Economic Themes (2010) 48 (1) 7, 91-104

EFFECTS OF SOCIAL CAPITAL ON THE EFFICIENCY OF SOCIAL OUTCOMES


Marija Džunić

Abstract: In recent literature, social capital is treated as a factor of various social and economic outcomes. Social capital can produce effects only in the second-best world, i.e. in the presence of deviations in relation to the optimal conditions, such as externalities, free-riding, information asymmetries, imperfect competition and the like. Given the numerous benefits it produces for individuals and the society, it is assumed to be a resource that should be maximized. However, social capital creates both benefits and costs, so social groups may possess too little or too much of this resource from the aspect of social efficiency, which leads to a conclusion that there are different types of social capital and that from the social aspect it is a resource to be optimized, not maximized. The positive effects of social capital are identified in its function as a source of social control, family support, as well as providing benefits based on social connections in the community and overcoming information assymetries. There are also some less desirable consequences of social capital, such as redistributive effects, deepening income inequalities and political tensions, polarization of society, compromised autonomy of individuals.

Keywords:  social capital; efficiency; social networks; public goods; information assymetry

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