24/2002
October
Social capital and rents
 
Luca Crudeli


This paper speculates on the nature of Social Capital and the relation that occurs between its formation and the distribution of rents characteristic in a given economy, SC defined as a general willingness to contribute to the wealth of others and of the community, or, in other words, as Toquevillian civil engagement. Following Kahn's work [2000, pg. 21], an economic rent is intended as the difference between an individual's first best opportunity and his next preferred one.
The need to analyse Social Capital vs. the distribution of rents within a given society is the produce of a very sceptical position about the validity of Social Capital as an ontological analytical category. First of all, in the literature the concept is confusing and blur. As a matter of fact no precise definition of SC exists and this leads to problems of "circularity" in the analysis [Galassi, 2002]. As a matter of fact, even in the empirical literature no directional causation between SC and economic performance is ever tested, but, most of the times, regressions aim to find simple statistical correlations between the two. Secondly, as it has been remarked notably by Fine [2001], taking SC too seriously has strong, in-built implicit political and research implications. In particular, it involves the acceptance of a dogmatic division between the economic and the social, and, as a consequence, the embracement of a market-centred framework of analysis 1 . Indeed, whilst with SC it appears as if social relations are finally brought in the economic analysis, this happens only at the cost of having them excluded initially.
This latter point and the whole of the interesting job done by Fine [2001] and by Kahn [2000], are at the core of this paper. Their contribution is indeed essential to understand the value of SC and to navigate safely through the lively draughts that characterise this vast literature. As Fine provides a stable wind for the sail of the paper, by questioning in Toto the appropriateness of a concept as Social Capital 2 , as a metaphorical compass, Kahn provides us with the direction to follow as his Rents are a tool for interpreting the dynamics that develop within the social arena. Similarly to
Columbus voyage, the aim of this paper is to lead the reader to rediscover what was actually already known by classical economists. Going beyond the simplistic idea that the social is nothing more than a response to market failures, indeed, we will see that social arrangements and institutions are not simply a side effect of market exchanges, but on the contrary, the society as a whole is the domain where rents are continuously distributed and appropriated by individuals, while the market is just one of the arenas of this domain (although frequently the most important one).
Outside of any metaphor, whilst, Fine's work has to be framed into a wider and deeper critique against the way economic research in the academia and in international institutions is proceeding today, and Kahn aims to give new birth to Political Economy, the (much more limited) scope for this paper is to show how interpersonal relations (Social Capital) are shaped by the economic opportunities (the Rents) which are spread within the economic system, and do not actually constitute a factor of production themselves. This implies that spending too much energy on concepts such as SC is often useless, unless the exercise is completely contextualised within a specific social framework, which takes of historical and geographical traits, power relations, gender issues, class struggles and considering multiple equilibria. But even in this stance, referral to the SC concept cannot go any further than being an analogy, a conceptual tool to focus policy intervention in promoting some sort of shift of the economy (and the society) from one equilibrium to another, which although having new winners and losers, is ethically preferred.

 
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