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Social Capital

December 30th, 2023 | Tags: capital Social Capital BVI VI economics
Dickson C. Igwe. Photo: VINO/File
Dickson C. Igwe

If capital drives wealth, power, and inequality, any attempt to create greater equality will involve capital too, and its management and ownership.

That capitalism rules the 21st century is not in dispute. In fact, the history of the world post the Industrial Revolution of the 1700s is the story of capitalism and its ascendance as the undisputed ideology of the modern world.

Capitalism, the thinking behind capital and its ownership has triumphed over socialism and communism, two ideas at the other end of the social and economic spectrum.

Capital governs politics, society, and power in all cultures. The failure to recognize the fact of capital is a limitation for any aspiring politician, thinker, or entrepreneur. The relationship between power and capital is symbiotic: the two are chained together.

A number of economists argue that the triumph of capital and the resulting social inequality it creates is not a good thing. Wealth concentrated in the hands of the tiniest number of people will concentrate power to such a degree that it will eventually affect humanity in ways that may well be unsustainable.

Today, 100 families control the world economy. Populism and a right-wing backlash in the west is the result of that concentration of wealth and resulting inequality. Then social anger was the catalyst for fascism, volatility, and war for decades.

However, there is no evidence capitalists- the owners of capital- are threatened. The concentration of wealth and power in their hands continues unrelentingly. The capitalist culture grows without limit, even in former communist states such as China, Russia, and Vietnam.

The struggle between capital and those who demand greater equality has been an ongoing tale. Civil wars in Europe, the two world wars, the Cold war, and conflicts in Asia, Africa and the Middle East are a continuation of the story of the thrust of capital to the top of the world’s power pyramid.

Behind every war is capital. The struggle between capital and communism resulted in civil war in Spain in the 1930s and offered European fascists a rallying point: Hitler, Mussolini and Franco.

The prevailing power of capital is a reality of history where nations with the optimum capital mix tend to prevail in war and peace. That was the story of the USA in the Pacific between 1941- and 1945, against the Empire of Japan. The influences of capital and the control of capital starts and ends wars.

In World War 2, Germany lost when it overstretched its own capital mix – enterprise, machinery, raw materials, technology, labor- attempting to fight wars on multiple fronts in the north, south, east, and west. Japan too, simply did not possess the vast capital mix its US enemy brought to bear in the Pacific War after the attack on Pearl Harbor in 1941. US capital won the Second World War. Russia relied on American capital to march into Berlin in 1945 just as US capital drove the allies to victory.

History has revealed that greater equality will not come about through violence, the barrel of the gun, as the owners of capital have the upper hand in the game of power. Greater equality can come about only through the democratic process and a recognition by the powerful capitalist that it is in his interest that there be a fairer distribution of wealth and power.

One way in which greater equality is established is through the idea of social capital.

Social capital is another term for public investment. Social capital is capital that drives the highest quality of life for the poor and the most vulnerable: public healthcare, free education, public transportation, social welfare, agricultural cooperatives, public housing, and community police.

The quality of a country’s social capital depends primarily on the tax regime: taxing the rich to invest in the underprivileged. Nevertheless, social capital benefits the high-income earner and the rich too, by ensuring a safer community with essential public services available to all, rich and poor.

Social capital decides the standard of living of a country, arguably as much as a country’s private capital: private industry and business. Private capital adopts GDP as a measure of economic output. Social capital also adopts GDP as a measure, but quality of life is crucial to outcomes in the social capital mix.

The quality and management of a country’s social capital has far-reaching effects on the standard of living, quite apart from GDP. Countries, such as those in Northern Europe, with the highest standards of living in the world, possess a mix of social capital that has ensured very high levels of well-being for their populations. Those countries also tax at a very high rate, which is anathema to Jack the Capitalist.

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