Beyond Community and Society The Externalities of Social Capital Building

Beyond Community and Society: The Externalities of Social Capital Building
Author(s): John M. Heffron

Source: Policy Sciences, Vol. 33, No. 3/4, Social Capital as a Policy Resource (2000), pp. 477-
494
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Policy Sciences 33: 477-494, 2000.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands. [477]
Beyond community and society: The externalities of

social capital building
JOHN M. HEFFRON
Educational Research Programs, Pacific Basic Research Center, Soka University of Am
The concept of social capital is both a very new and a very old one
earliest human societies, in their efforts to manage and control a host
environment, produced assets that gave their strivings a larger, c
effect, one of the earmarks of social capital formation. Pre-scientific
anthropologists tell us, engaged in a process of ordering and classif
experience that if not scientific in our modern sense of the term was n
mythological either. What Claude Levi-Strauss has called the scie
concrete - 'the organization and exploitation of the sensible world
terms' - is a quintessentially human activity, as relevant to our ancient
as it is to us today (Levi-Strauss, 1973: p. 16). Pre-modern forms of soc
tended to be nested in structures, not individuals; they were context d
time-bound, and almost exclusively group-based (Redfield, 1953).
The current interest in social capital is new in the sense that only in
hundred years or so have the historical dimensions of community yiel
set of sociological principles designed to explain the impact of still larg
- a market economy, modern individualism, the rise of the welfare
emergence of a 'culture of professionalism' (Maine, 1905; Cooley, 1
and Burgess, 1921; Homans, 1950; Tonnies, 1963; Bledstein, 1976; Ben
pp. 15-43). Needless to say, these new concerns have shaped almost irre
our understanding of community and society. No longer based on t
order of things, stable community structures would have to be conscio
deliberately 'made,' not from the elements of a usable past but from t
qualities of modern life that threatened to undermine the old struc
world was entering a new entrepreneurial and acquisitive age, the mate
which - private ownership, individual rights, contracts, social and occu
mobility - would, as John Dewey wrote in The Public and its Probl
back into local life, keeping it flexible, preventing the stagnancy
attended stability in the past, and furnishing it with the elements of a
and many-hued experience' (Inkeles, 1969; Dewey, 1927: p. 216).
Fifty years later, the sociologist Geert Hofsteed demonstrated the r
of such modern values as individualism, equality of opportunity, and 'un
avoidance' for the generation of what we call social capital. The p
groups who scored high on Hofstede's values scale enjoyed greate
equality, social mobility, and political freedom, prerequisites for the g
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and, as the studies in this volume suggest, necessary if insufficient ingredients of

social trust and cooperation (Hofstede, 1980). The objectification of community
life has had the unintended effect, however, of displacing historical communities
and their workings from the center of social analysis (Bender, 1978; Wolin, 1960).
Most of the current literature on social capital, and the study of group behavior
generally, has tended to take everything but the community itself as the point of
reference, asking instead what effect changes in the amount or degree of social
capital have on individual attitudes and 'personality,' on determination of social
status, on the political life of the state, or on the daily operations of the market
(Parsons et al., 1953; Rieff, 1966: pp. 66-78; Merton, 1968; Putnam, 1993;
Knack and Keefer, 1997; Newton, 1997; World Bank, 1999).
Today, trust and cooperation are rarely viewed as natural forces embedded
in or expressive of the human condition or in a priori notions of community.
The groups and associations, as well as the individual behaviors from which these
qualities spring, are temporary and contingent. They can as easily be unmade and
the world reduced in the next instant to relative anarchy and anomie. Indeed,
trust and cooperation are in constant flux, the product of unstable social forces
the control over which, planning elites often claim, must fall variously to
government, business, and enlightened social scientists (Lippmann, 1922; Lynd,
1939; Lasch, 1991: pp. 412-475).
Alarmed at recent evidence suggesting a world-wide decline in associational
life, social scientists and their allies now gather at schools, think tanks, and
foundations to develop 'broad-based, actionable strategies that may succeed in
rebuilding our... [stocks] of social capital' (Putnam, 1998: p. vii). Development
workers, disillusioned with the mechanisms of state government, turn to the
possibilities of local and grassroots 'capacity-building' to achieve their ends.
They talk about 'formulating purposive organizational development strategies,'
urge investments in 'accelerated institution building,' and yet despair at the
obstacles to 'creating' what isn't already there - the stable community structures
necessary for sustainable development (Cernea, 1987: p. 14; Uphoff, 1988). At
the macro level, a large 'transnational private aid network' consisting of private
donors, NGOs, Northern Atlantic governments, Third World nonprofits, host
country governments, and grass-roots recipients, by absorbing 'pressures for
more radical restructuring of the international economic system,' will serve,
argue students of the nonprofit sector, to achieve overall 'system maintenance'
(Smith, 1990, pp. 279-282). At no other time in our recent history, it would seem,
have the discontents of community building or the antinomies of moderniza-
tion given experts wider scope (or brighter prospects) for enlightened social
planning and public policy. The downside of experiments in social engineering
- and one of the furies of 'enforceable trust,' the tit-for-tat that is said to hold
people together in otherwise unequal relationships - is what some have called
negative social capital (Portes, 1998: pp. 8, 15-18). In the extreme case of group
conformity and exclusivism, it points to the deeper failures of the socialization
process itself; a process in which social capital formation is also implicated
(Lang and Hornburg, 1998).
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Neither is it possible any more, after the rise of modern sociology, to neatly
separate community demands and individual motivations, independent political
structures and inner group dynamics, or the benefits of membership from the
growing importance of non-membership. Not simply content to study group
processes, researchers now want to know what connects up the 'inner cohesion
of groups and their external relations.' In the evolutionary hierarchy of Gemein-
schaft (community) and Gesellschaft (society), the latter, it is said, will gradually
supersede the former until the withering away of community obliterates the last
distinction of group life, the distinction between membership and non-member-
ship (Wirth, 1938). The ascendancy of the reference group in sociological theory
is a good case in point. When the individual is the unit of analysis for the study
of group behavior, often more important than how one interacts with a member-
ship group is how one interacts with the groups of which one is not a member.
The individual's reference group, according to Robert K. Merton, is a'frame of
reference for self-evaluation and attitude formation' (Merton, 1968: pp. 335-
440) 'No man is an island' ceases to hold true so long as the island hermits are
communicating with one another, taking positive assessment of the develop-
ments of neighboring islands, and in the mirror of the 'other,' adjusting their
individual behavior accordingly.
All of these considerations have served to expand the role of policy and
policymaking in the fulfillment of individual needs; group needs; and society's
own need for stable, other-directed group associations. We may wonder whether
social capital is something that states or governments or nongovernmental
organizations can ever actually bestow on a people, given the stubborn persis-
tence of organic religious, ethnic, family, and kinship ties around the world, but
there is no doubting the sincerity or the seriousness of the reformers' zeal and
their desire to do something. Taking the physician's oath to first do no harm,
the twelve PBRC studies in this volume of Policy Sciences have resisted that
temptation, emphasizing instead the externalities of pre-existing forms of
social capital and the function of those potential benefits within larger policy
arenas - labor management, industrial regulation, national reorganization,
communal property rights, land redevelopment, native sovereignty, and other
areas.
Which is not to say that the policies benefiting from socia

