Socialstructing: Bringing Social Back into Our Economy and Organizations

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33 Responses to “Socialstructing: Bringing Social Back into Our Economy and Organizations”

  1. Anonymous says:

    So far this is the best inverse argument FOR Capitalism. Your mother did not just have social capital. She was a physician and had intellectual capital. Talk to the person without intellectual capital about their position in society. Who wants them for friends?

    Black Markets inevitably emerge when command economies grow. They are merely inefficient means that allow a few well connected people to survive, but do not in general benefit a mass of society.

  2. jacobian says:

    I keep seeing people describing this as a “black market”. It’s not a black market, it’s a gift economy. A black market is trading in contraband. A gift economy is where informal custom dictates distributive forces.

  3. Anonymous says:

    People do things for others for monetary reasons, or they for social reasons. The 2 don’t mix (Dan Ariely gives the example of offering your mother-in-law money for a Thanksgiving dinner).

    The OP is describing the 2nd type of environment: mutual aid and solidarity. It baffles me that people see it through a financial paradigm, but I guess that’s another reason why “social capital” sucks as a name. The 2 things are opposites.

  4. JL Bryan says:

    That’s a fascinating article. I think it’s true that the internet is rehumanizing the world, allow people to connect, work, and play on their own terms. Spontaneous networking and collaboration are undermining the overgrown, top-heavy, oppressive structures (both corporate and political) of the 20th century. Yay!

  5. Anonymous says:

    i would call it a black market, because it needs to be hidden from the authorities and kept secret – ie. in the dark, under the cover of night, black.

  6. JoshuaTerrell says:

    This resonated with me. It made me think about how people value money more than personal connection in this day and age.

  7. Anonymous says:

    I’d love to read an intro paragraph of what you are talking about and then, if interested, following a link to your full article. Your wall-of-text articles totally turn me off before I even start to read.
    Please think about it as I am sure you are a fascinating writer, otherwise why would you be a guest contributor?

  8. mdh says:

    I see a lot of the same people who hoard fiscal capital also hoard social capital. What else are the secret societies of Yale and Harvard for?

  9. Machineintheghost says:

    I don’t remember the source and can’t find it on Google, but I vaguely remember hearing about an economist who rhetorically asked, what does “the economy” economize? What does a theoretical free market save because it is so precious? The answer was “love.” In the theoretical free market economy, you’re supposed to have as much goodwill as you can, and consequently pay cash for your food and socks and so forth in order not to strain the hospitality of your fellow citizens.

    I took it as meaning that heavy dependence on “social capital” to run an economy leads to mafia-style corruption.

    I’ve heard before that, in the USSR, being a fully licensed physician was not only underpaid, but was widely regarded as women’s work. In photos, Soviet doctors always seemed to wear white toques like chefs. If you wanted a relatively high-power job without the requirement for a lot of education, you ran a gas station, i.e. the gatekeeper of fuel. You’d distribute gas to the folks who can pay not just in rubles, but in favors.

  10. TheHikingStick says:

    Some folks here in the U.S.A. understand social capital, too. My wife and I had a wonderful wedding reception, much in part to valued contributions of friends. I have a special rememberance of John and Cindy, both chefs who took the modest foodstuffs I purchased and made them into a beautiful and memorable display. Our honeymoon in the northwoods of Wisconsin was made possible by other friends who let us use their cabin.

    We have gained and given to the informal economy for years. Most of my family’s dental work in recent years has been possible because I’ve been doing computer services for the dental clinic. This past weekend, we were able to borrow a trailer and three canoes so we could take a family trip in northern Minnesota. We’re always glad to let college age kids drop by and do their laundry or have a meal, in exchange for helping out a bit with the kids (e.g., playing a game with them, taking them for a walk).

    The informal economy is alive and well.

  11. Steaming Pile says:

    The true meaning of the parable of the loaves and fishes – the synergy of cooperation with one’s fellow human beings. That guy Jesus was a smart fellow.

