Andy Haldane, Chief Economist at the Bank of England, talks about “Reweaving the Social Fabric Post Crisis” in an article for the Financial Times. He notes that whilst a pandemic destroys almost all forms of capital — economic, financial, human etc. — one form of capital bucks the trend, social capital.
Social capital refers to the effective functioning of social groups through interpersonal relationships, a shared sense of identity, shared norms and values, trust, cooperation and reciprocity. It is regarded as the form of capital that contributes to the common good.
Haldane says, “We see this daily on our doorsteps through small acts of neighbourly kindness. We see it in the activities of community groups, charities and philanthropic movements, whose work has risen in importance and prominence. And we see it too in the vastly increased numbers of people volunteering to help”.
Haldane speaks of its importance in relation to the economic and social progress that followed the Industrial Revolution, suggesting that “came courtesy of a three-way partnership among the private, public and social sectors. The private sector provided the innovative spark; the state provided insurance to the incomes, jobs and health of citizens; and the social sector provided the support network to cope with disruption to lives and livelihoods”.
He adds, “back then, social capital (every bit as much as human, financial and physical capital) provided the foundations on which capitalism was built”. And he estimates the value of the social sector to the UK, or Third Pillar as it has been called, to be more than £200bn, or around 10 per cent of UK gross domestic product.
Haldane’s recommendations include:
Changing how societies and companies keep score, to better recognise all of the capitals and all of the paid and unpaid contributions citizens make
Strengthening the infrastructure that underpins the social sector
Embedding for good the new model army of volunteers the crisis has spawned
Establishing a national civic service as a goal for everyone, young and old, rich and poor, supported and recognised by government and businesses.
Haldane is right about the importance of social capital but does not explain how and why so much has been lost. To be fair, doing so would not be easy in one short article. The trend has been long-term and the reasons numerous. But to restore social capital we will need to understand these reasons.
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