lation in a given country, organization, or political move
residual effect redounding to the overall stock of social c
Montgomery has defined it, is a preferred future and th
bring it about, then any policy with a larger public pur
protection of people's civil and legal rights (including th
adequate food and shelter, public health, collective security, o
- can help to create the moral and material condition
formation, and for the qualities of trust and cooperation
in social capital a productive one. These synergies, while
inadequate to sustain the broad-based agreements necess
public policies. What Jeffrey Broadbent calls 'macro-relat
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the buildup of credibility and trust between states as 'actors' and a large, trans-
local public, is another important aspect of effective social organization,
whether it contributes to micro-level social capital or not (unpublished remarks
at the PBRC Aspen Institute Conference, 2000).
Many of the case studies in this volume fit this feedback model, in which the
relationship between social capital and public goods is a circular one of shared
resources and benefits. Where these studies separate themselves from the pack
(dozens of new studies on the subject of social capital) is at the point of path
dependency, the belief that any surfeit or abundance of social capital is the fault
not of the individual or group but of 'a lack of a specific layer in the enabling
environment' (unpublished remarks, World Bank, 1999). Several of the studies
in this volume document the activities of groups that are particularly resistant
to outside influence and control - groups, indeed, that are born in resistance to
dominant forces. Not easily colonized, these groups nevertheless turn out to
provide an important resource, however unintended, for the performance of
public services (cf. Trask and Carroll, this volume).
The extrapolation of external policies from a resource as divisible, fungible,
and essentially contingent as social capital is not a simple undertaking, not
matter how it is approached. Yet if the concept is going to mean anything it will
have to prove its value to larger concerns, ones that go beyond sociological
categories like community and society that by themselves mean very little. The
authors of the papers here took a different tack, asking themselves in each of
the several cases what characteristics of and what inputs into social capital
either enhanced or detracted from its use as a policy resource. The policy
arenas under consideration have included education (Brinton; Ross and Lin;
Torres et al.; Print et al.; Lee; Mao; Lu), rural development (Mondal; Carroll;
Quinones and Seibel; Fox and Gershman; Sen), indigenous group rights (Trask;
Norchi; Carroll), gender equity (Marshall; Candland), national reunification
(Mao; Lee), science and technology (Norchi), industrial relations (Broadbent;
Brinton; Taylor; Chen); and state and religion (Candland). Of course, people
are trying to achieve many things with social capital, not all of them subsumed
under these categories. Other public purposes include policies aimed at gender
equity, increasing or protecting local self-reliance and control, enlarging confi-
dence in public institutions, ensuring social mobility for the disadvantaged,
promoting historical preservation, and achieving social justice through a more
equitable allocation of resources.
Five research questions, which we can now formulate as tentative conclusions,
guided the work of sorting and sifting through the many variables of social
capital and its exploitation. The questions were:
Are there different kinds of social capital that serve policy purposes?
Does the social capital of a group change when members are invited to work
together for purposes that deviate from those of the group?
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Do groups increase their social capital when they join with other groups to
serve an external cause?
How do group leaders seek to strengthen the commitment and loyalty of

