Social Capital


Corruption  –  Justice  –  Taxes and Spending  –  Foreign Relations

Social capital is the fuzziest of the three forms of capital, the hardest to define and by far the hardest to measure, but at the same time the most important.  It consists of the immaterial things that bind people into communities and, ultimately, into a single nation.  They take the form of written and unwritten laws, organizational structures, social customs, shared belief systems, and much more.

The common denominator of social capital is that it promotes trust and cooperative action.  When it works well, people mostly trust each other.  They mostly trust policemen and judges to treat them fairly.  They mostly trust government officials not to steal from the public or do favors for their friends at public expense.  They buy groceries with reasonable confidence that the meat isn’t going to be putrid and the milk won’t poison their children.  They walk down the street without expecting to be attacked and they do business without expecting to be cheated.

That doesn’t mean that people in high-trust societies are naïve or stupid, or that they aren’t reasonably vigilant.  It just means that in a society in which deviant behavior is rare, and usually gets punished, people need to waste much less time, money, and effort on protecting themselves from predators.

It turns out that this is an enormous economic multiplier – even more than physical or human capital, according to many social scientists. [Pinker, p. 541] If most people in a society are decent, honest, and trustworthy, it is much easier to find good employees or business partners and to get things done, so businesses expand and innovate much more readily.  If most public officials are lazy, slow, and dishonest, and have to be bribed to get them to issue necessary permits, the economy will drag badly.  If the reverse is true, the economy can move forward much more rapidly and efficiently.

The complexity of human societies makes this part of the Interlock very difficult to outline clearly.  Things get fuzzy very quickly when trying to measure things like trust, culture, and morality!  But the importance of social capital to the rest of the Interlock simply cannot be overstated – and, unfortunately, neither can the very large problems that have developed within the US in this respect.

The US has suffered a great deal of neglect and deterioration in social capital over the last half century.  Customers have less trust in the integrity of businesses, employers have less trust in their employees and vice versa, and voters widely believe that politicians are either incompetent or liars who only care about what large donors and special interest groups want.  Even our trust in each other has gone down:  in 1972, 46.3% of Americans said that they thought most people could be trusted, but by 2006 that number had dropped to 32.3%.  [Data is from NORC’s General Social Survey]

For the Interlock, a decline in the level of interpersonal trust is a concern, but it is minor compared with our now disastrously low trust in the systems that keep America moving.  Polling data consistently shows a collapse in faith in our institutions, particularly our government institutions.

As recently as 1987, two thirds of adult Americans had a positive opinion of Congress.  Today, confidence in Congress is in single digits, the lowest level in the history of these polls.  Congressmen routinely score lower in popularity than cockroaches, root canals, head lice, used car salesmen, and traffic jams.

Unfortunately, there is a lot of evidence that this loss of confidence is based on a real decline in the competency and integrity of our economic and political institutions, and that this decline has had a serious negative effect, both on our economy and on our quality of life.


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