When can we say we’ve won a war? As Americans, we have a tendency to mobilize for collective action only when our leaders declare war, whether actual military wars against other countries or entities, or more nebulous concepts like wars on terrorism, drugs, poverty or homelessness. This is the devilment at the heart of attempts to analyze things which can only be understood in a complex context. Of course, that shouldn’t stop us from trying. However, numbers have a validity, and take on a life and importance of their own, outside of more discrete methods. Anyone who’s worked in a bottom-line oriented organization knows how difficult it is to convince on the basis of “feelings”, even if they may be, sometimes especially if, they are correct. So how do we get to a place where leaders, decision makers and the general public can have some idea of how we’re doing on our various attempts to battle social ills? If it’s true that data shapes policy, then we should make sure we use data that accurately reflect broad policy goals.
What are the numbers, where do they come from, what are they actually showing, and what is the context in which they’re interpreted? Every bureaucracy, whether the military or a neighbourhood soup kitchen, tends to see data through the prism of their expectations, which might be at odds with the larger strategic goal. Whether counting victory as larger body counts while losing the greater war, or serving more meals while the homeless population steadily increases, it’s problematic to be blindsided by smaller tactical issues if we have no way of knowing whether we’re succeeding in our larger goals.
The biggest problem is the human tendency in fighting vaguely-defined ills is that their very nature enables rent-seeking, which is an economic term meaning the individual desire to collect rents without any actual economic contribution. We see this across all human activity, and it can be an incredibly powerful driver of behavior. As some anonymous wag once said, nothing is as difficult as persuading someone of the untruth of a fact when his paycheck depends on it being true. Much waste and fraud can be seen in this context where the outside situation changes, but the individual or group tasked with dealing with the original problem refuses to change their behavior to suit. After all, growth is the only goal, why act against it in the present even if ancillary costs (future pollution, non-competition, etc.) might well strangle it in the future. Bureaucracies set up to fight one battle may find the war won, but continue anyway through inertia and the individual interests bound up in that collective. I mention bureaucracies because they tend to be concerned with their own survival, and thus place on premium on creation of their own brand of social capital, whatever form it may take.
Social scientists use the term social capital to explain why the neoclassical theory of economics doesn’t actually explain human behavior, and why simplistic truisms of human behavior (Everyone just tries to maximize their individual good always and forever no matter the consequences to others) are insufficient to explain actual human behavior in the real world, at least the behavior of that majority percentage which isn’t clinically sociopathic.
On the one hand, a group tasked with a mission may have sky-high social capital reserves within that group, but if their actions become misaligned from the larger goal which they’re supposed to serve, society as a whole suffers. To take just one, obvious, example, consider the Mexican Zeta drug cartel, which began as, of all things, a group of elite soldiers, which are traditionally some of the groups with the very highest forms of internal trust, self-sacrifice and other hallmarks of social capital. As such lurid examples show, “social capital” as a term (just like other potentially open-ended terms such as “economic growth”) must have defined boundaries, if it is to be useful. Therefore, in this essay social capital has meaning only when used in terms of the nation-state as a whole, which remains, despite such experiments as the EU, the defining social grouping of our era.
There are a multitude of historical examples showing that in the absence of strong national government institutions imbued with regulatory power, and a sense of professional integrity, national society will devolve into tribes which exhibit, rather than a Rawlsian veil towards others, a starting point of hostility towards all outsiders. This has real and serious consequences for the economy and nation as a whole. To put it in simple terms, when there is no social capital, groups will fight over getting a bigger piece of a steadily-diminishing pie, rather than having a smaller piece of a pie that is growing. In the context of the developing world, this ties in neatly with the concept of the resource curse, which describes the difficulties non-developed countries have to harness the income of exported natural resources for the benefit of the population as a whole. Growing economies is a real and measurable goal, and economics has given us many different ways to measure the success or failure of policy, from GDP to GNP to PPP. Yet social science has not provided any equivalent tools with which to note the success or failure of policies geared towards making countries better communities, with enhanced levels of trust and certain shared, universal, values. This matters to “hard” economics policy because trust is a vital component of of any economic activity. How do you write a contract with another corporation is you don’t trust them, or they trust you, to carry out each side of the bargain, or if there is no fair method to enforce compliance? How can you make an investment in a country if the government has shown it might nationalize it, or that it might arbitrarily devalue the currency? How about simple pilferage by employees, or conversely, nonpayment of wages or benefits by employers? Such issues are difficult to quantify, but governments and businesses need to take such national and/or social attitudes and characteristics into account when making policy or investments. Although is seems a soft concept, social capital matters in a concrete way.
How then to measure this nebulous concept?
Well, it’s not as if there haven’t been attempts. The nation of Bhutan has a “Happiness Index” instead of measuring GDP, which might be considered as something of a proxy for social capital. Although I’m not aware of any attempts to create anything similar in the US, there have been arguments in Europe for measuring something other than income as a denominator of a nation’s progress. How would one create, measure and use such a metric?
Polling is potentially useful, but currently faulty on a couple measures. Mostly, any questions have to be consistent over time if they’re to have any validity, and social changes, for example immigration, can change the context of such questions to the point where they become questionable. Instead I propose an index based on several factors the correlations of which are varied, some positive and some negative:

