What is social capital (and why should you care)?

Dogwalkers in our neighborhoodEvery morning at about 7:30, I take the dog for a walk. As a nine-month old hound, Tahlequah is a bundle of energy. If she doesn't get exercise, my day is miserable. She torments the cats. She barks at passersby. She destroys anything she can get her paws on. I used to view these walks as a nuisance, but now I recognize they're beneficial to both man and beast.

Plus, they help me build social capital.

You see, there's a loosely-knit group of neighborhood dog owners who tend to walk the same route at the same time every day. Several times each week, Tally and I run into Lara (walking Hunter), Peter (walking Footie), Chuck (walking Rory), Dave (walking Pippin), Susan (walking Flanders and Gigi), Danna (walking Artie), and a variety of other folks. We've been doing this walk for only a few months, but some of the dogs and their owners have strolled the beach for years.

As we walk, we talk. We get to know each other. We share what we know about our areas of expertise — real estate, psychology, personal finance — and what we know about the neighborhood. And we keep an eye on the area to make sure things are safe. For instance:

  • On a recent walk, Lara's partner told me about some local breweries I hadn't heard of.
  • When I mentioned I saw a house for sale in the neighborhood and wanted to know more, Susan emailed the RMLS info to me.
  • Like the rest of Portland, our neighborhood is struggling with a surging homeless population. When people abandon their camps along the beach, we dogwalkers are the ones who haul out the trash.

Every morning, we're building social capital. We're strengthening the bonds between the members of this group (some of the folks are close friends), and we're improving the overall quality of life in our neighborhood. This social capital might not be tangible, but it's just as real and just as valuable as any other medium of exchange. Maybe more so.

Defining Social Capital

“The core idea of social capital theory is that social networks have value,” writes Robert Putnam in Bowling Alone. “Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective), so too social contacts affect the productivity of individuals and groups…Social capital refers to the connections among individuals — social networks and the norms of reciprocity and trustworthiness that arise from them.

Note: Putnam is talking about real-life social networks, not the virtual networking so common in 2016. When he published Bowling Alone in 2000, Twitter and Facebook didn't exist. I believe that digital social media can enhance real-life relationships, but it can't replace them.

You create social capital when you volunteer at a food pantry, help your neighbor start their car, have your Sunday School class over for a picnic, or join a softball league. Any time you participate in your community, you're generating social capital, both for yourself and for the other people involved.

You see, social capital differs from other forms of capital in that it has both an individual and a collective aspect. When you generate social capital, you benefit — but so does your community. (Not always, of course, but generally so.) The more connected you (and your community) are, the more social capital you can produce.

“A well-connected individual in a poorly connected society is not as productive as a well-connected individual in a well-connected society,” Putnam writes.

In a well-connected community, even loners profit from the high level of social capital. According to Putnam, “If the crime rate in my neighborhood is lowered by neighbors keeping an eye on one another's homes, I benefit even if I personally spend most of my time on the road and never even nod to another resident on the street.”

Aspects of Social Capital

Social capital isn't a new idea, although the term itself is relatively recent. In the past we've called it other things: goodwill, fellowship, community. The concept existed in ancient cultures as “the golden rule”, perhaps most familiar to us from the Biblical admonition to do unto others as you'd have them do unto you.

“Social capital turns out to have forceful, even quantifiable effects on many different aspects of our lives,” writes Putnam. “What is at stake is not merely warm, cuddly feeling or [community pride]…Our schools and neighborhoods don't work so well when community bonds slacken…Our economy, our democracy, and even our health and happiness depend on adequate stocks of social capital.”

When we don't interact with each other, when we isolate ourselves inside our homes, we have less motive to help our neighbors and improve our communities.

Putnam differentiates between bonding social capital and bridging social capital. “Bonding social capital constitutes a kind of sociological superglue,” he writes, “whereas bridging social capital provides a sociological WD-40.”

  • Bonding social capital creates strong in-group loyalty. (And thus may create strong out-group antagonism.) Examples of this sort of inward-directed networking include church groups, country clubs, and college fraternities and sororities. I think of bonding social capital as “strong ties with intimate friends”. The older I get, the less have of this, and I miss it.
  • Bridging social capital creates connections across societal boundaries. Examples of this outward-facing form of networking include bowling leagues, national organizations…and my dog-walking group. I think of bridging social capital as weak ties with acquaintances. I believe I have lots of this, which is great.

