Social Capital: Why We Need It and How We Can Create More of It

Social capital lowers the cost of economic transactions and fosters social ties that lower crime rates, homelessness, and school dropout rates. Government policy and programs cannot create social capital.

We [also] build our sense of civic identity and opinions about government through social interactions. […] Our social capital — which Putnam defines as the overarching belief about society that facilitates co-operation — diminishes when we lose opportunities to engage with people outside of our regular social networks.

Solidarity, trust, and cooperation make up the stuff now often called social capital. Without it, a society wouldn’t last long. The creation of social capital among members of a society is possible only if shared norms align their expectations, habituate them to exercise self-control, instill in them a unity of purpose, and incentivize them to tran

Social capital refers to a kind of capital that economists had largely overlooked: the social ties among individuals and the norms of reciprocity and trustworthiness that arise from those ties.38 When everything else is equal, a firm with more social capital will outcompete its less cohesive and less internally trusting competitors (which makes sen