members?
How do political leaders make use of social capital to implement policies

that require public participation?
While the answers to these questions vary widely depending upon the nature
and scope of the policies and the social capital described in each of the papers,
and while not every author addresses all questions with the same special
interest, several conclusions each linked to a question do nevertheless suggest
themselves. We tackle them in order in the five sections that follow.
The vagaries of dependency: Social capital and the policy learning curve
It should come as no surprise that the energies locked up in social capital are
not always accessible or cast in a form that makes them useful to policymakers.
Public access to these resources is conditioned upon the kind and degree of
social capital, that is, whether it is of the bonding type (and thus more particular-
istic and ingrown) or of the bridging type (more expansive and accustomed to
working through 'networks' of trust and cooperation); whether its ties are
strong (intensive and repeated) or weak (temporary and contingent); vertical
(operating through formal hierarchical structures) or horizontal (in which
authority is more decentralized); open (civically engaged and exercising open
membership) or closed (protective and exercising closed membership); geo-
graphically dispersed or circumscribed; and instrumental (membership as
social collateral for individual wants) or principled (membership as bounded
solidarity). For the policymaker, knowing these variables and the considerable
spread between them is vital, although it can entail a steep learning curve. The
experiences reported in this volume shed a great deal of light on the lessons
policymakers must be willing to absorb if they are to make wide and effective
use of the many dimensions of social capital.
For Japan's ruling Liberal Democratic Party (LDP) the opportunity costs
have been high - declining popular support, rapid ministerial turnovers, a
disastrous economic recession, and mounting business and labor unrest - for
failing to convert Japan's social capital into effective public policy. In a survey
of 122 labor organizations Broadbent (this volume) has uncovered a'complex
sphere of ties' among labor, business, corporatist elites, and government, the
one greatest constant of which has been the role and function of the state. While
the 'network state' has served as an influential power broker, mediating Japan's
internecine conflicts, it has performed poorly as a learning organization able to
cobble together multistranded sources of social capital into broad-based and
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responsive social policy. When norms of reciprocity advance the interests of the
state - by reducing potential labor conflicts, for example - the state is a willing
co-partner; when they cost the government money - when the same groups
lobby, for example, for greater health insurance benefits - the state is quick to
withdraw its support. Because of its considerable influence, however, the state's
withdrawal over any given issue can have devastating consequences for the level
and efficacy of Japan's social capital.
Whereas in Japan the communal sources of policy tend to reside at the
macro level in strong vertically organized political and economic interest groups,
in the transborder subregions of Asia-Pacific studied by Chen (this volume) they
exist at a different level altogether. Not simply a means to more effective public
policy, affiliate groups serve in these intermediary zones as a divining rod for
competing local, national, and global economic forces. Drawing on ethnic and
kinship ties, native-place identities, and a rich fund of local and subregional
knowledge of economic and political practices, local associations in these areas
have taken over many of the traditional policymaking responsibilities of central
government. As Chen writes, 'depending on the extent to which the policy-
making environment is centralized or decentralized, social capital can have
more or less room to accumulate and exert its influence, instead of being merely
used or manipulated politically.' Ethnically based social networks have had
both 'gluing' and 'lubricating' effects on transborder trade and industrial relations,
facilitating stronger business-state ties, which in turn have led to more efficient
and responsive policymaking at the local level. It took a policy regime willing to
recognize the wealth-generating potential of strong, horizontal, and principled
social capital to reap the full benefit of this resource.
Compare the flexible, liberalized approach of policymakers in the transborder
regions of the western Pacific Rim with the bungled attempts of officials in the
Bangladesh Department of Cooperatives and the Rural Development Boards
to set up farmer's cooperatives in the depressed rural countryside. Beginning
in the twentieth century and down to today, government bureaucrats, according
to Mondal (this volume), have defined their role as 'regulatory and restrictive
rather than enabling and promotional.' Government-sponsored cooperatives
settled over the spontaneous social energies of the poor like a hard veneer,
trapping indigenous sources of social capital in a web of bureaucratic entangle-
ments. The NGO rural development programs, whose dramatic successes
Mondal's paper chronicles, on the other hand, tapped directly into these sour-
ces.
The village community combines the villagers' sense of unity, org

