(Portes, 1998).

Human and social capital are both complex and versatile ideas, providing a human agency and social structure lens to better understand people and society.

Notwithstanding weak measures, human capital has a relatively long history of analysis and application to public policy (and private strategy at the firm level) providing insights into people’s behaviours and actions.

Social capital is the most influential development in economic sociology in the past ten-years and has brought within reach new understandings of social relationships and social structure (Woolcock, 1998). However, social capital’s popular (intuitive) appeal, immaturity and contested definitions and findings present difficulties. Rigorous analysis and application of social capital is required to avoid the fast-track from intellectual insight, to policy buzz-word, to popular cliché, to oblivion (Portes and Landolt in Woolcock, 1998).

There is clear evidence that human and social capital enable people, communities, firms and societies to cope with rapid social and economic change (OECD, 2001). For example, using education as a proxy for human capital it is positively correlated with: employment; earnings; lower crime rates; better health; lower uptake of social benefits; higher volunteering rates; more active citizenship; and tends to be passed on to subsequent generations (OECD, 2001; Schuller, 2001).

To draw out the importance of human and social capital to policy development and delivery, Table 1 provides a comparison of human and social capital. The subtleties and contested perspectives have been put to one side to consider the similarities and differences between human and social capital.

As noted in the Portes quote that opens this section, clearly the sources of human and social capital are located in the individual and relationships respectively. However, the decisions made by the individual to take a particular action may be vested in values and behaviour patterns that reflect the relationships of the individual.

The process of accumulating or investing in human and social capital are mutually reinforcing as the development of human capital takes place in a cultural context which is partly defined by social capital. An individual’s life chances are impacted on by access to education (what you know), access to social capital (who you know) and social background (where you come from). Intuitively (and empirically) where you come from influences access to education and networks – however, these links are not automatic or readily measurable.

Table 1. Comparison of human and social capital (Modified from Schuller, 2001 and drawn from various sources including OEDC, 2001; Cote, 2001; PRI, 2003a; PRI 2003b; Woolcock, 1998; Winter, 2001).

The model describing the outputs of human capital is linear (Schuller, 2001). For example investment made in time and money for acquiring skills and knowledge results in economic and productivity returns for the individual. Whilst the linearity can be criticised as simplistic; the managerial, methodological and political story is acceptable. This overlooks the mutually reinforcing objectives of human and social capital. For example, a training activity may both increase competencies for increased productivity and strengthen networks for increased access to support.

The outputs from social capital are much less knowable than for human capital. Social capital is context specific. Thus the outcomes are apparent only when there has been explicit and specific measurement. For example Landry et al (2001) measured the effect of social capital on innovation on firms in the manufacturing sector. Findings suggest that trust is not a significant factor in the probability that a firm will innovate. However, an increased probability of innovation is likely where there are positive increases in participation and relationships. The study also notes a correlation between increased competitiveness and decreased probability that a firm will innovate.

The outcomes of human and social capital are removed from the outputs and can be considered as long-run returns or consequences of investment. Drawing on a number of empirical studies, Woolcock (2001) proposes that if you are 'social capital rich' (well-connected) you are more likely to: be employed; enjoy accelerated promotion; receive higher remuneration; be well regarded by peers; live longer; have less sick-days and be more efficient at completing assigned tasks. It is however, difficult to untangle the source of these benefits (as either human or social capital) let alone establish causality.

The measures of human and social capital currently consist of a mix of weak proxies and convenient data covering the determinants, components and outcomes. The current understanding of human capital through broad-based instruments to measure literacy and numeracy needs to be augmented with direct measurement of competencies such as teamwork, problem solving and other measures that may be culturally specific. The resulting measures would provide a fulsome picture of adult life skills (OECD, 2001).

Despite the contested definition of social capital there is agreement across the literature that measures need improvement for both qualitative and quantitative dimensions. The measures need to be context specific and based within a theoretical framework (PRI, 2003a). As social capital continues to develop, social capital taxonomy will emerge with adherent forms and (subsequent) analytical frameworks. Such frameworks could be built from policy evaluations assessing the yield of social capital from policy interventions (OECD, 2001). The utility and application of emerging frameworks will depend on the disciplinary perspective, scale and research question.

Despite the positive messages that come with social capital, it is not a panacea for all ills (Côté, 2001, PRI 2003b) and more is not necessarily better for either individual or societal outcomes (Woolcock, 2001).

Untangling human and social capital is one conundrum; another is the 'publicality' of social capital. Côté (2001) notes that social capital is partly a public good and partly a private good. Social capital resides in the relationships that people and communities enter into. The creation of social capital through voluntary relationships highlights the key role of government as fostering and supporting the development of social capital – not creating it. That is, government and other actors have a role to play in managing the environment where relationships (networks) are formed (OECD, 2001).

The role of government in the development of human capital is relatively clear with regard to improving life chances through basic education. The role of government in facilitation and support of social capital however, requires further work.

The OECD (2001) report provides a set of four reasons as to why human and social capital should be considered in public policy: 1) human capital contributes to economic growth, and whilst the evidence is unclear regarding social capital there is a sufficient case to justify further research; 2) human and social capital are associated with non-economic benefits such as health and well-being; 3) human and social capital are mutually reinforcing; and 4) human and social capital contribute to life-chances, social inclusion and social cohesion.

Schuller (2001) suggests that social capital is an important policy concept because it: 1) reduces the reliance on single, narrow policy instruments by increasing the social context of complexity and inter-relatedness; 2) considers the interaction of human and social capital and subsequent effect of social cohesion; 3) provides a long-term context for policy problems; and 4) considers the quality of relationships and introduces a moral dimension to policy making.

In considering the implications of social capital for development policy, Woolcock (1998) proposes: social capital provides a social structural explanation of economic life and has strong theoretical underpinnings based in understanding social relationships; that the definition of social capital should focus on its sources rather than its outcomes or processes; strategic combinations of different types of social capital are required to sustain economic life; and can be deployed for constructive and destructive purposes.

Woolcock contends that community development outcomes amount to 'getting the social relations right' (Woolcock, 2001). The social relations he sees as 'right' are positive outcomes through top-down (embedded) and bottom-up (autonomous) relationships prevailing at both macro and micro levels. This enables social ties: 1) within the local community; 2) between the local community and other civil society; 3) between civil society and macro institutions; and 4) within corporate sector institutions (Woolcock, 1998; see Report 2.2b p55).

Building on this idea for policy development and delivery, Woolcock (reported in PRI, 2003c) stresses that effective public policy interventions must go beyond policies and programs to consider practices that link social capital to public service delivery. That is, invest in new practices that reflect embedded and autonomous social relations. These new practices have the potential to shift relations between the government, the market and community (Adams and Hess, 2001) and encourage sustainable economic growth that fosters participatory governance (Woolcock, 1998).

Building on Woolcock’s observation that practitioners and policy developers cannot wait for theorists and researchers to know everything about social capital (Woolcock, 2001), David Halpern of the UK Prime Minister’s Strategy Unit (reported in PRI, 2003c) suggests that the concept has been suitably clarified for public policy practitioners to identify specific policy interventions. The emerging challenge from this 'learning by doing' approach is undertaking sufficiently rigorous analysis and evaluation to advance our knowledge and future application of social capital.

A policy model for social capital

There is general agreement that human capital is a useful concept to apply to policy and research as an aid to understanding economic growth and individual behaviour. The concept’s utility arises from its length of service, general explicability and consistent definition. Despite, social capital’s recency, confused concepts and over-versatility there is general agreement that it is useful for research and policy (PRI, 2003b).

A recent study examined the contribution of human and social capital to the sustainability of six Australian rural communities. In summarising the six case studies, Cocklin and Alston (2003) concluded that: the most important and interesting issues lie at the boundaries between the classification of the various capitals; and the cases clearly substantiated that social capital is essential to achieving sustainability.

Whilst there are clear distinctions between human and social capital, investment in either is likely to be mutually reinforcing. This fact, in concert with the recency of social capital suggests that policy innovations lie in the insights that social capital conceptions can reveal. For this reason, this paper will now consider a policy framework for social capital specifically; however, the framework does include human capital as a component.

To understand social capital it is important to differentiate between its determinants, sources and outcomes. Woolcock (2001) emphasises that to make sense of social capital: 1) definitions should focus on the source; 2) sources should be recognised as multi-dimensional – bonding, bridging and linking; 3) it should be applied as a relational (sociological) variable; and 4) there is a need to identify the broader political, institutional and legal environment in which the studied social networks are embedded.

