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The High Cost of Cheap Social Capital

Abstract

This paper briefly reviews the theory of social, negative, and cheap social capital and then explains the popularity and the high cost of cheap social capital. Next, this paper points out that our voluntary exchanges (which are enabled by prospects of mutual gain) and the high cost of involuntary exchanges (which are entered into in response to threats and defensive and destructive acts) both reflect our responses to the same physical and socio-emotional needs. Therefore, what differentiates our responses to similar needs are the relationships we have with others—whether they are social, negative, or cheap. Finally, this paper offers some suggestions for avoiding the high cost of cheap social capital.

*Lindon J. Robison is an emeritus professor in the department of Agricultural and Resource Economics (AFRE) at Michigan State University, East Lansing Michigan. He thanks Tristan Claridge for reviewing and commenting on this paper; Meghan Rollins Wilson for providing editorial assistance; and Julie Taylor and Lana Bailey for contributing to the ideas and organization of this paper.

Introduction

We mostly assume that commodity exchanges are voluntary and motivated by the possibility of mutual gain. Recently, exchange theory has been enriched by recognizing that relational goods produced in social capital–rich relationships of empathy and sympathy can be exchanged either alone or with commodities. It would be naive, however, to assume that all or even most human exchanges are voluntary or even beneficial. And while voluntary and mutually beneficial exchanges are to be emphasized and applauded, to ignore involuntary and welfare reducing exchanges by assuming that they will disappear is equivalent to putting one’s head in the sand—something an ostrich never does.

To ignore involuntary and welfare reducing exchanges by assuming that they will disappear is equivalent to putting one’s head in the sand—something an ostrich never does

In what follows, this paper distinguishes between voluntary and involuntary exchanges and considers those that include relational goods and bads and commodity gains and losses. In addition, relationships that employ defensive and destructive acts to compel involuntary exchanges will also be examined.

Because the concepts of social capital, negative social capital, cheap social capital, and physical and socio-emotional needs are all important to the theme of this paper and potentially unfamiliar to readers, I will spend time herein defining and giving examples of these concepts. By so doing, readers should thus be able to understand the theme of this paper; namely, that the high cost of cheap social capital, the voluntary exchanges motivated by social capital (defined here as empathy), and the involuntary exchanges motivated by negative social capital (defined here as antipathy) and by cheap social capital (characterized by relationships of persons who share antipathy for the same object) are all motivated by the same physical and socio-emotional needs and differentiated by our relationships with our exchange partners. Finally, this paper also offers some prescriptions for avoiding the high cost of cheap social capital.

Voluntary and Involuntary Exchanges

This paper defines an exchange as an act of giving up one thing and receiving another[1]. Exchanges of commodities and relational goods that contribute to changes in our consumption levels and capital stock accumulations can be divided into voluntary and involuntary exchanges. Voluntary exchanges occur when exchange participants can choose to exchange or not. Involuntary exchanges occur when at least one of the exchange participants is unable to refuse the exchange offer—such as being confronted by a robber with a gun who asks for the victim’s wallet or their life. In addition, exchanges can produce secondary and tertiary exchanges that may occur later. For example, the robber who received the victim’s wallet may become the object of the victim and the victim’s friends’ antipathy and may be prosecuted for committing the crime.

An externality is defined as a cost or benefit imposed on an uninvolved party without their consent[2]. Therefore, an externality includes an involuntary exchange because at least one party did not agree to the exchange. Furthermore, persons or groups who agree to compete for the same goal and who could also decide not to compete are not creating externalities. The exchange, although often producing winners and losers, is still voluntary. However, competitive events that are not mutually agreed to (such as war, graft and corruption, threats, and other exchanges) are externalities because they exemplify how harmful consequences are imposed on another person without their consent. Because involuntary exchanges have mostly been ignored, the purpose of this paper is to explain them and the high cost they impose on objects that are forced to exchange.

A Review of the Social Capital Paradigm

Social capital. This paper supports the definition of social capital as the empathy one person or group has for another person or group (the objects of their social capital). Those who view others with empathy and who internalize their well-being provide social capital, and those who are viewed with empathy and whose well-being is internalized by others are the objects of social capital[3].

At the heart of relationships are commonalities, the things persons in a relationship have in common or the values that they share.

Relationships and commonalities. Relationships in this paper are defined as connections between individuals and groups. At the heart of relationships are commonalities, the things persons in a relationship have in common or the values that they share. Commonalities may be earned, such as where we work, play, or worship, or they may be inherited, such as our age, genealogy, sex, first language, or nationality of our parents[4]. Related to earned commonalities are covenants, commitments, and agreements that create commonalities that connect us to each other.

Relational goods. Relational goods are intangible signals exchanged mostly in social capital networks. For example, we create relational goods when we smile, shake hands, hug, listen to others, and invite others to join us. We can also provide relational goods when we share information; identify what we have in common; recognize each other’s achievements; acknowledge important events in each other’s lives, such as birthdays and graduations; recommend a good book, restaurant, or place to visit; make introductions; offer a discount; provide comfort; or give a carefully selected gift. Commonalities are necessary but not sufficient for the exchange of relational goods.

Attachment value goods[5]. As defined above, relational goods are intangible. However, we can change (increase) the value and meaning of both intangible and tangible things by embedding them with relational goods. This process creates attachment value goods. To embed things with relational goods, we must associate the things with people with whom we have exchanged relational goods and with whom we share social capital. Examples of things that can become attachment value goods include flags, flowers, hometowns, paintings, photos, rings, rituals, celebrations, firesides, food, and sacred symbols associated with deity and one’s religion[6]. In fact, anything that someone embeds with relational goods can become an attachment value good.

Combinations of goods. While commodities, relational goods, and attachment value goods have been described separately herein, most exchanges involve combinations of all three kinds of goods. For example, participating in holiday celebrations may involve exchanging commodities (including physical gifts), relational goods (such as including others in celebrations), and attachment value goods (including decorations and ceremonies associated with holidays shared together).

