Linking Indigenous Social Capital to a Global Economy



arrangements. The first step, in our view, is to recognize the legitimacy of indigenous social
capital arrangements. The second step is to recognize that
individuals who are bound to
traditional forms of highly exclusive bonding social capital are rational actors and thus efforts to
induce them to participate in new types of bridging social networks will require the development
of new incentive structures
.

Incentives & the Structural Properties of Bridging Social Capital

One of the most serious obstacles to understanding the intricacies of social capital
formation is the inclination to treat something that is social as inherently juxtaposed to that
which is individualistic or utilitarian. This view can lead to the assumption that developing
bridging social capital requires a complete cultural overhaul and tends to neglect the more
practical problems of identifying incentives with which to induce persons to participate in more
expansive bridging networks. This is especially true when certain types of social relationships
within which individuals are embedded appear to produce behaviors that are harmful, both in
terms of their personal lives and society-as-a-whole.

Thus, for example, in economically developing countries the apparent reluctance of the
poor to invest in ventures that would seem to offer them greater returns and move them out of
poverty, is oftentimes misdiagnosed as a "culture of poverty" problem. 14 Hernando De Soto's
empirical research shows that the low risk behavior of the poor more typically is the result of
institutional constraints, especially the lack of secure property rights, that forces them to invest
all of their energies on trusted highly dense social networks.15 Similarly, the Russian peasant
household's rejection of the post-Soviet reformers' (most of whom never left Moscow) proposals
for expansion of their operations was not due to lack of information or an inherent rural



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