Social Capital, Capability, and the European Project

Robert LindleyInstitute for Employment Research

University of Warwick

Seminar on ALLIANCES TO FIGHT POVERTY

Rome, 28-29th of April 2011The challenges for a poverty reduction strategy:

The responses of the Alliances

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Problem: the resilience of the neo-liberal approach• Tempering the economic with the social• Limiting the social but then failing economically

Alternative platforms and their orientations

Stepping-stones:• Re-connecting the economic with the social• Adopting broader targets of progress• Recognition of the role of ‘social capital’

Solution: Can the Capability Approach help to rescue the European Project?

Social Capital, Capability and the European Project

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• The Single European Market and its ‘social dimensions’

• Lisbon, etc. the knowledge-based society with new and expanding configurations of demand, higher productivity and headroom to address poverty and social exclusion

• Trying to develop benign and effective activation regimes

• Raising the floor on labour market regulation• Propping up social partnership (i.e. the trade unions)• But leaving in place the market-orientation of social life

Tempering the economic with the social

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• Increasing diversity in knowledge production and exploitation – use of knowledge and ICT in knowledge production/exploitation

• Significance of tacit knowledge and organisational effectiveness

• Greater codification of knowledge: ‘what is practiced’ and ‘what is known’

• Wider consciousness of ‘practice’

• But over-selling education as the solution to poverty and social exclusion -

• Knowledge-based policy development systems

The knowledge-based scenario

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Limiting the social but still failing economically

• Productivity is relatively low

• Entrepreneurial drive is weaker than it needs to be

• The science base has not been harnessed sufficiently

• Product market competition is not vigorous enough

• Inadequate investments in education (E), training (T) and CPD– problems with employer commitment– imbalance of effort between E, T and CPD

• Supply-side orientation of policy – too concerned with individual behaviour– too little with organisational effectiveness

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“A premature Greek default would change everything. As would the failure by the EU and Portugal to agree a rescue package in time; or an escalation in the EU’s dispute with Ireland over corporate taxes; or a ratification failure of the ESM in the German, Finnish or Dutch parliaments; or a German veto for a top-up loan for Greece in 2012; or the refusal by the Greek parliament to accept the new austerity measures; or a realisation that the! Spanish cajas are in much worse shape than recognised, and that Spain cannot raise sufficient capital.”Wolfgang Münchau , Financial Times (www.ft.com) 2011

... and still facing financial collapse

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• Alternative platforms based on negative evidence: restraining social demands has not been matched by prudent market behaviour and sustained growth

• The financial sector has been allowed to judge other economic and social actors meanwhile detaching itself from national economies. Its voice is out of keeping with its performance.

• Alternative platforms based on ideas: theories • Alternative platforms based on sharing experience

and innovating more effectively • Knowledge-based policy development systems

Alternative platforms

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Reconnecting the economic with the social• Social policy as a ‘factor of production’ • Asserting ‘what business is for’• Social justice and forms of social relationship as

ends in themselves • Taking care with ‘business-case rationales for

equality and diversity policy• Respecting the subtle balance between paid and

unpaid activity and the role of the third sector

Adopting broader targets of societal progress

Recognising ‘social capital’ and its role in the economy

Stepping-stones

‘Beyond GDP’ – measuring distribution of income and well-being /quality of life

• French Government – Stiglitz Commission 2008

• EU Social Indicators

• French-German report 2010

• UK Government 2010 request to Office of National Statistics

Shifting the focus of social indicators from those in the Lisbon targets reflecting spending on social services and benefits (i.e. Inputs) to those in the Europe 2020 Agenda

Yet EU lagging behind – the UNDP Human Development Index is 20 years old!

Broader targets of progress

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• A rallying ground for the neo-liberal sceptics• The influence of SC on economic outcomes: growth,

business infrastructure, innovation, regional development, organisational performance

• But also on other outcomes directly: educational access and attainment, health and wellbeing, crime

• Deployed in explanations of micro and macro phenomena • Disciplinary diversity ... and a rapprochement between

economics and sociology?• Relationship with human capital• Problems of definition and measurement

Social Capital (SC)

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Early identification of sites of ‘non-economic’ behaviour requiring better explanation :

• Risk-sharing through mutual lending organisations• Ethnic and migrant communities – business development • Roles of social networks in job search and mobility• ... and in promoting health and well-being • Charitable giving

But beware of the tendency for economics to colonise its critics.

Long-standing challenges to neo-classical economics

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Social capital – key ingredients

The resources that individuals can mobilise through being embedded in social networks

•respected norms and shared values•trust among members•enforceability of obligations

SC may have a macro significance as a collective asset which the group can use to support actions by individuals which benefit them and/or other group members.

Networks can have negative as well as positive effects – limiting access to outsiders or discouraging relationships that extend outside the network

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SC – key ingredients contd.

People as individuals, families, etc. may actively invest in their positions within these networks, recognising the potential costs and benefits of doing so.

Organisations/institutions may also invest in social networks so as to harness them to foster the production and use of particular forms of social capital.

Measurement based on survey questions that relate to e.g. perceptions of trust, associational activity, voting, volunteering, charitable giving.

A diversity of disciplines but little collaboration across them.

