The following material has been drawn, with permission, from DFID’s Sustainable Livelihoods Guidance Sheets.  For an introduction to the asset pentagon, change in asset status, and relationships within the framework (click here) 

What is Social Capital?

There is much debate about what exactly is meant by the term ‘social capital’.  In the context of the sustainable livelihoods framework it is taken to mean the social resources upon which people draw in pursuit of their livelihood objectives.  These are developed through:

networks and connectedness, either  vertical  (patron/client)  or horizontal (between individuals with shared interests) that increase people’s trust and ability to work together  and  expand their access to wider institutions, such as political or civic bodies;

membership  of  more  formalised  groups  which  often  entails adherence to mutually-agreed  or  commonly  accepted  rules,  norms  and  sanctions; and

relationships of trust, reciprocity and exchanges that facilitate co-operation, reduce transaction costs and may provide the basis for informal safety nets amongst the poor.

The above are all inter-related. For example, membership of groups and associations can extend people’s access to and influence over other institutions. Likewise trust is likely to develop between people who are connected through kinship relations or otherwise. Of all the five livelihood building blocks, social capital is the most intimately connected to Policy, Institutions and Processes.   In fact, it can be useful to think of social capital as a product of these structures and processes, though this over-simplifies the relationship. Structures and processes might themselves be products of social capital; the relationship goes two ways and can be self-reinforcing.  For example:

• when people are already linked through common norms and sanctions they may be more likely to form new organisations to pursue their interests; and

• strong civil society groups help people to shape policies and ensure that their interests are reflected in legislation.

Why is it important?

Mutual trust and reciprocity lower the costs of working together. This means that social capital has a direct impact upon other types of capital:

• By improving the efficiency of economic relations, social capital can help increase people’s incomes and rates of saving (financial capital). (Isolated studies have shown that communities with ‘higher levels’ of social capital are wealthier but questions remain about measuring social capital.)

• Social capital can help to reduce the ‘free rider’ problems associated with public goods. This means that it can be effective in improving the management of common resources (natural capital) and the maintenance of shared infrastructure (physical capital).

• Social networks facilitate innovation, the development of knowledge and sharing of that knowledge. There is, therefore, a close relationship between social and human capital.

• Social capital, like other types of capital, can also be valued as a good in itself. It can make a particularly important contribution to people’s sense of well-being (through identity, honour and belonging).

Though indirect support to natural capital through Policy, Institutions and Processes is very important, direct support focused on resources themselves as opposed to people’s ability to use those resources  still has a place when it comes to conservation for future use (e.g. in situ biodiversity conservation).  One of the foundations of the sustainable livelihoods approach is the belief in and pursuit of various types of sustainability.  This includes, but is not limited to, environmental sustainability (i.e. sustainability of natural capital and the services that derive from it, such as carbon sinks and erosion control).

Is it always positive?

Social capital can be used in negative as well as positive ways.

• Those who are excluded from strong groups that convey multiple benefits may be disadvantaged in a variety of other ways (e.g. landless women with few skills).
  

• Networks may be based upon strictly hierarchical or coercive relationships that limit mobility and prevent people from escaping from poverty.
  

• Membership of a group or network often entails obligations (e.g. to assist others in times of distress) as well as rights (to call upon assistance). Calls for assistance may come at difficult times.

INSIGHT

Some people choose to distinguish between social capital and ‘political capital’, derived from access to wider institutions of society. Though we do not make this distinction here, this should not be taken to suggest a ‘downgrading’ of the importance of political factors and issues of access beyond the community. As well as having its own intrinsic value, social capital may be particularly important as a ‘resource of last resort’ for the poor and vulnerable.  It can:

• provide a buffer that helps them cope with shocks, such as death in the family;

• act as an informal safety net to ensure survival during periods of intense insecurity; and

• compensate for a lack of other types of capital (e.g. shared labour groups compensating for limited human capital within the household).

What can be done to build the social capital of the poor?

Social capital has the fortunate quality of being, in some cases, self-reinforcing; stocks can be increased, rather than depleted, by the right type of use. Neglect, on the other hand, can undermine social capital and trust (unlike savings in the bank which, if neglected, continue to accrue). Social capital can also be actively, though often unintentionally, destroyed through heavy-handed interventions that impose new social relations without taking into account the strengths of the old.

Most attempts to build social capital focus on strengthening local institutions, either directly (through capacity building, leadership training or injection of resources) or indirectly through creating an open, democratic environment in which they flourish.

Sustainable livelihoods objective: a more supportive and cohesive social environment... achieved through (for example):

Direct support to asset accumulation

Indirect support (through Policy, Institutions & Processes)

Feedback from achievement of livelihood outcomes (virtuous circles)

To improve the internal functioning of groups

-Leadership
-Management

To extend external links of local groups

To group/work formation and structure

To the development of more open and reliable policy environment (‘good governance’)

To organisations to help them develop systems for external consultation with civil society

Self-reinforcing relationships (e.g. success in increasing the sustainability of natural resource use can strengthen the managing group)

Greater household income may extend scope for participation in external activities

While empowerment of groups may be a primary objective, social capital can also be a by-product of other activities (e.g. participatory research groups formed to develop and test technologies may develop a life of their own). Most commonly, increases in social capital are pursued in conjunction with, or as a necessary component of, support in other areas. Thus joint responsibility savings and credit groups rely on social capital, as do integrated pest management efforts which require joint action to combat a problem.

What type of information is required to analyse social capital

Levels of social capital are hard to gauge from the outside. They may be discernible only after lengthy analysis (which may be beyond project/programme resources) and it is unlikely that they will be quantifiable. For example, simply counting the number of registered groups in a community is not likely to yield a measure of social capital; group nature and quality is as important as group numbers. Often we will be looking at trends whether the state of social organisation appears to be becoming better or worse for livelihoods rather than trying to gauge exact levels of social capital.

It is very important not to permit these difficulties to cause neglect of social factors when working with communities. Over time it will be vital to develop an understanding of the nature of civic relations at a wider community level, of the types of social resources upon which households rely and of who is excluded from these benefits.  Groups with overlapping membership can be particularly problematic if it emerges that people with a particular social profile are excluded from all groups. Another important point for observation is people’s coping strategies in times of crisis and the extent to which they have relied on social resources to see them through. 

INSIGHT

There is clearly much to learn about building social capital, including:

• how best to support groups (especially of the poor who may lack time for group activities);

• what are appropriate indicators of effective group functioning; and

• what is the relationship between various types of government structure and ideology and the ‘density’ of social capital at the community level.