The concept of social capital has become one of the most important concepts in the social sciences, developing in recent decades — particularly in the 1990s — with applications in economics, sociology, and politics. The phenomenon is undoubtedly ancient, dating to the emergence of human communities on earth. Yet the availability of social capital varies between groups and societies, leading to disparities in economic growth and social cohesion.
The importance of the subject today lies in the widening of rifts in many societies, including those considered advanced. Populist movements have emerged in these societies that reject the political values and traditions that long prevailed within them. Alongside these developments, values of tolerance and acceptance of the other have begun to recede, threatening the social fabric.
Among the developments in these societies is the decline of social institutions that once provided a network of social and political relationships, strengthening the bonds of which society is composed. These bonds serve as the structure that holds its parts together, and the greater these structures and institutions grow, the greater the social capital.
This structure produces important social values related to trust. When this value prevails in a society and its components, it paves the way for political and economic growth. Trust is vital to politics: political leaders rely on community bases that grant them the trust needed to lead countries, cities, towns, or localities. An absence of trust creates a vacuum that limits leaders' ability to implement their policies and programmes, and the process of political exchange between leaders and the broader public becomes extremely costly — because the leader must push decisions through by coercion.
The same applies in the economic sphere, where trust is the foundation of commercial dealings between individuals, whether they are sellers or buyers. Although there are institutional safeguards for commercial transactions, the presence of social capital greatly facilitates trade and financial dealings. Reputation and trust — for certain businesses and companies — ease the borrowing process, which itself rests on the degree of trust and market reputation enjoyed by individuals and commercial enterprises.
For example, the trust that the United States built in its currency, the dollar, through a gold-backed guarantee reinforced the dollar as a currency of exchange. Even when President Richard Nixon decoupled the dollar from gold, investors did not lose confidence in the greenback. Most commercial, financial, and energy transactions continue to be conducted in dollars, even after the withdrawal from the Bretton Woods agreement in 1971.
Multiple associations in many countries contribute to increasing social capital. When Alexis de Tocqueville visited the United States in 1831, he was struck by Americans' ability to organise themselves into associations without state intervention. These gatherings formed the foundation of American pluralism — indeed the very foundation of civil society in the United States.
Robert Putnam, the renowned professor of political science at Harvard University, laments the decline of social capital in the United States. In his widely read book Bowling Alone: The Collapse and Revival of American Community, Putnam argues that civic life and social capital are in retreat. Political participation — one of the most important indicators of citizenship — at both the local and national level is in continuous decline. This has been accompanied by a deterioration in trust in the American government: the proportion expressing distrust in it rose from 30% in 1966 to 75% in 1992.
The author also points to the diminished efficacy of religious ties. Despite American society's religiosity — characterised by a relatively greater number of houses of worship than any other society — religious practice has become individualised rather than channelled through religious institutions such as churches. American society has witnessed a decline in church attendance and participation in church-based organisations.
The same applies to civil society institutions such as trade unions, whose membership has fallen over the years. Putnam cites an intriguing fact about the decline of social cohesion and the fall in social capital: he notes that bowling — the game from which he drew the book's title — has grown in popularity as a pastime over decades, yet participation in bowling leagues has fallen markedly by around 40%. This decline illustrates the weakening of social bonds, which are the very basis of social capital production.
Such is the state of the United States at its 250th anniversary. As the old saying goes: every age has its state and its men.