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An essay on social capital: Looking for the fire behind the smoke

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Social capital is defined as mutual trust. It is related to production by a key hypothesis: social capital determines how easily people work together. An easy-to-use proxy (Putnam's Instrument) is the density of voluntary organizations. Social capital might be a new production factor which must be added to human and physical capital, or it might enter as a reduction in either transaction or monitoring costs. A direct and an indirect way to measure social capital are discussed. The crucial question is if social capital can be changed. That is, if self enforcement can replace third party enforcement, and it is discussed how much harm totalitarian regimes do to social capital, when they expand their area of central control.
Original languageEnglish
JournalEuropean Journal of Political Economy
Pages (from-to)339-66
Number of pages272
Publication statusPublished - 2000

    Research areas

  • Social capital, Transaction cost, Third-party enforcement, Market transition, Socialism

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