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© 1995 Oxford University Press

research-article

Self-organization and Social Capital

ELINOR OSTROM

(Workshop in Political Theory and Policy Analysis, Indiana University Bloomington, IN 47408–3895, USA)

Abstract

All forms of capital are created by spending time and effort in transformation and transaction activities. oPhysical capital is the arrangement of material resources to improve flows of future income. Social capital is the arrangement of human resources to improve flows of future income. Human capital is the knowledge and skills that individuals bring to the solution of any problem. Social capital is created by individuals spending time and energy working with other individuals to find better ways of making possible the achievement of certain ends that in its absence would not be possible. The investment in social capital frequently takes the form of bargaining over which rules will be adopted to allocate benefits and costs of collective action. This process is illustrated in this article by focusing on the bargaining over rules that are endogenous to thousands of farmer-owned irrigation systems throughout the world. When participants are characterized by substantial heterogeneities of capabilities and interests, the rules that are adopted substantially affect the distribution of outcomes. If participants are faced with crosscutting and off-setting differences, however, a configuration of rules can enable participants to generate mutually productive outcomes over time. If external agents of change do not take into account the delicate balance of interests embedded in social capital, when investments in physical capital are undertaken, efforts to improve productivity can have the opposite effect. Institutions that are slowly developed through many years of tough bargaining and trial and error processes may be quickly destroyed by insensitive overemphasis on physical technology.


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