  12. wolfiesma says:

    Yeah, but then your mom joins Facebook and the whole house of cards comes tumbling down…

  13. Anonymous says:

    I didn’t see it mentioned here specifically. Social lending is an online version of using this social capital in personal finance.

    http://kiva.org (International Charity)

    The whole point of Kiva is that loaning money to people with a plan has more impact on the community than giving it to people.

    http://prosper.com (US)
    http://lendingclub.com (US)
    http://uk.zopa.com (UK)
    . . .and many more around the world

    I just had a conversation today with my co-worker where he told me how the early generations of Japanese-Americans would get together, pool resources, and loan money to individuals who made a case for it. This kind of social capital helped their community do so well.

    This is the only part missing from these online services. The local focus. That being said I have seen ethnic/religious groups in prosper.com. While people may frown on it, I think it is a great idea.

    Yes. Social capital can lead to problems, but the alternative we have now in the States where the loan application just goes through the formula is heartless. In a time when credit is frozen, there needs to be additional forms.

    >I see a lot of the same people who hoard fiscal capital also hoard social capital. What else are the secret societies of Yale and Harvard for?

    So true. But, regardless of your class, being social and having a network of friends make more resources available to you.

    >The informal economy is alive and well.

    That is great to hear. I agree.

  14. Lucifer says:

    they should this socialism

  15. JL Bryan says:

    “I took it as meaning that heavy dependence on “social capital” to run an economy leads to mafia-style corruption.”

    Technically, the Soviet economy was supposed to depend on the brilliance and wisdom of the economic planners. It wasn’t designed to run on social capital.

    The social capital system the author describes is how people helped each other survive the Soviets.
    I think this was the result, not the cause, of mafia-style corruption (aka the Communist Party).

  16. chris says:

    Politicians also understand social capital, the only difference is their “friends” have lots and lots of money.

  17. Griffin says:

    A reliance on social capital is one of the worse things about ancient society. This is what medieval Europe and Rome were based on – they had NO market economy, it was all social capital (Okay, they had a small market economy, but if you participated in any large way everyone would look down on you.). Its how buildings got built, how armies were gathered, how money was raised for the government.

    It leads to corruption, cronyism, and a rigid class system.

    While it has its place in personal relationships and the like, and it has its benefits, the drawbacks of social capital are nothing to scoff at.

  18. DWittSF says:

    If a black market is one that is opaque to authority, then the biggest black marketeers are Goldman Sachs.

  19. Moriarty says:

    “I see a lot of the same people who hoard fiscal capital also hoard social capital. What else are the secret societies of Yale and Harvard for?”

    I’ve noticed the same. The same people I see obsessed with increasing material wealth are also obsessed with networking and rubbing elbows with the rich and powerful, and each is seen as a means to the other.

    Marina, you talk about how the very poor use social capital, but I’m sure it’s at least as important among the rich and powerful. The former is viewed as relying on the community and the latter as elitism or nepotism of various kinds, but it’s essentially the same thing, no?

  20. buddy66 says:

    I commented yesterday about growing up in a hooverville during the Great Depression. It would take a book to describe the varieties of voluntary services and interactions we and our neighbors came up with; everything from field gleaning expeditions, gardening, policing, weddings, dances, births, parties, funerals…

    I was too young to feel the strain and challenges the adults were undergoing, so what I mostly remember is the sense of family and community and shared activities. My sister remarks, ”We couldn’t get away with anything because everybody knew everything.”

    Our suburban grandchildren find it all very amusing.

  21. Machineintheghost says:

    @ 11.

    Thanks, good points.

    As I recall, there are different definitions of “social capital.” Some writers think of it as a sort of barter system for favors. But others think of a nation’s “social capital” as including things like the rule of law and the incorruptibility of civil servants. I’m told Swedish social democracy works partly because they have a lot of the second kind of social capital.

