Village Earth

Social Capital Theory and Its Relevance to Sustainable Community Development: A Review of the Literature


By: David Bartecchi


Over the last 25 years, social capital theory has received a great deal of attention from theorists, policymakers, and civic organizations as a tool to assess and understand the relationship between social networks and collective action.  It has been applied to a an array of topics and contexts including the study of irrigation mutual companies in Pakistan (Freeman, et al. 1989), high school dropouts in the United States (Coleman 2000), community relations in Italy (Putnam 1993a), farmer organizations in Sri Lanka (Uphoff 2000), community development in Kenya (Gugerty and Kremer 1999), black market interactions in Russia (Rose 2000), and civic engagement in America (Putnam 2000). This post will attempt to review the different ways scholars have discussed and debated the topic over the years.


Social capital is defined as “features of social organization, such as networks, norms and social trust that facilitate coordination and cooperation for mutual benefit (Putnam 1996).” The term social capital was used as early as 1920 in Lyda Judson Hanifan’s work, The Community Center, referring to “goodwill, fellowship, sympathy, and social intercourse among the individuals and families who make up a social unit.” Even earlier, Georg Simmel described the norms and obligations that emerge from transactions between social networks (Simmel 1971; Woolcock 1998).


An important variable to social capital is the amount of trust between members in a social network. Two forms of trust exist in social networks: ‘generalized’ trust, which is trust between two unknown members of social network and special trust which is shared between friends, relatives and other people who have knowledge of one another (Paldam 2000).  In general, trust is the glue that holds together the normative environment of groups with social capital.  It is the assurance that your cooperative behavior will be reciprocated by others and not taken advantage of by free riders. The level of trust determines what level of cooperation can take place between two people.  Thus, any measurement of social capital should also measure trust between various levels of social networks.


Social capital theory understands human agency as being guided by social norms and values. This perspective exists in a theoretical realm, somewhere between the theories of self-serving and individualistic rationality of Adam Smith and the structuralism of Levi-Strauss (Woolcock 1998).  With it’s acknowledgement of the interaction between individual and structure, social capital theory is most closely related to the ideas of Durkheim, Parsons, and Weber who argued that the decisions and actions of individuals are motivated by normative values (Durkheim 1984; Parsons 1961; Weber 1947). Social capital theory is founded on the premise that individuals are “embedded” in a network of social relations that influence decisions and action which can be traced to Karl Polanyi and later Granovetter (Coleman 2000; Granovetter 1985; Polanyi 1957).

Some researchers argue that the motivation for individuals cooperating with one another is that it is the most individually maximizing strategy for the individual in a given situation (Moulin 1995).  Others contend the motivation to cooperate is not solely individualistic utility maximization but rather that it solidifies personal relations and networks where individuals are trying to generate trust, establish expectations, and create and enforce norms (Granovetter 1985). The current understanding of social capital can be credited to James Coleman and his study of high school dropouts. For Coleman, social capital is the synthesis between the two-intellectual streams, “it accepts the principle of rational purposive action and attempts to show how that principle, in conjunction with particular social contexts, can account not only for the actions of individuals in particular but also for the development of social organization (Coleman 2000).”


Researchers have used social capital to explain cooperation at and between two conceptual levels. Originally, social capital was used to explain cooperation at the micro-level, which includes social networks between individuals, households, organizations, and communities. James Coleman’s 1988 study of high school dropouts and Mark Granovetter’s 1973 study of the diffusion of information regarding employment opportunities are both examples of studies of micro-level social capital.


The concept of social capital was extended beyond the micro-level by Robert Putnam (1993) to try to understand how macro-level structures such as governments, are positively influenced by micro-level social capital. Other studies that focus on the relationship between micro and macro include Christiaan Grootaert’s analysis of the East Asian “miracle” and Buckley’s (1996) study of the success of the port city of Boosaaso, Somalia. Other researchers have argued for a contrary thesis which states that the performance macro-level structures may have more to do with the formation of micro-level social capital (Buckley 1996; North 1990; Olson 1982; Rose 1995; Tarrow 1996; Wacquant 1998). Of particular, these researchers have sought to understand the ways macro-level structures have functioned to erode micro-level social capital, lowering individuals’ and groups’ ability to coordinate and cooperate for collective action.


