The Importance of Building Social Capital

1 Social Capital Introduction There are various distinct definitions all trying to explain in essence what the concept of social capital really means. However, for the purposes of this paper, two definitions are considered; that of the World Bank and that which the Australian Bureau of Statistics (ABS) subscribes to. According to the World Bank, “social capital refers to the institutions, relationships and norms that shape the quality and quantity of a society’s social interactions” (The World Bank, 2012). The world Bank goes further to explain that these relations resulting from the social cohesion of society as being very critical for the sustainability of development and economic prosperity. The ABS’s definition is based on that of the 2001 Organization for Economic Cooperation and Development (OECD) which states that “social capital is the networks, together with snared norms, values and understandings which facilitate cooperation within or among groups”

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2 This essay looks into the public relation aspects of social capital in a global context, with particular interest on how social capital is used to address social issues in a particular society.

There are various methodologies that exist when it comes to the determination of the specific impacts of social capital on the society. The focus of this paper shall be to examine in detail the social based approaches and methodologies that are used in Australia (Stone, 2001, p. 8). The different methodologies that are used will be shown to have a direct correlation with issues such as policy development, exploitation of both human and capital resource and society interrelation in terms of the workmates, neighbors, family members and friends in an Australian setting and generally contribute to the economic well being, that is the reduction of poverty, of a society on a personal, familial and communal level.

These social based approaches are split into different network types and social norms; the networks are either closed or open, household based or global, homogenous or heterogeneous, dense or sparse and lastly whether they are vertical or horizontal in nature (Stone, 2001, p. 7). On the other hand, what determine the quality of the social relationships in these groups are the norms of trust and reciprocity. When it comes to the norm of trust, depending on the network type it can be that between familiar persons like family, friends and neighbors or even a generalized form between members of different networks. Also there is the trust on institutions and other civic organizations such as trust on the implementation of policy by government agencies. The norm of reciprocity is a bit complex, but the gist of it is based on a give and take approach, if you may, between different networks. Interaction of the networks in this case can either be direct or indirect in nature and the response to willing interaction can either be immediate or delayed depending on the agency of interaction or needs of the different networks (Stone, 2001, p. 12). With respect to economic gains to the different networks, the norms of trust

3 and reciprocity play a big role as they are the key determinants of the horizontal, vertical or diagonal relationships that form among the social networks (Stone, 2001, p. 26).

General characteristics In all methodologies of measuring the impact of social capital on the economic well being of the networks, there are some general characteristics that are generally similar in all approaches. Among these characteristics are: Size, frequency of interaction, social participation, geographical dispersion of the members, density of integration, composition and homogeneity of members and the social anchorage of the networks (Stone, 2001, p. 7). When it comes to the size of the network, its efficiency continues to wane as the networks gets larger. Generally, small and closely knit groups are generally more efficient and close as compared to larger groups. The frequency of interaction of a network is important in the sense that when there are constant interactions, the values and ideals that brought the network together tend to become tighter among the membership. Despite the size and frequency of interaction in a network, what really makes them tick is the participation of each member in the grouping. It has been noted that in instances where there is widespread participation in processes, each member feels that they own the process and as a result put in more effort towards achieving their goals. An example is when it comes to matters of security; when a neighborhood security committee collaborates with law enforcement in community policing, the neighborhood security becomes much more improved as opposed to an instance where there is no cooperation (Stone & Hughes, 2002, p. 31).

The geographical dispersion of different networks can affect the operation of a network in that members residing in different localities usually end up having different priorities and needs. The density of integration is especially important when it comes to the interrelation of various networks as it determines the interaction and subsequent formation of other networks

4 when like-minded individuals come together. All networks, be they family, civic or global, are determined by the composition and homogeneity of their members. The social anchorage of a network becomes more pronounced in importance especially when it comes to dealing with issues such as security. Here, a member who has resided in a particular area for more years usually tend to be much more familiar and involved in the neighborhood and community matters than a newer member (Davis, 2006, p. 9).

Family networks The use of family networks as a measure of social capital is the most detailed method as it looks directly at the basics of a society (Stone, 2001, p. 11). This is especially true because even before one looks at global, civic or even local networks, their basic structure comes from the home interaction that individuals are involved in at family level. Here family networks are used as a general term to other smaller methodologies that are used in the study of social capital.

