Social capital is the value created through having relationships with other people. It’s called “social capital” because like financial capital it’s an asset, but unlike an individual’s money, the stock of which decreases with use, social capital (though hard to measure) grows.
Conversely, even when the owner does nothing with it, money can grow through interest. The value of social capital, however, diminishes through lack of use because the network connections weaken.
Like cash, social capital is everywhere. It exists by default in families and communities — a sort of built-in informal mutual support structure. We add to it when we make new friends and, in business, through new contacts.
The relationship with those individuals evolves over time, and their value to us depends on their skills and their reliability. In that way, we build networks of people we can call on for help and advice, who can similarly call on us — a valuable network based on reciprocity.
Though our stock of social capital is proportional to the number of friends and business contacts we have, the relationship is complex. Most sociologists contend that we can manage only a small number of high-value close friends — the kind we trust and would call on for support and who would be happy to call on us. The most valuable are those we regard as true friends and regularly meet face-to-face.
The rest, various levels of acquaintances, are of limited value; indeed the relationship may be counterproductive if we have too many. That’s why we must carefully control how we use virtual social networks. Many sociologists are undecided about the value to individuals of such networks. Most agree that, on balance, they’re good as long as we’re disciplined in how we use them.
For some people, these networks have almost become a contest about who has the most “friends.” Ironically, this time-wasting contest gives users the illusion of being more productive and more popular than they really are. They become ensnared in a numbers game of ever diminishing returns.
Most of us belong to many social networks related to family, community, clubs, work, online groups, etc. Some of these networks overlap. For example, a person in our book group could also be in our sports club. Sometimes the overlap may be cross-cultural and transcend our usual community.
For example, our network may be linked to another in a different part of the world. We may not benefit frequently from such links, but if we do, their value is likely to be greater than the value of our “home” networks simply because what they offer is harder to come by locally.
In an increasingly materialistic world, we often forget that the word “worth” is not synonymous with the word “money.” We need money to buy material necessities. But beyond a certain amount — when all we spend it on are luxuries — its real value diminishes even if the money accrues interest in a bank.
The only way it retains real value is if we share it with someone who doesn’t have enough of it. That’s why putting some of our spare cash to work in a philanthropic social network project, for example, delivers double returns because turning financial capital into social capital is one of the best ways to use both.
“Even five minute meaningful conversations with other people not only fuel us in the moment but also build up a reserve of social capital so that when hard times strike, we can draw down on that bank account.” — Michelle Gielan