Wednesday, October 07, 2009

capital gains

Senscot | Ask yourself this question: do you think most people can be trusted? Don’t dwell on it for too long – just offer a general sense. Would you say ‘yes’, or would you say ‘no, you can’t be too careful’? The chances are that, if you are from a professional background, relatively politically engaged and with a university degree – a typical RSA Fellow – you would answer ‘yes’. If so, you would be among a minority of Britons today.

This wasn’t always the case. In the late 1950s, about 60 percent of Britons said they thought most other people could be trusted. The figure had fallen to 43 percent by the early 1980s and to 29 percent by the mid- to late 1990s. This question helps measure what sociologists and political scientists call ‘social capital’. It gives a sense of the extent to which individuals and communities trust each other, reciprocate helpfully and are connected to other people.

Robert Putnam first brought this declining trend to wider public attention using US data in the mid-1990s and subsequently published his findings in Bowling Alone (2000). He found that Americans seemed to have become less engaged with one another from the late 1960s – as demonstrated by falling memberships in Parent-Teacher Associations, fewer family picnics, a decline in churchgoing, less political engagement and less social trust.

Yet Putnam – a friend and colleague with whom I have worked for more than a decade – got his initial account wrong in one important respect. The story he told so comprehensively using US data turned out not to be true for all countries. While a broadly similar decline occurred in the UK and some other Anglo-Saxon countries, as well as in France, subsequent analysis has shown that this was not the case in all countries. Evidence suggests that in the already high-trust Scandinavian nations, social trust has actually increased over the past two decades. The World Values Survey for 1981-2005 put it at 59 percent in Finland, 68 percent in Sweden and 74 percent in Norway.

Certain ‘traditional’ forms of social capital, such as church-going, Women’s Institutes, party membership and trade union memberships, have almost universally declined. But while in the US and the UK this seems to have been associated with a trend towards privatisation and disengagement, in other countries it was associated with the rise of ‘solidaristic individualism’, to use a phrase coined by Swedish sociologist Bo Rothstein.

In essence, we Anglo-Saxons have spent the past few decades using our growing personal wealth to escape from the inconvenience of other people. To use an everyday example, we buy several TVs so that even our own children don’t have to negotiate with each other about what to watch. We use our wealth to ensure that we can do what we want, when we want to. In contrast, our Scandinavian neighbours seem to have used their wealth to see more of one another – to go out with friends, to join more reading groups and so on.

It is not just a matter of idle curiosity that nations, regions and individuals have such different levels of social capital. National economic growth rates have been shown to be strongly affected by levels of social trust. Econometric models suggest that social trust has an effect on economic growth that is as significant as that of economic catch-up (the tendency of less developed countries to catch up economically with their more developed counterparts) and larger than that of human capital (levels of education and skills).