The Economics of Social Capital - Volume 2

I was going to include this in the first one, but it was getting a bit long already, and it was late, and I was tired and I wasn't really firing on all cylinders. By the time I got to the end of the post, I couldn't quite find the metaphor I was looking for... I'm still not sure I have, but I'm going to try, because there's something that needs addressing.

Yesterday, I said that all personal relationships are worth the same in terms of social capital. It's hard to wrap your head around of course, because personal relationships can come in different styles and intensities. My relationship with my brother is not the same as my relationship with the doorman in my apartment building. However, yesterday I argued that they possess the same social capital. How can that be?

The thing I realized is that it doesn't matter how much money you have, the thing that matters is how you spend it. Sometimes you get a good deal and are able to use a weak connection and turn it into something great. Wayne's example was about a guy he met at a conference who in turn invited him to another function in Chicago. That was a dollar well spent. Meanwhile, your mom's dollar buys a lifetime of love, support, and nagging about eating vegetables. Another dollar well spent, but in a completely different store. You can't possibly shop in every store, and you certainly don't buy every item in the stores you do enter. Sometimes you shop for specific things and you know which store to go to. Other times, you wander around the mall until something grabs your attention and intices make a transaction. No matter how you break it down, it only matters how and where you choose to invest your social capital.

Of course, you can't put price tags on things like a personal support network or good conversation, but you can safely say that those with a lot of social capital probably afford these things a lot easier.

Next time: Professional Capital (aka - competence)

The Economics of Social Capital

We've been talking about "social capital" in class. It's the idea that the benefits and drawbacks from personal relationships over social networks (in real-life or in virtual situations) make deposits and withdrawls in our overall accounts of human interaction. Apparently, the more positive relationships you have with family, friends, coworkers, friends of friends, acquaintances, etc., the more social capital you've achieved. If you abuse those connections and the relationships turn sour, your social capital fund can suffer a slide. Social capital can then be used within your social network for the powers of good (get a job, get a discount, get advice, etc.).

It's a great system, quite similar to the "emotional bank account" described in 7 Habits of Highly Effective people. What makes this more interesting, if you make the direct comparison to money, a lot of other metaphors come into play. You can invest capital, expecting a return. You can have debts, you can forclose or go bankrupt, you can be rich or poor.

One concept we discussed in our group was inflation. My original thought was that "dollars" of social capital must be worth less than they used to be, because many years ago, it was much harder to keep in touch, and therefore the circle of friends and acquaintances would have been smaller. Then the telephone showed up, and the circle grew. Then email showed up, and suddenly long distance charges were overcome. Then chat became popular and you could have 50 people from all over the world on your desktop available to message at any point. Then social media started telling us that we now can contact hundreds of "friends" at the touch of a button.

So if someone with 20 friends used to be rich in social capital, am I absolutely dirty rotten filthy stinkin' rich because I have 375 friends on Facebook? Or has the value of social capital just depreciated?

Wayne was wise enough to point out that some great things come from continued contacts with these obscure acquaintances, so the value can't be that low. Experiences that would not otherwise be possible, can now be arranged because somebody had email, a cellphone, Facebook, etc. I completely agreed with him, but was certain that our relationships aren't as... potent... as they once were.

Perhaps what we lack in potency, we now make up in volume. While that seems like a prime definition for inflation, I finally figured out that the difference is this. Human relationships are unique. What you feel about your mother is nowhere near what you feel for a classmate, for example (unless you've got some mommy issues that need some attention). On the other hand, what you feel for one dollar is exactly what you feel for the next dollar and the next. No single Loonie gets priority treatment. It doesn't matter if it's been in your pocket for a year, or five minutes, a dollar is a dollar.

Social capital is NOT subject to inflation because in this system, a person is a person. Your mom, your classmate, your spouse, your boss, that friend of a friend, that girl from the bar who took your phone and put her number in under "Ashley maddy," and that guy you met at the conference last year all have the same value: one personal relationship. They're all just loonies in your pocket... and now, because of continuously improving technology, we're all much richer.