Pannell Discussions

No. 170, 20 September 2010

Social capital

One of the most interesting books I've read recently is "Making Democracy Work" by Robert Putnam. It explores dramatic differences in the effectiveness of regional governments in Italy, arguing that the main explanation is differences in 'social capital'. 

Social capital refers to features of a society that facilitate cooperation and coordination. It includes the levels of trust that people feel for each other, social norms for reciprocating positive deeds, and the strength of networks within the society.

In the 1970s Italy reformed its democratic system, creating 20 new regional governments. Robert Putnam was studying various aspects of Italian politics, and decided to research how the new governments performed, and why. A synthesis of his research over 25 years is provided in this fascinating book.

He and his collaborators found that there were distinct differences between regions in the performances of the new governments. The best of them were reasonably good at providing services to their communities, and the worst of them were really dreadful.  Many different pieces of evidence underpinned this conclusion, and they were quite consistent in their indications of which were the better governments.

One striking example was when the researchers (pretending to be local community members) wrote to each government with identical requests for three pieces of advice or assistance. In the most efficient regions, they received thorough replies within a week or so. In the least efficient regions, none of the mailed inquiries ever received any response at all. They followed up over many weeks with several phone calls and even a personal visit, before finally getting satisfactory responses.

A clear geographic pattern emerged, with the best governments being in the north and the worst in the south. Of course, reasons behind such differences are bound to be complex, but Putnam's conclusion was that the key factor was the difference in social capital between communities in the north and the south. People in the north were more community-minded. On average, they were more trusting of each other, and they behaved such that the trust was justified. They were more strongly connected to people outside their own families (e.g. through clubs and association) and more likely to reciprocate positive behaviours. These social characteristics and norms tended to flow through into the behaviour of regional government officers, making them more efficient, and reducing for everyone the 'transaction costs' of getting things done.

Putnam explained the differences in social capital as being due to differences in political and social histories over many centuries. This suggests that it could be hard to change, which is reflected in his conclusion.

"Stocks of social capital, such as trust, norms, and networks, tend to be self-reinforcing and cumulative. Virtuous circles result in social equilibria with high levels of cooperation, trust, reciprocity, civic engagement, and collective well being. These traits define the civic community. Conversely, the absence of these traits in the uncivic community is also self-reinforcing. Defection, distrust, shirking, exploitation, isolation, disorder, and stagnation intensify one another in a suffocating miasma of vicious circles. This argument suggests that there may be at least two broad equilibria toward which all societies that face problems of collective action (that is, all societies) tend to evolve and which, once attained, tend to be self-reinforcing." (Putnam, 1993, p.177).

It certainly made me glad to live in Australia. In social capital terms, I'm sure we would be as good or better than the best of the Italian regions studied. We've got our problems, of course, and I'd be the first to admit that there are plenty of problems with our governments, but it's clear that we do better than many. 

On the other hand, one shouldn't attribute too much to social capital. I've sometimes seen people emphasise it as a driver of environmental behaviour, to the exclusion of other important factors. Certainly it can make a difference, but if other factors are strongly against the adoption of an environmental practices (e.g. Pannell et al., 2006), social capital can't work miracles.  

David Pannell, The University of Western Australia,

Further reading

Pannell, D.J., Marshall, G.R., Barr, N., Curtis, A., Vanclay, F. and Wilkinson, R. (2006). Understanding and promoting adoption of conservation practices by rural landholders. Australian Journal of Experimental Agriculture 46(11): 1407-1424.

You can access the paper at:  Non-subscribers can buy a copy on-line for A$25 or email to ask for a copy.

Putnam, R.D. (1993). Making Democracy Work: Civic Traditions in Modern Italy, Princeton University Press.

Pannell Discussions are brief pieces on issues and ideas in economics, science, the environment, natural resource management, politics, and agriculture.

169. If I were a government minister  6 Sep 2010

171. Lifestyle landholders  27 Sep 2010

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Last revised: June 01, 2011.