experience, and their institutions of group formation, thus effective
an incubator of rural development organizations; it thus is und
entity in which functions and attributes of these groups are compr
integrated.
There is strong evidence in Mondal's paper that this policy of empowering
the poor through educational programs, revolving loan and credit associations,
and through cultural festivals and 'people's theatre' that reconnect poor people
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with the joys and sorrows of their past, has also changed government thinking
about the poor and about its own role in rural development. From a mixed
policy of benign neglect and coercive benevolence, planners and policymakers
in the Bangladesh government progressed to 'a greater appreciation of social
capital' through the efforts of local NGOs and the poor themselves.
As the papers by Broadbent, Chen, and Mondal demonstrate, policy elites
come to an appreciation of social capital, if they ever do, by indirection. The
burden of proof lies with civil society, the sea in which social capital swims.
Community groups must first demonstrate their effectiveness - in achieving
their own purposes but also more importantly the purposes of others - before
their value to larger public purposes can be taken for granted.
The insider as outsider: Public policy as negative social capital
It is one thing to consider what effect a group's social capital may or may not
have on the larger policy environment in which it operates, quite another to
consider the price of success for such influences. How far can 'insiders' go
toward assimilating the views of 'outsiders,' however commensurate with their
own, before they begin to dissipate the bonds and principled norms that made
them insiders in the first place? At what cost to the coherence and internal
integrity of well-ordered groups do states pursue policies that depend in large
measure on the social capital inherent in those groups? Is there a danger of
eliding the distinction between civil society and the state, as the latter comes to
rely increasingly on the former for the efficacy of its public policies? On the
other hand, can we point to cases in which almost the opposite obtains: Groups
that bond well with external policy actors earn a social 'residual' that adds to
their stock of social capital? Several of the authors provide materials for a
fruitful discussion of this problem, raising the interesting question whether public
policies that rely too heavily on associational strengths may in themselves
constitute a form of negative social capital.
In four distinct cases studies, Norchi, Carroll, Trask, and Candland address
the several dimensions of a problem - the effects of public policy manipulations
on group social capital - experienced in strikingly similar ways by groups in
India, Pakistan, Sri Lanka, Indonesia, Ecuador, and Hawaii. For the indigenous
Onge community of the Indian Nicobar and Andaman Islands, sitting on a
'pharmaceutical treasure chest' of medicinal native plants and herbs, contact
with the outside world of formal patent and intellectual property right laws,
commercial contracts, and licensing agreements has proved a harrowing one.
Not only has it forced the Onge, a small, endangered tribe of 103 people, to
confront questions of 'heritage' that normally would never have occurred within
their seamless society; the promise of economic gain has forced hard new
choices upon individual members of the tribe. Faced with the encroachment of
powerful multinational pharmaceutical companies, often having modern Indian
commercial law on their side, tribesmen can choose to resist outright, find a
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way as a group to control and harness valuable local knowledge, or bargain

independently with 'external bioprospectors.' All three options bode ill for the
preservation of what precious little social capital still remains at the end of a
process of deforestation, land removal, and tourism that Norchi (this volume)
calls the 'Big Squeeze at Little Andaman.'
There is an irony in the Onge's situation and by analogy in almost any effort
to align a larger public good, the universal health benefits, for example, of
native medicinal plants, with the communal resources necessary to harness
that good. As Norchi writes, 'The future of the tribe will depend upon existing
and prospective policies, and the successful implementation of those policies
will depend upon Onge social capital. Poorly calibrated policy application can
destroy the cohesiveness of traditional groups and with it Onge social capital.'
To protect their identity, culture, and local knowledge, the Onge today have a
variety of legal and quasi-legal instruments at their disposal, including contracts,
licensing agreements, and Letters of Collection (LOC), as well the support of
international covenants like the United Nations Declaration on the Rights of
Indigenous Peoples and such sui generis intellectual property arrangements as
the Trade Related Intellectual Property Rights Agreement (TRIPS) of the World
Trade Organization.
In addition to attenuating rights or dividing members against one another,
as in the case of the Onge, public policy manipulations can also serve to reduce
group ties from principled to enforceable types. The use of contracts and other
legal instruments to establish a 'property right' and thus potentially divide
members along economic lines is one case in point but other more subtle forms
of cooptation can also take place. Carroll's study (this volume) of indigenous
'meso-level' peasant federations in Peru, Bolivia and more specifically Equador,
points to the way that external policies can create and manipulate social capital
for certain public purposes (distributing land titles or managing water resources,
for example) yet end by serving entirely different purposes - in the case of the
federations the creation a new type of social energy, one of radical protest and
government resistance. The government can coopt some of this resistance by
paying off the leadership. However, in most cases the damage is already done.
Groups do not soon forget the experience of empowerment or easily shed gains
in the degree of dignity and self-worth that organizational capacity building can
produce, even when it is to serve the ostensible purposes of repressive and racist
mestizo governments. Trask's study of the native Hawaiian sovereignty move-
ment (this volume) and Candland's analysis of faith-based NGOs in Pakistan,
Sri Lanka, and Indonesia (this volume) tend to reinforce the negative impacts
of partisan political manipulations on local social capital. As Candland writes,
'The socially transformative power of religious institutions and religious princi-
ples is seemingly undermined both by governments that attempt to use religious
rhetoric to legitimate their policies as well as by religious movements and
religious political parties that rely upon the government to promote their
strategies for social and political reform.' While the groups Candland has
studied may not interact well with policy elites and vice versa, the relations
258
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between state and religion in these three otherwise very different countries are
intimate and coterminous. Faith-based groups have a much wider scope for
larger community-level projects and with it the ability to make a difference than
they do in Andean countries or, as Trask's study shows, in Hawaii.
The main source of state income in Hawaii is the tourist industry, which
depends for its existence upon a received view of Hawaiian history and native
custom radically at odds with what most native Hawaiians themselves believe.
Intentionally or unintentionally, the island's promoters undermine the sacred
origins of native Hawaiian arts, song, and dance as well as traditional forms of
social life by trotting them before the world as artifacts of a glorious but bygone
age. Native Hawaiian social capital is compromised not by the memories
recorded in its songs and chants, which recall Hawaiians to the values that
have enabled them to endure colonial oppression, but by a nostalgia, promoted
by its enemies, for a pristine and simpler past. The social capital embodied in
the native Hawaiian sovereignty movement is a force for what might be called
productive intransigence. It represents a political force backed by a list of
demands - for the repatriation of native Hawaiian lands, federal recognition
of their sovereign status, and local and state statutes protecting Hawaiian local
knowledge as well as Hawaiian religious and civic cultural traditions. For those
Hawaiians in the movement who also find themselves working in the tourist
industry the resentments run particularly high, fueling, not sapping the strength
of their native organizations. The sovereignty movement, nonetheless, sits
alone, awash in a sea of negative social capital that isolates and excludes it
from the main centers of Hawaii's economic power and decisionmaking, lays
excessive claims on its members and the cultural capital vested in each one of
them, and maintains them in a state of permanent subjugation.
Clearly, the political environment in which social capital and consanguine
policies operate is critical to gauging the potential impact of one on the other.
Even here the implications are not obvious. Theocratic states do not always
provide the best environment for the charitable work of faith-based groups;
authoritarian states can produce the social conditions for organized civil dis-
obedience; and the social capital of users groups can disable its sources of
support. Perhaps the real strength of a group's social capital, and a better test
of its value as a policy resource, lies not in its approximation to isomorphic
political structures but in its ability to join with other groups either to reinforce
its own purposes, serve an external cause, or both.
Dissipation and consolidation: The ebb and flow of intergroup cooperation
If 'no man is an island,' it is also fair to say, given the recent explosion of
voluntary group activity (in the developing countries of Asia, Africa, and Latin
America alone, the emergence of over 20,000 indigenous nongovernmental
organizations in the last twenty years), that no group is an island either. One
thing we know with certainty: considered as a public resource, the net worth
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of a group's social capital decreases in direct proportion to its insulation from

