under British colonies, they embrace social capital. Their economies are founded on socialistic ideals. Such countries have strong social fabrics. They are strongly interlinked to one another. Such associations provide them with natural form of insurance against many risks that face investments (Hattery, J.A. 2010, p. 37).
The other factor that affects social capital is reciprocity. This aspect provides that an individual acts for the benefit of others and not for him or herself. This is different when it comes to capitalism. Capitalism empowers an individual at the expense of others. The system benefits those have invested in it meaning that the rest of the population has no stake. It is a result of this principle that people in the United States and other countries have started the occupy campaign.
Capitalism breeds a class society. It creates a society where some individuals own more resources than others. Under capitalism individuals, rights and rights to own property are acknowledged. In this case, all property is owned privately. A small fraction of people will own land, technology, factories and other means producing goods and services of what percentage of the population owns it. It is against this background that populations around the world have begun to advocate for social capital (Lin, N. 2002, P 45).
As presently constituted, majority of the people in western countries own nothing in as much as their countries are extremely rich. In capitalised economy, free markets are supposed to turn the poorly performing sections of the economy to profitable organizations. In entirely capitalised economies with no welfare structures, poverty can strike people at any time. This may lead to loss of homes, employment, diseases, emergency of slums among other issues. Such situations may make people move else where in search of better means of lives. Another major setback of capitalism is limited government control; it promotes liberalism in the economy. Governments can only watch as things go from poor to worse. They cannot act to protect vulnerable sections of the society.
Another aspect of social capital is the question of trust. This is the enthusiasm to take risks in social setups. It is the tendency of human beings to believe that come to ones aid as required and act in mutually supportive ways. At the same time, there must be no suspicion at all. All parties must be unanimous that they are acting in true faith. Other people have defined the element of trust in a different manner, but they all have a similar meaning altogether (Hattery, J.A. 2010, p. 83).
Social capital can also be defined as the resources that, players in the industry accrue from certain social structures and then turn them into meaningful use for their own benefit. These opportunities accrue as a result of some developments in the relations among actors. What this definition means is that social capital provides an avenue for people to mobilize their wealth and utilize them for their own advantages. This definition therefore means that when people come together they form strong forces that are able to withstand forces that an individual cannot withstand.
James Coleman, the man who revolutionized the use of the term social capital a few years ago, said that the use of the term social capital would be understated by private agents in the business. He continued to argue that, it would not be possible to get the corporation of industry players in the usage of the term social capital. He anticipated that the private sector players will understate the meaning of the word for their selfish gains. I openly differ with the author. The people who provide labour or the working class constitute a sizeable percentage of people who sell their ability to labour in exchange for a wage or salary; this is what defines capitalism in my few. The author counters this by stating that, capitalism opened up the democratic and divorced politics from economics, but capitalism does not just stop there. One must go deep to try and understand its true meaning; one should understand intricate issues in class division and profit motives.
Capitalism is incomplete unless issues relating to profit motives are defined. In his book, Coleman outlines various advantages of capitalism. Even though his book says that, these advantages are as a result of many other factors and not just capitalism alone. Given that capitalism separates politics from economic matters, chances of corruption, lack of information and incentives. Such problems are only associated with government. But the book entirely attributed to capitalism as the book suggests the author feels other factors too like education also claim credit for the same. Education enlightens people about their rights, and they will ask for what belongs to them.
There is cost effective allotment of resources. In capitalism, there is the concept of free market. Capitalism requires that resources are dispersed based on consumer choices no firm is given preference if it s products are not the peoples choice. But the author wonders why this has been witnessed in other countries even where capitalism never existed. It means there are other underlying factors that have made this possible and not just capitalism as it is suggested in the book (Lin, N. 2002, P 63).
However, the book explained that capitalism led to successful production. What this means is that, businesses are given incentives to do their best in production in marketing systems and cost cutting. Most American firms grew rapidly as a result of capitalism. They went outside the United States to establish their brands in other countries. This proved to be a success, and indeed I agree with the author. Most countries actually want without success to have their firms do business in other countries. China though seams to have made it, its mission to third world countries especially Africa seams to have been a success.
The author notes that, in competitive economies, financial incentive exist to encourage people to work had. People work hard when there is a possibility for financial gains. They will take risks set up businesses. In the long run, this contributes significantly to economic growth. But on the on hand these incentives are not just limited in capitalised countries. It is possible to come up with such business strategies elsewhere. Coleman is quick to add that capitalism may not be the cause of robust businesses in the west as the book outlines, but other factors also may have a bearing (Hattery, J.A. 2010, p. 51).
In regard to equity, social capital can be defined as an average of the actual potential that is linked to a permanent system of networks of mutual consent. These can be social responsibilities that can be converted into economic resources. When people organization themselves and form meaningful associations. The ability to obtain meaningful achievements comes by default, in social capital. This means that people stand to gain from meaningful association.
In the society currently, social capital does not have a clear undisputed meaning. It depends on various aspects among them the norms and values of the society. In the west, for example, the concept of social capital is not well entrenched in the population. The society is highly capitalized. Imitating friendships and personal ties easily find their way in the legal system. Compared to other societies in Africa or Middle East, the concept of social capital is highly entrenched in their cultures. To them, social capital is not a new concept like it is the case in the west. People in those societies have been socialized in a manner that encourages strong personal ties (Halpern, D. 2004, p 38).
In such highly socialized societies, the concept of social capital is highly valued and protected. As a result, many economical developments have been realized because of social capital. It is easier to for the population to mobilize its resources and invest wisely. The question of collective bargain comes into play, it is not hard for people to come together and invest successfully than if you were on your own. Social capital is heavily based on social networks. Having adequate structures that integrate people together and bridge their diversity is a boost to social capital. It means that the society will develop as a complete but not as an individual.
The issue of social capital is a complex phenomenon in the society. In as much as the concept is embodied in strong networks and unity, this does not always guarantee positive results. Negative externalities also exist in the name of social capital. Many gang associations like the Ku Klux Klan and mafia organizations achieve their business through shared norms. These organizations therefore, can legitimately claim to have social capital. The biggest challenge is that they unleash terror to the society.
This is the reason why other people argue that social capital is not a form of capital but, instead; it is a negative influence in the society. They argue that the concept encourages people to assemble into dangerous groups in the society. This is the situation in countries that align themselves as the beneficiaries of social capital. It is often hard in for those societies to attain national integration. They only manage to network within their tribes and not at national level. This is a threat to social capital because social capital provides for limitless interlocking. When all this definitions are analyzed and compared, one aspect comes out clearly. The issues that run across are that social capital is both a means and a form of capital (Halpern, D. 2004, p77).