A simple way to describe social capital is the benefits derived from being social. The core idea of social capital is that ‘relationships matter’ and that social networks are a valuable asset. That being social and working together is important and valuable.

Social capital is aspects of social context (the “social” bit) that have productive benefits (the “capital” bit). It includes the store of solidarity or goodwill between people and groups of people. You could think of it like a ‘favour bank’, although this only encapsulates part of social capital. Another simple explanation is as helpfulness behaviours resulting from feelings of gratitude, respect, and friendship.

The adage: “it’s not just what you know, but who you know” relates to the powerful effects that social capital can have and is an easy way to understand the concept in the context of how it impacts our everyday lives.

We intuitively understand that we can derive benefits from our social relationships with others, whether it be as simple as finding a reliable mechanic (which can save you money), or borrowing a cup of sugar from a neighbour (which can save you time), or finding a new job or client (which can make you money). These are just a few tangible examples of the benefits of social capital, there are many more. In fact, social capital is what allows humans to collaborate, coordinate, and coexist. It is essential to the human social existence.

Social capital is fundamentally about how people interact with each other. It is about 1) the nature of our social connections, and 2) the norms and shared understandings that influence our action and interaction.

Most scholars agree that social capital is multidimensional and is an umbrella term for a range of social factors such as networks, norms, trust, social identity, belonging, and many more.

Social capital is about knowing a lot of people well, but it’s more than that. It’s about having strong positive relationships embedded in positive social structures with a lot of people from a variety of backgrounds and positions.

The following points illustrate how social capital is multidimensional:

  • A large social network is important because knowing more people gives us access to more potential resources, both in terms of total value and variety of resources. A larger network also increases the likelihood of access to those resources when required. For example, you may know a mechanic who can help with your car, but if she is on holidays at the same time your car breaks down then you cannot access that resource. Chance plays an important role the manifestation of social capital (but is rarely acknowledged in the literature). If you have a larger network then you are more likely to have more than one contact for any given resource, so increasing the likelihood of access to that resource when required.
  • Strong relationships develop over time through repeated interactions. It takes time to develop deep connections and to establish norms that, if positive, can provide access to more valuable resources. For example, a strong relationship may facilitate access to more sensitive and richer information.
  • Positive relationships are also important because social capital exists where there is trust, mutual respect, goodwill, favours, or obligation. Consider the different ‘value’ of a relationship with someone you disrespected, or lied to, or stole from, compared to with someone whom you have helped or supported.
  • Relationships with people from diverse positions is also important because not all ties have equal value. Everything else being equal a tie with someone who has access to more resources is more valuable than a tie with some with someone who has access to few resources. Keeping in mind that there are wide variety of resources that have value. Material goods and services are obvious, but it can also include aspects of human capital such as knowledge, skills, and wisdom, as well as social capital such as introductions to a ‘friend of a friend’. It can include power and influence, as well as emotional resources such as compassion, caring, support – for example, someone who will listen to your problems.
  • Positive social structures relate to the social context within which your relationships exist. For example, within the context of society, your organisation, your family, or any other grouping within which the relationship is grounded. The social structures, including social norms, provide the background context for interaction. They influence individual behaviour and set the tone for social interactions between group members. Social structures provide the background context for interaction even where no previous relationship exists.

Social capital started as an academic concept, having been widely applied to a very wide range of phenomenon in the social sciences over the last few decades. The concept has even spread outside of academia to economic and community development, politics, business, health, and a range of other areas.

Unfortunately, social capital is not a unified theory. Social capital has been approached from different perspectives and different disciplines, resulting in a huge variety of definitions and conceptualisations. There is disagreement about what is and is not social capital, confusion about how to measure social capital, and widespread use of different terminology.

The commonalities of most definitions of social capital are that they focus on social structures that have productive benefits. Definitions generally have some combination of role-based or rule-based (structural) and mental or attitudinal (cognitive) origins.

In addition to different theoretical approaches to social capital, there are differences between conceptualisations at different levels of analysis:

  • At the level of the individual, social capital tends to focus on social networks and the characteristics of these relationships.
  • At the group or organisation level, there tends to also be a focus on social norms and social structures such as roles and rules.
  • At the community or societal level, the focus tends to be on trust, trustworthiness, civic norms, association membership, and voluntary activities.

Despite the various criticisms of social capital, the concept has great potential to transform our society and our economy.

About The Author

4 thoughts on “What is social capital?”

  1. Avatar

    Hello Mr. Claridge,
    I enjoyed the article on Social Capital and all the interesting examples you provided. I am just learning about it on the formal level but as I read more and more… realize that it is an ‘automatic” kind of human notion that occurs naturally and from within. It makes a lot of sense to me that we can use it as a formal concept to help people better understand the significance of continuing positive social relationships overall.
    The major question I am pondering is how the use of phones in our everyday lives helped or hindered the type of social capital our present-day society benefits from. I am always observing people on their phones at all times and it keeps nagging at me as to how it may threaten the ability to obtain new social capital in real-time…boots on the ground. I hope to hear your ideas on this and would love any resources that you can provide.

    I appreciate your time,


  2. Avatar

    Hello Tristan,

    Thank you for taking the time to write this article on social capital.

    The last sentence in the article that identifies both the potential of the concept but recognises the levels of criticsm, is particularly interesting. As you have framed it, social capital is almost palpable in some individuals. When moving from one organisation to another, for example, the social capital of that organisation is an element that needs to be deeply considered for the fit it has with the individual. And, clearly, there are some societies that foster trust better than others.

    What are the three areas of greatest potential where you see social capital being deployed? How would you know they have had that level of impact? Finally, how does social capital interface with the concept of social mobility?

    Of particular interest, is how social capital can be fostered in marginalised communities and mobilised to enhance the long term life chances of those communities. One of the most powerful examples, in my opinion, is the hip hop culture. All elements of it were born from highly marginalised communities on both the East and West Coast of America and have since flourished into multi-billion dollar entities in their own right. Of course, I have relied on a metric – dollar value – to define value, but I recognise that layers at which social capital will have been built at all the layers you identify, with minimal commercial gain. It is in these areas that I have the greatest interest.

    I would love the opportunity to speak with you more about this topic and my details are below.

    All the best,

    1. Avatar

      I believe social capital has the potential to highlight and communicate the importance of social relationships and social processes in every area of human endeavour. This is most urgently needed in the contexts where it is most ignored and undervalued. The importance of social capital is a truism. And the only reason we need to talk about a concept such as social capital is because the importance of social processes has been systematically sidelined by the modern focus on individualism and competition. The core ideas of social capital are not new, but in the term social capital they have been packaged in the language of capital and this is believed to more effectively communicate them to people who are attuned to this language.

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