the groups and associations that now populate and affect every sector of
society.
Whether joined by ties of mutual antagonism, support, or indifference,
people today - even those possessing what Mary Brinton (this volume) calls
'private social capital' - tend to locate themselves not in one but in several,
often highly nested secondary groups. That individuals use their group mem-
bership to access the benefits and rewards of other groups of which they are not
members has become a commonplace. When affiliate status is not enough and
only membership in the other group will do, a history of loyal membership,
experience tells us, is the best recommendation. Life in the network society is a
highly public and closely watched one, as much as if not more than life in a 17th
century small town or village. The difference between then and now is that
group ties and affiliations are a matter of individual choice, driven less by
communal obligations than by considerations of the marketplace, non-market
value preferences, or abstract notions of duty to society and the state.
The studies by Brinton and Zhou (this volume) address the two most common
forms of bridging social capital. In the one, groups collaborate to achieve a
common cause, without sacrificing and in some cases even reaffirming their
original purposes. In the other, the locus of cooperation is an external cause,
usually but not always unrelated to their original purposes. In both cases, there
are dangerous opportunities. Overextension can deplete the original supply of
social capital for either internal or external uses, especially when the trust
residing in one set of norms and expectations is nontransferable, or transferable
at prohibitive cost. Underextension has its own opportunity costs. Groups tend
to do a poorer job of consolidating social capital when they are closed than when
they are actively open to and tolerant of outside influences, even negative ones.
In the lifecycle of the Chinese entrepreneurial associations in Zhou's study,
powerful overriding concerns - the ubiquity of Chinese Party officials at all the
meetings, a struggle for industrial control between the central government and
the municipalities and between factory managers and directors (entrepreneurs
in Zhou's terminology), and the unique practical and ideological challenges of
establishing market socialism on a secure footing - have mediated the benefits of
cooperation with other groups. The inherent contradictions of the 'government-
organized nongovernmental organization' (GONGO) have forced entrepreneurs
to look outside the state and their own particular industries for new ways of
shoring up fledgling reserves of social capital, not without some cost to one of
the most important underlying assumptions of market socialism: the persistence
of the Party. Social capital formation and consolidation within management
circles will remain at a deadlock until the new class of self-conscious entrepre-
neurs and beleaguered party apparatchiks can solve this dilemma.
We have long understood the importance education plays, especially public
education, in the socialization of the young and the stabilization of society. The
generalized values of trust and cooperation that children learn in school pro-
duce other continuities - in outlook and behavior, in goals and standards, and
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in expected outcomes - that not only lend a certain level of predictability to