In short, bonding social capital is built in homogeneous groups (where people are similar) and bridging social capital is built in between heterogenous groups (of dissimilar folks). Both types are great. The latter is more difficult to build and maintain, but tends to provide the most value to individuals and society.

Note: Often interactions contain elements of both bridging and bonding social capital. For our purposes at Money Boss, I'm not going to differentiate between the two. I'm simply going to talk about “social capital” as a single, unified idea. If you want a more scholarly exploration of the subject, I encourage you to borrow a copy of Bowling Alone from your local library.

Boosting Social Capital

According to Putnam's research, social capital has eroded over the past few decades. There's less of it in U.S. society today than there was fifty years ago.

“The ebbing of community over the last several decades has been silent and deceptive,” writes Putnam. “Weakened social capital is manifest in the things that have vanished almost unnoticed — neighborhood parties and get-togethers with friends, the unreflective kindness of strangers, the shared pursuit of the public good rather than a solidary quest for private goods.”

Boosting social capital will benefit you and your community. “Trustworthiness lubricates social life,” says Putnam.

When I think of social capital, I'm always reminded of our condo. It's easy for the homeowners in our building to turtle up, to stay inside and not interact with neighbors. But doing so creates barriers rather than build bonds. So, we as a community have made a conscious effort to foster fellowship, to get to know each other. As a result, we're much more likely to lend a hand when a neighbor needs assistance.

People with lots of social capital can find help when they need it; those with little social capital tend to spend a lot of time frustrated and alone.

The classic Christmas film It's a Wonderful Life is a great illustration of social capital in action. Jimmy Stewart plays George Bailey, a man who repeatedly goes out of his way to help friends and neighbors. When disaster strikes, everyone he's helped before comes to his aid.

Sure, it's a sappy feel-good moment, but it's a fine example of social capital in action. When his brother declares that George is “the richest man in town”, he's not too far off the mark. He might not have much financial capital, but he's flush with social capital.

This is the final message of the movie: “No man is a failure who has friends.

Although George Bailey repeatedly sacrifices his own interests to create social capital, you can often create win-win situations in which everyone profits. But the best way to build social capital is to help others without expecting anything in return.

When I write about how to build confidence and overcome fear, I preach the “power of yes”. When I do, I use the lottery as a metaphor:

My work nowadays involves meeting and chatting with folks from all walks of life. They email me to say, “Want to have lunch?” and I say, “Of course!” We talk about podcasts or travel or bicycling or comic books. Whatever strikes our fancy. When we’ve finished our tea or Thai noodles, nothing seems to have happened — not on the outside, anyhow. What’s happened, though, is that we’ve both received lottery tickets. By meeting and chatting and sharing ideas, we’ve been given tickets in the lottery of life.

I like the lottery metaphor, but it might be more accurate to describe these actions in terms of social capital. When I meet new people, I'm earning social capital. They are earning social capital. And we, as a community — whatever community that might be — are earning social capital.

Awesome People

During our fifteen-month RV trip across the country, Kim and I were struck by this fact: People are awesome. Everywhere we went, the folks we met were warm and friendly and engaging. They were happy to chat and to share their lives. They invited us to break bread with them — and we invited them to join us for the same. Out of thousands of interactions with strangers, we had exactly two bad experiences.

If social capital has declined in this country, it's not because people are worse than they once were, that they're meaner or less tolerant. If anything, I suspect they're better. Nicer. More trustworthy. Despite the negative news promulgated by the mass media, everyone really does want to get along — and they try to do so. The lack of connection stems from something else.

Many pundits have attributed the decline of community groups and civic involvement to the digital age. The irony, we're told, is that in this era of greater connectivity — we live in a “global village”! — we're more disconnected from our real-life neighbors than ever before.

Apparently, however, this disconnectedness is nothing new. Putnam's research shows that the United States tends to go through cycles of increased and decreased social capital, just as we tend to experience cycles of increased and decreased economic prosperity. During the 1950s and 1960s, we experienced a boom in social capital. Right now, we're near the bottom of a downturn.

