- Social Capital -

In Australia the neo-liberal economic agenda has triumphed - and with globalisation governments have reduced ability to affect economic outcomes. Social capital is now seen as government's main concern. Social capital is a measure of the nature and extent of interpersonal relationships in society. If individuals know each other trust each other and undertake volunteer work, then social capital is greater. This is popular with politicians because (a) it resonates with voters concerns about problems in their own neighborhoods (b) provides solutions to otherwise intractable problems without government spending. 40 years ago 22 workers paid tax for everyone on welfare. Now it is 5. Social capital justified 'work for the dole'. But the parties have problems basing policy on social capital. The problem for Liberals is that volunteers work because they are not subject to external control. The problem for Labor is shifting from state concepts of governance (Roskam J 'Right or left, it comes down to social capital', FR, 13-14/12/03)

Social capital (mutual trust, tolerance and civic engagement) is the medium that lubricates market capitalism - and helps it run smoothly within, rather than outside society. Latham identified this with Adam Smith's writings - while Fukuyama has also raised the issue. But replenishing the stock of social capital as become harder as market assumes functions of civil society, and it is in decline. According to Productivity Commission ('Social Capital: reviewing the Concept and the Policy Implications'), lack of social capital raises costs of doing business. Costello and Latham both follow British New Labor view that both sides of social contract - rights and duties - must be in balance. This does not encourage state provision of welfare. The new battle is over how to rebuild social capital. Costello favours the church to do so in preference to the state. ('Need to restock social capital', FR, 25/8/03, editorial)

Philanthropy can not replace the shrinking public sector. But it can sponsor fresh initiatives in relation to civil society. There are many examples in the US – but the effect of philanthropy (though almost invisible) is significant in Australia also (with examples involving the environment, arts, medical research and innovative welfare programs) (Cham E ‘New way of giving for new world’, A, 11/3/02).

Participation in community, service and sporting clubs is falling. This reflects a loss of social capital (ie of interconnectedness between people). Professor Robert Putnam (Harvard) has analysed this trend in US. Finds less participation than at any time since great depression. Informal organization (families having dinner together) has also declined. The number of lawyers in US has doubled - perhaps indicative of decline in social connections. Reasons include: lack of leisure time; growth of cities; but most important is change from civic culture to less engaged baby-boomer generation (Johnstone C. 'Slump in social capital will cost us dearly', Courier mail, 8/9/01)