  22. JL Bryan says:

    “Marina, you talk about how the very poor use social capital, but I’m sure it’s at least as important among the rich and powerful. The former is viewed as relying on the community and the latter as elitism or nepotism of various kinds, but it’s essentially the same thing, no?”

    This would be an interesting area to study and compare/contrast.

  23. Marina Gorbis says:

    Wow, 4 hours on the plane and 26 comments! Thanks y’all.

    1. It is not surprising that in poorer countries where people have less money and fewer assets, people rely on social relations to fill many functions we pay for. Think babysitting, medical advice, meal preparations, housecleaning, even counseling. These are functions performed by grandparents, friends and relatives. And yes, these exchanges include many forms–barter, gifts, obligations. Here we outsource such services to professionals and pay money for them.

    2. Black market is not at all the same as social capital. In fact, black markets often arise in places where social connections are weak. Black markets are based on someone making money. Social capital is a part of everyday human connections and relations.

    3. Finally, I agree that organizational forms based on social rather than financial currencies are not panacea to all of our problems. Social networks can be exclusionary (secret societies, clubs, cliques), they have their own rich and poor, and can lead to huge inequalities. I think it is important to recognize that we are transitioning to new types of organizations and that our current management practices and regulatory frameworks are not suited to this new reality. We need to recognize this and adjust them accordingly.

  24. JL Bryan says:

    @ 15

    True, definitions are slippery. You might think of various institutions as social capital as well.

    A lot of this (what the writer is discussing) seems to boil down to barter, doesn’t it? Goods and services exchanged directly, rather than using money. It only works if you can find a mutually beneficial exchange–but the internet certainly enables that, and on a global scale.

  25. Anonymous says:

    Interesting notions about corruption, black markets, social capital. Definitions need defining.
    But in this discussion, if not totally in real life, I am on the side of real money. It seems that part of the original notion of the “American Dream” (sorry ’bout the quotes) is that money would cleanse you of all the baggage of your past, of your class, and that a stevedore with the cash was every bit as good as a doctor with the same amount. But not in this world of “social capital.” He would not have the same call on the same class of “friends.” Maybe this is the witnessing of the birth of a new class system.
    Cheers, Tedsy

  26. Kevin Morris says:

    Even within existing hierarchical corporations, it has been known for quite some time that the ‘underlying’ networks are where the true value is created – not necessarily the network as illustrated in a formal org chart.

    Our business is actually called ‘SocialStruct’ and we do just what you describe in the article: help organizations realize the value of social capital.

    Great to see such an insightful, intellectual analysis on the topic and looking forward to more guest posts.

  27. RevEng says:

    @#17: I’m not sure that it’s the same thing. Barter is directly thing-for-a-thing, whereas many of the transactions the author described seem almost like “favors”.

    I also came from a poor family and we relied on trading favors with people often. I think this is more what is meant by social capital — doing something for somebody else earns you “brownie points”, which inevitably results in them eventually doing you a favor. It’s not an explicit thing; people just help each other out. In that way, it’s a lot less mechanical and critical than financial capital — acts don’t necessarily have some set price. It’s capital in so much as you can’t get something for nothing — somebody who takes advantage of the kindness of others without giving in return eventually finds themselves without willing donors. However, if people help each other out regularly, the proportions matter little — friends rarely argue over the relative worth of cooking a meal, painting a fence, or helping move furniture.

    In many ways, I find this system of favors much more balanced: people receive what they need, when they need it, accumulating favors benefits others more than the accumulator, and those who are unable to help as much are not given proportionally less help — in fact, I find it’s often the opposite.

    It also breaks down the differentiation between trade and charity — rather than having to generate shared pools of currency and direct them to charities, charitable people merely give more favors than they receive. In this respect, a charity is an entity that can’t return the favor.

    Social capital likely won’t replace financial capital, because of the organization and scale that a corporation provides, but it certainly exists and is essential to everyday life. Many of us would have to work far more than 40 hours a week if we were to provide for ourselves entirely through financial capital.