Building on Woolcock and other significant literature, the Canadian Government Policy Research Initiative (PRI) has undertaken work to develop a theoretically informed framework to analyse social capital (PRI, 2003a; PRI, 2003b; PRI, 2003c). The PRI identifies a network analysis approach that is theoretically defensible, will provide the greatest long-term explanatory power and will provide consistency and rigour. The framework (Figure 3) is based on individuals, their networks, and the structural and qualitative characteristics of those relationships. It is a systems approach with a lean definition of social capital; that is 'refer(ing) to the networks of social relations that provide access to needed resources and supports'. The emphasis on outcomes in this framework is likely to provide a strong analytical basis for application.

Through the proposed framework PRI argue that a network-based model of social capital should allow scrutiny of three fundamentals (as proposed by Lin, 2001): 1) the determinants of investment in social capital; 2) access and mobilisation of social capital; and 3) returns on investment.

Any application of this framework will be specific to a policy question. The components of the framework, including subsets of the components and their context may provide insights into new policy tools and conceptualisations of issues and practices.

Figure 3. Network-based conceptual model for social capital (from PRI, 2003b).

A brief description of Figure 3, the framework components follows:
Determinants of social capital formation
There are two levels of determinants: 1) individual level – these may include demographics, employment history, education, ethno-cultural background, perceptions and attitudes; and 2) community level – these may include existing networks, existing infrastructure supporting network development, and prevailing norms and values.

Social networks that convey social capital

1. Network characteristics - may include: 1) structure and composition – for example, size, density, strength of ties, heterogeneity; 2) resources and abilities – the productive capacity or potential with regard to the context and specific policy question; 3) normative characteristics – this may include any norms of behaviour including trust and reciprocity, relevant to the network at hand, context and specific policy question; and 4) network dynamics – the evolution and variation of investment in the network over time.
2. Network Transactions – In some analyses it may be useful to consider transactions within the network structure. Transactions may include negotiation, information flow, support or the application of sanctions. This may provide the opportunity to identify costs of maintaining, reducing or activating networks. Understanding the transactions costs are important efficiency and equity issues for public policy.

Complementary Resources

Social capital in and of itself may not be sufficient to realise a particular outcome. Other resources such as physical, economic and human capital may be required. The absence of complimentary resources may highlight a significant prospect for public policy intervention to achieve a desired outcome.

Network Outputs

Outputs are the immediate results from the use and access of a network. The network transaction and resultant output may not produce a positive outcome. Other resources and conditions may be required to achieve the desired outcome.

Opportunity structure

Conditions in the broader context may inhibit or catalyse the potential of social networks to achieve a desired outcome.

Social, economic and health outcomes

Social capital (in the case of this model) is only interesting in that it contributes to achieving desired policy outcomes. The framework is outcomes focussed irrespective of whether policy analysis or development is being undertaken.

Insights

New understandings

Overall there is support for applying the social capital concept to policy questions. Social capital is likely to be only one factor among a number (for a given policy question) and it is wrong to suppose that increasing social capital will necessarily lead to a positive outcome. However, social capital does provide useful insights into the importance of community, and social relations at the individual, community and societal level. Application of these insights may lead to innovative combinations of policy tools or the creation of new ones.

Human capital is a useful concept to apply to policy and research as an aid to understanding economic growth and individual behaviour. Without discounting the importance of human capital, this paper concentrates on a social capital framework because: 1) there is significant evidence that human capital and social capital are mutually reinforcing; 2) there is a long history of research into human capital that confirms its contribution to economic growth; and 3) the combination of the previous points suggests that the greatest policy innovation is likely to arise from insights into social capital.

The most useful public policy conceptualisation of social capital is an instrumental approach – that is as a means, rather than an end in itself.

The fundamental objective of a social capital perspective in public policy is to facilitate networks of social relations that provide access to resources and supports. Public policy that invests in social capital will improve the life-chances and well-being of individuals and communities.

The public policy challenge is to identify intentional ways of: 1) supporting the development of social capital that is useful for a specific context; 2) preserving existing stocks of social capital at individual, community and societal levels; 3) enabling efficient and equitable access to social capital for improved life-choices and well-being; and 4) influencing mobilisation of social capital where it may be under utilised.

The usefulness of human and social capital is dependent on measurability. Qualitative and quantitative measures of human and social capital will continue to develop. For measures to be useful they need to: 1) distinguish between determinants, components and outcomes; 2) have a theoretical underpinning; 3) be relevant to the policy/research question; and 4) be appropriate for the level (individual, community, society).

Our understanding of social capital is strengthened by taking an approach which focuses on relationships, networks and social structure in the context of the broader environment. To examine this further we will initially adopt and apply the network-based framework developed by PRI (PRI, 2003b).

The network-based model for social capital provides a starting point for developing public policy strategies for specifically managing networks. The components of the model provide a basis for understanding the conditions required to mobilise, invest and accumulate social capital. Application of the model to either existing policy or in developing new policy will help frame the contribution and relevance of social capital to any given policy question. Table 2 outlines the components of the model as: 1) strategic inquiry points and 2) elements. A useful worked example, applying Landcare to the model is provided in Appendix 1.

Table 2. Strategic inquiry points and elements for incorporating social capital in policy development and delivery. (Drawn from PRI, 2003b).

New perspectives and challenges

This report (2.2a and 2.2b) The relevance social and human capital for public policy development and delivery and the findings from 2.1 Making Sense of Recent Developments in Public Sector Governance (Petris, unpubl.) will be synthesised as a part of developing a draft analytical framework for public sector strategies and tactics.

As the synthesis and development of the draft framework commences, it is important to acknowledge the broad context in which this work is situated. The issues that will require consideration as the draft framework develops will not be considered in this report. The general issues relate to: 1) perspectives on social structure; and 2) how public managers might go about their work in a new environment.

Perspectives on social structure and the role of government will influence the range of strategies and tactics. For example, government’s role as a service deliverer is declining as models to co-produce policy outcomes with community and industry increase (Halpern et al, 2004). With this change also comes an increasing emphasis on government’s role in changing behaviour and culture for public benefit (Mulgan and Lee, 2001).

This communitarian view of the role of government is most prominent in the capacity building paradigm. Macadam et al (2004) defines capacity building as an 'initiated process designed to help individuals and groups. . .to appreciate and manage their changing circumstances, with the objective of improving the stock of human, social , financial, physical and natural capital in an ethically defensible way'. Macadam et al, echo the co-production position, stating that all stakeholders (including government) form a community of practice in which all are co-learners. To acknowledge the shift of the role of government towards capacity building, Cavaye (2000) makes the point that the work of public agencies should be redefined to include both a delegated and community role.

Examining alternative social structure perspectives will provide an opportunity to seek insights and (ultimately) increase the range of strategies and tactics. A potentially valuable area to explore would be social and human ecology, including assessments of theories of behaviour change at the individual, interpersonal and community levels (see Halpern et al, 2004).

Having established that there may be a very different environment for public managers; it is likely they will require new skills and competencies. The needs are likely to be in two major areas: 1) knowledge management; and 2) network management.

Clearly this is closely allied with public sector reform. Adams and Hess (2002) are unequivocal: 'knowledge is the new game in public administration and networks are key sites where knowledge is generated, spliced and diced'. Whilst network management is a major focus of this project, issues regarding knowledge management will require attention too.

Next steps

This report (Report 2.2a and Report 2.2b) provides:

1. a case for applying human and social capital to policy development and delivery;
2. an overview of the similarities and differences between human and social capital;
3. a case for investigating social capital as a likely source of policy innovation;
4. a network-based model of social capital for specific strategies and tactics in developing public policy; and
5. a foundation for the development of a framework for public sector strategies and tactics.

Clearly the major task arising from this report is to synthesise the findings from this report and Deliverable 2.1 in the development of a draft analytical framework for public sector strategies and tactics. There are numerous immediate tasks and opportunities for developing the draft framework, these include:

1. Applying the network-based model for social capital to emerging governance models. Further analysis is required to determine if the network-based model for social capital (or an adaptation) is robust enough to provide the foundation of the public sector strategies and tactics framework.
2. Using the compiled cases (from Deliverable 2.3) to identify appropriate examples for early testing with the network-based model for social capital, prior to developing the public sector strategies framework.
3. Seeking collaboration and support from Canada’s Policy Research Institute (PRI) as the developers of the network-based model for social capital. Initial contact with PRI has been very positive. The PRI are currently applying the model to a range of cases. Of particular interest to us are: i) successful transfer of scientific knowledge from universities to businesses leading to innovation and product development; and ii) resilience of remote communities to economic challenges (such as structural adjustment).
4. Fully investigating knowledge and network management tools to ensure that the social capital and governance synthesis is fully informed. Additional areas that may inform this investigation are the economic fields of game theory and prospect theory.
5. Scoping alternative perspectives for valuable insights, in particular social/human ecology (theories on behavioural change) and the communitarian view of the role of government (redefining the work of government).

