Too Many “Capitals”
In Chapter 5 of the book Social Capital: An International Research Program, Yanjie Bian suggests that too many loosely-defined forms of capital can confuse the differentiation, definition and application of capital forms. We completely agree.
What is the underlying rule for differentiating one type of capital from another?
A Methodology for Evaluating Capitals
Bian proposes a methodology for narrowing down the growing list of capitals based on the “extent to which resources are embodied to human actors.” More specifically, he argues that resources of any type can only be transformed into capital through human involvement. Therefore, only the most basic form of that involvement should be considered when qualifying a resource as a fundamental form of capital.
For example, one type of capital is natural capital: the resources occurring naturally in the environment. We expect that he would not categorize natural capital as fundamental since environmental resources are not necessarily tied to people at every phase of their investment and use. Our water, air and soil exist with or without human involvement.
Three Fundamental Forms Proposed
Based on this methodology, Bian identifies three fundamental forms of capital.
- Material Capital: tangible resources such as an individual’s financial wealth and physical property. Material capital is external to people, but by definition requires their involvement at every phase of investment and use.
- Human Capital: intangible resources such as an individual’s strength, skills and expertise. Human capital only exists within people and can only be invested and used with their involvement.
- Social Capital: resources (material or human) embedded in human relationships. Social capital requires a relationship of trust in which one person gains access to resources owned by the other. Unlike material and human capital, social capital is not tied to a single person; it requires the involvement of two people.
Applying the Methodology: Our Takeaways
Bian makes an interesting point that the growing list of capitals presents a problem. His proposal of a methodology for narrowing down that list gave us a starting point for considering possible solutions to that problem. We appreciated the clarity and simplicity of the three fundamental capitals presented, and we had not considered such an elegant contrast between material and human capital.
We faced some challenges when attempting to apply the human-focused methodology more broadly.
However, we faced some challenges when attempting to apply the human-focused methodology more broadly. First, when considering other forms of capital such as political capital, it was a challenge to argue that these other forms were less embodied in human actors. For example, political capital refers to a politician’s trust, goodwill and influence. Is this not inherently embodied in humans and relationships? The example we gave on natural capital even seemed like a bit of a stretch, but was the best exclusion we could construct. It also struck us as odd that social capital was inclusive of both human and material capital, and yet was identified as a separate form of capital.
To learn about how we resolved our challenges with this human-focused methodology, read about a proposed framework for categorizing capital in our post Discussing “Capital” with Precision.