Social Capital

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Nowadays, many social scientists agree that social capital is present and positively contributes to economic growth in the light of many studies. In other words, social capital is important to the efficient functioning of modern economies. It constitutes the cultural component of modern societies, which in other respects have been organized since the enlightenment on the basis of formal institutions, the rule of law, and rationality. Building social capital has typically been seen as a task for second generation economic reform; but unlike economic policies or even economic institutions, social capital cannot be so easily created or shaped by public policy. This project will define social capital, explore its economic and political functions, as well as its origins, and make some suggestions for how it can be cultivated.


Social capital is a concept imroved in sociology and also used in business, economics, organizational behaviour, political science, public health and natural resources management that refers to connections within and between social networks as well as connections among individuals. Despite the fact that there are a variety of depended definitions, which have been described as "something of a cure-all" for the problems of modern society, they tend to share the core idea that social networks have value. Just as a physical capital or a college education human capital can increase productivity of both individual and collective, so too social contacts affect the productivity of individuals and groups.

Furthermore, Social capital is a form of capital that exists within relationships among individuals . The notion of physical capital, as embodied in machines, tools, and equipment, has been extended by economists to include human capital. Just as physical capital is created by changes in materials to form tools that facilitate production, human capital is created by changes in persons that bring about skills and capabilities that make them able to act in novice ways. Social capital comes about through changes in the relations among persons that facilitate action. If physical capital is wholly tangible, being embodied in observable material form, and human capital is less tangible, being embodied in the skills and knowledge acquired by an individual, social capital is less tangible yet, for it exists in the interpersonal relationships. Just as both physical capital and human capital facilitate productive activity, social capital does as well. It is argued that social capital is different from other forms of capital because it leads to bad results like hate groups or inbred bureaucracies. This does not disqualify it as a form of capital; physical capital can take the form of assault rifles or tasteless entertainment, while human capital can be used to devise new ways of torturing people. Since societies have laws to prevent the production of many social "bads," we can presume that most legal forms of social capital are no less "goods" than the other forms of capital insofar as they help people achieve their aims. Perhaps the reason that that social capital seems less obviously a social good than physical or human capital is because it tends to produce more in the way of negative externalities than either of the other two forms. This is because group solidarity in human communities is often purchased at the price of hostility towards out-group members. There appears to be a natural human proclivity for dividing the world into friends and enemies that is the basis of all politics. It is thus very important when measuring social capital to consider its true utility net of its externalities. To be successful in today’s knowledge and intensive economic environments, one cannot simply work in isolation. For one thing, the beating volume and complexity of information available today makes it possible for any person to stay...
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