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Greg Berry

Jessica, good piece. Your distinction around measuring vs. "spending" social capital is an important one. I also appreciate the risk management frame of reference.

I think your argument would be further buoyed by the realization that social capital can be an actor in relation to financial capital. The simplest example is your credit score: act in a trustworthy and consistent manner (as defined by the credit rating agencies), and you have more access to financial capital (most of the time). Although that's a very literal example, many intangible social capital balances have a similar affect, whether to find work, gain access to an investment opportunity, or other opportunities. When considered as a multiplier of financial capital, social capital can have more measurable value, without having to be "spent" directly, which we agree is a ludicrous concept.

Jessica Margolin

Yes, absolutely! Thank you for pointing out that complex issue in a simple way.

With the credit score, the idea that past un/dependability is a reflection of character illustrate what happens when we don't keep track of enough information to really understand the data.

Clearly someone who is struggling in a low paying philanthropic position (or even a teacher) but subject to illness, or with the birth of a sick child, is unable to perform financially in a way that would be visible as "dependable." Yet, they're dependable citizens in the sense they make productive choices, they contribute overall to the investment in society, and as such are worthy of leniency in their credit "score." If luck were to find them, they'd use it responsibly. (And THAT is what Microfinance was originally about.)

This would be unlike, say, a high-flying greedy executive who makes a lot of income but spends it even faster. (Nevertheless, the flamboyant person throwing money around might have a fleet of sycophants - so it's not obvious what's going on until reputation is apparent, including the reputations of responsibility and demonstrations of collaborative behaviors of those who are related to the greedy central figure.)

Thankfully we're leaving the period of time where we've had to create abstract indicators of trustworthiness and dependability from blindly recorded behaviors! Our ability to track and process data is now at the point where it can be useful...if we gather it correctly.


Hi Jessica. Love this post. In part because I can relate to working hard to impose rational frameworks onto irrational and intangible things (in fact, similar to you, I went from being a music student in college to realizing I was more interested in the science and mathematics of music (check out Past Life Melodies by Sarah Hopkins for an amazing illustration of overtones)). You must be an INTP or INTJ? Either way, we sort of epitomize the human need to reduce uncertainty in this regard, despite our recognition of its inevitable existence.

As far as social capital as an intangible asset... I often think of its value in terms of its ability to lower transaction costs. In some cases, I think you're right to express this as risk management (i.e. when social capital is understood as trust). I also agree with Greg's comment that it can be understood as lowering transaction costs in terms of search costs(i.e. being plugged into a network provides more ready access to business opportunities). My intuition says these are two distinct distinct benefits of social capital, one more quantifiable than the other.

Anyway, very much an interest of mine, as well, and something I have far from figured out. Actually, I have two posts coming out this week that touch on the topic. I'd love your feedback.

Mike Shoemaker


Would appreciate your feedback - http://bit.ly/7G3KgO

Jessica Margolin

Thanks, Mike!
Actually I waver between F & T, but usually am an ENFP (although Jamais Cascio thinks I'm an ENTP, and I value his perception!)

I absolutely agree with you both - there's a measureable upside of a social network in terms of lowering transaction costs (sometimes down from infinity, in the sense of "it's who know you...")

On the other hand, there are research pieces that show that searching your network will bias your result more than a more objective search, and there are negative results such as nepotism, etc., that actually the objectivity of financial valuation *solves*... so, really all I can conclusively say is that it's complicated.

I look forward to reading your post.


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