The puzzle of underdevelopment: is social capital the solution?

Abstract

In this essay I present a survey of the literature on social capital and I stress that ‘social capitalists’ tend to view underdevelopment mainly as a problem of collective action. Although I do not deny the importance of the latter in solving the development puzzle, I believe that social capital is not the way forward when trying to generate economic growth. I argue this based on the following: 1) it is not clear what it is meant by social capital; it is a vague and confusing concept, and 2) I believe that the role of the State, power relations, politics, international factors and even geography remain as the key factors to understand why some countries/regions develop and some others remain underdeveloped. To construct my argument I rely on some of the very same works in which it is argued that social capital is the answer to underdevelopment, and I show that what the authors of these works are really saying, although they do not seem to acknowledge it and insist instead on the relevance of social capital, is that the factors I have pointed out above are the ones we should concentrate on when trying to generate economic growth. However, this does not mean that the social capital concept should be done away with: if by development one means the creation and the distribution of wealth (‘social capitalist’ assume development is the same as the generation of wealth and nothing else) then social capital can become relevant if by it one means solidarity, i.e., the distribution of the wealth generated by economic growth in favour of those who most need it.