Social capital investments. We can invest in three kinds of social capital (in this paper, to invest means to increase the stock of something that can produce value later[7]). First, we can invest in social capital provided by our ideal self, which is what some refer to as one’s conscience or what Etzioni referred to as our moral self[8]. We invest in social capital provided by our ideal self by choosing actions consistent with our value system and traits we admire. Second, we invest in social capital provided by those we admire and whose goodwill we value by choosing actions that demonstrate our commonalities, traits, and values they admire. For example, to increase our being the social capital objects of others, we may adopt their name, join an organization to which they belong, visit places they visit, dress like they do, or promote the causes they promote. Third, we invest in the social capital we provide others by choosing actions that increase our commonalities with them.  For example, we may wear the jersey of a sports team we support, fly the flag of a country whose causes we support, or provide aid for others even though we may have no personal connections, such as stopping to aid a stranded traveler or comfort a disappointed toddler.

A Review of the Cheap Social Capital Paradigm

To provide the background for the main theme of this paper, the high cost of cheap social capital, this paper will review the concepts of negative social capital, cheap social capital, cheap social capital networks, cheap social capital objects, relational bads, and attachment value bads. For more details, Tristan Claridge and I discussed cheap social capital in a podcast[9].

Despite its many benefits, social capital has a dark side

The dark side of social capital. Despite its many benefits, social capital has a dark side, which is that the benefits of belonging to a social capital network are often unavailable to nonmembers of the network. Those excluded from social capital–rich networks sometimes feel resentment, envy, and fear, as well as, eventually, antipathy (negative social capital) toward social capital network members (the objects of their negative social capital), especially when they are not members of other networks that can provide the benefits that they are being denied.

Negative and cheap social capital. This paper supports the definition of negative social capital as the antipathy one person or group has for another person or group. Cheap social capital is defined as the relationship between persons who share negative social capital for the same person, group, or thing. Cheap social capital relationships have been characterized by the expressions: marriages of convenience or strange bedfellows.

Cheap social capital relationships depend on the commonality of a shared object of antipathy

Cheap social capital and the need for an object. Relationships require the exchange of relational goods and/or commodities.  These exchanges are enabled by commonalities that create opportunities for exchanges.  Cheap social capital relationships depend on the commonality of a shared object of antipathy. Furthermore, for the cheap social capital object to enable the creation of cheap social capital relationships, the object must be viewed as potentially harmful to or obstructing of the aims and goals of those who view it as an object. Cheap social capital relationships may also share inherited commonalities that create separations between them and their objects. For example, for many years, some organizations admitted only men into their ranks—though some organizations had wealth and racial restrictions as well—thus sometimes facilitating the formation of cheap social capital relationships among excluded persons[10].

Cheap social capital networks. Because it is difficult to do alone what can be achieved by a coordinated network, persons who do not belong to a social capital network may be motivated to create or join an existing cheap social capital network. Cheap social capital networks are cheap and popular because potential objects of antipathy are abundant; a stranger, a competitor, or anyone who is different can become a negative social capital object. However, cheap social capital networks are also cheap because the benefits they produce are inferior to those produced by social capital networks. Cheap social capital objects viewed as potentially threating, may inspire cheap social capital networks to adopt defensive and destructive acts.

Relational bads. Relational bads are intangible signals exchanged in relationships that may signal exclusion, lack of validation, mistrust, and disdain. When we exchange relational bads, our negative social capital for each other likely increases. We create relational bads when we frown, avoid contact, ignore suggestions, criticize, and deny invitations from others to join their networks. We can also produce relational bads when we withhold information; emphasize our differences; denigrate others’ achievements; refuse to acknowledge important events in each other’s lives such birthdays and graduations; withhold recommendations that would benefit others; refuse to make introductions; charge higher than market prices; and impose externalities.

Attachment value bads[11]. The process of creating attachment value bads occurs when the value and meaning of both intangible and tangible things are changed (decreased) by embedding them with relational bads. We embed things with relational bads when we associate them with people who are the objects of our negative social capital. Attachment value bads can include rejection letters; the flags of our enemies and competitors; places of abuse and exclusion; symbols of threatening organizations (such as the Nazi swastika); and evidence of unfair treatment or misinformation[11].

Concepts Related to the Cheap Social Capital Paradigm

Various social science concepts relate to negative social capital, cheap social capital, and cheap social capital networks. Consider several examples interpreted here from the perspective of the cheap social capital paradigm.

Conflict theory. A creation of Karl Marx, conflict theory claims that social order is maintained by domination, fear, and power rather than by consensus and conformity. From the perspective of the cheap social capital paradigm, conflict theory claims that social order is maintained by requiring involuntary exchanges and that those with wealth and power will try to hold on to it by any means possible, including by suppressing the poor and powerless. Finally, according to Marx, the poor and powerless in return, will come to view the wealthy and powerful as objects of their negative social capital and will form cheap social capital networks to defend themselves against the wealthy and powerful, using violent means if necessary[12].

Scapegoating. Creating an object of cheap social capital to blame others for undesirable outcomes, even if they are not responsible, is referred to as scapegoating[13]. The term scapegoating is described in the Bible as the act of sending one twin goat into the wilderness to carry the sins of the people (Leviticus 16:8–10 KJV). Individually, scapegoating is a psychological defense mechanism useful for displacing negative feelings about oneself[14] and is mostly motivated by the desire to shift blame for whatever one has done wrong. Finally, scapegoats can be used to prevent defections from one’s own cheap social capital network by making competitors’ networks less attractive. From the perspective of the cheap social capital paradigm, scapegoating provides an explanation and motive for creating objects of cheap social capital networks.

Externalities. Negative social capital implies that we can gain satisfaction by creating externalities for the objects of our negative social capital because we have negatively internalized their well-being[15]. From the definition of negative social capital, we can infer that some humans can be cruel to other people and take pleasure from their misfortune—even when they pose no threat—because these people have become externalities to the cruel humans. Understandably, the French philosopher Blaise Pascal concluded that humans are the glory and the scum of the universe[16]. However, humans typically only do things to get pleasure or to avoid pain; for most of us, hurting others causes us to feel their pain, so we avoid it unless we’re threatened. Unfortunately, negative social capital provides us with the motives to create externalities by harming others, even the harmless.