events; they enable societies to absorb the differences and discontinuities, the
occasional anomalies that left to multiply can disrupt the social order. The
social capital in schools performs a controlling function that naturally links
it in a symbiotic fashion to a whole host of other social institutions. This has
been especially true in modern Japan, where, as Brinton shows, schools, work-
ing closely with employers and the state, have provided a social safety net
to ease the transition from school to work, not only fitting the right child to
the right job but also reinforcing a work environment that is itself highly
socialized.
Not unlike the quasi-public associations linked to China's state-owned enter-
prises, the institutional social capital embedded in Japanese schools, while
good for meritocracy, has been bad for individual initiative and achievement.
Unfortunately, it took the recent economic downturn to demonstrate this
inherent imbalance in the school-to-work system. Even in those industries and
businesses with which they had cultivated close, long-term relations, schools
found that they could no longer guarantee full employment for their students.
Nor were industries (and indirectly the state, which had underwritten the
system) able to uphold their obligations. A system of intergroup linkages that
had been designed to consolidate social capital at both the school and firm level
seemed to collapse like a house of cards at the first sign of economic distress.
The resulting loss of trust and cooperation, Brinton argues, has fallen hardest
on the young. No longer able to rely on the 'system,' students are thrown back
on their own, often meager social contacts to find a job.
Taylor's study of the vagaries of workplace social capital under market
socialism shifts the focus from making a living to achieving job satisfaction.
The responsiveness to workers' needs and demands, he shows, varies dramati-
cally between trade unions in the state sector and those in the growing number
of foreign-owned enterprises in China. The state has used coercion to produce
benefits but not social capital, whereas foreign enterprises have created the
conditions for social capital but few real benefits. Entrepreneurial in nature,
foreign-owned companies are less corporatist and therefore have fewer obliga-
tions or loyalties to their workers. Workers find that their opportunities are
greater but morale lower. Workers in China are actually better off, although far
less empowered, in industries where whatever social capital exists is in the hands
of the state. In both cases social capital serves to manage conflict and to
maintain a fragile industrial peace, workers benefiting (just enough) from too
much structural support in the one case and too little in the other.
The one lesson in all these cases, that the effort to consolidate social capital
through intergroup alliances creates dependencies that instead can dissipate
social capital, points to a fourth finding of the various studies under review:
the importance of group leadership in determining the salability of social
capital.
261
[488]
Tit for tat. The exchange value of social capital
How do group leaders manage the social capital of the group when others have
come between the group and their own authority? How do group leaders
manage internal tensions that arise when social capital becomes a resource for
other policies? The PBRC studies give a number of interesting answers to these
questions. In the faith-based group studied by Candland (this volume), religious
leaders have a variety of means at their disposal to establish authority, enforce
group loyalty, yet still serve larger community purposes. Under the cloak of
politics and armed with the Islamic belief in the oneness of state and religious
laws, leaders like Zia ul Haq of Pakistan have been able to command support
for repressive policies, like reducing women's legal standing, that run counter
to the more socially progressive policies of the Jamaat-I-Islami, an organization
of 4.5 million members dedicated to the 'creation of an exploitation-free society,
equal distribution of wealth, and respectable status for women.' Combining
indulgences (absolutistic expressions of faith) and deprivations (regulations
limiting freedom of association), the political leadership of Islam has been the
single greatest obstacle to achieving this vision. Emphasizing 'doctrinal purity
and obedience,' even the leaders of Jamaat-I-Islami exploit fundamentalist
loyalties and fears to protect their programs, its system of private religious
schools, for example, from government interference. In the case of Islam,
political and religious leaders have been able to preserve group loyalties against
unfavorable government policies by linking them to a national religion that
makes no such distinction, and by effectively obliterating the distinction be-
tween the private and the public sphere.
Secular group leaders employ a different set of strategies, not limited to the
glorification of the membership or to reinforcements of reward or punishment,
for securing the integrity of the group against outside influences, while also
exploiting those influences to enhance the group and their own prestige. In
some of the cases reported here, they spin off new, affiliate organizations or
make alliances with like-minded groups. The Broadbent, Chen, and Brinton
studies point to this type of 'interorganizational' leadership. A system of polit-
ical favors, they show, can give groups the comparative advantage they need or
feel they need to enter an even playing field with larger and more powerful
groups.
Other groups and their leaders may make an entirely different use of their
authority to promote uprising and resistance to proposed policies (Trask and
Carroll); appeal to external forces to police unruly members (Zhou); shift the
group's goals and objectives (Zhou, Broadbent, Mondal, and Trask); or enforce
group discipline of the members (Candland, Taylor, and Zhou). These tend to
be fairly extreme responses to the problems of social capital formation. Most
leaders seek an ideology that is flexible and able to accommodate the influences
of both modernity and traditionalism. There is probably a limit to what group
leaders can do to resist the blandishments of government or to stanch the
effects of larger managerial forces; this raises the final question addressed by
262
[489]
the PBRC studies in this book: How do political leaders make use of social
capital to implement policies that require public cooperation?
The intelligence gap: Problems in the political management of social capital
In the PBRC series on social capital - a total of 23 studies covering over a