These smaller methodologies involve studying the family within the household context, family beyond the context of the household and the family relation with neighbors and friends approach (Stone, 2001, p. 12). i.

Single household network The use of a family within a household context is important especially when studying a

particular family outcome such as income generation in the family (Stone, 2001, p. 10). The household is characterized by very strong relations of reciprocity and trust within the household.

This trust generally ensures the nurturing of human capital within the family unit as the various family members chip in with their incomes and manpower in order to improve their living conditions within the society. What usually determine the effect of the human capital in the family are the size of the family and the ratio of parents to that of their children. Although the

5 exact extent of the involvement of parents in giving a quantifiable measure, this method is at best flimsy as the relationship quality of the relationship between parents and siblings is not taken into account. Despite these limitations, the truth is that more progress is observed in a family setting that has a strong adult support structure that closely guides the children in their daily life aspects such as showing affection, helping out on sports activities or even in doing their homework. ii.

Household and relatives network Another aspect that has been used to study social capital is the family relations that go

beyond the household to other family members, relatives or other kin. These relations are especially useful when it comes to financial issues and social support, for instance in the death of a family member. The time stock investment of these family members becomes more evident when it comes to serious emergencies in households. Members will readily ask for help from their relatives. The money stock becomes even more important in times of need; individuals will prefer to borrow petty amounts of cash from their kin despite there being a relative ease in accessing the same amount from banks and other financial institutions. Other forms in which relatives help and do not have a financially quantifiable amount include the time that they spend in helping out to raise the young ones of family members, taking care of a sick relative or even standing in for a kin during parents day meetings. However, the contribution of relatives in a family network is strongly dependant on the density of the extended family, their proximity to each other, and the size of the network coupled with other norms and characteristics of the network; more important among which is the willingness of the relatives to help (Stone & Hughes, 2002, p. 12). iii.

Household, friends and neighbors network

6 When it comes to neighbors and friends, they also promote social capital through the different neighborhood networks and association activities such as participating in communal activities like the neighborhood security committee. What promotes these neighborhood networks are the social participations within the neighborhood of all the individuals. These participations can be anything from informal visits between neighbors and friends, to social engagements in public such as going to an event together or even attending the same social club.

They can also involve group activities such as attending the football game of the local school together by network members (Stone & Hughes, 2002, p. 28). These participations highlight a complete engagement in mutually beneficial activities by group members which strengthen neighborhood ties to a point that individuals can start benefitting each other financially.

The down side of this measurement approach is that it is difficult to really quantify to what extent these social participations actually translate to complete social relations of the network. The argument raised is that attending to the same activities by people residing in the same neighborhoods could only reflect the limited options that are available in a community to persons in terms of where they can spend their free time. In this social participation it is inherently impossible to conclusively ascertain whether or not the norms of reciprocity and trust actually exist. A better way of determining the effect of neighbors and friends on social capital is to simply map out whether social relations exist. This can be done by relying on measures such as the number and proximity of close friends within a neighborhood and the level of intimate knowledge of each others family’s between said neighbors, and not just on physical closeness of residents within a neighborhood (Stone, 2001, p. 11).

Association relationship

7 This method of measuring social capital and particularly the economic impact to members of the network is among the most precise ones. The precision of the method comes from the fact that individuals usually end up joining formal groups in order to meet specific needs such as the membership to groups like local women’s group, an investment group, political party, and lions group. The members who join these grouping usually do so in a bid to improve on their social, political and economic well being as a whole. It is usually easy to measure, for instance, the effect that joining an investment group has on the financial status of a person since the investment trend of that individual can be obtained from records of that network and the difference in gains obtained for before and after membership (The World Bank, 2012).

In the association relationship network, there has been a rise in another complementary network known as the association membership. Unlike association relations, this membership is characterized by little to no face contact if any at all. Despite the lack of interpersonal relation, groups in these categories such as a law society having members in Canberra and Sydney still serve the same purpose as those with personal interactions such as a local business group. This is because the reason for their formation is what holds them together as opposed to a personal relationship such as a friendship (Stones & Hughes, 2002, p. 14). In association relations method for measuring social capital, the norm of trust takes a back seat as members do not join for trust but rather due to strong shared personal motivations that usually result to a strong degree of group member cooperation.