Affinity fraud. Affinity fraud refers to investment scams done by people who use their commonalities and social capital to bilk the unwary. Those promoting the scam frequently are, or pretend to be, members of a group’s social capital network and can thus convince potential investors that they will act in the interests of network members. Further, fraudsters often enlist respected community or religious leaders from within the network to legitimize a fraudulent investment. Luckily for the fraudsters, their affinity fraud victims often fail to notify authorities or pursue legal remedies and instead try to work things out within the group, which is particularly true when the fraudsters have used respected community or religious leaders to convince others to join the investment[17]. Thus, because social capital facilitated the fraud, it is often difficult for regulators or law enforcement officials to detect and prosecute an affinity scam.

Social exclusion. Social capital and cheap social capital theory recognizes that we can gain relational goods by comparing ourselves favorably with those who are different from ourselves, including those who have differences from us in education, income, race, skin color, gender, religious affiliation, ethnic origin, living standards, political opinions, appearance, sexual orientation, addictions, employment, and age. One way we compare ourselves favorably with others is to make those who are not like us objects of our cheap social capital and cheap social capital networks. The excluded people (objects) are often denied opportunities and resources available to members of the ‘in” group. Social exclusion that blocks opportunities may apply to housing, employment, healthcare, civic engagement, democratic participation, and due process[18].

Sportswashing. Sportswashing is an effort to earn attachment value for a country, corporation, or other organizations by associating it with a popular event or famous sports figures[19]. Specific sportswashing activities include hosting sporting events; purchasing or sponsoring sports teams; and participating in a sport. At the international level, sportswashing has been used to direct attention away from poor human rights records and corruption scandals, including the German government’s hosting of the 1936 Olympic Games and Argentina’s hosting of the 1978 World Cup (during the reign of the military dictatorship)[20]. More recently, the United States Department of Justice has accused Russia and Qatar of bribing FIFA officials for the right to host the World Cup soccer matches in 2018 and 2022, respectively[21]. Human Rights Watch claims that Qatar used the World Cup to cover up their unenviable human rights record, which includes the disadvantaging of women[22]. At the individual and corporate levels, sportswashing has been used to cover up vices, crimes, and scandals. For example, for eighteen years, Larry Nassar was the team doctor of the United States women’s national gymnastics team. Using women’s gymnastics as a cover, he sexually assaulted hundreds of children and young women[23].

Five Fundamental Needs

Needs and exchanges. A need is a condition requiring supply or relief[24], and we seek to satisfy our needs through exchanges. A theme of this paper is that we engage in voluntary and involuntary exchanges to satisfy the same five fundament needs.

We engage in voluntary and involuntary exchanges to satisfy the same five fundament needs

Five fundamental needs. For the purposes of this paper, we identify five fundamental needs.  While the literature describing human needs is diverse and unsettled, Maslow’s description is frequently cited[25]. His list of needs includes physical needs for commodities and socio-emotional needs for internal and external validation; love and belonging; and transcendence. In addition, Maslow distinguished between deficiency needs (things we lack) and growth needs (things we need to achieve). Some have presented Maslow’s description of our needs as a pyramid with the most basic needs at the bottom[26].

Consider these five fundamental needs described below. While I do not claim that the needs I describe include all human needs, I have found that these five explain much of the behavior described in my work as a behavioral economist[27].

Our need for internal validation. Our need for internal validation is the need for our approval from our ideal self (sometimes referred to as our conscience), which is what Etzioni calls the moral dimension. He characterized the conflict between our physical self and our ideal self with this example: “I want to go to the movie, but I ought to go visit my sick uncle in the hospital.” Etzioni’s example illustrates how our ideal self compares our actions with our moral philosophy or value system[8]. Therefore, being validated by our ideal self communicates to ourselves that we are acting in alignment with what we value and believe is important.

Our need for external validation. Our need for external validation is our need for approval from people we regard. Karyn Hall writes that it is “reasonable for anyone to want their ideas, choices, achievements, or opinions validated by those around them.”[28] This need for external validation is evident in children who look to their parents for approval[29]. Moreover, our need for external validation may help explain the popularity of books designed to help us do just that, including Dale Carnegie’s book How to Win Friends & Influence People, which has sold over 30 million copies[30].

Our need for commodities. Commodities are basic goods (such as food, shelter, safety, and clothing) whose production or exchange is facilitated by our relationships. For example, to satisfy our need for commodities, we invest in productive skills (human capital), human-made capital (cars, houses, roads, and tools), natural capital (the environment—such as the air we breathe and the water we drink), and financial capital (our borrowing capacity).

Our need to belong. Scholars Baumeister and Leary argue that belongingness is a fundamental and universal human need. In addition, they found that the feelings of being left out can produce severe physical and emotional consequences[31]. Thus, to mitigate these feelings, we are naturally motivated to become part of a group or network in two ways: by fitting in or by finding “home” and “family.”

To fit in, we adopt the values, customs, traditions, and objects of worship of the group we wish to join. Fitting in is being accepted for being like someone else. Sometimes, fitting in requires that we sacrifice validation from our ideal self in exchange for the external validation of the group we want to join. However, trying to fit in can also sometimes be productive. For instance, fitting into a group with standards that we wish to attain can help us to meet those standards.

We can also satisfy our need to belong by finding people who treat us like family and who accept us for who we are (even if they disagree with our choices or beliefs). As a result, belonging is being somewhere where we want to be and where we are welcomed by those who are already there. This kind of belonging does not require that we sacrifice internal validation to satisfy our need to belong.

Our need for transcendence. According to Maslow, transcendence refers to our need for connections to something or someone outside of ourselves. Therefore, efforts to satisfy this need are often manifest by acts of altruism[32]. Such altruistic acts can be described as our efforts to transcend ourselves by sacrificing our own needs to improve the well-being of others[33]. By connecting to others through altruistic acts, we can learn through their eyes about the world around us, the choices available to us, and the consequences of those choices. Through altruistic acts, we expand our awareness of other people, people with whom we share similar traits and interests, and we increase our ability to transcend ourselves, which occurs when we increase the social capital we provide others by adopting their interests, supporting their causes, and associating with their attachment value symbols.

Another reason people make transcendent choices is because doing so tends to be correlated with greater happiness, health, and longevity. Indeed, the most important reason offered by those who perform altruistic acts is that it makes them happy[34][35].

