Developing social capital is a cause that conservatives take seriously

The Treasurer, Peter Costello, needs to be congratulated on entering the debate about the importance of social capital. As those familiar with the thoughts of Sir Robert Menzies will know (in particular, his radio speech The Forgotten People) there is much about social capital that closely resonates with Liberal philosophy.

That social capital's natural home is on the conservative side of politics explains why many "left-leaning" commentators have been so critical of the Treasurer's recent speech at the Centre for Independent Studies.

For many years public figures and politicians like Eva Cox and Mark Latham have sought to identify social capital with their side of politics.

By demonstrating that Liberal governments are not simply about good economic management and sound fiscal policy, and that community well being is a central part of politics, the Treasurer has begun to stake the "social agenda" territory as an important part of future policy development.

As recent history has shown, especially demonstrated by the fall of the Kennett regime, voters do not simply judge governments on their economic success. Whether in England, the USA or Victoria, voters are calling for governments and policies that value social concerns and promote a strong sense of community.

This sense of working together at the local level to achieve both personal and group goals rests heavily on recent debates about "social capital".

Much has been written about the importance of financial and human capital to the success of a business organisation or to the economy as a whole. More recently, writers such as Francis Fukuyama have argued that efficient and viable economies do not simply rely on concepts like human capital.

Equally as important in explaining why particular economies are successful is the idea of "social capital". This social capital is not simply important because of its economic impact; equally as important is the way in which it facilitates a healthy and robust democratic system of government.

Robert Putnam defines social capital as: "... features of social life - networks, norms and trust - that enable participants to act together more effectively to pursue shared objectives". Fukuyama, after referring to the work of the sociologist, James Coleman, defines social capital as: "the ability of people to work together for common purposes in groups and organisations."

Closely related to the concept of social capital is its importance to the health and robustness of what is termed "civil society". Putnam uses the expression "civic engagement" in this context and defines it as: "people's connections with the life of their communities."

Fukuyama defines "civil society" as: "a complex welter of intermediate institutions, including businesses, voluntary associations, educational institutions, clubs, unions, media, charities and churches ..."

Both Putnam and Fukuyama argue that the health of a democratic society depends, in a large part, on a strong dose of social capital. The presence of intermediate voluntary organisations between the individual and the state promotes such democratic values as cooperation, collaboration and the achievement of common goals.

Putnam, in his book Making Democracy Work (1993), analysed a number of regional governments in northern Italy. His conclusion was that those regions where people were heavily involved in community groups and sporting clubs had a better chance of having effective, democratic governments.

As noted by de Tocqueville, in Democracy and America, one of the defining characteristics of early American democracy was the widespread prevalence of intermediate associations. These voluntary associations acted as a buffer and a conduit between the individual and the state.

Putnam's thesis, outlined in his book Bowling Alone, is that in America there has been a significant decline in social capital over the past 30 years. By looking at such indicators as membership of community groups, sporting clubs, school parents and friends associations, Putnam shows that there has been a significant decline in the percentage of the population involved in such pursuits.

Both Putnam and Fukuyama go one step further and argue that this serious decline in social capital is having an adverse effect on America's civil society. Fukuyama refers to high rates of crime and juvenile delinquency as a result of the lack of trust associated with social capital. Putnam also refers to a lack of trust and argues that young people, in particular, are adversely affected.

The argument is that in a complex, abstract society individuals are increasingly experiencing a sense of hopelessness and alienation. As societies become "global" - because of the impact of information-related technologies, new forms of entertainment media, international financial markets and the global economy - individuals search for a sense of the local and the particular.

Meaning, in a more lasting human sense, cannot be delivered by the market. What people want is a sense of communal belonging and a sense that they are valued as individuals who can contribute to the common good.

Within the Australian context the concept of social capital has also gained increasing currency. The journal of the Sydney-based Centre for Independent Studies, Policy, and the journal of the Melbourne based Institute for Public Affairs, IPA Review, have both published articles on the topic.

Vern Hughes argues that, unlike America with its strong history of intermediate voluntary associations, the modern Australian state is based on a belief in state paternalism. Since Federation, Australians have expected strong centralised government; the expectation being that what the individual cannot achieve, the state should supply. While there has been some evidence of voluntary associations in Australia, Hughes, similar to Putnam and Fukuyama, argues that over the last 30 years the supply of social capital has been gradually eroded.

Hughes concludes his article by arguing that "Australia must seek to reconstitute civil society with a rich and diverse associational life". Central to this is the need for individuals, community groups and government to introduce a range of structures based on the concepts of social capital and civil society.

As outlined in Mark Latham's essay in the CIS publication, ways to bolster social capital are difficult to find. Contrary to the arguments normally accepted by the old guard of the Labor Party, the Federal member for Werriwa argues that governments cannot enforce social capital.

Top-down models associated with state paternalism, where attempts to remedy complex and sensitive social issues are based on the assumption that more money and increased government interference provide the solutions, do not work.

That statism does not provide the answer explains Latham's argument that the left's commitment to government intervention is misdirected and ineffective. In areas like welfare increased government assistance promotes a dependency mentality where individuals and communities lose the ability to take control of their own lives. One only needs to read Noel Pearson's views about why Aboriginal communities are disintegrating to see the force of Latham's argument.

The Treasurer has proven himself a very adept and successful manager of the Australian economy. By recognising that "man does not live by bread alone", he has also demonstrated a canny ability to highlight contradictions in the left's perspective and to redefine social debate to better suit a conservative agenda.