18
SD’s Special Take on Institutions
ExplicitFormal
Macro Level National and State Level policy
Economic, Social, Environmental, Financial, Fiscal and certain aspects
of Sectoral Policy
Sectoral Policy; Interaction with
Government Line Ministries and Social Delivery Systems at State
and District Level
Meso Level
Micro Level Village Level
Administrative and Elected Government Structures and
Systems; NGOs operating at the field level
Micro Micro Traditional Household
Structure and Authority System
Institutional Culture and Capacity of line agencies, elected
state and district governments, business and NGO community
TacitInformal
National Cultural and Historical Context
• Traditional caste, ethnic and gender exclusion
• Feudal traditions and patronage systems • Ethnic and Religious cleavages between and within
countries
Local Cultural and Historical Context
• Village factions • Relations between castes, ethnic religious
group • Presence or absence of positive social capital
Age and gender - based disparities in access to
resources and opportunities
Global Level
boundaries of a single nation state, it is exponentially more difficult to do so across those boundaries.
3.4 Institutions and Social Capital
When we say that institutions are “the rules of the game” we mean that they establish
people’s claims on assets and capabilities and also their obligations to others. In a sense every institution is based on either formal or informal, explicit or tacit sets of expectations between
people. When these expectations are formal, backed by the rule of law we speak of “rights” and contractual obligations; when they are not so codified we sometimes speak of “trust” or “social
capital”.
In its broadest definition social capital can be seen as a means of solving collective action
problems – reducing uncertainty about whether claims and obligations will be honored, facilitating the sharing of knowledge and the management of commonly held resources and generally lowering
19 the transactions costs of human interaction. If institutions are the “rules of the game”, then social
capital is something like the collective agreement to play by those rules. From this perspective social capital can encompass both the formal laws and the power of coercion vested in government
as well as the voluntary cooperation found in informal social networks and associations
36
. Collier’s distinction between “public” social capital
37
and “civil” social capital captures this difference in both the nature of the agreement established backed by the formal authority of the state or backed
by informal social sanctions and also the source of the social capital. Public social capital is generated by government and manifest in “the institutions of government that facilitate private
activity”
38
. Civil social capital is generated by the community and manifest in the form of “trust which lowers transactions costs, knowledge shared through social networks and enhanced
capacity for collective action
39
.” Pursuing this distinction, Knack
40
defines public social capital as “governmental institutions that influence peoples ability to cooperate for mutual benefit – enforceability of
contracts, the rule of law and the extent of civil liberties that are permitted by the state”. Civil social capital by contrast, “encompasses common values, norms and informal networks and
associational memberships affecting the ability of individuals to work together to achieve common goals”. Both types of social capital improve the gains to cooperation within the group.
Collier and Knack both appear to see public social capital primarily as a macro phenomenon where the “group” in question is the nation and civil social capital as a micro
phenomenon where the group could be the household, the community, or other local or meso level aggregations. While Knack sees the economic effects of civil social capital as occurring only at the
micro level, he does concede that its political effects can be manifest at the macro level as “social cohesion and civic engagement”. He cites a number of studies which suggest that civil social
capital can “strengthen democratic governance Almond Vertan,1963, improve the efficiency and honesty of public administration Putnum, 1993 and improve the quality of economic policies
Easterly Levine”. Added to this the evidence available from Social Development’s own Participation and Civic Engagement group on the results of public accountability mechanisms
pursued by civil society groups in India, Philippines, Brazil and elsewhere and their effects on public expenditure and service quality, makes it difficult to confine the economic effects of civil
social capital to the micro level.
41
Ideally public and civil social capital complement one another, together providing what Fukiyama describes as the “high trust society”. In such societies there is “less need to spell things
out in lengthy contracts; less need to hedge against unexpected contingencies; fewer disputes and less need to litigate if disputes arise”
42
. He cites Japan, Germany and the US as high trust societies and China and France as low trust societies. The main difference he sees is that in the latter
countries is their reluctance to trust people outside the family. Trust in these societies is “specific” between people one already knows and has links with rather than “generalized” trust in strangers. It
is this generalized trust or “spontaneous sociality” that Fukiyama sees as supporting more flexible and productive economies where new ideas and technologies can be taken on and corporations can
hire professional managers rather than keeping all the managerial positions “in the family”.
20 Knack
43
notes that although Fukiyama’s book is largely descriptive, an empirical study carried out by La Porta
44
provides support for his conclusions. Using an index of trust measuring the percentage of a sample survey who think that “most people can be trusted” to “you can’t be too
careful in dealing with people”
45
, the study found that regardless of income levels, countries where there is high generalized trust grew faster than countries where people’s trust was confined to
family members. There is a good deal of evidence that civil social capital – often generated within more local
level groups where face to face contact and personal relations can be maintained – comes in to fill the “trust” or “contract enforcement” vacuum left by the absence of good governance. Knack and
Keefer
46
found that the impact of trust on growth is significantly higher for poorer countries – where legal and financial markets are less well developed.
The discussion of public and civil social capital is useful in elucidating the connection between social inclusion and empowerment. While public social capital and social inclusion
manifest themselves primarily through policies, laws and formal institutions at the national, civil social capital and empowerment tend to be most visible at the local level and in the tacit, unwritten
codes of behavior. Just as policies, laws and government institutions can either be inclusive and pro-poor or not, so civil social capital and the norms and behaviors that support it can either support
and empower the poor and marginalized -- or it can be repressive, locking them into perpetual poverty and exclusion.
This is where the agency of individuals and groups manifests itself. As we noted earlier, even for a single individual, the number of institutions which may shape his or her identity and
values is myriad. So are the accompanying claims that individuals can make on others and the obligations he or she has towards others by virtue of membership in these various institutions.
And while some of these institutions present mutually reinforcing claims and obligations, other institutions affecting the individual present very different – and often competing – sets of claims
and obligations. Some of these claims and obligations empower her and increase her freedom while others restrict and confine her. This is the seemingly chaotic field upon which social change takes
place. This is where individuals and groups act by accepting, rejecting or combining in new and creative ways some of the “ humanly devised constraints on human interaction” which institutions
present to them.
Section 4: A Theory of Social Change
4.1 Initial Conditions of Poverty and Inequity