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 • Perspectives on public policy – design and delivery

• Multi-level governance

• Analysis, voice, deliberation - bureaucrats /technocrats

• Particular application at the territorial level

Recent background to the Capability Approach

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• demographic (age, sex, ethnicity)

• aptitude - ability

• health – disability

• cognitive and manipulative skills

• educational and vocational training attainment

• family background, social and spatial location

• personal and occupational ‘journeys’ to date

• financial resources

Characteristics and resources

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A capability for ‘X’ exists if the characteristics and resources of the individual make the achievement of ‘X’ a potential outcome – i.e. a ‘real possibility’, part of the ‘opportunity set’

• Capability for choosing• Capability for exercising legal rights and entitlements• Capability for effective voice• Capability for working in a high quality job• Capability for fully deploying abilities and skills• Capability for sustaining a full working life• Capability for balancing personal, social and

professional life

Capabilities

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Conversion Factors (CFs) - generic

• operating on CR as well as C directly?

• positive/negative

• rights – converting the formal to the effective

• releasing potential for future autonomous development

• …or continual reinforcement is needed

• vicious and virtuous circles

• range of phenomena encompassed (Sen, Nussbaum)

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CA - theoretical perspectives

• diverse interpretations and uses of the CA

• overlapping uses of concepts:• characteristics and resources (CR) – capabilities (C)• capabilities (C) – conversion factors (CF)• conversion factors (CF) – functionings (F)• capabilities (C) – functionings (F)

• other concepts/issues:• opportunity sets• process of ‘choice’, ‘agency’• normative use of CA – cultural universalism/relativism• individual – collective notions of CR, C, CF, F

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Organisational design

... the missing policy discourse?

• the limits to flexibility strategies

• fostering active organisational learning

• learning cultures and management practices

• retaining and developing staff

• diversity management – cost-benefit calculus vs. CSR?

• creating high performance organisations (HPO)

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E.g. The capability for being an HPO

• more co-operative relationships with customers and suppliers

• participative management with horizontal co-operation

• quick adjustment to changing technology and markets

• stability sought through quality, productivity and flexibility

• constant improvements on the job

• great attention to education and training

• need for higher order generic skills

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Employment relationship as one CF

Positive approaches to harness worker commitment:• well-designed pay and bonus schemes• internal cohesion, fairness and equity• job security• opportunities for CPD-LL• participation in decision-making• able to reconcile personal and professional life

But how to generate employer commitment? KBE needs trust and continuity for knowledge sharing, etc. but employer instinct is to narrow and shorten contracts.

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Caveats to adopting the Capability Approach

• Unlike neo-liberalism, CA is not based on a theory of behaviour - if offers a way of differentiating objectives, placing the promotion of freedom to choose at the heart of public policy.

• It generates challenging measurement problems, especially where collective capability is concerned.

• It offers a way of thinking about objectives which can fundamentally alter the style of policy-making, program design and monitoring.

• The conceptual terminology is problematical.• Many more concrete examples of its use are needed so

as to share them with policy-makers and other actors.

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Can the Capability Approach help to rescue the European Project?To counteract the divorce of the economic from the social

• it can connect evidence on outcomes and processes in a richer way - e.g. the social model of disability

• it can deploy ideas/variables such as social capital more effectively

• it provides a rationale for measuring what is important for social progress rather than settling for monitoring convenience

• it is applicable to the economic, social and political spheres together

Perhaps a long-term vision would be that of the

the European Union as an Enabling Union

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Reserve

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Capability approach – an example

... Regional capability

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Regional ‘effectiveness’

• ‘Regionalism’• creating capacity for autonomous development• using the capacity effectively

• Constraints on ‘regionalism’: • culture, electoral credibility, power - governance, analytical capacity• socio-economic situation – public and private regional resource base

• Key national ingredients at regional/local level • quality of networks and partnerships – orientation (e.g. supply chains) • skills agenda, science and innovation• regional devolution policy

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As the sum of:

• individual capabilities

• firms’/organisations 'capabilities

• network/partnership capabilities

• institutional capabilities

Or a more complex function of them?

…plus national capabilities/foreign capabilities?

Regional capability?

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Characteristics: region-specific

• ‘metrics’• absolute or relative indicators?• if relative, which comparators to choose?

• socio-economic history: path-dependency• wealth, economic performance and structure• demographics and skills base• quality of networks/partnerships – e.g. RIS• extent of policy community• cultural cohesiveness/diversity?• national-regional financial transfers

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Capabilities: region-specific

• Capability for voice:• ability to marshal the regional civil society • ability to influence national policy discourse • so as to allow for regional diversity and…• avoid reinforcing current disparities

• Capability for analysis and advocacy• Capability for autonomous development• Capability for economic concertation (Some capabilities support other capabilities.)

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Regional Conversion Factors

• regional governance

• development agencies

• economic development partnerships

• regional/local business networks

• university-business/community networks

• national science base – regional links

• active labour market policies – harnessed regionally

• support for regional civil society organisations

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Regional Functionings

Most valued outcomes (absolute/relative aspects?): • strong economic development• high social inclusion, cohesion – low poverty/inequality• diverse communities share gains in well-being • environmental sustainability• high levels of health, security and overall happiness

…and, to handle risks to the above:

Strong underlying capacity to ensure future development • high levels of individual and organisational capability• robust ‘conversion factors’

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• Employment: 75% of 20-64 year-olds in employment• Innovation: 3% of EU GDP to be invested in

R&D/Innovation• Climate change/energy: greenhouse gas emissions 20%

lower than 1990; 20% of energy from renewables; 20% increase in energy efficiency

• Education: reduce school drop-out rates and at least 40% of 30-34 year-olds with completed third level education

• Poverty and social exclusions: at least 20 million fewer people in or at risk of poverty and social exclusion

The 2020 Agenda