An Austrian Analysis of Social Capital

Alexander Craig

Advisor: Virgil Storr, PhD, Department of Economics

Committee Members: Peter J Boettke, Stefanie Haeffele

Online Location, Online
July 21, 2021, 10:00 AM to 12:00 PM

Abstract:

This dissertation examines social capital through an Austrian lens. Social capital is the collection of social ties, cultural understandings, and norms that facilitate individuals cooperating with one another. The Austrian school of political economy’s emphasis on capital heterogeneity, plan coordination, and institutional context naturally lends itself to analyzing social capital development, use, and maintenance. 

The first chapter criticizes a common line of argumentation that treats social capital as an under-produced boon to communities which policy measures should augment. Considering the theoretical basis of these claims leads to doubt that social capital is necessarily under provided and reveals that social capital is often better conceived of as a club good. Furthermore, it is unclear that policy can do much to encourage social capital given information problems about its proper structure. This chapter is co-authored with Virgil Storr.

The second chapter examines the means by which improved coordination of individuals’ plans can take place when those plans relate to the use of social capital. By articulating a categorization scheme of types of coordination improvements, i.e. types of social learning, this chapter elucidates previously underappreciated categories of social coordination mechanisms and uses empirical examples to demonstrate their relevance for understanding real-world collective action. This chapter is co-authored with Virgil Storr.

The final chapter examines the social role entrepreneurs play in constructing social capital directly as well as constructing sites where social capital formation can take place, building on previous work on social relationships and social spaces in the marketplace. Especially after the social upheaval wrought by natural disasters, these spaces become critical components of the disaster recovery process. This chapter is co-authored with Stefanie Haeffele.

Throughout all three chapters empirical evidence from ethnographic work on disaster recovery from researchers at the Mercatus Center provides illustration for the arguments made, mustering qualitative evidence of the use and changes in social capital networks throughout New Orleans and New York during times of crisis and recovery after Hurricanes Katrina and Sandy.