dozen countries in Asia and the Pacific (13 of them appearing in this present
volume) - not one has failed to identify some problem, sometime, somewhere
in the political management of social capital. What are those problems? Under
what circumstances do they arise? How are they managed so that the social
policies that depend so heavily on reservoirs of trust and cooperation can
eventually see the light of day? Are those policies made more popular and
ultimately more effective as the enabling environment for associations and
association-building is intensified? Does the government have a positive role in
supplying such hothouse conditions or are they better left to NGOs and at
another level down, to grassroots groups themselves?
Problems arise in the political management of social capital over the nature
of outside involvement in the internal affairs of the group. Is the intervention in
fact, or in the perception of the group, centralizing or decentralizing; cooptive
or responsive; weak or strong; informed or uninformed? In the transborder
subregions in the Chen study, the governments of China and Taiwan have
devolved local autonomy and decisionmaking powers not only to local govern-
ment in these investment zones but to investor groups as well. There is evidence
that individual- and firm-level social capital in these areas has reshaped business-
state relations and created favorable government practices leading in turn to
more balanced, responsive, and effective economic policies. Local Chinese
officials and their civic partners have developed a culture of trust and friend-
ship not simply by government mandate but through social interactions. Chen
concludes: 'depending on the extent to which a policymaking environment is
centralized or decentralized, social capital can have more or less room to
accumulate and exert its influence, instead of being merely used or manipulated
politically.'
What local Chinese officials seem to understand intuitively, existence of
traditional and modern elements in enlightened economic planning, the larger
bureaucratic and political forces of the New China seem to appreciate only
dimly. The government's treatment of entrepreneurs in Suzhou, one of the
fastest developing industrial cities in China, is a deadly cocktail of patronage,
liberalization, and cooptation. Ostensibly to 'improve factory performance' but
in reality to satisfy the status longings of the 'directors' (by giving them the
illusion if not the substance of political autonomy), the government has agreed
to appoint directors to party secretary positions and to give them the power to
appoint factory managers, a traditional prerogative of the state. Meanwhile, the
government was able to use entrepreneurial associations as quasi-governmental
administrative agencies to administer the new social and economic groups
263
[490]
under market socialism, and to help enforce among their members state policies
like the one-child-per-family policy. As Zhou observes: 'By identifying their
status as entrepreneurs and putting entrepreneurial associations under govern-
ment leadership, the state was taking the initiative to control this social group
with rising social power.' The new entrepreneurial class has begun to see
through these tactics and to look not to the associations but increasingly to the
market to achieve its economic goals. Thus what began as a promising experiment
in public-private sector partnership foundered on the machinations of a govern-
ment willing to release the productive energies of the free market but afraid of
losing its political control.
Compare the effects of a single-party system like China's with Japan's multi-
party, multi-associational system of mediating organizations. Business, labor,
and government representatives broker relations among themselves in a'a fabric
of expected reciprocity, of give and take' that checks the exercise of a central
authority (cf. Broadbent). As relative equals, the major interest groups in Japan,
including government, find they must use 'persuasion and guidance,' not pre-
scription, to court public support and to achieve their policy goals. These
achievements tend to be restricted to elites in Japan, where grassroots social
capital is at a premium. In less developed countries in the region, the political
future of social capital seems to lie precisely however in the cultivation and
empowerment of grassroots organizations.
Certainly this is true of the rural development activities of the BRAC and
PROSHIKA groups of Bangladesh, where the effects of cooperation have
included higher literacy rates, increased family income, greater gender equality,
improvements in community health, and such nonmaterial benefits as enhanced
feelings of self-worth and human dignity, mutual trust, and community net-
working. While the initiative for these development efforts has come from the
villagers themselves, the government has played a positive role in leveraging
those efforts to achieve sustainable growth. In 1990 it established the NGO
Affairs Bureau to bring assistance to NGOs in the field as well as to ensure
their accountability; in the same year it created the Rural Employment Assistance
Foundation to provide start-up funds and assistance to local NGOs. Moreover,
with the encouragement of the government, more and more NGO members
have secured election to local government posts, further blurring the lines in
Bangladesh between GOs and NGOs and laying the basis for the pursuit of
common goals.
Fox and Gershman (this volume) come to similar conclusions in their study
of the post-reform World Bank and its disposition toward 'pro-poor social
capital' formation in Mexico and the Philippines. 'Putting reforms into practice
that expand opportunities for pro-poor social capital accumulation requires,'
they write, 'balanced multisectoral coalitions to offset inevitable opposition.'
Where the process of project design and implementation is open, informative,
and broadly participatory; and where it takes into account the density and
heterogeneity of social capital, there is a greater chance that targeted aid will
make a difference.
264
[491]
Whether and to what extent government is willing to share power with