Deliverable 2.3, the draft analytical framework for public sector strategies and tactics is due in December 2004. The analytical framework will: 1) identify the range of strategies and associated tactics/tools available to public sector managers for operating more effectively in complex and contested policy environments; and 2) determine the circumstances in which these strategies (and tactics/tools) are appropriate.

References

Adams, D. and Hess, M. (2001). Community in public policy: fad or foundation? Australian Journal of Public Administration 60(2): 13-23.

Adams, D. and Hess, M. (2002). Knowing and skilling in contemporary public administration. Knowledge, Networks and Joined-up Government. 61(4), Considine, M. (ed), Centre for Public Policy, University of Melbourne, Melbourne, 68-79.

Brookfield, S. D. (1986). Understanding and facilitating adult learning. Jossey-Bass, San Francsico.

Burt, R. S. (2000). Structural Holes versus Network Closure as Social Capital.In Social Capital: Theory and Research. Lin, N., Cook, K. S. and Burt, R. S. (eds), Aldine de Gruyter, New York.

Cavaye, J. (2000) The role of government in community capacity building. Department of Primary Industries, Queensland, Australia.

Coleman, J. S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology. 94: S95-S121.

Côté, S. (2001) The contribution of human and social capital. ISUMA: Canadian Journal of Policy Research, 2(1): 29-36.

Granovetter, M. (1973). The Strength of Weak Ties. American Journal of Sociology. 78(6): 1360-1380.

Gray, I. and Lawrence, G. (2001). A future for regional Australia: escaping global misfortune. Cambridge University Press, Oakleigh, Australia.

Halpern, D., Bates, C., Mulgan, G., Aldridge, S., Beales, G. and Heathfield, A. (2004). Personal responsibility and changing behaviour: the state of knowledge and its implications for public policy. Prime Minister’s Strategy Unit, London,

Landry, R., Amara, N. and Lamari, M. (2001). Social capital, innovation and public policy. ISUMA: Canadian Journal of Policy Research, 2(1): 73-79.

Lin, N. (2001). Social Capital: A Theory of Social Structure and Action. Cambridge University Press.

Macadam, R., Drinan, J., Inall, N. and McKenzie, B. (2004). Growing the capital of rural Australia – the task of capacity building. Rural Industries Research and Development Corporation, Barton, ACT (Publication No 04/034, Project No RUE-2A).

Mulgan, G. and Lee, A. (2001). Better policy delivery and design: a discussion paper. Performance and Innovation Unit, London.

OECD (2001). The well-being of nations: the role of human and social capital. Organisation for Economic Cooperation and Development, Paris.

Petris, S. (unpubl) Making Sense of Recent Developments in Public Sector Governance. Draft report for the Strategic Policy Division.

Portes, A. (1998). Social Capital: Its Origins and Applications in Modern Sociology. Annual Review of Sociology. 24: 1-24.

PRI (2003a). Social Capital Workshop: Concepts, Measurement and Policy Implications. Policy Research Initiative, Canada.

PRI (2003b). Social Capital: Building on a Network-Based Approach (Draft Discussion Paper). Policy Research Initiative, Canada.

PRI (2003c). The opportunity and challenge of diversity: a role for social capital? Synthesis Report.International Conference, Montreal, Quebec, Canada 23-25 November 2003. Policy Research Initiative, Canada.

Putnam, R. D. (1993). Making democracy work. Princeton University Press.

Schuller, T. (2001). The complementary roles of human and social capital. ISUMA: Canadian Journal of Policy Research, 2(1): 18-24.

Szirom, T., Lasater, Z., Hyde, J. & Moore, C. (2002). Working together – integrated governance. Institute of Public Administration Australia.

Woolcock, M. (1998). Social Capital and Economic Development: Towards a theoretical synthesis and policy framework. Theory and Society. 27: 151-208.

Woolcock, M. (2001). The Place of Social Capital in Understanding Social and Economic Outcomes. ISUMA: Canadian Journal of Policy Research 2(1): 11-17.

Woolcock, M. and Narayan, D. (2000). Social Capital: Implications for Development Theory, Research, and Policy. The World Bank Research Observer, 15(2): 225-249.

Appendix 1. Applying a network-based approach to social capital: Landcare as a worked example.

Disclaimer

This is a brief worked example to accompany Our Rural Landscape Project 5.1, Report 2.2a. The report proposes that a network-based framework for social capital can provide insights in to the strategies and tactics available for networks managing complex issues.

This example is not exhaustive. It is provided for demonstrative, not analytical purposes. Any analysis would require substantial research into the elements.

It is also important to note that the starting point for applying this framework relies on identifying that networks are an essential element of achieving the desired policy outcome. It is also important to undertake such analysis at a given level (eg individual, community, society).

Proposition

Landcare is a social movement and Government program with the broad aims of coordinating private land managers for improved productivity and sustainability. This brief worked example proposes to consider the Landcare program at the state level with the following assumptions:

• the policy objective is to achieve improved agricultural productivity and land management
• that the policy objective can be served through facilitating networks of social relations that provide access to needed resources and supports.

Framework

A network-based framework for social capital is applied to the above proposition. The framework (Figure 1) was developed by the Canadian Government Policy Research Initiative. A brief description of the framework components (drawn from PRI, 2003) follows:

Determinants of social capital formation

There are two levels of determinants: 1) individual level – these may include demographics, employment history, education, ethno-cultural background, perceptions and attitudes; and 2) community level – these may include existing networks, existing infrastructure supporting network development, and prevailing norms and values.

Social networks that convey social capital

1. Network characteristics - may include: 1) structure and composition – for example, size, density, strength of ties, heterogeneity; 2) resources and abilities – the productive capacity or potential with regard to the context and specific policy question; 3) normative characteristics – this may include any norms of behaviour including trust and reciprocity, relevant to the network at hand, context and specific policy question; and 4) network dynamics – the evolution and variation of investment in the network over time.
2. Network Transactions – In some analyses it may be useful to consider transactions within the network structure. Transactions may include negotiation, information flow, support or the application of sanctions. This may provide the opportunity to identify costs of maintaining, reducing or activating networks.
   Complementary Resources
   Social capital in and of itself may not be sufficient to realise a particular outcome. Other resources such as physical, economic and human capital may be required. The absence of complimentary resources may highlight a significant prospect for public policy intervention to achieve a desired outcome.
   Network Outputs
   Outputs are the immediate results from the use and access of a network. The network transaction and resulting output may not produce a positive outcome. Other resources and conditions may be required to achieve the desired outcome.
   Opportunity structure
   Conditions in the broader context may inhibit or catalyse the potential of social networks to achieve a desired outcome.
   Social, economic and health outcomes

Social capital (in the case of this model) is only interesting to the extent that it contributes to achieving desired policy outcomes. The framework allows both analyses of existing policy and development of new policy to start with the outcome.

Figure 1. Network-based conceptual framework for social capital (from PRI, 2003).

Applying the framework

The components of the framework can be used as cues for strategic inquiry. A summary of the strategic inquiry points, elements for consideration and example strategies and tactics is presented in Table 1.

Reference: PRI, 2003. Social Capital: Building on a Network-Based Approach (Draft Discussion Paper), Policy Research Initiative, Canada.

Table 1. Outline of the Strategic Inquiry Points (drawn from the framework), elements for consideration and example strategies and tactics, for the policy proposition regarding Landcare.

Section 2
Social Capital: Current Knowledge and Application to Public Policy

Deliverable 2.2b

Dr Peter Howden, Practice Change Research

Introduction

We are witnessing the emergence of a new public policy whose rules and expectations are significantly different from those we have become familiar with over the past fifty years (or longer in some cases). This new public policy has the logic of social capital wired deep into its structures and systems (Stewart-Weeks, 2000).

The concept of social capital is intimately tied to the operation of networks and the agency of individuals within networks. For that reason it is critical to understand the role it might play in our developing understanding of emerging models of governance.

This paper will overview the development of the theory of social capital and summarises the key conceptual issues emerging from its analysis and application across a range of disciplines and policy problems. Importantly, it will also identify a range of ways in which a social capital perspective may enhance the development of policy and programs in environments characterised by multiple stakeholders and complex ('wicked') problems.

This review is deliverable 2.2b for Our Rural Landscapes (ORL) Key Project 5.1 ('Linking Policy and Practice') and complements an 'insights and understandings' paper ('The relevance of social and human capital for public policy development and delivery'). Key questions emerging from this review will be highlighted in text boxes throughout the document. These questions may not be directly addressed in the paper, but will be a critical foundation for the development of our understanding and practices for public policy and investment under ORL KP5.

Social capital: a contested concept

Social capital has variously been described as a resource to action (Hogan and Owen, 2000; Stone, 2001), a metaphor about advantage (Burt, 2000), an investment in social resources with expected returns in the market (Lin, 2001), or an ability of actors to secure benefits through membership of social networks (Portes, 1998). The basic idea behind the concept, though, is that a one’s family, friends, and associates are an important asset that can be called on through networks or social relations, as a means to achieve desired outcomes.