Civic networks These civic networks are a method of using the level of institutional relationship between individuals within a community with civic institutions that they interact with on a daily basis (Davis, 2006, p. 11). These institutions include law enforcement, government and state agencies,

8 parliament, law courts, media, churches, and big corporations. The level of these interactions can be used to measure the social capital of a particular group especially in cases where the range of interrelation between individuals and civic institutions can be properly determined. Such include community’s relationship with a factory within its environment, the level of interaction that the two share in terms of environmental conservation and employment opportunities that are availed to members of the society. These directly influence the amount of disposable income that families in that network have through wages and salaries received.

To best understand this institutional realm, the norm of trust is examined in terms of the levels of institutional confidence that is observed by community members towards that institution. However, it is not usually enough to just use trust and confidence in the network but rather to look at the amount of ties that exist between the community and institution (Stone, 2001, p. 20). For instance, in as much as people may have confidence in law courts; generally they also have fewer interactions with them. This is unlike the relatively stronger ties that the same individuals will exhibit towards an institution like the church to which they tend to have stronger ties to due to the frequency of their interaction. When it comes to measuring the impact of these civic institutions on the economic status of the individual units that make up the network, it becomes more practical to use the most reliable and frequently interacted with institution in examining social capital.

Civic networks exhibits a wide range of diversity and more importantly also a diverse array of vertical, horizontal and diagonal relationships (Stone & Hughes, 2002, p. 16). The vertical relations come up when institutions such as the police directly engage the communities on security matters or vice versa. Horizontal interaction in this network is mostly exhibited when different institutions within the network interact for a particular purpose; for example when the

9 police reach out to the media in a bid to encourage community policing in a neighborhood through adverts and awareness campaigns. It is however the diagonal relationships that really ties the network down more tightly. Interaction among all members of the network is especially important when it comes to policy and law formulation as diagonal relations ensure that a wide and consultative approach is adopted. This would make enactment of the resulting legislation to be much more effective as there is a sense of ownership of the legislation by a majority (Davis, 2006, p. 8).

Global network Apart from just knowing the capacity, type and size of a network, the importance of having an ability to distinguish the level of social relations is among the most important approaches when it comes to social capital measurements (Stone & Hughes, 2002, p. 34). Unlike family based network measurements whose member associations are generally informal in nature, the global network interactions are more complex and tend to also be highly organized institutional interactions. Global networks however have humble beginnings in local based organizations which form open network connections with other local institutions. They in turn also reach out to other institutions and with time a strong web-like association is formed within a nation (The World Bank, 2012). It is this web of national based institutions that eventually break boundary barriers and becomes global networks. An example of global networks are regional trade and economic blocks such as the European Union (EU) whereby member states eventually consolidated their association into a strong federation that started out from local relationships to ease trade barriers and tariffs that made the cost of doing commerce high.

Conclusion

10 There exist very diverse methods that have been used in the determination and measurement of social capital as a concept. But in the case of this essay, emphasis was laid on those methodologies that reflect directly on the economic status of individuals within a network.

The family based networks are the ones that exhibit much more strongly the norms of reciprocity and trust among its members. These norms, if strong enough, usually lead to the social capital arrangement best exploiting the human capital and physical resources available to the network for better quality of life through economic gain. In other network approaches, such as civic and global networks, the norm of trust is not as important as in the family based networks as here members are drawn more to each other as a result of them having similar and common goals. To best understand the importance of social capital in societal development, the concept needs to be studied further in a multi faceted manner in the future so as to determine its other impacts on the fabric of society.

Bibliography DAVIS, ELISABETH. ‘A National approach to measure social capital.’ Australian Bureau of Statistics (ABS). (2006).

STONE, WENDY and HUGHES, JODY. ‘Social capital: Empirical meaning and measurement validity.’ Australian Institute of Family Studies. Research Paper No. 27, June 2002.

STONE, WENDY. ‘Measuring social capital: Towards a theoretically informed measurement framework for researching social capital in family and community life.’ Australian Institute of Family Studies. Research Paper No. 24, February 2001.

THE WORLD BANK, ‘Social capital.’ The World Bank [web page] (2012) <http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTSOCIALDEVELOPME NT/EXTTSOCIALCAPITAL/0,,contentMDK:20185164~menuPK:418217

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