James S. Coleman - "Social Capital in the Creation of Human Capital"

This articles introduces the concept of social capital. It is used as part of a general theoretical strategy accepts rational action as a starting point, but rejects the extreme individualistic premises that usually accompany it. In this way, Coleman hopes to bring the economic principle of rational action into the analysis of social systems without discarding social organization.

"If we begin with a theory of rational action, in which each actor has control over certain resources and interests in certain resources and events, the social capital constitutes a particular kind of resource available to an actor" (pg. S98). Social capital is defined by its function (my own note--many find this problematic). It is not a single entity but many entities with two elements in common: 1) they all consist of some aspect of social of social structures; 2) they facilitate certain actions of actors within the structure. Unlike other forms of capital, SC adheres to the structure of relations between and among actors. Before describing the forms of SC, Coleman describes 4 examples that illustrate these forms:

1. Wholesale diamond markets where strong social ties permit high levels of trust between merchants, making expensive security measures virtually unnecessary.

2. "Study circles" of Korean student activists whose relationships come from hometown or church ties, and thus have an extra layer of trust.

3. One woman's increased feeling of security in Jerusalem, over Detroit, which he says is a result of the social norm that people watch out for each others kids in Jerusalem.

4. The system of obligations that exist among merchants in the Kahn El Khalili market in Cairo that are based on family stability and stability or proprietorship.

Just to clarify:

Physical capital: created by changes in materials to form tools that facilitate production.

Human capital: created by changes in persons that form skills and capabilities that enable them to act in new ways.

Social capital: created by changes in the relations among persons that facilitate action. SC is less tangible than the other two because it exists in relations. But just as PC and HC facilitate productive activity, so does SC.

Forms of Social Capital:

1. Obligations, expectations, and Trustworthiness of Structures - "This form of social capital depends on two elements: trustworthiness of the social environment, which means that obligations will be repaid, and the actual extent of obligations held. Social structures differ in both these dimensions, and actors within the same structure differ in the second" (pg. S102). This type of capital exists in social structures where people are involved in a network of obligations to one another, where they trust one another to fulfill obligations, and where obligations are fairly extensive. Self-sufficiency reduces social capital. Actors with large numbers of obligations owed to them have more social capital and pools of resources that they can rely on to achieve goals.

2. Information channels - This refers to the use of social relations to acquire information, facilitated by the use of social relationships maintained for other purposes. Ex., finding out about a job from your hairdresser.

3. Norms and effective sanctions - When a norm exists and is effective, it is a powerful, though sometimes fragile, form of social capital. In addition to facilitating action, this form of SC also constrains other actions. Coleman notes that their constraint of deviance can prevent beneficial as well as harmful innovation.

All social structures and social relations facilitate some forms of SC. Certain kinds of social structure, however, are especially important in facilitating some forms of SC:

1. Closure of social networks - closure allows the creation of sanctions that enforce norms since group members are in contact with one another and can unite to impose sanctions, can develop a set of group obligations, etc.

2. Appropriable Social Organizations - voluntary associations can be used for purposes other than their original intent.

Social Capital in the Creation of Human Capital: The most important effect of social capital is its effect on the creation of human capital. Both SC within the family and SC in the community play a role in the creation of human capital in the rising generation.

SC in the family - family background is analytically separable into three different components: financial capital, human capital, and social capital, all of which are important. FC is measured by family income. HC is generally measured by parents' education. But what about SC? SC is the relations between children and parents (and other family members). It gives children access to the adult's HC and depends on both the parents' physical presence and the attention they give the child. "If the human capital possessed by parents is not complemented by social capital embodied in family relations, it is irrelevant to the child's educational growth that the parent has a great deal, or a small amount, of human capital" (pg. S110).

SC outside the family - SC can also be found in the relationships outside the home, in the relationships between parents and in the parents' relations with the institutions of the community.

Public Goods Aspects of Social Capital: Physical capital and human capital both allow the person who possesses the capital to benefit from it. Social capital is a public good. It requires investments of time on the part of people who will not reap the complete benefits of their investment. The withdrawal of major investors in SC who exit to pursue other interests can have serious costs for the entire group. An action may have small costs for the individual do it, but much greater costs for the group as a whole. Coleman says we should try to find ways to increase SC, probably through the creation of some formal institution.