Social Capital and Micro-Credit: A Study of Their Relationships Vis-Á-Vis the Importance of Economic Capital in Generating Development

Abstract

Whether one is a neo-classicist or a Marxist or even an environmentalist, the matter of contention is often the mode or extent of utilisation of 'economic capital' rather than its supposed centrality to what is understood as 'development' in contemporary discourses. Such shared recognition of the importance of 'economic capital' is often accompanied by an indifference towards the seemingly non-economic forms of productive forces available in society. However, as early as the nineteenth century, de Tocqueville's [(1840) 1969] emphasis on the role of associational life in American democracy and Durkheim's [(1893) 1964] focus on the importance of social relations in national progress foreshadowed an interest in unlocking the inherent potentials of people's collective living. Eventually, once the term 'social capital' started to gain in currency in the late 1980s onwards through a series of influential writings (Bourdieu 1986; Coleman 1988; Fukuyama 1995; Putnam 1993), researchers and practitioners in the field of 'development' have been continually exploring the scope and viability of the concept as a supplementary, if not an alternative source of development, particularly for those falling outside the conventional financial systems. Such enthusiastic optimism, however, is not without its critics (Fine 2001; Harriss 2002) who view the notion of 'social capital' as part of a neo-liberal agenda to undermine political economy, depoliticise development and reduce the role of the state. Against this backdrop, with acknowledgment of the methodological constraints of drawing on secondary sources and my own anecdotal observations, I intend to argue that 'social capital' can be an important tool in the alleviation of poverty, but to say it is as important as 'economic capital' in generating development would be an overstatement. To illustrate my thesis, I shall basically focus on the way 'social capital' is related to the apparent successes and failures of micro-credit schemes. I shall also briefly attempt to assess the relevance of social capital vis-a-vis economic capital to the concept of 'development'.