Memberships and Inequality

1. Introduction Broadly understood, social capital refers to various types of community relationships that affect individual outcomes. As such, social capital is involved in many of the areas of current social science research where the explicitly social determinants of behavior are fundamental. Since Loury (1977) introduced it into modern social science research and Coleman's (1988) seminal study placed it at the forefront of social research, the term social capital has spread throughout the social sciences. Despite the immense amount of research on it, however, the definition of social capital has remained elusive. From a historical perspective, one could argue that social capital is less a natural kind in social science analysis than an umbrella term that encompasses distinct research interests and questions all of which are attempting to meld individual and social explanation in ways that transcend traditional interdisciplinary boundaries; Durlauf (2002a) makes some criticisms of Putnam's work for this reason. That said, there are important commonalities in different efforts to define social capital; Durlauf and Fafchamps argue that different conceptualization of social capital generally share three main features: (1) social capital generates positive externalities for members of a group; (2) these externalities are achieved through shared trust, norms, and values and their consequent effects on expectations and behavior; (3) shared trust, norms, and values arise from informal forms of organizations based on social networks and associations. The study of social capital is that of network-based processes that generate beneficial outcomes through norms and trust.: is that it is functional: social capital is assumed to always produce socially desirable outcomes. Such an equation means tthat policies that promote social capital are always good. For the purposes of this chapter the notion that social capital is always benign will be challenged from the perspective of its effects on equality. Simply put, social capital may be inequality-enhancing, and so any policymaker whose objectives include egalitarian considerations will therefore be forced to reject any necessary equivalence between an increase in social capital and better social outcomes. 1 To see why this can be so, I draw on the discussion Durlauf and Fafchamps (2006, section 2.4). Suppose that clubs and networks are the mechanisms by which trust is sustained across individuals. These social structures by definition exclude those who are not members, and so create differential circumstances across individuals; Fafchamps (2002) and Taylor (2000) analyze how social groupings can harm nonmembers. So to assume …