by Sandy Ikeda
Over at The Austrian Economists Dave Prychitko writes:
I still have trouble with the concept of Social Capital. I know what it means. Peter Berger encouraged us to read and discuss Granovetter fifteen years ago, and we did. Enjoyed it, and thought it was a great breakthrough in understanding networks, tacit knowledge, expectations, coordination. But I don’t see why we Austrians should call it social “capital.” If those outside the school want to do so, fine. But should Austrians? I seem to be the only one who criticizes the social capital concept. Why do I hesitate? See, for example, Kirzner’s (or Lachmann’s) book. I know what they mean by the word capital. I know how it fits into higher-order goods, and so on. I’d like to see how “social capital” is “capital” in the Austrian sense of the term. Not by analogy, but by direct theory. How does it fit into our higher-order goods concept? How does it directly relate to interest and time preference? And so on.
I won’t try to address all of Dave’s concerns here, only the part about the appropriateness of the term and the Lachmann connection. Continue reading