 

Rate of violent crime (Self-evidently negative)

Rate of incarceration (Ditto)

Community participation outside of one’s group (Positive)

Gini index (Neutral, but lower would generally indicate more of a communal spirit than all-against-all in economic matters at least. One would not expect economic matters to be completely irrelevant when examining social capital.)

Employment level (Weakly positive, but strongly subject to external and independent factors such as the business cycle, tax and labor market regulations, etc.)

Donations to charities (Positive)

Cross-denominational religious participation (Strongly positive)

Education and/or literacy for women (Strongly positive according to all current development research)

Employment and/or wage-earning for women

Single-religion or single-group primary education (Negative correlation)

 

Positive correlating factors would be balanced by negative, and out would come one number which would give an idea of how high or low the level was of social capital in the country in question.

An SCI which is repeatable across cultures, valid through different time periods and consistent would be a valuable tool for politicians, policy makers and researchers. Such an index would provide a deeper picture of a country’s progress for the majority of its citizens beyond that simply available from raw GDP, GNP or CPI figures. While GDP if, for example combined with the Gini index, does provide one tool of interpretation of a national population’s general economic well-being, it is not by itself applicable to analysis of heterogenous societies, which, in an age of increased travel, migration and interconnectedness, seems to be the reality for increasing numbers of countries. It is a sad reality that while violent conflict between countries is increasingly rare, violent conflict within countries has seen a surge since the end of the cold war and the destruction of old political certainties. Thus more than ever we need a way to chart how countries (“we”) are doing in providing the primary service of a nation: safety for its citizens, and wide-spread economic growth.
Combining crime rates, economic development and factors such as literacy and giving is a way of measuring this which takes into other elements which tend to be ignored.
Some may note that in this proposed model index there is no provision made to measure levels of internet use or penetration (Ironic for something posted on a blog). This is by design. While an argument may be made that the web and the infinite number of forums therein provide a virtual space for furthering interconnectedness, an increasing body of evidence suggests that this is a false conclusion. The proliferation of fora has seen a concurrent, and well-noted, rise in the echo chamber effect, wherein dissenting views are not encouraged, and individuals seek only reinforcement for pre-existing views. This is actually inimical to the creation of social capital in any form. Will the internet be a force for the formation of social capital in the future? It seems on present evidence not. In any case, the starry-eyed utopians who believed “information wants to be free” have been decisively crushed by a combination of the forces of commerce on the one hand, and “security” on the other, with a strong dash of criminality thrown in for good measure. Also, internet use and penetration varies wildly even within the OECD countries, let alone those less developed.
A further possible weakness of this index is the inability to account for economic parasites, rent-seekers and other criminal or semi-criminal elements antithetical to growth and social capital creation which exist outside the measurable justice/penal system. This is not by design, but by lack of capacity. The underground economy can be estimated in most countries, but by such a variety of country- and culture-specific methods that there is little to no transference. In addition, the very nature of hidden activity means that it is useless in a hard, data-driven sense. How to measure the unmeasurable?
On the bright side, an SCI which is universal, reliable and consistent would provide policymakers with a useful tool to measure progress beyond that provided simply by raw economic numbers. Aggregation of information of “soft” social developments can help point out what we do right and wrong as countries and societies, and can indicate what works and what doesn’t in providing greater welfare and well-being to citizens. Isn’t that that the goal of policymakers everywhere?