Whereas economic capital is in people’s bank accounts and human capital is inside their heads, social capital inheres in their relationships (Portes, 1998).

concept in an early stage of development – although, one built on an increasingly solid empirical foundation (Woolcock, 2001).
As Woolcock (2001) warns though, practitioners and policymakers cannot wait for researchers to know all there is to know before acting. He argues instead for adopting a stance of learning by doing, including more rigorous evaluations of project and policy impact on social capital.

A fragmented conceptual development

Opinions differ as to the origins of the concept of social capital. Some authors point to a substantial genesis in the work of economists and economic sociologists (Woolcock, 2001). Others warn that the contributions of sociology and classical theory should not be overlooked, even if the actual term 'social capital' was not used.

The work of Hanifan (1916) is widely cited as the first use of the term. (Ostrom and Ahn, 2001; Winter, 2000b; Woolcock and Narayan, 2000). Hanifan was a West Virginian school reformer whose work looked at the role of communities in satisfying individuals’ social needs.

The idea of social capital, note Woolcock and Narayan (2000), then disappeared for several decades, reappearing in work in a range of disciplines, including that of an 'urban scholar' (Jacobs, 1961), and an economist (Loury, 1977). Jacobs’ 1961 book (The Death and Life of the Great American Cities) describes a complex range of street life that leads to a whole array of different relationships and contracts, and, claims Stewart-Weeks (2000), '…is still one of the best descriptions of what social capital … actually looks and feels like.' Loury (1977), in his work on racial income inequalities, argues that orthodox economic theories were too individualistic, and that 'the social context within which individual maturation occurs strongly conditions what otherwise equally competent individuals can achieve' (cited in Portes, 1998).

None of these writers¹, cited earlier work on the subject, 'but all used the same umbrella term to encapsulate the vitality and significance of community ties'(Woolcock and Narayan, 2000).

Economic sociologist Mark Granovetter also made an important contribution to the development the concept of social capital, particularly in his early work The Strength of Weak Ties (Granovetter, 1973). Comparable to what will later be described as 'bridging' and/or 'linking' social capital, Granovetter coined the term 'weak ties' to refer to the power of indirect influences outside of the immediate close circle of friends and family (eg. as a source of political influence) (Portes, 1998).

to internalised systems of norms and values. The undersocialised view – in which classical and neo-classical economics operate – 'disallows by hypothesis' any impact of social relations on production, distribution or consumption.

…culture is not a once-and-for-all influence but an ongoing process, continuously constructed and reconstructed during interaction. It not only shapes members but is shaped by them, in part for their own strategic reasons (Granovetter, 1985).

Granovetter (1985) notes that in classical and neo-classical economics, the fact that actors may have social relations with one another had been treated, if at all, as a 'frictional drag' that impedes competitive markets. While some modern sociologists may take account of social influences, he said, they tend to do so in an 'oversocialised' way (this is typical of New Institutional Economics, for example). Both over and under-socialised views have in common (ironically) a conception of action and decision-making carried out by actors atomised from immediate social context (Granovetter, 1985).

Finally, a number of authors emphasise the importance of classical theory in identifying the bases for social capital (see Kilby, 2002; Portes, 1998; Woolcock, 1998). Particularly they point to the work of Marx and Engles, Simmel, Durkheim and Parsons, and Weber as valuable (even critical) in theoretically informing any perspective on social capital.

However, it is work beginning in the 1980s that is recognised as being truly seminal in the development of the concept of social capital. Specifically, the work of Pierre Bourdieu, James Coleman, and Robert Putnam variously underpins most contemporary conceptualisations of social capital.

The three approaches are different. Winter (2000a) developed a table (reproduced below) to compare the three perspectives, particularly emphasising divergences in the purpose and analytical scale underpinning the theories. As we will see later in the paper though (see, for example, Table 2), the theorists differed in other key areas as well.

Table 1. Definition, purpose and analysis of social capital (modified from Winter, 2000a)

The following section gives a brief outline of the approaches of Bourdieu, Coleman and Putnam.

Three Theorists, Three Theories

Pierre Bourdieu

While first of the three to elaborate a theory of social capital, Bourdieu’s conceptualisation is perhaps the least known – although many authors are beginning to 'rediscover' his work (Judge, 2003; PRI, 2003b).

Bourdieu argues that 'capital' can represent itself in three fundamental guises: economic capital, cultural capital² and social capital, with economic capital the source of all other capitals (although the transaction costs are quite different between the three).

Bourdieu’s definition is instrumental, identifying the benefits accruing to individuals by participation in groups.

Social capital is the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance and recognition-or in other words, to membership of a group-which provides each of its members with the backing of the collectively-owned capital, a 'credential' which entitles them to credit in the various sense of the word (Bourdieu, 1985).

His definition identifies two parts to the concept, the structure of the network and the resources contained in that network. Thus '[t]he volume of social capital possessed by a given agent thus depends on the size of the network of connections he can effectively mobilise and on the volume of the capital (economic, cultural or symbolic³) possessed in his own right by each of those to whom he is connected' (Bourdieu, 1985). Bourdieu’s work is grounded in Marx’s capital theory and outlines the process by which elite classes maintain and reproduce their position and capital resources (and therefore, inequalities), through their 'networks of mutual acquaintance and recognition'. Those richly endowed with social capital, he notes, are symbolised by 'a great name' (Bourdieu, 1985).

Bourdieu contends that the existence of network connections 'is not a natural given', rather 'they are product of investment strategies, individual or collective, conscious or unconsciously aimed at establishing or reproducing social relationships that are directly useable in the short or long term.' In short, the social networks underpinning Bourdieu’s concept of social capital require ongoing investment (time and energy) in 'sociability'.

Hogan and Owen (2000) and Lin (2001) consider that a weakness in the Bourdieu conceptualisation is the focus only on the 'size' of networks and not their 'strength'. Bourdieu’s representation, notes Lin (2001), only makes sense when 'all members maintain strong reciprocal networks (a completely dense or institutionalised network)'. Hogan and Owen, while largely subscribing to the Bourdieu conceptualisation, consider quality ofnetworks more important than scale. Indeed, Bourdieu himself describes how individuals interact and reinforce mutual recognition and acknowledgment as members of a network or group, surely a feature of the content of the relations, not the scale of the network.

James Coleman

Coleman developed his concept of social capital in longitudinal studies of education outcomes in high school students in deprived communities (PRI, 2003a). His work, grounded in the earlier analysis of Granovetter, focused on the role of social capital in the family and community in aiding the formation of human capital.

Coleman’s emphasis is instrumental and functional, focusing on social capital as an aspect of social relations and social structures.

Social capital is defined by its function. It is not a single entity but a variety of different entities, with two elements in common: they all consist of some aspect of social structures, and they facilitate certain actions of actors-whether persons or corporate actors-within the structure (Coleman, 1988).

Coleman’s application of the concept of social capital centres on the role of (amongst other things) 'norms and sanctions', 'information channels', and 'obligations, expectations and trustworthiness of structures' as resources available to a group, to solve problems common to the group. Coleman also recognises that the development of social capital is context specific noting that 'a given form of social capital that is valuable in facilitating certain actions may be useless or even harmful for others' (Coleman, 1988). Unlike Bourdieu, though, Coleman argues that social capital is not a product of deliberate investment, but is a by-product of other activities (eg. participation in 'civic' activities).

Much criticism has been directed at Coleman for what is seen as his 'vague definition and the "laundry list" of forms - a list that arguably conflates determinants, sources, and outcomes of social capital' (Judge, 2003). Portes (1998) considers that this has led the way for the labelling of a number of different and contradictory processes as social capital. Hogan and Owen (2000) consider that Coleman has failed to maintain a distinction between the concept of social capital (what it is) and a theory of social capital (an account of its manifestations, its sources, processes of accumulation, and its effects).

Coleman has also been criticised for his conservatism, with his emphasis on the 'primordial role of traditional family structures and religious participation to generate strong social capital'(PRI, 2003a). Putzel (1997) also lamented a 'disturbing trend in the literature' that idealised the family as the most productive site of social capital, reminding us that (as feminists have pointed out) families are hierarchical organisations and a site of reproduction of patriarchal relations within society.

Some of the most enduring forms of oppression linked with patriarchy and racism are perpetuated even in the most civic of places (Putzel, 1997)

Perhaps Coleman’s most useful contribution was, as Winter (2000a) notes, uniting two broad philosophies of human action under his conceptualisation of social capital: One (typical of most sociologists) that sees the actor as socialised and action as governed by social norms, rules, and obligations. The other (typical of most economists) that sees the actor as having goals independently arrived at, as acting independently, and as wholly self-interested.