How We Respond to our Needs

What accounts for our different responses to our similar and often unmet needs?

Manfred Max-Neef explained that human needs are “few, finite, and classifiable” but that it is in the infinite ways we satisfy those needs that the diversity, wastage, and muddle occurs[36]. Therefore, the important question is this: What accounts for our different responses to our similar and often unmet needs? This paper claims that how we attempt to satisfy our needs depends on our relationships with others and ourselves and that said relationships alter the exchanges we conduct to satisfy our needs. This claim is supported with examples from personal experience, research, history, and current events.

Our five needs described earlier are the same regardless of where we live on the spectrum of relationships that ranges from apathy and antipathy to sympathy and empathy. Nevertheless, efforts to satisfy our needs are different depending on where we are on the spectrum of relationships with our exchange partners. Below, I describe how efforts to satisfy our needs are differentiated by the nature of our relationships.

Internal validation. We create our ideal self from the traits, attitudes, and qualities of our esteemed social capital objects. These objects may include the following: religious figures such as Jesus Christ, the Buddha, and Mother Teresa; political figures such as George Washington, Winston Churchill, and Mahatma Gandhi; and esteemed teachers (living and dead) such as David Thoreau and family relatives. Additionally, the traits of cheap social capital objects can sometimes become traits and qualities to be avoided and not adopted by one’s ideal self.

Consistent with the need for internal validation from one’s ideal self are the findings from an impressive study published in the journal Science; this study found that people are more likely to try and return lost wallets with money in them than those without. Alain Cohn, who participated in a similar study, concluded that people tend to “have an aversion to seeing themselves as a thief.”

External validation. Gaining approval from our social capital objects and important others whom we admire, leads us to perform acts and develop attitudes and character traits of which they approve. On the other hand, we often commit destructive and defensive acts against their cheap social capital objects to gain their approval.

In December 2015, Serena Williams was named Sportsperson of the Year by Sports Illustrated magazine. Writing about what motivated Serena in a particularly difficult match, wrote Delores Smith-Johnson who surmised that “[Serena must have] thought about the hard work that her father had put into train[ing] and support[ing] [she and her sister] on this journey.”[37] In this example, Serena satisfied her need for external validation from her father by winning difficult matches.

Also consistent with the need for external validation from one’s family (and possible religious associates) is the honor killing enacted by Pakistani Waseem Azeem. After, he told reporters that he killed his sister Qandee Balock because her social media posts had brought dishonor to the family’s name. Waseem was later pardoned for his act[38].

Commodities. To gain social capital with our customers, we can produce or improve a product or service (a commodity) that others are willing to pay to obtain because it will improve their well-being. However, having negative social capital with customers allows us to increase our profits by exploiting our customers in different ways (sometimes by selling them inferior or harmful products). Alternatively, negative social capital can lead some people to inflict commodity losses on others by using unfair business practices.

In contrast, if customers are viewed as objects of social capital, significant gains in productivity can occur. Although Ford was motivated by profit, he pursued it in ways that benefitted his employees. First, he produced a car that they and other ordinary workers could afford to purchase by improving the moving assembly line. He also reduced the hours they worked during the week by instituting work-free weekends[39]. By reducing the time to produce a car, Ford cars became affordable to the average wage earner.

Consistent with viewing commodity producers as objects of cheap social capital are efforts to impose commodity losses on them. For example, Chinese authorities used the threat of commodity losses to limit criticism of their humanitarian practices. After hearing reports of forced labor in western Xinjiang, home to Muslim Uighurs, Swedish fashion retailer H&M said that it was deeply concerned by the news. In response, H&M was criticized by a Communist Party organization for its comments and removed from major e-commerce apps, including Tmall, Jingdong, and Pinduoduo.[40]

Belonging. When we have social capital for another group or organization, we adopt their traits and characteristics so that we can belong. Alternatively, we can find a group with whom we already share traits and characteristics. Additionally, when we have negative social capital for another group or organization, we find and join with others who share our negative social capital for the same group or organization.

Recognizing the need for others to belong, Queen Elizabeth II has helped countless others feel like they fit in. At age 25, she “became queen regnant of seven independent Commonwealth countries: the United Kingdom, Canada, Australia, New Zealand, South Africa, Pakistan,” and Sri Lanka, “as well as Head of the Commonwealth.” Helping visitors feel welcome has almost become her specialty during her reign. Her genuine spirit of inclusion has been a wonderful example that a world of divisions should follow. Exemplary efforts to include different countries and people include her historic “visits to China in 1986, Russia in 1994, the Republic of Ireland in 2011, and visits to or from five popes.”[41]

Also consistent with the desire to fit in was Julia Roberts’s character Maggie in the movie “Runaway Bride,” who let her desire to belong lead her to adopt the preferences of her fiancés to the point that she lacked a knowledge of who she really was and wanted to become. This was illustrated by her preference for eggs. When jilted former fiancés were asked how Maggie liked her eggs cooked, they responded: “Scrambled, just like me,” or “Poached, just like me.” In every situation, the jilted fiancé thought that Maggie liked her eggs just like they did. She later discovered that she prefers eggs Benedict[42].

Transcendence. We can satisfy our need for positive transcendence by attempting to improve the well-being of others. Alternatively, we can satisfy our need for negative transcendence by performing defensive anddestructive acts to reduce others’ well-being.

Consistent with the desire to increase our ability to internalize the well-being of others (and to increase the social capital we can provide to others), we often perform altruistic acts of service and resource sharing. For example, “Doctors Without Borders” is a private international association that was founded in 1971. The association is composed mainly of doctors and other healthcare workers but is also open to other professions who can help provide lifesaving medical care to those most in need. Association members assist victims of natural disasters, human-made disasters, and armed conflict. These volunteers serve others irrespective of victims’ and other volunteers’ race, religion, creed, or political convictions[43].

