Social Capital
Categories: Ethics/Morals
Regular capital is money. If you talk about raising capital to start your falafel stand, you mean you're hitting your brother-in-law up for a loan.
Speaking generally, though, think about capital as something you invest. Your brother-in-law is giving you that investment in the form of cash. But in a broad sense, that capital relates to a stake. He owns a share of the venture because of the money he put into it. You own a share because it's your idea and you're doing the work.
Okay, now to social capital. It's basically the stake a person has in society...an investment in social relationships. The reason you can get money from your brother-in-law is because your sister married him. You have a relationship. If you were a stranger, you wouldn't even have a chance to present your business plan.
If you go to Exeter and then Harvard, your college buddies work for hedge funds and run the State Department. If you need a job, they'll hook you up with a six-figure gig as the VP of some corporate division. However, if you dropped out of high school and spent most of your youth shooting rats at the junkyard, your buddies have a different social standing. If you need a job, maybe they can hook you up at the dog food factory, or you can earn some cash picking up scrap metal for the dude who owns the junkyard (or maybe he'll just pay you for rat removal).
Either way, the social capital built up in that Exeter/Harvard situation is worth more than the social capital in junkyard alternative. It pays more dividends, so to say.