Robert Putnam

Putnam developed his theory of social capital in a '20-year, quasi-experimental study of subnational governments in different regions in Italy' in which his central conclusion was that '…the norms and networks of civic engagement powerfully affect the performance of representative government' (Putnam, 1995).

However, he is most famous for his observation that Americans were increasingly 'bowling alone' – a reference to statistics suggesting that while the number of bowlers had increased by 10% (some 80 million people bowled at least once in America in 1993), league bowling had decreased by 30%.

Putnam wrote of a decline in America’s social capital, pointing to a decrease in volunteerism in civil organisations (eg. Lions, Scouts, Red Cross). He states that while these were being replaced by 'vibrant new organisations'– eg. National environmental organisations – '[f]or the vast majority of their members, the only act of membership consists in writing a check for dues or perhaps occasionally reading a newsletter' (Putnam, 1995).

Putnam’s concept of social capital is drawn directly from Coleman’s, but it is developed in a different direction, a different sociological and geographical scale, to both Coleman and Bourdieu (Winter, 2000a). Putnam’s view saw social capital as a resource accruing to whole political communities 'as an emergent property of society as a whole'(Putzel, 1997).

'social capital' refers to features of social organisation such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit (Putnam, 1995).

Putnam placed great emphasis on the role of civic, particularly voluntary, association in instilling habits of co-operation, solidarity, and public-spiritedness, which he saw as contributing to generalised social trust (PRI, 2003a).

Putnam is said to be the most widely cited social scientist of the 1990s⁴ (PRI, 2003a). His 'oratorical skill, combined with his knack for linking the concept to a number of major public policy concerns' has been pivotal in popularising social capital with both the public and academia (PRI, 2003a). However, with the enormous popularity of his conceptualisation comes an equal (if not greater) level of criticism.

Portes (1998) suggests that the fundamental problem with Putnam’s argument is its logical circularity. As Castle (2002) asks, is social capital assumed to exist simply because a favourable outcome has been observed? Or does the (observed) presence of social capital characteristics mean a favourable outcome is assumed to follow?

Further, Putnam has been accused of painting a 'dangerously romantic' picture of social capital (Stewart-Weeks, 2000), placing too much emphasis on associational life – and assuming that trust will follow (Winter, 2000a). His earlier work, in particular, has been criticised as ethnocentric and gender blind, and for its failure to acknowledge the 'dark side' of social capital (PRI, 2003a). Levi in a scathing criticism of Putnam’s romanticism, points out that Timothy McVeigh and other co-conspirators in the Oklahoma City bombing were members of a bowling league, adding that 'this is a case where it may have been better to bowl alone' (Levi, 1996 – cited in Putzel).

social capital research in australia

Winter (2000a) suggests that it was Cox’s 1995 Boyer Lectures which popularised the term 'social capital' in Australia, paving the way for a surge in interest across a range of disciplines – including public health, education, sociology, and public policy.

A relatively well know empirical study was that of Bullen & Onyx (1998a; 1998b) who sought to measure social capital in five localities in New South Wales using a 68-question survey based around themes identified in an extensive literature review. They concluded that the concept of social capital can indeed be used in empirical study, that is, there is something distinctive that we can label social capital, and we can measure it in a verifiable manner.

The work of Bullen and Onyx was based on the work of Putnam and perhaps the same criticisms can be levelled at this work that has been level at Putnam (and Coleman). In using a functional approach, they arguably conflate determinants, sources, and outcomes of social capital. What they have measured may indeed be the relationship between elements that relate to social capital, but they have not (at least in the work I saw) linked the empirical work to a clearly argued theoretically informed conceptualisation of social capital.

The Australian Institute of Family Studies (AIFS) has developed a useful framework for their Families, Social Capital and Citizenship project (Stone, 2001). Importantly, the AIFS framework (see appendix 1) distinguishes between the core components of social capital, the sources and the determinants.

AIFS operationalise social capital by focusing on both the structure of social relationships, as well as qualitative elements of those social relations.

social capital consists of networks of social relations which are characterised by norms of trust and reciprocity (Stone, 2001).

Two key papers (Stone, 2001; Stone and Hughes, 2002) offer both a rigorous assessment of the elements of these core components (and options for their measurement), as well as testing of the validity of these various measures.

The Australian Bureau of Statistics (ABS) has also recently released its social capital framework (ABS, 2004). The focus of the ABS is broad level indicators that can be compared across sub-populations, sub-national geographic areas, other countries, and over time. The ABS also suggests that their indicators can also serve as benchmarks for local studies. The framework is necessarily broad and focuses on existing survey data (largely not developed to measure social capital per se) and a few extra questions added to the General Social Survey. The framework focuses on social capital as networks, considers types of social capital, their structure, composition, qualities, and transactions, and distinguishes between positive and negative outcomes of social capital. A concern is the utility of such a broad scale measure at a local level and whether it may have any real value in informing, for example, place-based policy.

Significant work has been done through the Centre for Research and Learning in Regional Australia at the University of Tasmania. Much of the Centre’s output on social capital has been produced by Ian Falk who is a research fellow at the Centre (but based at Charles Darwin  University). Interestingly, Michael Woolcock, who researches social capital for the World Bank, is also a research fellow at the Centre. The focus of Falk’s approach to social capital is again different from those outlined above. His work is grounded in theories of adult learning and trust. Further assessment of this work may provide useful insights, particularly at the intersection of social and human capital.

Theoretical debates

Woolcock (2001) suggests there is an emerging consensus across the social sciences concerning the definition of social capital, and while there are differences in approaches to the concept, there are some significant common features that underpin conceptualisation of social capital in the literature. Cox and Caldwell (2000), for example, note that

• All link economic, social, and political spheres and implicitly recognise that social relationships influence how markets and states operate.
• All focus on relationships and the ways in which reliable, stable relationships among actors enhance the effectiveness and efficiency of both collective and individual action and interaction.
• All presuppose that social capital can be strengthened, and that the process requires resources.

However, much of the 'consensus' about the definition of social capital may instead reflect the dominance and popularity of one particular conceptualisation, one that some suggest has opened the way to the view of social capital as a cure-all for the maladies affecting society (Portes, 1998).

The 'popular' approaches also may not lend themselves to developing a useful tool for the application of social capital concepts to program or policy development. A clear theoretically informed conceptualisation is desirable to make sense of the complex range of ideas underpinning this concept.

For the purpose of this overview I will give a brief overview of several critical theoretical 'controversies': functional versus structural conceptualisations; the 'location' of the capital asset (whether the level of analysis is the individual or the 'group'); whether social capital is a collective or individual 'good' (or both); as well as the potential for different 'forms' of social capital. The table below (from Lin, 2001), for example, outlines some of these issues and 'problems' with them.

Table 2: 'Controversies' in social capital (from Lin, 2001)

I will also touch on other debates, such as the notion of 'bad' social capital, or whether it is 'capital' at all. Finally, I will look at contrasting views of the role of government in building social capital.

The 'location' of social capital

One of the most fundamental debates in the social capital literature is around two divergent perspectives on the 'location' of social capital – or the level at which return or profit is conceived. In one conceptualisation, social capital is 'possessed' by individuals who access and use resources embedded in social networks to 'gain returns in instrumental actions or to preserve gains in expressive actions' (Lin, 2001). In the other, social capital resides in the process of social groupings and/or whole of societies and therefore is neither stored nor owned by individuals (Cox and Caldwell, 2000).

Interestingly, Portes (1998) considers that the greatest theoretical promise of social capital lies at the individual level, which he says is exemplified by the analyses of Bourdieu and Coleman, while Lin (2001) argues instead, that Bourdieu’s conceptualisation is of social capital as a collective resource (endowing members with 'credits').

While the two perspectives describe social capital differently in terms of the level at which the utility or outcome can be assessed, all theorists, including Lin, Bourdieu and Coleman, share the understanding that social capital consists of resources embedded in social relations and social structures (Lin, 2001). In other words, even at the individual level of construction, social capital can only be drawn on through social relations.

A collective or individual asset?

Another important debate centres on whether social capital should be assessed as an individual or collective asset. Putnam, for example, defines social capital as intrinsically for the public good, Coleman notes public good aspects of social capital, while Bourdieu’s work explicitly focuses on accumulation to the individual.

The distinction between conceptualisation of the location of the capital asset, and that of who is benefited by its 'use', is represented in the matrix below (Figure 1) – along with the likely theoretical position of the key theorists. Although as noted above, there are some differences of opinion on this.