From Bowling Alone:

My message is that we desperately need an era of civic inventiveness to create a renewed set of institutions and channels for a reinvigorated civic life that will fit the way we have come to live. Our challenge now is to reinvent the twenty-first century equivalent of the Boy Scouts or the settlement house or the playground or Hadassah or the United Mine Workers or the NAACP.

Lately, I've been asking myself: “What concrete steps can I take to increase social capital, for myself and for my community?” Here are a few of my answers:

  • I can share my knowledge and experience liberally and often. I can continue to attend events and speak for free.
  • I can meet one-on-one with anyone who asks.
  • I can participate in my local community. (To that end, I've joined the HOA board and begun looking for neighborhood groups and activities to join.)
  • I can support my friends, family, and colleagues in their various endeavors.

I encourage your to join me. Let's become more involved with our communities. Let's be nice to people — all people. Let's give without the expectation of return. Let's do what we can to build social capital.

“We should do this,” Putnam writes at the end of Bowling Alone, “not because it will be good for America — thought it will be — but because it will be good for us.”

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Mike P
Mike P

I had some of these same thoughts as I settle into my new rural city of 25k. I’ve been trying to attend community events and be part of local groups to integrate better. This recent election prompted me to volunteer to serve on our city’s planning commission and I’m excited that I’ve been selected. Change starts locally

Mr. Grumby
Mr. Grumby

Great article. I was encouraged to hear that your experiences while traveling in your RV were overwhelmingly positive, despite what is written or blathered about on the web or in the news. We have also found that to be true in our travels, and a low-news diet has been instrumental in maintaining perspective. I hadn’t thought about Social Capital as you described it before. It’s helpful to know that walking the dog and more deliberate actions can contribute personal connectivity. I think Mrs. G said you are in Portland, Oregon. If so, we would love to have coffee or a… Read more »

Joe
Joe

Great post, JD. I’m a big fan of the quote:

“The everyday kindness of the back roads more than makes up for the acts of greed in the headlines.” – Charles Kuralt

ExploreMountainsOnSkiFoot&Bike
ExploreMountainsOnSkiFoot&Bike

Great topic. I really enjoyed reading “Bowling Alone”. I recently read “Born on Third Base” by Chuck Collins, and one of his recommendations is essentially to build social capital by interacting with neighbors and community members. One way to do that is to ask for help. Ask to borrow a tool from a neighbor or help to complete a project. Most people like to help others and feel bad about asking for help. By asking for help breaks the ice for others to help and “allows” others to ask for help too. I recently reached out to an acquaintance from… Read more »

Heather
Heather

Isn’t it great when kindness to ourselves translates into kindness to others? Maybe this is always so. Thanks for drawing attention to this ongoing and relevant topic. It was a great read! It rejuvenates my commitment my volunteer cause of Meals on Wheels.

Thehappyphilosopher
Thehappyphilosopher

I will have to place that book on my reading list. I think the fact that everything moves in cycles is an underappreciated fact of life. The economy, societal moods, our own moods, sleep, wars, crime, everything. As the pace of change increases though, I wonder how the natural cycles will react. Will they be less visible? More volatile? More frequent? The only great thing about social media/blogging community, etc. is the fact that geography is no longer a limiting factor. I think to some extent it has replaced much of the bonding social capital that we used to be… Read more »

Jason
Jason

Love this post. I teach a class on this and it is amazing the disconnect that my students have. I would push back a bit and say that the social capital disparity is getting worse. People are great but a sense of tight nit community is lacking. I saw Putnam give a lecture on this last year at Harvard.. of course it helps that he teaches there. We need more of these posts to get more convos going about creating community! Good start

stellamarina
stellamarina

In the old days a lot of the support community was found at church. As many of us have moved away from organised religion, we have lost the sense of belonging to that community and having the social support it gave. So yes, we need to work on finding replacements for us and our children.

Finance Nize
Finance Nize

One of the great and best topic I’ve found this day really enjoyed reading the whole article. Exercise, blaming, crimes, mistakes, etc. are all part of the life which none can avoid or refuse at any cost. We need to act according to the situation; I believe everyone should take off some time from their daily work, and spend some good time in their community/society. Thanks for highlighting such an important topic, keep pointing out points which people tend to forget/miss these days.

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