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The Risks of Social Capital

A response to the mid-term report on ‘Social Finance and Social Ties’ based on the experience of the People’s Rural Development Association (PRDA), a Sri Lankan NGO which has an ‘Economic Initiatives’ programme in 40 Sri Lankan villages. Contribution to the « Finance of solidarity and social links » workshop, Dourdan, (France), July 2002.

Fernando Sunimal, July 2002

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Summary :

The mid-term report focuses on the benefits of social capital and does not adequately discuss its risks. Social capital can sometimes be dysfunctional and counter-productive. A high density of internal relationships and of trust within a group can result in the fragmentation of a higher level community, depending on the quality of the norms and beliefs that bond the group/lower level community together. The over-strengthening of ties of trust and solidarity within a local network/lower level community can result in the virtual closure of the network. This can lead to its virtual insulation from the higher level community and from the external social, economic, cultural and political environment which in turn can be very damaging to the local network/lower level community. PRDA’s experience has identified 3 types of social capital in Sri Lankan village communities. They are: ‘structural social capital’ (consisting of formal and informal networks and groups, roles, rules, procedures); ‘lower level cognitive social capital’ consisting of values, norms and beliefs that are specific to the local level – i.e. to the ‘little tradition’ – and ‘higher level cognitive social capital’ consisting of the national or civilizational norms, beliefs and values that have their origin in the ‘great tradition’ to which the country belongs. Conceptually it is useful to separate these 3 kinds of social capital one from the other. An agency taking action such as an NGO should have as its objective the building of new social capital supportive of larger social objectives by facilitating the enhancement of specific, selective components of the 3 types of existing social capital that will help the community to reach defined social objectives.