Figure 1. Distinguishing between the 'location' of social capital and the level to which benefit accumulates (and the perspective of the three main theorists)

Some authors question whether collective action that only results in individual or group good is social capital at all. Cox and Caldwell (2000), for example, argue that social capital should be linked definitionally to 'public good'. They suggest that the outcomes of social relations that do not lead to a positive public good do not in fact constitute social capital but rather may simply be described as collective action or 'solidarity'. Approaching it this way, however, would require some judgement as to whether a particular increase in norms, networks and trust has a net benefit for society as a whole (Productivity Commission, 2003), or how we would gain consensus on where we would invest in such 'goods' (Kilby, 2002).

Lin (2001) suggests that most scholars agree that it is both collective and individual goods, but, he and others (eg. Portes, 1998; Woolcock, 1998) also warn of other considerations when social capital is considered this way, 'along with trust, norms, and other collective or public goods'. As these authors note, this conceptualisation can be the result of confusion between the sources of social capital and the benefits derived from them. For example, Woolcock (2001) notes that social capital in the form of trust (in one conceptualisation) is created as a by-product of other collective endeavours, such as participation in civic associations. But these activities are themselves seen as public goods, and are also identified as social capital. This leaves a problematic conceptual task of distinguishing between the source and the effect (see also the discussion below on the function/structure debates).

Social capital, notes Lin (2001) as a relational asset, must be distinguished from collective assets (such as culture, norms, trust). Causal propositions may be formulated, he suggests, for example that 'trust' promotes relations and networks and enhances the utility of embedded resources, but these this must not be assumed as evidence that 'they are all alternative forms of social capital or are defined by one another' (Lin, 2001).

Closed and open networks, 'structural holes', and dimensions of social capital

Much discussion on social capital is focused on norms and trust in close ties around family and tight networks of acquaintance. Norms arise in these networks, said Coleman (1988), to limit negative external effects or encourage positive ones, and there needs to exist sufficient ties ('closure') between individuals (a dense network) to ensure the observance of norms and the creation of trustworthiness in a social structure – ie. it is less risky to trust someone in a closed network.

Lin (2001), however, argues that closure was neither 'necessary or realistic', pointing to work (eg. Granovetter’s) emphasising the importance of social 'bridges' in networks. Granovetter (1973) suggests that when seeking jobs (or political allies), 'weak' ties that link you to people who move in different social circles are actually more valuable that the 'strong' ties that link you to relatives and close friends in a similar social niche.

Burt (2000), in a similar vein, considers 'structural holes' a more important source of social capital (see figure 2, below). Weaker connections, argues Burt (2000) are the structural holes that provide a competitive advantage to those 'brokers' who can span them. These holes are 'buffers', separating what he called 'nonredundant' sources of information – networks are redundant if they are (1) cohesive, in that they are strongly connected, and (2) equivalent, in that they are linked to the same third parties (and therefore likely to contain similar information) (Burt, 2000).

Thus, individuals with contact networks rich in structural holes are the individuals who know about, have a hand in, and exercise control over, more rewarding opportunities. (Burt, 2000)

Figure 2 - Group performance across structural holes and network closure (from Burt, 2000)

While we may not be interested in policy mechanisms that may create or reinforce competitive advantage, this model of networks suggests other important factors in managing networks. Strongly connected groups (Figure 2, B) are not necessarily better. That is, there is a limit to where actively improving connectedness can produce more effective or efficient networks (provided mechanisms are in place to limit those who may seek to make use of the competitive advantage of being in structural holes). Also, identifying those in critical structural holes, or activating 'missing' connections may be an important factor in the development of programs or the management of governance networks.

Woolcock (1998) developed a similar matrix to highlight a range of possible (community) development outcomes influenced by the level or configuration of 'horizontal' connectedness. These range from 'anarchic (amoral) individualism' (the absence of all four dimensions of social capital) at one extreme, to 'beneficent autonomy' (the presence of all four dimensions) at the other,

Figure 3. Integration and linkage in bottom-up dilemmas of development (modified from Woolcock, 1998)

Another way of characterising these 'levels' of social capital has emerged more recently in the literature – 'bonding', 'bridging' and 'linking' social capital. Putnam has written on the importance of bridging and bonding capital (see PRI, 2003a), however, this categorisation has been championed and extended by others, including Michael Woolcock’s later work for the World Bank.⁵ Bonding social capital characterises the ties within a community of interest (or practice). Bridging social capital consists of the ties that link groups or individuals (ie. to those from another culture or with different interests), particularly those with resources and information that differ from those within the community of practice. Linking social capital consists of the 'links' individuals or groups have to organisations outside of a community (ie. links to power and resources).

While linking social capital might be seen as an extension of bridging social capital, Woolcock (2001), introduced the idea to distinguish between the horizontal and vertical connections that are variously important in economic and community development. According to Woolcock (2001), bridging social capital is a horizontal linkage, while linking social capital focuses on the importance, for example, to the socially excluded, of connections to leverage resources, ideas and information from formal institutions beyond the community. In short, a community that has a dense internal social network structure in which many of its members are also linked (horizontally) to outside activities and groups and (vertically) to positions of power and resources, is in a potentially strong social network position.

Perhaps more important in the context of the development of government programs and policies, is the consideration of the interaction between micro and macro levels in network transactions – 'linking' social capital. Woolcock – also drawing on Granovetter (and other theories) – developed a framework (figure 4) for understanding the interaction of social capital at different levels in society.

Figure 3. Integration and linkage in bottom-up dilemmas of development (modified from Woolcock, 1998)

Based on manifestations of 'embeddedness' and 'autonomy' the model is broken into four domains (in brackets) related to internal characteristics and linkages. In simple terms, the domains can be defined in the following ways: integration refers to micro level social cohesion; linkage refers to the extent of micro-level connection outside of 'primordial groupings'; integrity refers to the 'professional ethos' of 'senior policy makers' in negotiating and pursuing collective goals; and, synergy refers to the social relations between representatives of formal organisations (Woolcock, 1998).

A model like this provides a more comprehensive picture of multi-level network interactions. Amongst other benefits, in a policy context, this framework allows us to understand how the existing social resources and local knowledge of communities can be articulated with the material resources and scientific expertise of external agencies (Woolcock, 1998).

These conceptualisations, however, also suggests a paradox. Different 'types' or 'elements' of social capital might be useful at different life stages of social relationships and social groupings, or in different contexts. It might not be as simple as just building 'bridges' and bringing in diverse views to encourage innovation in a tightly 'bonded' community, or even simply providing a balance between theses different levels. For example Woolcock (2001) suggests that the need for obligations changes as one's economic status changes, or in practice, this might mean that the more successful local social institutions are at providing financial success, the less necessary those institutions become. For government and policy makers, this means that any intervention may need to be monitored carefully and not conceived as 'set-and-forget' solutions.

Importantly though, considering the multi-dimensional (multi-level) nature of networks allows us to develop a richer picture of how communities (of both place and, practice) work, and consider how social capital might operate in these networks. This will allow a more robust response informed by a more comprehensive understanding of the functioning of the networks in which we are seeking to drive change.

The 'function' versus 'structure' debate

Another significant division in how social capital is conceptualised is in whether it should be defined by its function, or by the social structures that bring it into being. The first sees social capital as those social resources that enable cooperation and collective action. The second sees social capital primarily in terms of particular structures (social networks) and the resources they convey.

The functional conceptualisation of social capital may be the most widely adopted and influential approach (Judge, 2003). However, the continuing debate…

… leaves unresolved whether social capital is the infrastructure or the social content of social relations, the 'medium' as it were, or the 'message.' Is it both? (Woolcock, 1998)

Both Coleman’s and Putnam’s approaches are explicitly functional, but the way they have been articulated has been widely criticised (i.e. Coleman’s laundry list) for failing to adequately distinguish what social capital is from what it does. The concern here is that a functional theory can lump multiple phenomena under one label of 'social capital' and obscure their independent dynamics (PRI, 2003b) and the relationship between them. As Lin (2001) notes, '…a single functional theory that needs to account for all elements of social resources that lie behind every instance of social cooperation quickly loses its parsimony, and thereby its explanatory utility.' Particularly, a poorly framed functional definition can 'invite conceptual imprecision' (Hogan and Owen, 2000) and reduce the usefulness of any social capital framework for research and policy development.

There are a number of network-based approaches to social capital, although, Adler and Kwon (2002) suggest that they can be divided into two streams: those concerned with the effects generated by the pattern or structure of relations within a network; and, those concerned with the content of those relations (eg. norms or trust). The AIFS framework (Stone, 2001; Stone and Hughes, 2002), and that of the Canadian Policy Research Initiative (PRI, 2003a; PRI, 2003b) are potentially hybrids of these approaches, conceptualising social relations as networks, but interested in both the structure of social relations as well as their content.