Also consistent with the desire to increase our antipathy for others, we may commit defensive and destructive acts. For example, Vladimir Putin’s vision of re-creating the former Soviet Union led him to order Russia’s armed forces to invade its peaceful and sovereign Ukrainian neighbor. He described the Ukrainian people as Nazis persecuting Russian sympathizers within Russia’s borders. While the outcome of the invasion is still being determined, the cost of Putin’s efforts to rule (measured in terms of human tragedy) has so far produced over 3 million refugees, thousands of deaths, and massive destruction of property[44].

Involuntary Exchanges: Defensive and Destructive Acts

The needs that motivate an involuntary exchange are the same as those that motivate voluntary exchanges

To satisfy deep and often unmet needs, individuals and members of cheap social capital networks use defensive and destructive acts against objects of their negative social capital and objects of their friends’ negative social capital to enforce involuntary exchanges. Nevertheless, the needs that motivate an involuntary exchange are the same as those that motivate voluntary exchanges. For example, the motivation for such acts may be driven by the internal validation that comes by demonstrating superiority over one’s object or by maintaining one’s honor by inflicting harm on one’s object. Or the acts may be motivated by commodity gains that are made at the expense of others who are viewed with antipathy or apathy and who sanction the breaking of agreements or the use of deception. Also, these acts may be motivated by the desire to earn membership in a cheap social capital network or to gain the approval of others who share one’s cheap social capital; in this case, destructive and defensive acts against a shared object may be required for membership—as in the case of some gangs. Further, some defensive and destructive acts may be required to deepen one’s antipathy toward another to reinforce the separation between “us” and “them.” Whatever the motives that produce defensive and destructive acts against objects of negative social capital, they haven’t changed much over time. Below, we will review some of the timeless methods that have been used to commit defensive and destructive acts against objects of negative social capital, acts that have often been committed by cheap social capital networks. These acts can be viewed as efforts to destroy social capital as well as human, financial, natural, and human-made capital of negative social capital objects.

Enact new or change existing laws to disadvantage objects of negative social capital. After the Civil War, the Southern states (and some others) passed “Black Codes,” which allowed for the arrest of mostly Black males for a variety of small offenses, such as moving freely within a state without written permission. After those who were arrested were convicted, they were then leased for farming, mining, and other forms of work to employers who provided revenue for the states. For example, in 1898, some 73% of Alabama’s entire annual state revenue came from convict leasing[45]. Another example of changing laws to disadvantage objects of negative social capital occurred after the 2020 election when Donald Trump and his supporters challenged, without evidence, the integrity of the election that he lost[46]. Subsequently, nineteen mostly Republican-controlled states passed laws making it harder to vote. Many of these changes targeted early voting and absentee ballots, which Trump supporters viewed as responsible for his defeat[47].

Destroy reputations using unfavorable labels. During Donald Trump’s administration, undocumented migrants became the object of his cheap social capital network, and he sought to destroy their reputation by declaring that “when Mexico sends its people, they’re not sending their best. . .. They’re sending people that have lots of problems, and they’re bringing those problems [to] us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.”

Limit financial capital needed to sustain economic growth. During the 1960s, South Africa’s system of apartheid made South Africa the object of some countries’ cheap social capital. This prompted a disinvestment effort that intensified in 1986 when the US Congress passed the Comprehensive Anti-Apartheid Act over the veto of President Ronald Reagan. The act banned new US investments in South Africa, sales to its police and military, and bank loans (except for the purpose of trade). However, some claim that this US disinvestment effort pressured the South African government to ultimately dismantle its apartheid system[48][49].

Limit objects’ commodity exchange opportunities by charging them higher-than-market prices. In 2000 and 2001, colleagues and I conducted a multistate survey to examine the role of social capital and cheap social capital on land sales. We found that farmland sellers charged unfriendly neighbors nearly 8 percent above the arms-length sale price for land. As a result, less than 2 percent of land sales were made to unfriendly neighbors[51].

Kill and otherwise harm persons lacking the commonality of a ruling group. Between April 7 and July 15 of 1994, armed Rwandan Hutu militia members slaughtered between 500,000 to 800,000 members of the Tutsi minority ethnic group, as well as some moderate Hutus. The Tutsi minority ethnic group, the object of the Hutus’ negative social capital, lacked the ethnic commonality of those in power[52].

Cancel culture members call negative attention to and promote ostracism of their negative social capital objects

Destroy the social capital of cheap social capital objects using social media. Members of what has been called the cancel or call-out culture attempt to destroy the social capital of persons or groups who align with positions or views counter to their own. Using online, social media, or in-person messaging, cancel culture members call negative attention to and promote ostracism of their negative social capital objects. Often, cancel culture is viewed as a form of boycotting or shunning a person (often a celebrity) or another entity that has been deemed to have acted or spoken in an unacceptable manner[53].

Break treaties, agreements, and contracts with negative social capital objects, often to gain commodity advantages. From 1778 to 1871, the United States government made more than 500 treaties with Native American tribes; each of these treaties has since been violated in some way or outright broken by the US government. The US’s motive for breaking most of these treaties was to gain access to the land that was promised to Native Americans by the treaties[54].

Use the attachment value of official organizations and government and the social capital of famous persons for private gain. Albert Bacon Fall, the secretary of the interior in the Warren Harding administration, leased Navy petroleum reserves at Teapot Dome in Wyoming, as well as two locations in California, to private oil companies at low rates without competitive bidding in exchange for bribes. Fall was convicted and became the first presidential cabinet member to go to prison. As a result of the Teapot Dome scandal, Congress passed legislation giving subpoena power to the House and Senate for review of tax records of any US citizen, regardless of elected or appointed position[55].

Misuse or expropriate the assets of vulnerable persons or groups to increase one’s own commodity well-being. In a study of 122 adults with severe mental illness who were receiving disabilities payments, 30 percent reported that someone owed them money and that they had trouble getting it back; 27 percent reported someone borrowing something without permission; 25 percent reported that they had been persuaded to lend money when they really didn’t want to; 20 percent felt cheated after someone sold them something; and 35 percent reported running out of money before being scheduled to get more for the reasons listed above and similar ones[56].

Take advantage of another person or group trust by promising more than is possible or is intended to be delivered. Charles Ponzi, a famous con man, used payments from new “investors” to satisfy promises made to previous ones. He attracted investors by promising them impossible short-term profits of 50 to 100 percent. Ponzi swindled $15 million over the course of eighteen months when, to use a popular expression, he robbed Peter to pay Paul. In 1920, he was convicted and subsequently imprisoned, paroled, convicted, imprisoned again, and eventually deported to his native Italy[57].

