Activity

Hopefully, thinking about society in this way allows us to better understand differences in economic performance. Social capital evolves over long periods of time, lives in the heads of those operating within society (but is often embodied in institutions, such as governments or firms), and influen…

when an economy like China grows from extreme poverty to something like middle-income status is 'capital deepening', or the application of more capital per worker

Social capital is not quite as intuitive a concept as plain old capital. Physical capital--buildings and computers et al--shapes the way people behave at work. Social capital--behavioural patterns that live in our heads--do too.

[...] A firm's cultural capital lives in all its employees; if one quits, it is not threatened; if most do, it is. When labour is organised, it can appropriate the returns of this cultural capital (as it deserves to do). When it isn't, the returns are most easily appropriated by top executives.