Measurability

Lin’s (2001) concern about 'measurability' (Table 2 - above), stems from Coleman’s questioning of whether social capital will become useful as a quantitative concept in social science. Lin (2001) considers that this 'confusion' results from extending the notion beyond a network based approach. Above all, this issue is rooted in the structure/function divide, where the failure to sort between the sources, manifestation, and effect of social capital creates considerable measurement difficulties.

Often studies select from a range of approximate items gleaned from the literature on social capital, or draw on existing data sets, not initially designed for the analysis of social capital (PRI, 2003a). Few back these analyses with clear framework that might unite the indicators or measures in a sensible and theoretically sound way. Measures of a range of factors supposedly related to, or indicative of, social capital also may not give much information about their interrelation, or sort between these factors as cause, manifestation, or effect.

For the purpose of program and policy development, an understanding of how we might measure the impact of social capital is critical. Given the diversity of network structures outlined above, it is important that we have a 'base-line' understanding of the networks we interact with, before we apply any governance models, or even assume anything about the function of those networks. Further, the difference between the function of social capital at different levels in networks suggests that considerations of unit of analysis and level of data aggregation will also be important. It is also likely that measures of social capital may need to be adapted to specific regional contexts (PRI, 2003a).

The existing work of Bullen and Onyx (at a local level) and the ABS (at a national level) – as well as other indicator work such as that of the AIFS – may be useful measures from which to develop an understanding nature of social capital in various networks. However, what will be measured and what indicators may be most relevant will depend, in the end, on how social capital is defined and the framework in which it is operationalised.

But is it 'Capital'?

There is still some debate as to whether social capital should be viewed as 'capital' at all. Some begin from the premise that because the concept of capital has its source in the economic literature – the noun is 'capital', the modifier 'social' (Castle, 2002) – then this should be the fundamental starting point for its analysis. For example, Lin (2001) built his conceptualisation of social capital, from an analysis of the theories of capital. Castle (2002), on the other hand, argues for this treatment in the name of developing a true multi-disciplinary approach.

capital has been developed by economic sociologists, it provides as much opportunity for 'sociological imperialism' as for 'opening the floodgates' to economic rationalism.

Adler and Kwon (2002) consider there are some advantages in seeing it as a form of capital. Like other forms of capital (ie. physical and economic) it is a (potentially) long-lived asset that is not costless to produce or acquire, but may be invested in with expected returns in the form of various benefits. It also can be, as Bourdieu (1985) observed, substituted for other forms of capital. Unlike other forms of capital, though, social capital is a relational asset and cannot exist without connection to others.

In a sense, this debate may amount to little but semantics. More important is the inclusion of 'social' into the capital debate and the modification of the dominant (economic based) conception of rational actors – self-interested, and affected minimally (if at all) by social relations. The economic conception of rational action, notes Coleman (1988), 'flies in the face of empirical reality'. Persons’ actions are shaped, redirected, constrained by the social context, and 'rational' actors sometimes act 'irrationally'.

'Bad' social capital

The existence (or not) of 'bad' social capital has taken up considerable space in the literature. Woolcock wrote in 1998 that most discussion on social capital considered it an unqualified 'good', and (as noted above) Cox and Caldwell consider 'bad' outcomes are not social capital at all. Many more recent conceptualisations, however, are considering the 'dark' side. Although, Kilby (2002) argues that social capital does not have an absolute value, rather, it has a relative value, dependent of the viewer and those whose interests are being served.

From a policy or program development perspective, though, there is some value in understanding that while social capital is 'good' in some instances, more is not necessarily better.

As an example, Portes (1998) identifies four ways in which social capital can have a 'negative' affect:

• Exclusivity: In that strong internal ties within a group can bar access by others to that group.
• Excessive claims on group members (burnout): That is less 'active' (free rider) members of a group can place an enormous burden on the more active and successful, backed by the solidarity of the group.
• Conformity: Where participation in a group can create a demand for conformity, which can be restrictive of personal freedoms.
• Normalising: Where group solidarity is formed by common experience of adversity, or in opposition to mainstream society. 'Success' outside that realm (in mainstream society) can undermine that capital. This can result in 'downward levelling' forces that keep members in a downtrodden group in place and force the more ambitious to escape.

A more extreme example commonly given of 'bad' social capital is that in the tight bonds of Mafia communities, although consideration of 'power' and symbolic and cultural capital are also important in this context. In common extension 'problems', the resistance of one group of people (eg in a locale) to change, or a farmer group (eg. Landcare) antagonistic towards government may be better understood through a (value neutral) social capital lens, as would the understanding of processes that lead to burnout in community (eg. Landcare) leaders.

Trust

Many question how networks can possibly function without norms, trust and reciprocity, although the concepts are often used in different ways, with different emphasis, and related to each other in different ways (see, for example, the definitions in Appendix 2). Others (as outlined above), although agreeing that they are important in social systems, consider that such 'outcomes' are a 'public good' and therefore not actually social capital per se. (eg. Lin, 2001;  and Portes, 1998). However it is worth noting some of the issues arising from the most commonly cited 'measure' or proxy for social capital – Trust.

Trust variously takes up a central role in the conceptualisation of social capital, or is considered a critical source or outcome of social capital. Many point to the critical role trust must have in individual (social capital) transactions that Portes (1998) notes, are 'characterised by unspecific obligations, uncertain time horizons, and the possibility that the reciprocal obligations will not be met.' Networks depend wholly on trust, claims Kilby (2002), and any existing norms or rules of behaviour are weak in comparison. Others argue that it is theoretically possible to have very high levels of trust while only engaging in a bare minimum of social interaction (PRI, 2003b).

Hughes, Bellamy and Black (cited in Winter) identify three forms of trust: interpersonal trust or trust of familiars; social trust or trust of strangers; civic trust or trust in organisations and institutions. Trust operates differently at different levels of social interaction. Trust also seems to have different 'power' at the different levels and interacts differently with other elements of 'public good' (eg. norms and reciprocity). Falk and Kilpatrick (1999), for example found no evidence to support Coleman’s macro views of (generalised) trust in their studies of interactions in rural communities. Hogan and Owen (2000) also found there was not a statistically significant relationship between trust and active citizenship. Falk and Kilpatrick (1999), though, state that trust is important in basic social interactions, but that it is 'embedded in specific and situated instances or cases.' The other literature, they note seems to use trust as a general term for more visible element of social cohesion and reciprocity, 'or they "prove" its importance through citing illustrative examples and instances' (Falk and Kilpatrick, 1999, my italics).

Importantly, Falk and Kilpatrick (1999) observe that there are few existing sources of research on trust, and that the conceptual and analytical bases are extremely variable and incomplete.

The all-pervasive nature of trust assumes the dimensions of a generality of such proportions that it becomes useless for theoretical or analytical purposes. (Falk and Kilpatrick, 1999)

Trust and norms of reciprocity, state Woolcock (1998), are 'benefits' that are 'nurtured in and by particular combinations of social relationships'. As undeniably important as they are, he notes, they may be 'one indicator of the types and combinations of social capital that are present, but they are not to be confused with social capital itself' (Woolcock, 1998).

The Importance of Context

The temporal, spatial and social context in which social capital networks operate is also important, but often absent from operationalisations of the concept.

Kelly (2001), for example, in her work on the impact of the Regional Forest Agreement (RFA) process in Western Australia found that response to change was highly dependent on characteristics of communities (as well the nature of the change event). This included the historical and political context in which they operate, and their social, environmental and economic characteristics. Her analysis of four towns affected by the RFA showed that each community responded quite differently, depending on the variations in the manifestation of these factors.

The Role of Government in Building Social Capital

The Productivity Commission (2003), from their scan of the literature, suggests that social capital may generate benefits for society in four main ways:

• by reducing transaction costs;
• by facilitating the dissemination of knowledge and innovation;
• by promoting cooperative and/or socially-minded behaviour; and
• through individual benefits and associated social spin-offs.

Each of these though, can 'operate' without intervention, or deliberate activation by an outside agent. Despite important areas of common agreement, however, the review above highlights the wide range of perspectives of social capital and disagreement at fundamental levels of analysis, making understanding of its application as an instrumental tool in public policy somewhat problematic.

For example, two disparate approaches to the role of government in 'building' social capital are apparent in current debates.

Some emphasise the potential for governments to 'crowd out' civil society and to weaken informal networks, or that, in effect, state-society relations are inherently are zero-sum game (Woolcock, 1998). This approach has been supported by some studies suggesting that decreased government support can help to free up inactive reserves of 'social capital' within volunteer or not-for-profit groups (Van Kemenade et al., 2003). Critics argue that this approach relies too heavily on voluntary organisations to prop up ailing communities and that withdrawal of government services are, not anyway, made with the explicit intention of activating latent social capital.

Others argue that government can provide important mediating structures for civic association, and that government intervention can strengthen social capital, particularly where it is unevenly distributed, or manifests in persistent social exclusion.