Withhold the truth and blame others for unfortunate events. The USS Maine was a United States Navy ship that sank in Havana Harbor in February 1898. The event contributed to the outbreak of the Spanish–American War in April of the same year. American newspapers claimed that the Spanish were responsible for the ship’s destruction, and the phrase “Remember the Maine! To hell with Spain!” became a rallying cry. Although the Maine explosion was not a direct cause of the war, it served as a catalyst that accelerated the events leading up to the war with Spain. Later investigations found that igniting coal dust was likely responsible for the explosion of the Maine, not Spain[58].

Classifying Cheap Social Capital Networks

Cheap social capital networks are ubiquitous

Cheap social capital networks are ubiquitous[59]. To help study the nature of cheap social capital networks, consider possible ways to organize them by the commonalities they share in addition to the shared object of their negative social capital.

Other commonalities. While cheap social capital networks do share the object of their negative social capital, they also nearly always have other commonalities, and these can be used to further classify cheap social capital networks.

Political affiliation. Members of political parties often attempt to gain support by creating objects of cheap social capital that can be the basis of forming a cheap social capital network (with the opposing political parties as their objects). About this issue, Zachary Neal said, “There has been a steady progression toward a Congress characterized by strong partisan polarization that imposes severe constraints on compromise because each party views the other as not merely having a different legislative agenda being pursued in parallel, but rather as an opponent to their own legislative agenda.”[60] Furthermore, political opponents Donald Trump and Ron DeSantis were described as owing their popularity on the right “far more to their skill at denouncing enemies [and each other], real and imagined, than to their ideas or governing record.”[61]

Saboteurs. Some cheap social capital networks embedded in a large social capital network find it advantageous to conceal their identity so they can actively oppose the institutions of the large network. This configuration describes saboteurs, terrorists, and crime syndicates that exist unrecognized within a mostly disconnected and weak larger network. For example, the nineteen 9/11 hijackers were affiliated with the militant Islamist group al-Qaeda in four countries: fifteen were from Saudi Arabia; two, from the United Arab Emirates; one, from Egypt; and one, from Lebanon. Their network and their purposes were not known until after their attacks[62].

Ethnic minorities. Amy Chau discusses in her book, World on Fire, economically successful ethnic minority networks and how they become the cheap social capital objects of the larger population in which they live[63]. At the time she wrote her book, the Chinese community in the Philippines comprised only 1 percent of the population while also controlling 60 percent of the economy. In Indonesia, the Chinese minority comprised 3 percent of the population while controlling 75 percent of the economy. Other examples of economically strong ethnic minorities controlling disproportionate amounts of resources include Europeans throughout Latin America and Africa, Israeli Jews in Israel and the Middle East, Russian Jewish oligarchs in post-Communist Russia, Croats in the former Yugoslavia, Indians in East Africa, Lebanese people in West Africa and Mexico, and the Yoruba, Igbos, Kikuyus, and Tutsis in Nigeria, Cameroon, and Rwanda[64].

The defensive and destructive acts done by cheap social capital networks directed toward what Chau describes as “market-dominant minorities” has taken several forms, including backlash against markets that benefit the market-dominant minority’s wealth, resistance to democratic forces that favor the market-dominant minority, and violence—sometimes genocidal—directed against the market-dominant minority itself[65].

Dictators. Strong leaders, especially dictators, often create cheap social capital networks by scapegoating a small minority group or a person within their network. Because dictators have little social capital to achieve their social goals, they often resort to violence to maintain power, often through institutions such as military or police forces. However, since members of these cheap social capital networks are connected by their shared negative social capital and not by internal social capital ties, the network is often fragile and subject to manipulation by another strong leader. As a result, cheap social capital networks are frequently at risk of becoming dominated by a strong leader.

The High Cost of Cheap Social Capital

Defensive and destructive acts intended to harm cheap social capital objects produce costly consequences

Defensive and destructive acts intended to harm cheap social capital objects produce costly consequences. Consider the examples below.

Reduced trade and specialization. Adam Smith claimed that productivity required the division of labor and specialization. However, specialization requires exchanges to obtain what persons and groups require but can no longer produce because of their specialization. Thus, cheap social capital networks depend on relational bads to maintain their object’s ability to keep the cheap social capital network cheap. However, when relational bads are included in voluntary commodity exchanges, the cheap social capital networks limit these exchanges, thus reducing productivity and the likelihood of investing in public goods (while also increasing the production of externalities). Indeed, perhaps the greatest cost of negative social capital and cheap social capital networks is that they divert investments from productive goods designed to benefit members of social capital networks and invest them in capital designed to defend against and reduce the well-being of another person or group.

To illustrate this phenomenon, consider that on July 26, 1941, President Franklin Roosevelt seized all Japanese assets in the United States in response to the Japanese occupation of French Indochina. Britain and the Dutch East Indies followed with similar actions. As a result, Japan lost access to three-fourths of its overseas trade and 88 percent of its imported oil; so, Japan occupied Saigon, which threatened the control of the region’s rubber and tin (which the West imported). Japan’s attack on Pearl Harbor soon followed on December 7, 1941[66].

Producing harmful products. In his book on the dangers of smoking, Robert Procter claimed that secret documents had established that, at least since 1953, cigarette manufacturers knew about a link between smoking and cancer. Yet, the cigarette makers conspired to hide the fact from consumers, treating them as objects to be used for profit. Furthermore, some evidence suggests that cigarette makers not only hid the risk of smoking but also made smoking more addictive. Unfortunately, cigarette smoking was responsible for more than 500,000 deaths in 2020, creating what the World Health Organization calls an epidemic[67].

War. War, regardless of its cause, leads to the objectification of one’s enemies.  To defend itself against the object of their cheap social capital, combatants must shift from the production of consumer goods to the production of goods useful for defensive and destructive purposes. For example, the production of US cars in 1940 reached nearly 4.7 million, but on January 1, 1942, the government froze the sale of consumer vehicles; so, instead of working on luxury designs and automotive innovations, automakers focused on building tanks, trucks, airplanes, Jeeps, torpedoes, and even helmets. In fact, during the entirety of World War II, only 139 additional cars rolled off the assembly lines[68].