Micheal Woolcock (1998) makes at attempt at a synthesis by arguing that there exists a structural relationship between micro-level social capital and macro-level structures. He asserts that Macro-level structures negatively influence the development of micro-level social capital when they lack organizational integrity and are too closed, preventing organizational linkages to form between the micro and macro levels. Social networks at the micro-level negatively influence the performance of macro-level structures when they are too closely integrated to allow for linkages with other networks.

Woolkcock explains this as the “bottom-up dilemma of development” (Woolcock 1998). This dilemma is created when social relations within neighborhood, ethnic, religious, or familial networks become too integrated. Woolcock draws on Edward Banfield’s concept of “amoral familism” which is a condition where normative obligations and expectations for reciprocal behavior is concentrated within families and does not extend to the broader community. Woolcock argues that amoral familism prevents participation in civic institutions by limiting an individual or group’s ability to extend trust beyond the loyalties of their family to broader community and civic institutions.


Pierre Bourdieu provides an alternative way to understand the interaction between micro-level social capital and macro-level structures. Bourdieu explains that practices at the micro-level, what he calls “habitus,” exist in a dialectical relationship with the objective structures of a given “field” of cultural production (Bourdieu 1977). Habitus is the culturally defined, unconscious cognitive structures that motivate and define behavior. Habitus becomes objectified in the social structures of a culture in such forms as kinship, political organization, or traditional networks of reciprocity such as the Kula ring described by Malinowski [Malinowski, 1922 #220]. The complex of these objective structures makes up the field.


The dialectic between habitus and the objective structures that make up the field occurs because of the antagonism that is created between the changes in habitus, caused by individual agency, and the concentration of power in, as well as the durability of the objective structures that make up, the field. Both habitus and field are changed by this antagonism. The habitus is pushed to be more reflective of the objective structures of the field and the objective structures are pressured to be more reflective of habitus. Bourdieu explains that the objective structures of the field, such as government bureaucracies or urban landscapes are more durable and less likely to keep up with the changes in habitus; he calls this problem “structural lag” (Bourdieu 1977).

Bourdieu explains:

“the hysteresis of habitus, which is inherent in the social conditions of the reproduction of the structures of habitus, is doubtless one of the foundations of the structural lag between opportunities and the dispositions to grasp them” (Bourdieu 1977).

Moreover, this problem becomes increasingly acute as power and economic capital become concentrated in the leaders and objective structures of society giving them the ability to organize the structures to their benefit. As Bourdieu explains:  

“Economic power lies not in wealth but in the relationship between wealth and a field of economic relations, the constitution of which is inseparable from the development of a specific body of agents, with specific interests; it is in this relationship that wealth is constituted, in the form of capital, that is, as the instrument for appropriating the institutional equipment and the mechanisms indispensable to the functioning of the field, and thereby also appropriating the profits from it (Bourdieu, 1977 p. 184).”

Essentially, Bourdieu argues that those in power maintain their and increase their positions of power by structuring the field in a way that ensures their monopoly over it and the benefits its provides.  


What does this all mean for community leaders and workers? Well, several things. First of all, at the micro-level social capital theory suggests that the higher levels of social capital (trust, communication, shared norms, etc) generally shared within and between communities will positively influence the performance of macro-level structures (e.g. local, state and national governance) because you have more informed, engaged and organized citizens. The opposite is also true, low levels of social capital at the micro-level would lead to less accountability at the macro-level.  On the other side of the coin macro-level structures, when corrupt, unaccountable and oppressive can have a corrosive effect on micro-level social capital. As community workers, we should seek to understand the relationship between the micro and macro-levels. It’s easy, especially for outsiders, to jump to conclusions about low levels of collective action within communities (at the micro-level) without first understanding the historical relationship between that community and the broader macro-level structures. In some cases, closed social networks (nepotism, factionalism) develop as a hedge against macro-level unpredictability (e.g. corruption, relative absence of the rule of law, etc). It is not likely these networks will become more open until things begin to change at the macro-level.


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