It is also important to consider that government cannot actually 'build' social capital per se, but only influence the environment in which it is created (or destroyed). Further, it should be remembered that developing effective networks takes some time and given the complex interaction of contextual factors (eg. historical and cultural), and the different levels at which it operates (eg. macro, meso, micro), confidence that an actual intervention will be effective in the way intended may be problematic. This suggests that caution must be taken in adopting instrumental or deterministic approaches to the application of social capital in programs and policy making.

Broadly, researchers (cautiously) agree that social capital can be generated and/or strengthened. Many also agree that government can have either a positive or negative affect on the generation of social capital, depending on the circumstances of the intervention. However, there is little agreement on the type of interventions that might be invested in, or frameworks for deciding when intervention might be desirable.

Towards a conceptual framework

From this review of the literature, it is clear that any analysis of the role of social capital in public policy should begin from a clear conceptual framework that is inclusive of the range of functions and structures important to the understanding of its operation in networks and communities. Identification of an appropriate framework that will inform the development of new governance and tactics under ORL KP5 is a critical goal of this review. This, however, still leaves us with a concern about what starting conceptualisation will be most productive, a network approach (eg. Bourdieu), or the more popular functional approach (eg. Putnam).

As noted above, though, the inclusion of 'public good' elements (inc., norms, trust and reciprocity) into measures of social capital has led to much confusion about just what should be included, or excluded, from the social capital rubric. The 'laundry list' of possible contenders also likely contributes to the perception of some of social capital as a 'fluffy' concept without rigour or real practical application. Dimensions of civic life such as trust and reciprocity are likely to be variously important, depending on the context of the policy intervention, but conceiving them (as per Lin) as 'collective assets' and keeping them analytically distinct will allow more precision in the formulation of a useful conceptual model.

Network based approaches also have their problems in that there remains disagreement as to what aspects of networks are important, variously the structure and the content (eg. Bourdieu), or the quality (see Adler and Kwon, 2002). Measurement issues also are important here as determining the content or quality of a network is a 'far more daunting task' than assessing the pattern or structure of those relations (PRI, 2003a). It is desirable that any such approach is flexible enough to capture the range of network characteristics – the importance of which should be defined by the context in which the framework is applied.

However, perhaps only intuitively (as there is clearly no resolution of this issue in the literature), the most useful conceptualisation of social capital – in the context of its application to public policy under ORL KP5 – appears to be that of social capital as networks of social relations that convey social capital and provide its members with resources to action (or 'advantage').

This 'simpler' conceptualisation will allow for more flexibility in the application of the concept to policy problems. This approach should also allow more clarity in developing measures of the effects of interventions or of the current (base-line) 'condition' of social capital in target communities or networks. However, it is also clear that the area of measurement of social capital is also one of the areas that needs much more work. Development of further measures of social capital should take place in the context of a theoretical framework. Attention should also be paid to the validity of broad macro measures (even as base-line comparisons), and focus more on context specific measures, particularly from the perspective of place based (micro-level) interventions.

Adopting a network based approach, and considering the 'resources' contained in those networks, also requires that we place greater attention to the role of human capital and the agency of individual actors within those networks. The resources that individuals bring to collective action also reflect the social context and social situation in which they operate, so it follows that social capital is 'embedded in socially constituted individual attributes' (competencies) as well (Hogan and Owen, 2000). Individual competencies (including dispositions, understandings, values, and capacities) are a critical part of the 'resources to action' held in any network.

This, critical intersection between social and human capital will be developed further in an 'insights' paper (deliverable 2.2a) developed from this review and an overview of the human capital literature.

The Canadian PRI Perspective

At this stage it is important to note important convergences with the approach taken by the Canadian Policy Research Initiative (PRI) (2003a; 2003b). Many of the findings and suggested policy directions developed by this group parallel the proposed directions emerging from this review.

In 2003 the Policy Research Initiative (PRI) launched an interdepartmental research project with the aim of understanding the potential of social capital to affect public policy outcomes, and to develop an analytical and measurement framework that had practical application for their federal level policy departments⁶.

After a review of the literature, the PRI (2003a; 2003b) argues that the most rigorous and theoretically informed approaches appear to be those based on individuals, their networks, and the structural and qualitative characteristics of those relationships (an approach we find most useful in the context of ORL KP5).

Social capital refers to the networks of social relations that provide access to needed resources and supports (PRI, 2003b)

From workshops including policy researchers and managers from 15 Federal departments and agencies, they developed the following framework (figure 5, below). It is a systems approach that 'allows us to see how social capital is developed, how it operates, and how it may contribute to the achievement of various outcomes' (PRI, 2003b)

Briefly, the important components of the model are:

Focus on Determinants – this includes both individual factors: eg. demographics, employment history, education, ethno-cultural background and various perceptions and attitudes, and community level factors; eg. the presence of existing networks, the existence of infrastructure conducive to supporting network development, and prevailing norms and values.

• Network Characteristics, including;
  • network structure and composition (eg. size, density, strength of ties, degree of heterogeneity)
  • resources and abilities embodied within the network (ie. the productive potential of the network, relative to the policy/ program context)
  • normative characteristics (eg. values and norms, trust etc)
  • and network dynamics.(ie. how the network is changing over time)
• Network Transactions and Outputs (eg. processes related to the use and access of networks, such as processes of negotiation, the sharing of information, encouragement and support, or the application of sanctions).
• Other Complementary Resources and the 'Opportunity Structure' – 'complimentary resources' include such things as other capital (eg. physical, financial) available to the network. The 'opportunity structure' involves other environmental factor that may influence the effectiveness of the network (eg. a downturn in the business cycle).

Figure 5 – Canadian PRI Social Capital Model (from PRI, 2003b)

A feature of the framework is the focus on outcomes. The final element of the model, therefore, may well be the starting point for analysis, as the particular program or policy question you start from may well dictate what aspects of the framework are important.
Importantly, this model may not only allow us easier access to the complex ideas underpinning social capital, but it is also amenable to the incorporation of concepts of human capital and human agency.

Insights from the intersection of this review and the PRI approach

Conclusion

A social capital perspective will enhance the development of policy and programs in environments characterised by multiple stakeholders and complex ('wicked') problems, by giving us a better understanding of the actions of the constituent networks and individuals within those networks. Social capital, however, should be seen as part of a toolbox for achieving policy or program outcomes and not a 'cure-all' by itself.

The most useful immediate application of concept of social capital may be in understanding the current interaction of government programs with communities. For example, there are a number of ways in which a social capital lens could be considered in the context of programs and policies.
By raising awareness across government about its potential role in achieving (or obstructing) policy objectives.

• By a more systematic tracking of the existing use of social capital in achieving program outcomes.
• By developing and refining measurement tools and indicators to register the presence of social capital and assess its impacts on program outcomes.
• By identifying the effects of social capital on existing program outcomes and where appropriate facilitating their reproduction in other program areas.
• And by ensuring that programs and policies across government do not work at cross-purposes in the ways in which they incorporate or affect social capital (modified from PRI, 2003a).

However, a more sophisticated understanding of social capital as networks of social relations that convey 'advantage' to its members, and its intersection with agency and human capital, may also allow government to work directly and affirmatively in the areas that promote active citizenship. Emerging models of network governance provide an approach to operating in complex environments with multiple stakeholders and conflicting views. The addition of a social capital lens, backed by a clearly defined and theoretically grounded conceptual framework, should allow the development of governance processes that nurture networks and the resources, and relationships embedded in them. Such approaches promise to provide substantially smarter and robust policy outcomes that are more appropriate to the changing social and economic landscapes that we are currently operating in.

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Appendix 1 - AIFS Conceptual Model of Social Capital (Stone, 2001)

Appendix 2 – Selected Definitions of Social Capital

Footnote

* Report 2.2b Social capital – current knowledge and application to public policy provides an overview of the contemporary social capital literature).

# Both this report and Report 2.2b Social capital – current knowledge and application to public policy consider the Canadian Policy Research Initiative network-based framework.

• A worked example using the policy framework is provided in Appendix 1.

¹ Woolcock and Narayan also note a number of other early works that use the term ‘social capital’.

² Cultural capital represents the non-economic, symbolic, forces such as family background, social class, education credentials, etc. which influence a persons (academic) success.

³ Symbolic capital broadly amounts to status or recognition and is the form taken by the other kinds of capital when they are perceived and recognised as legitimate.

⁴ He was described by one of his researchers as ‘the General Motors of academic enterprise.’ (Leigh, 2002).

⁵ he World Bank hosts a substantial site with numerous reports and publication as well as a forum for debate on social capital - see http://www.worldbank.org/poverty/scapital/

⁶ See their website at: http://policyresearch.gc.ca/page.asp?pagenm=root