Displacement. When cheap social capital networks create adversarial relationships with their objects, socio-emotional distance as well as physical separation occur. Recently, the World Bank reported that globally, there are more than 100 million forcibly displaced people (including refugees), internally displaced persons, and asylum seekers who have fled their homes to escape violence, conflict, and persecution[69].

Commodification. Creating an object of cheap social capital requires that a group first objectifies a person or group through the process of commodification. This process involves turning people and their high attachment value goods into “things” by exchanging the people/goods for money[70]. In his book What Money Can’t Buy: The Moral Limits of Markets, Michael J. Sandel lists several examples of this process of commodification. In society, the privilege of immigrating into the United States; admission into a prestigious university; the right to rent a person’s womb; a ticket to a congressional hearing; concierge health care; the use of humans as lab rats for drug trials; the right to tattoo ads on people’s bodies; and human blood and organs are all for sale[71].

Crime. Crime is an act that objectifies victims by failing to respect their human rights and fails to respect laws, rules, and customs that have acquired attachment value. In a 2021 study, Cohen and colleagues estimated that the cost of crime in the United States in 2017 was $2.6 trillion, while direct costs to victims and taxpayers totaled $620 billion (about $1,900 for every person in the US), which exceeds the $590 billion spent on the military or the $450 billion spent on social welfare programs[72].

Limiting competition. Economic systems have often been described along a spectrum. At one end are competitive systems that promote reduced costs, encourage innovations, provide more choices for consumers, and organize production by using what Adam Smith describes as an invisible hand. The disadvantage of this system is that the allocation of resources based on purchasing power leaves the weak, sick, infirm, and last-in-line with poverty levels of commodity goods. This system may also lead to the exploitation of goods whose use-cost is not captured by market forces (e.g., clean air and water). At the other end of the spectrum are allocative systems (such as taxing systems) that use government and other power to allocate resources based on equity considerations, sometimes at the cost of economic incentives. Examples of such allocative systems are public utilities, national health insurance, and low-income assistance programs. These contrasting economic systems and the political ideologies that support them have been described as a conflict between equity versus efficiency. Without social capital, the conflict is irresolvable, and incredible amounts of resources have been consumed attempting to reduce competition or exploit resources that are not traded competitively. Furthermore, negative social capital and cheap social capital networks reduce the possibility even more that social capital can resolve the equally unsatisfying options of efficiency versus equity[73].

Cheap social capital networks may attempt to increase the negative social capital of their objects by lying

Lying. One of the first casualties of conflict is often the truth, since those opposing each other attempt to increase the negative social capital of their objects by lying[74]. George Orwell described this observation in his 1949 dystopian novel, Nineteen Eighty-Four, by examining the role of truth and facts within societies and the ways in which they can be manipulated. Therefore, the novel follows a totalitarian superstate, Oceania, which is led by a dictatorial leader, Big Brother, who is supported by an intense cult of personality. To maintain his cheap social capital network, Big Brother invented an enemy that the population of Oceania were taught to hate during Hate Week, a psychological operation designed to increase the population’s fear and hatred toward its cheap social capital object[75].

Mitigating the Costly Consequences of Cheap Social Capital

Consider the next several approaches for mitigating the costly consequences of cheap social capital. These approaches share the same goal: to reduce the negative social capital between the cheap social capital network and its object.

Let time perform its perfect work. Sometimes, the differences between people or groups are so embedded with hard feelings that only time and new experiences can dull them. Consider the Hatfield and McCoy Kentucky and West Virginia clans. Their conflict began in the Civil War, when the two clans fought for different governments. Their conflict was made worse when the two clans began killing each other. While their feud officially ended in 1891, it really ended in 1976 when members of the two clans shook hands[76]. Indeed, it was a long time between the end of the Civil War and the shaking of hands in 1976, but cheap social capital was eventually mitigated.

Discover or create new commonalities

Creating commonalities. Another solution for mitigating the costly consequences of negative social capital and cheap social capital networks in the past has been to discover or create new commonalities including marriages between members of different networks.  This solution was popular among royal families of different countries, including Catherine of Aragon of Spain and King Henry the VIII of England. Indeed, the importance of joining families together even when they are not separated by cheap social capital can be a useful solution for mitigating the costly consequences of cheap social capital networks that may form in the future. Joining families together often occurs when persons attend the same church, school, service club, community organization, or political action group.

Additionally, treaties and covenants create commonalities that often end hostile relationships and provide opportunities to build social capital relationships. For example, treaties sometimes begin by simply declaring that peace will commence. For example, the Treaty of Paris, which ended the American Revolutionary War with Great Britain in 1783, begins by declaring that both parties will forget all past misunderstandings and differences. Similarly, the Israel–Jordan peace treaty, signed in 1994, declares the end of belligerency between the two nations[77].

Moreover, voluntary commodity exchanges can also often lead to the development of social capital ties and preferential trading arrangements. On the other hand, commodity exchange arrangements nearly always terminate at the beginning of hostilities between nations. This type of created commonality, then, is not as long-lasting as other types.

Viewing others with sympathy, empathy, trust, and regard

Refuse to objectify others. Of course, an up-stream solution to the defensive and destructive consequences of negative social capital and cheap social capital networks is to choose to not objectify other persons. A wonderful example of refusing to objectify another person occurred during a town hall meeting when Senator John McCain was a candidate running for president of the United States against Barack Obama. A lady in the audience provided McCain with an opportunity to objectify Mr. Obama by saying, “I understand Obama is an Arab and not even a US citizen.” McCain responded, “No, ma’am, that’s not true. He is a decent family man with whom I have some significant different views.” We can follow the example set by McCain by viewing others with sympathy, empathy, trust, and regard[78].

Additionally, it may be possible for cheap social capital objects to find commonalities among themselves that may provide the basis for building new social capital–rich networks. For example, instead of objectifying drunk drivers, Candace Lightner founded Mothers against Drunk Driving (MADD) on September 5, 1980, after her 13-year-old daughter, Cari, was killed by a drunk driver. Subsequently, MADD became a powerful force for educating drivers about the dangers of drinking (or doing drugs) and driving[79].

