As part of my work on capital, which in turn contributes to my thinking on the politics of care, and how it must be defined, I have posted this new glossary entry on social capital, which is an addition to the entries already made on capital and capital maintenance concepts.
Social capital is the stock of institutions, relationships, norms and shared understandings that enable cooperation, trust and collective economic activity.
It includes:
- public institutions,
- democratic systems,
- legal frameworks,
- administrative competence,
- social cohesion, and
- shared expectations of fairness and reciprocity.
Social capital underpins all economic activity.
Markets require trust, enforceable contracts and legitimate authority.
Money requires collective belief and institutional backing.
Investment requires stability, predictability and social consent.
Where social capital is strong, economies are more resilient, adaptive and inclusive.
Social capital is depleted by:
- inequality,
- corruption,
- exclusion,
- privatisation of public purpose, and
- the erosion of democratic accountability.
These processes weaken economic coordination and legitimacy, even when they appear to increase short-term efficiency or profitability.
Maintaining social capital requires sustained investment in:
- public institutions,
- representation,
- transparency,
- fairness,
- and shared purpose.
When social capital is run down, economic activity becomes increasingly extractive, coercive and unstable, relying on enforcement rather than consent and producing diminishing returns over time.
Related posts:
- Capital
- Capital maintenance concepts
- Financial capital
- Physical capital
- Human capital
- Social capital
- Sustainable cost accounting
- Income
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As part of my work on inequality I’m asking economics commentators to define which part of inequality that they are referring to. After all an increase in income and wealth inequality does not diminish social capital based on the revisit to the work of Wilkinson and Pickett. However an increase in inequality of opportunity or of freedom undoubtedly will diminish social capital.
Hence my reason for defining multiple forms of capital
I think the distinction you’re drawing is useful, but it’s only part of the picture. Inequality doesn’t automatically erode social capital — that much is true. But it does erode social capital when the institutions responsible for maintaining fairness, opportunity and trust are weak, hollowed‑out or under‑resourced.
That’s the missing link.
Social capital isn’t just about distributional outcomes. It’s about the capability of the state to mediate those outcomes in a way that feels legitimate, predictable and fair. When public institutions are strong — professionally staffed, stable, competent, and accountable — societies can absorb quite high levels of income inequality without losing cohesion. When institutions are weak, even modest inequality becomes corrosive.
So the real driver of social capital depletion is not inequality per se, but institutional fragility.
That’s why investment in the public workforce matters so much. Professionalising the civil service, maintaining administrative competence, and treating public administration as a form of capital maintenance are essential if we want to preserve opportunity, fairness and trust. Without that institutional backbone, inequality of any kind quickly turns into inequality of freedom and capability.
In other words:
Strong institutions turn inequality into a policy challenge.
Weak institutions turn it into a legitimacy crisis.
That’s where the politics of care, and the politics of capability, really begin.
My interpetation is this: institutional capacity can buffer inequality for a time, sometimes a long time, but it cannot indefinitely neutralise it. Inequality is not just a stress applied to institutions from outside; it slowly reconfigures them from within.
That is why investment in the public workforce matters, as you say — but it also explains why such investment becomes politically difficult in unequal societies. Those with surplus resources can opt out, and once they do, the constituency for maintaining universal, high-quality institutions weakens.
So I agree that weak institutions turn inequality into a legitimacy crisis. I would add that unchecked inequality tends, over time, to weaken institutions, turning what begins as a policy challenge into exactly that crisis.
In that sense, the politics of care and the politics of capability have to address both together. Treating either as primary on its own risks missing the feedback loop between them. These feedback loops are an issue I intend to address. They are vital.
Well explained Richard. A modern state must maintain its social capital. That means investing continuously in the competence, professionalism, and stability of the public workforce. Without that, nothing else works — not markets, not public services, not democracy