  28. Rick York says:

    Guys,

    What Ms. Gorbis and the rest of you are talking about is a Black Market. Whenever a prevailing economic system fails to provide its constituents with something they want or need, a black (or “gray”) market gets created. Call it social capital or any other politically correct name that you want, it’s still a black market, simply because it functions outside the accepted economic system.

    In spite of the name, there is nothing particularly evil about a black market. (Except to those who run the “white”/mainstream market.)

    Black markets occur because the prevailing economic system fails, in general or in a specific area.

    The “currency” of such a market will vary greatly. It can be local money, so-called “hard” currency – Dollars, Euros, etc. – well, maybe not Dollars these days. Or the exchange can be based on barter.

    Command economies, like the old Soviet Union, create artificial shortages affecting everyone except the leadership. “Free Enterprise” creates shortages by basically excluding a substantial part of the population on the basis of poverty.

    Both create black markets.

    • Antinous / Moderator says:

      Call it social capital or any other politically correct name that you want, it’s still a black market, simply because it functions outside the accepted economic system.

      ‘Social capital’ is politically correct? ‘Black market’ is a pejorative propaganda term used by capitalists to create the idea that any products or services that don’t make them a profit must be criminal. ‘Accepted economic system’? Accepted by whom? Oh yeah, the same people who created the term ‘black market’.

  29. jacobian says:

    Polanyi talked quite a bit about economies that were more socially structured than we have currently. He points out in “The Great Transformation” that in most places, at most times, the dominant organisational model has been the social one, and that market economies are a very recent innovation.

    Marcel Mauss, also has quite a lot to say on gift economies, which were the dominant form of economics in pre-feudal and primitive societies.

    For something more modern there is David Graeber’s “Towards an Anthropological Theory of Value”, which draws heavily on anthropology to present a theory of value rooted in human social experience.

  30. Anonymous says:

    I’m with #28, and #30.
    How in the heck is this sort of corruption and favouritism a good thing?
    Because that’s what it is.

    Look at the example in the article: No one had meat, but you did, because your mother knew the grocer–well, guess what? Nobody had any meat because the grocer was stealing all their portions to distribute to his contacts. Otherwise everyone would have gottne a (small) ration. This, to me, seems enormously unfair.

    I’m sure it does look great, if you are on the recieving end, but the key to this sort of favouratism is that someone else is always disadvantaged. Did they do anything to deserve being disadvantaged? No, nothing at all.
    You can be completely unprejudiced when it comes to race, or class, or gender, but it’s almost garunteed that you will along all three lines, because you’ll be descriminating against who you do not know.
    #30 is right, it very easily can lead to a class system.
    The laws on the books in the Soviet Union were very egalitarian, I recall– only reason that Party members were so tremendously favoured, in practice, is because they were in power. Because they had the social capital.
    Is that really a system you want to emulate?

  31. Machineintheghost says:

    @19

    That’s pretty much what I thought, if i did not necessarily express effectively. My impression was that a black market is better than no market at all. But it’s still dangerous and horrible in comparison with the ideal free market. Under a command economy, under the black market, you aren’t allowed to sell what you make. Under the table, you sell a lot of homemade jam for some basic electrical parts you need to do some home repairs. So far so good. But then you’re getting paid to look the other way when somebody plays the system in a more serious, exploitative fashion. The local mucky-muck gives a little favor to an examining physician so that his cousin Sasha can have a chance to get out of the horrible rotten Russian draft on the grounds of disability. A big local player becomes known as the type of guy the police don’t mess with, even when he beats up some girl who doesn’t like him. All under the table.

  32. Anonymous says:

    @30
    In ancient societies like Rome non-people (slaves) performed all levels of economic services — sweat labor, skilled trades, and intellectual — for the citizens of the city-state.

    In medieval Europe non-people (commoners) performed all levels of economic services — sweat labor, skilled trades, and intellectual — for their sovereign, easiest defined as the man with the authority and means to end their life.

    Those are examples of what warrior capital brings, and not evidence of social capital…

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