Tuesday, January 18, 2011
Rich and Poor Kids in the World of Social Capital
Is social capital real? Or is it some artificial extension of economic capital? There is argument that when 'social exclusion' came into fore about the marginalisation of some individuals i society, social capital was brought in as a solution. In any case, many of the entrepreneurial firms, and family businesses in India seems to be thriving based on the principles of social capital. However, danger is that the threat of 'crony capitalism', which is challenging the Indian growth story (http://www.tni.org/article/indias-crony-capitalist-model) could be the flip side of this social capital based growth.
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If take a look at our own industrial history till today we would realize that "crony capitalism" in the form of increasing autonomy has been widespread. Organizations grow and so does the the country but its of no use if the growth is unequally distributed. "Capitalism builds on the best", this line demonstrates how people have been working under the banner of social capital just for their own interests.
social capital is an extension to the economic capital.social contacts can be used to increase the productivity of an organisation.But due to social capitalism,crony capitalism is arising,that is leading to more inequality.It is a flip side of social capital based growth.
I think it's the chicken or the egg argument here. Those with greater economic capital i.e. the big corporates build their social capital through lobbying which inturn gives them greater economic capital. To borrow a line from Shantaram, the business of big politics is the politics of big business.
Social Capital is an effective means of achieving economic ends. But promoting Social Capital to achieve inclusion has been ineffective mainly because building social capital needs considerably resources, which leads to exclusion of the disadvantaged masses. Crony Capitalism would be an obvious outcome of a system which favours a select few. But is eliminating crony capitalism an option?? Are we risking our economic growth?
Crony capitalism is leading to a high degree of inequality in India. Social capital which is considered to be a capital asset as it has some value attached to it was introduced to counteract it. Can a value of this CAC blog be determined? We can get some value by calculating the money media outlets would pay for such a blog based on the number of links tracked by it. But will this be its real value! This shows that social capital is in turn an extension of economic capital which again rises the question- ‘Is it real’?
In my views, social capital is real only upto the extent where people cherish these values and work together for the benefit of the society. The moment the personal economic gains overshadow the collective benefit and the individual starts exploiting the social capital earned by the community for his personal use, the very meaning of social capital and its worth goes in for a toss. It leads towards inequality and the same is what crony capitalism has also been doing in. India is a perfect example of how crony capitalism leads to inequality in the society despite vast social capital.
In the present day scenario social capital is used as an efficient way to increase the economic capital by individuals. This has lead to an increase of crony capitalism which inturn has lead to an increase in the inequality prevailing in the society.
Benefits can be achieved by social capital. But only with the help of social capital the marginalised group may be escapped due to lack of resources with the marginalised group. The increased crony capitalism is also a threat as it has increased the inequality.
The concept of social capital is still of importance as it explains the importance of relationship between trust, social networks and the development of modern industrial society. Social capital can only be generated collectively thanks to the presence of communities and social networks, but individuals and groups can use it at the same time to achieve private objectives. It is true that it has been misused throughout Indian history by corporate houses, but still one must admit that, it has brought around spectrum of changes in the society spanning multiple sections from top to bottom.
I believe in the argument that money earns money, i.e. those who are economically sound; mostly they are the one who have more contacts. So, the social capital is generally higher for affluent people.
Social capital works good for consensus needs to be arrived in collective action. e.g. a village leader can bank on social capital when it comes to water distribution or construction works but hidden intention of political affiliation may be there. Prior to liberalisation in India crony capitalism was more pronounced businesss houses influenced govt. policies in their favour but now with competeion in market corporates bank on both 'crony' form and social capital to win goodwill and loyalty of people and expand future market. Thus I feel that social capital is shifted for economic and political gains in todays context.
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