Consider another example of refusing to objectify another person. On December 14, 2012, Adam Lanza fatally shot 20 children and 6 adults at Sandy Hook Elementary School before taking his own life[80]. Parents, family, and friends of Adam Lanaz, as well as the communities they were connected to, faced a real threat resulting from their connection to Lanaz, who had become the object of many persons’ negative social capital. Instead, these people used the shared tragedy to create the Sandy Hook Promise (SHP), a national nonprofit organization based in Newtown, Connecticut. Leaders and supporters of the SHP are committed to protecting children from gun violence, a commitment that has helped them to mitigate the cost of cheap social capital in their community and elsewhere[81].

Admit cheap social capital objects into a social capital–rich network. Another way to prevent the formation of a cheap social capital network and mitigate or prevent the costly consequences it produces is to reduce the membership requirement. Sometimes, this can be achieved by just changing rules and customs, which is what the Rotary Club did when it changed its rules to admit women into their clubs[82].

Frequently, the membership requirements for joining a social capital network are economic. Consider the network potential of college-educated persons with their employment, housing, health, and cultural advantages. While there are many efforts to provide nonmembers with the resources required to join, these efforts often come too late. Researcher and social capital scholar Robert Putnam observed that growing up in an unstable home environment, often with a poor single parent, makes it almost impossible for children raised in these conditions to join the college-educated network. Though successful intervention has occurred with the help of local families, churches, and philanthropists[83], using mentors who view the “kids” as objects of social capital appears to still be the best solution in mitigating the costs of cheap social capital because the economic and socio-emotional needs of some children cannot be met without assistance from groups or individuals outside of their networks.

Fact-check and publicize the results. The Washington Post Fact Checker team started recording and counting Donald Trump’s false or misleading claims during his presidency. Thereafter, they recorded 492 suspect claims in his first 100 days in office, and during the rest of his presidency, the Post counted an astonishing 30,573 untruths[84]. It is hard to estimate the consequences of Trump’s tales, but one might include the January 6, 2021, assault on Congress as being one of those consequences that was likely encouraged by Trump’s claim of the “big lie” that the 2020 election was stolen.

Reward truth-telling and punish lying

To combat lies and falsehoods and mitigate their creation of cheap social capital, we need to reward truth-telling and punish lying. For this to be effective, we need to limit the stage for liars because it is almost impossible to stop others from believing what is false, especially if it supports their bias. Therefore, we should encourage and applaud the efforts of (social) media in making it more difficult to tell and spread lies. Emilia Marcyk summarized the following fact-checking steps: (1) know your own bias and those providing information; (2) identify the source of the information; and (3) follow up on claims—ask yourself whether they are supported[85].

Reduce inequalities and unfairness. In one study, colleagues and I described that increasing income and wealth inequalities are often correlated with single-parent households[27]. However, income and wealth inequalities also produce other differences in one’s health, education, access to legal remedies, and living location. Together, these consequences make it very difficult for children raised in poor neighborhoods to transcend their circumstances. Additionally, Robert Putnam described these difficulties in his popular book on kids[86]. He also described how important and successful it is when children in disadvantaged conditions become the objects of the social capital of persons with resources. Furthermore, Putnam goes on to suggest that tax credits be expanded for the poor, access to quality day care be increased, and more money be given to community colleges. However, I believe that the solution will require providing even more social capital for kids living in poor conditions in order to combat the costly consequences of cheap social capital.

Create and sustain laws and institutions supported by the people

Establish laws and institutions to administer the laws. Plato, at the end of his life and while discouraged with the prospects of how absolute rulers rule, declared that the only solution to an enduring peace and prosperity was to trust no absolute ruler and was to instead create and sustain laws and institutions supported by the people. To Plato, the law alone can guard against the tyranny produced by selfishness and negative social capital. In The Republic, he called the law an “external authority” that functions as the “ally of the whole city.” Thus, George Washington, a student of Plato, declined the invitation to be the first king of the United States and helped to avert the consequences of the cheap social capital that such an act could have produced[87][88][89].

Maintain trading relations. In 1996, Thomas Friedman proposed the Golden Arches Theory of Conflict Prevention. He claimed (incorrectly) that no two countries with McDonald’s franchises have ever gone to war with each other. People in McDonald’s countries, he said, “don’t like to fight wars. They like to wait in line for burgers,” and “countries with middle classes large enough to sustain a McDonald’s have reached a level of prosperity and global integration that makes warmongering risky and unpalatable to its people.”[90] While some exceptions to Friedman’s claim do exist, it is noteworthy that McDonald’s vacated Russia soon after it invaded Ukraine[91]. Therefore, it seems that maintaining trading relations with other countries can help in mitigating costly cheap social capital consequences.

Summary and Conclusions

This paper proposed that defensive and destructive acts as well as positive and constructive ones are often motivated by the same universal needs. The different responses to the same needs often depend on the nature of the relationships between exchange partners, relationships that can have negative social capital characterized by apathy and antipathy or social capital characterized by sympathy and empathy. Therefore, because cheap social capital networks lack commonalities that enable the creation and exchange of relational goods, network members often engage in defensive and destructive acts to compel involuntary exchanges and produce negative externalities. Thus, the cost of defensive and destructive acts that are motivated by negative social capital and implemented by cheap social capital networks is high. These high costs of cheap social capital networks include the cessation of trade, lack of and disinvestment in public goods, diversion of consumer goods to materials used in conflict, and destruction of the truth. Furthermore, to mitigate the high cost of social capital, this paper recommends implementing practices such as finding or creating commonalities that can lead to the formation of social capital networks, the adoption of practices that reduce income inequality, and the retention of trading relationships.

To conclude, this paper pointed out that involuntary exchanges often impose high costs on their participants (especially on the involuntary ones).  It also pointed out that negative social capital often leads cheap social capital networks to participate in involuntary exchanges with their objects. Therefore, finding and creating ways to reduce the negative social capital that exists between cheap social capital networks and their objects may prove to be the most important factor in increasing our economic and social well-being.

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