The Challenge of Building Social

Capital for a Sustainable and

Desirable Future

Elinor Ostrom
Indiana University
Immense and Growing Interest
in Social Capital
 Let’slook at the citations in the Web of
Science on Social Capital
 Web of Science
Year Number of Citations
1991 2
1992 6
1993 15
1994 14
1995 28
1996 38
1997 61
1998 112
1999 129
2000 176
2001 210
2002 257
2003 296
2004 324
2005 358

*Includes Science Citation, Social Science Citation, and Humanities Indexes.

For an earlier version, see Ostrom and Ahn (2003: xii). Thanks to Andy
Revelle for doing this search.
Why? Link of Social Capital to Collective
Action and Development
 Collective action needed whenever
 More than one actor needed to generate outcomes

 Exclusion of beneficiaries costly

 Public goods – peace, knowledge, prosperity
 Avoiding public bads – war, destruction of natural

resources – e.g., forests

 Teams of all kinds (may produce goods OR bads)

 Scale varies from a single family, a gang, a small

community to the global “community”
 All development efforts involved some form of
collective action
Collective Action Difficult
to Achieve
 May require input from many – costly
 Since some benefits may be achieved even if
one is a hold out
 The temptation to be a free rider is always present
 Not participating or shirking threaten success
 Too many hold outs, however, and benefits not
achieved
 Trust that others will reciprocate contributions
is essential
What are Key Questions re SC
 What is social capital?
 How is it similar or different re other forms of
human-made capital—i.e., physical and
human capital?
 How do we build this form of capital?
 How do we measure the outcomes of social
capital?
 These are the questions that all of us here are
addressing in one way or another
Human-Made Capital
 All forms created by spending time and effort
now to increase productivity later
 Transformation activities
 Transaction activities
 All forms of capital can also be created as a
by-product of other activities
 Engage in a team sport – learn a lot about
others on the team
 Engage in making one type of physical
capital – learn transferable skills
Physical and Human Capital
 Physical: Stock of material resources
 Human: Stock of acquired individual
knowledge and skills
 Both built by transformation and
transaction activities
 Produce a flow of future returns (which
benefit some and may harm others)
 Create new opportunities
 Constrain events
Social Capital
 Stock of shared understandings, norms, rules,
and expectations that groups bring to a
recurrent activity (Coleman, 1988)
 Built by transformation and transaction
activities
 Produces a flow of future returns (which
benefit some and may harm others)
 Creates new opportunities
 Constrains events
Forms of Social Capital
 Networks of relationships both within and
across organizations (teams, gangs,
cartels)
 Institutions – rules-in-use
 Trustworthiness relationships built over
time
Institutions are:
 Rules-in-use that structure organizations
and activities
 Crucial
to building trust
 Forms of social capital themselves
 Represent investment of time and effort to increase
productivity and reduce social costs
 Can generate positive or negative consequences
 Take a long time to build up
 Can be destroyed rapidly
 Forms of Social Capital, Trust, and their
Linkage to Achieving Collective Action

Contextual Variables
Trustworthiness

Networks
Trust Collective Action

Institutions

Source: Ostrom and Ahn (2003: xvii).

Forms of Social Capital and Collective
Action: A Simple Causal Model

Forms of
Social Capital Collective-Action Situation
Affect TrustorÕs belief
Trustworthiness about TrusteeÕsbehavior Trustor entrusts

Network
Affect TrusteeÕs behavior Trustee reciprocates
Structure

Institutions

Better Outcomes for

Participants with Positive,
Neutral, or Negative
Externalities
The Need to Build Social Capital
 Not the foundation of contemporary
development practice
 Much development practice based on
panaceas
 Focused largely on building infrastructure
 Building irrigation systems without recognizing
the importance of building social capital
 Lets look at the performance of locally
constructed physical AND social capital --
compared to externally constructed physical
capital
Nepali Landscapes Look So Peaceful
Behind the Beauty are CPR Dilemmas:
Who Gets the Water?
Farmers Construct and Maintain Canals and
Roads in Tough Terrain: Tough Work!
Nepal Irrigation Institutions and
Systems Database
 After
years of fieldwork with colleagues in
Nepal, we now have data on outcomes:
 Overall physical condition of canals,
diversions works, and weirs
 Technical efficiency – getting water to tail end
of system
 Economic efficiency – relationship of benefits
to costs of maintenance
 For 230 systems
Table 1. Relationships between Governance Structure and Physical Condition
of Irrigation Systems

Types of Governance Chi- Sig.

Physical Condition Structure Square
of Irrigation Systems Value
FMIS (%) AMIS (%)

Overall Excellent [37] 18.2 8.4

condition 23.02 .00
Moderately good [144] 67.4 45.8
Poor [ 48] 14.4 45.8

Technical Highly efficient [58] 28.9 12.5

efficiency 27.30 .00
Moderately efficient [137] 62.8 50.0

Inefficient [33] 8.3 37.5

Economic Highly efficient [66] 33.2 12.5

efficiency 45.35 .00
Moderately efficient [140] 63.5 52.1

Inefficient [23] 3.3 35.4

Note: Number of irrigation systems is in brackets.

Source: Joshi et al. (2000: 78).
FMIS – High Levels of SC/
Low Levels of PC and HC
 Large variety of rules-in-use on FMIS
 Uniform formal rules on AMIS
 Frequently not enforced or even known by
farmers
 FMIS rules are tailored to local cultural
and biophysical setting
 Farmers themselves heavily involved in
planning, construction, maintenance,
and monitoring
Can Social Capital be Destroyed by Public
Policies?

 Yes – Through counterproductive international

aid (Samaritan’s Dilemma)
 Similar to many government agencies
 Show a need for major expenditures
 Spend the funds allocated quickly

 Contract to get the work done by national

firms
 Rotate frequently to different projects &
countries
Other Ways of Destroying Social
Capital
 Throughmassive consolidation of local
governments in US and Western Europe
 Increasing the size of schools
 Putting dissimilar ecologies in same local
government –
 Self organized institutions using different rules in
slightly different ecological systems (e.g. Maine
lobster fisheries_
 Yes – through declaring forests and other
common property to be owned primarily by
national government – India, Nepal, Africa
How Can Social Capital be Enhanced by
Governments?
 Creation and support of multiple forms of
conflict adjudication through fair, rapid, and
low-cost mechanisms – including arbitration
 Support University—Community—Business networks,
incubators, student internships, service learning
 Encourage joint scientific activities
 Support accurate knowledge acquisition about local risks,
environmental quality, while allowing considerable variety of
local solutions
And, What Can We Do?
 Develop a better theory of collective action
 More complex theory of human behavior
 Multiple types of players
 Importance of information and information-processing
capabilities
 Role of institutions in enhancing (or detracting from)
intrinsic motivations and trust
 Empirical research testing theory
 In the experimental lab
 In large-scale field research
 In small-scale qualitative research

 Triangulate our results

Studying and Building Social
Capital is
 Challenging
 Fun
 Economically worthwhile
 So, there is much for all of us to do!