On the Wealth of Nations: Bourdieuconomics and Social Capital

Why are some countries richer than others? We suggest in the line of political economy theory that traditional production factors cannot explain the observed differences. Rather, differences in the quality of formal institutions are crucial to economic wealth. However, this type of political economy theory accentuating the role of formal institutions cannot stand on its own. This implies a socio-economic approach in the study where we supplement the formal institutional thesis with Bourdieu's idea of material and non-material forms of capital. Such new socio-economics which might be termed a "Bourdieuconomics" implies the usage of a capital theory that, methodologically, operates with material and non-material forms of capital at the same level. Here, we stress the particular importance of a non-material form of capital, namely social capital, which facilitates informal human exchange, thereby "lubricating" civic society and the voluntary provision of collective goods such as trust and predictable behavior. In this way, social capital reduces transaction costs in society, thereby enhancing economic growth and the creation of differences in the wealth of nations. Future research should therefore be directed towards analyses of a new and formerly disregarded production factor, social capital, within a new field of socio-economics, namely "Bourdieuconomics." The question of why some countries are richer than others has puzzled social scientists for centuries. Already in the eighteenth century, Adam smith1 discussed this issue in his book The Wealth of Nations. Smith and other social scientists have focused on the role of material capitals such as physical and financial capital. Drawing heavily on classical social economic thinkers, such as mile Durkheim, Max Weber, Marcel Mauss, and Karl Polanyi, Pierre ~ o u r d i e u , ~ in his article "The Forms of C a ~ i t a l , " ~ contributed to breaking this line of thought by answering the two questions: what is capital and what forms of capital exist. The result was an original reformulation of Marx' concept of capital, where the term "capital" is expanded to include both nonmaterial as well as material phenomena. Thus, our contribution is to highlight the role of non-material capitals when explaining differences in the wealth of nations. Theory and Society 32: 607-631,2003. O2003 Kluwer Academic Publishers. Printed in the Netherlands In our view, such an expanded concept of capital has relevance to interdisciplinary social science research, which operates with a myriad of more or less exotic forms of capital, ranging from the religious, intellectual, and moral, to the natural and digital.4 Therefore, our goal is to enhance an operationalization of Bourdieu's expanded concept of capital as a general framework for an interdisciplinary research program that seeks to dissolve a largely artificial distinction between economics and social science. In line with ~ o u r d i e u ' s ~ own original vision of "a general science of the economy of practices," his expanded concept of capital can help us to unify and to explain the existing "plethora of capitals" within a unified theoretical framework. Anthropologist Alan Smart has characterized the Bourdieusian attempt to mediate between economy and culture in the following way: One of the most influential efforts to reintegrate social and economic analysis has been Pierre Bourdieu's theoretical project to develop a "general science of the economy of practices." Such a science would recognize market exchange and capitalist production, or the economic in a narrower sense, as only a particular type of economic practice and would explore the conversions that occur between the economic and the noneconomic ... . The central set of concepts in this ambitious program is an extended use of the term capital. What is conventionally considered to be capital is in Bourdieu's approach only one form economic capital while respect, obligations, and knowledge are seen as symbolic, social, and cultural capital. The study of the economy of practices would examine the distinctive logics and features of each form of capital, and the processes of conversion between the different forms7 Similarly to mar^,^ who spoke about "heaped up labor" (aufgehaufte Arbeit) or "stored up labor" (aufgespeicherte Arbeit), ~ o u r d i e u ~ has defined capital broadly as "accumulated, human labor," which can potentially produce different forms of profits. This work can be viewed as accumulated history,10 transferred through time in either objectified i.e., material form, or in embodied form, i.e., as part of a person: Capital is accumulated labour (in its materialised form or its "incorporated," embodied form), which, when appropriated on a private, i.e., exclusive, basis by agents or groups of agents, enables them to appropriate social energy in the form of reified or living labour." However, in contrast to Marxian capital analysis, which is exclusively macro-economic, historical, and one-dimensional (that is, being like all classical economic theories obsessed with visible substances), the Bourdieusian analysis is micro-sociological and investigates relations. Furthermore, it operates with a variety of material and non-material forms of interchangeable capital, i.e., forms of power'2 within specific fields (economic, political, juridical, artistic, religious, scientific). These forms of capital, the number of which like the number of fields seems to be unlimited, ranging from financial, cultural, technological, juridical, organizational, commercial, and symbolic to social capital. l3 Following Bourdieu, capital is inscribed in both objective and subjective structures and hereby becomes a guarantor for the regularity and stability of the social world.14 Indeed, at a given time, the various forms of capital can be said to be the very "immanent structures" of the social world, understood as "the set of constraints, inscribed in the very reality of that world, which governs its functioning in a durable way, determining the chances of success for practices." l5 It costs time and energy for actors to build up and subsequently profit from a capital. The capital must, of course, also contain value and therefore be the object of interest. Capital therefore implies investment strategies, both at the individual level as well as the group level.16 It constitutes "the games of society,"17 not only the purely economic game but also the more non-material, i.e., all the games. Such an expanded concept of capital is far from the traditional economic definition of the word as a resource that facilitates production and that is simultaneously not consumed in the production process, i.e., as a factor of production." In this sense, capital can in no way be separated from production, regardless of whether we are referring to physical capital (buildings, machinery, etc.), financial capital, or human capital (education and re-qualification). Within the social sciences, however, there has been a strong tradition for viewing exchange in a society as a totality, giving terms such as "interest" and "value" a high degree of ambiguity. Hence, social scientists from Mauss, Durkheim, Weber, and Simmel to Malinowski, Levi-Strauss, Eric Wolf, and Benedict Anderson have each in their own ways sought to explain and account for a general connection between culture and economy. Most path-breaking seems ~ u r k h e i m , ' ~ who, considering economic ideas and practices as collective representations in the form of the popular opinions dominating a society, strongly questioned what he termed the theory of economic materialism a theory held by economists who could only conceive of external, objective realities, and which made the economic life the "underlying structure" (substructure)of social life. Also, this critique is reflected in Mauss's idea of a total, social fact (fait social total). It is precisely this scientific tradition that has led to a critique of undersocialization within classical economy theory, which is accused of reducing human actions to simple profit maximization without cultural implications. In recent years, such a critique has been formulated by the economist Yoram y en-~orath,~' who spoke of the "Fconnection" (family, friends, and firms) and subsequently by the sociologist Mark ~ranove t t e r ,~ ' who has emphasized the embeddedness of economic transactions in changing, cultural contexts an expansion of economic anthropologist Karl ~ o l a n ~ i ' s ~ ~ original definition of the concept of "embeddedness." However, a much more serious and specific critique of doxa in the form of a highly irrational and unrealistic belief in natural given "markets" and "rational" economic practices, i.e., of the economistic economists' homo oeconomicus, has been formulated by Bourdieu in an attempt to reach a more realistic definition of economic reasoning, "une definition rtaliste de la raison economique" 23 and, lately, by Frederic ~ebaron , 24 who systematically questions the collective economic beliefs, termed La croyance Pconomique, invented and reproduced by traditional economic thought. As is demonstrated later in this article, Bourdieu's expanded concept of capital can in fact be viewed precisely as an attempt to construct a consistent, general theoretical framework, which can bring together economic and social science theories in order to avoid reductionistic economics or, put otherwise, to enhance a more anthropological economics. This is made possible by a theoretical break with both economism and culturalism. Before focusing, in a sociological perspective, on the role of informal institutions and the Bourdieusian theoretical framework that allows us to do so, we point in the next section to the political economy approach and its focus on the role of formal institutions.