[MUSIC]

Hi there.
Welcome back.
In this video, we will discuss
the central importance of trust to
any analysis of economics,
politics, or society.
And we'll introduce the central
concept of social capital.
Now imagine for a moment that you
can trust no one, no one at all.
What's your life likely to be like?
Would you leave the house?
Would you go out at all?
Would you work for anyone?
After all, who would pay you?
Would you dare carry money?
In fact, would money mean anything?
Basically, you would wander around in a
state of almost permanent fear and terror.
And so would everyone else.
Life as we know it would grind to a halt.
Okay, this is utterly unrealistic.
So imagine now that the only people you
can trust are your immediate family and
a few very close friends.
What is your life like now?
Well, you could now engage socially and
economically.
But you'd want to keep your
important activities as much as
possible within your trust radius.
You may form temporary alliances
with other groups, but
these would always be subservient
to that closed trust circle.
These are the people with whom you would
share your knowledge, your transactions.
Your plans for
your future and your rewards.
In fact,
most of your activities would be aimed at
binding these people ever closer to you.
Now you can probably imagine what
a state like this would be like.
You may even live in one.
It would be marked by clientelism,
the favoring of regular business contacts.
It'd be characterized by patronage,
the favoring of family and proteges.
It would be permeated by cronyism,
the favoring of friends.
And it would be riddled with corruption,
the giving or
taking of bribes to secure a deal.
Although it doesn't often
figure in political analysis,
trust is the glue that
holds societies together.
Now, trust is linked to a wider and more

popular concept called social capital.

Now, just as economists have devised
a concept called human capital, which is
ones raw hours of labor on a task, plus
all the skills and experience that you
bring to the task, so political scientists
devised a concept called social capital.
This covers ones human interactions,
plus the range and
intensity of ones network
of relationships.
And embedded in social
capital is the idea of trust.
But whereas the idea of human
capital goes back to the 1950s,
the idea of social capital was
virtually unheard of until the 1990s.
One rather unkind observer suggested it
coincided with the end of the cold war,
and the blow that this sent forward to
the specific international relations
perspective that had dominated
much of political scientists.
Since there's no one as inventive
as a political scientist who
has lost his paradigm, it was suggested
social capital was pressed into
service to fill an intellectual vacuum.
Well, I confess I secretly
sympathize with this view,
but I don't think it
conveys the whole story.
Many of the components of social capital
and trust rhetoric have already been
bubbling slowly in a branch of economics
called institutional economics, which
emphasized the role of agglomerations and
networks, and stakeholders.
At a time when hyper
globalization rhetoric was
boasting the triumphant markets, and
viewing institutions as impediments,
so an alternative discourse emerged.
Built around the centrality of formal and
informal institutions and
the conditions necessary to make
them work, including trust.
The main exponent of social capital was a
political scientist called Robert Putnam.
1995 he published an article
called Bowling Alone which he
later expanded into a book.
Central to Putnam's thesis
is the membership and
density of voluntary organizations,
since these are the networks that
are the building blocks of social capital.
Like many social scientists,
he also holds that personal trust is
directly linked to trust in institutions.

Or to put it in social
science terminology,
interpersonal trust is
linked to generalized trust.
In addition, he distinguished between
networks that provided bonding capitalism,
closed groups where you met
sort of your sorts of person.
And those providing bridging capital,
where you mixed with others.
Bowling clubs were a form of the latter,
and for Putnam, a jolly good thing too.
Now bowling alone contrasted
the increased popularity of
ten-pin bowling with a decline in
the membership of bowling clubs.
Was a metaphor for what he perceived was
happening in American society as a whole.
Membership of civic organizations
was everywhere in decline.
And this undermined the formation
of social capital, and
the nurturing of trust.
This fragmentation of society posed
a threat to democracy, posed a threat to
America's authority in the world, posed
a threat to it's economic pre-eminence,
well, posed a threat to
just about everything.
Now bowling alone, in an earlier work
applying these ideas to the evolution of
Italian democracy over a period of seven
centuries, were both heavily criticized.
But it made no difference to their
popularity, especially among policymakers.
I suppose this says something about the
links between academia and policy making.
We academics fondly imagine that our
work may perhaps, just a little,
influence policy making.
But policy makers usually have their own
preconceived ideas and they, or more
usually their civil servants just look for
some academic work that legitimizes them.
Oh well, Okay, to sum up.
We established that trust
was central to society, and
we've distinguished between interpersonal
trust and generalized trust.
We've examined the rise
of social capitalism, and
we've explored the concepts of bonding and
bridging capital.
In the next video, we'll look at how to
measure trust in different societies.