organized low-income groups, labor, business and consumer coalitions, or the
indigenous populations within its borders is, of course, the critical question in
all the studies. It may be too much to expect even the most democratic of
governments to relinquish regulatory control over the civic infrastructure, since
it would mean giving up almost everything that is dear to government - its
vested powers, managerial functions, ethic of public service and commitment
to the public order, and the utilitarian principle of the happiness of the greatest
number. Perhaps all that can be expected of even the least democratic govern-
ments is their recognition, as Simone Weil once said, that they 'co-exist with
other obligations.' (Weil, 1952, p. 152) Studying and measuring those other
obligations, while weighing them against governmental and quasi-governmental
projects that require broader patterns of public cooperation, has been the main
business of the current PBRC research program.
Conclusion
At the beginning of this volume, Alex Inkeles made four useful distinctions for
understanding the sea in which social capital swims. Without the prior existence
of formal social institutions such as the family, the school, and government, it is
not clear how strong or permanent the ties of social capital in any given part of
the world would be. In the absence of fairly well-developed cultural patterns -
those paradigmatic values and ideals that breathe life into social institutions -
it is not clear how enforceable or principled forms of social capital would arise.
Without the behavioral rules that Inkeles calls the psychosocial characteristics
of a given community or population, how are individuals to calculate the equa-
tion between their private interests and those of the group? Without established
modes of communication and association between individuals and between
collective entities, social capital would lack the necessary historical and str
tural support for realizing its full potential.
To one degree or another, each of the countries and populations studied
the PBRC capital has met the basic conditions for the formation, spread,
preservation of social capital. The more important question before us is, havin
once established such a resource, how does a society maintain - against
powerful forces unleashed by larger and larger agglomerations of social capita
- the original conditions for its emergence. Do family ties, robust governmen
structures, traditional cultural values all wither away, as Marx predicted
state would, at the end of a long process of embourgeoisification? Or do these
and other traditional supports reassert themselves with a vengeance? In at leas
one part of the world, Southeast Asia, there is growing evidence that materia
values such as individualism and achievement as well as traditional social norms
like 'obedience' and 'religious faith' - not the postmaterialist values of trust and
cooperation one normally associates with social capital - have been the driver of
a fifty-year period of rapid social and economic development (Inglehart, 1997).
265
[492]
Social capital, as the PBRC studies affirm, may serve to mediate state-society
relations; but the state, independent of its cooperative activities, is still as strong
as ever in most of the project countries, perhaps stronger than before the
'associational revolution' of the last 25 years. Local family and community ties
continue to exert themselves as forces of 'obligation' quite apart from either the
public policy-setting goals of the state or the generic presence of social capital.
Cultural capital, like that embodied in what it means to be native Hawaiian or
Taiwanese or South Korean, or poor or a woman, or Buddhist or Islamic, still
largely supersedes the abstract psychic income of group membership, although
group membership can either dilute or strengthen these identities.
Community and organization, we are learning, are not always the same
thing, and may not even be compatible with one another as social aggregates.
'Whereas men and women find their lives in modern society framed by inter-
actions in both of these patterns of social relations,' writes the historian
Thomas Bender, 'the two phenomena are separate and cannot be assimilated
into one' (Bender, 1978: p. 145). The advantage to studying social capital as a
policy resource, rather than as a form of organizational life distinct from
community, is twofold. It permits the researcher to study the effects of social
policy on behavior at the 'micro' level, that is, on individual groups and social
actors that may or may not already be engaged in social capital building. And it
permits him or her to focus on the 'individual' as a bearer of social capital.
Although public policies require organizational cooperation, their real strength
lies in their appeal to the individual and, in fact, to as many individuals as
possible. Social capital is one way of organizing and ordering these individuals
into productive association. In the actual study of social capital, focusing on
policy - on someone's preferred future and the actions necessary to bring it
about - moves the discussion beyond community and organization to a con-
sideration of the mundane human concerns - for a secure existence, for
respect, dignity, and a sense of meaning - that make social relations worth
pursuing at all.
Acknowledgements
The author is grateful to participants in the spring 2000 conference of the

PBRC Social Capital Project held at the Aspen Institute in Berlin, as well as
to the participants at previous conferences (1997-1999) held in Hong Kong,
Cambridge, MA, and Laguna Beach, CA. Extensive theoretical, methodological,
and case-specific discussions involving all the PBRC social capital grantees
form the background for the current volume and its special focus - the uses
(and ramifications) of social capital as a policy resource. Without the benefit of
these conversations, the author would not have known quite where to begin,
much less what to make of the examples described in the various papers here.
John D. Montgomery and Alex Inkeles, the editors, provided helpful guidance
and direction, yet gave me the freedom to develop my own conclusions. I am
266
[493]
thankful for their trust. The author gratefully acknowledges the generous
support of Soka University of American/Aliso Viejo, its president, Daniel Y.
Habuki, and its founder, and the founder of the Pacific Basin Research Center,
Daisaku Ikeda.
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Beyond Community and Society The Externalities of Social Capital Building

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Beyond Community and Society The Externalities of Social Capital Building

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Beyond Community and Society: The Externalities of Social Capital Building

Author(s): John M. Heffron

Beyond community and society: The externalities of

and, as the studies in this volume suggest, necessary if insufficient ingredients of

Which is not to say that the policies benefiting from socia

How do group leaders seek to strengthen the commitment and loyalty of

How do political leaders make use of social capital to implement policies

The village community combines the villagers' sense of unity, org

The insider as outsider: Public policy as negative social capital

way as a group to control and harness valuable local knowledge, or bargain

Dissipation and consolidation: The ebb and flow of intergroup cooperation

of a group's social capital decreases in direct proportion to its insulation from

in expected outcomes - that not only lend a certain level of predictability to

Tit for tat. The exchange value of social capital

The intelligence gap: Problems in the political management of social capital

In the PBRC series on social capital - a total of 23 studies covering over a

Whether and to what extent government is willing to share power with

The author is grateful to participants in the spring 2000 conference of the

Redfield, R. (1955). The Little Community. Chicago: University of Chicago Press.

Tonnies, F (1963). Community and Society. New York: Harper.

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