Responding to COVID-19: Social capital and the social sector in the 21st century

26 May 2020

This article was originally commissioned and published by the Campaign for Social Science as part of its Covid-19 programme.

This article was written by Andy Haldane, Chief Executive of the Bank of England and PBE co-founder.

“There’s no such thing as society”. So said Conservative Prime Minister Margaret Thatcher in 1987, in a famous interview for Women’s Own magazine.  She went on, “people must look after themselves first” and then, and only then, their neighbours.

We have since moved a long way.  In 2010, Conservative Prime Minister David Cameron made the “Big Society” – a plan to revitalise civil society – one of the centrepieces of his new Government.  While this initiative ultimately ran aground, the shift in tone could hardly have been more significant.

The coronavirus crisis has moved this dial several notches further.  In March this year, Conservative Prime Minster Boris Johnson observed:  “One thing I think the coronavirus crisis has already proved is that there really is such a thing as society”.  It is easy to see why he chose those words.

Across the world, there has been an outbreak of community kindness.  From small daily acts of neighbourliness, to the revitalisation of charities, community and social actions groups, to the growth of a new volunteer model army, including the remarkable 750,000 new NHS volunteers.  At a time of acute stress, civil society has emerged stronger than ever.

This continues a pattern seen through history.  Past pandemics have collapsed the capitals on which capitalism is built:  physical capital, like machines and factories;  human capital, like jobs and skills;  and financial capital, like debt and equity.  And as these capitals have collapsed, so too have peoples’ income and economies’ GDP.

Yet there is one capital that, historically and currently, has bucked these trends:  social capital.  As other capitals have fallen during past episodes of societal stress – from wars and natural disasters to pandemics and industrial revolutions – social capital has served as a vital counter-cyclical stabiliser.

The COVID-19 crisis is the latest in a long historical line of social capital gluing together societies otherwise at risk of coming unstuck.  The physical distancing policies being put in place globally to contain the spread of the disease have not, in fact, generated social distance.  Instead they have reinforced a sense of social togetherness, often using digital means.

Social capital is typically taken to refer to the network of networks and relationships in a society.  These networks are, for many people, the very DNA of a society.  Evidence makes clear that humans are social animals, driven by mutual-interest and reciprocity.  They are natural co-creators of social capital, what Rutger Bregman calls Humankind in his recent book.[1]

The benefits of social capital extend beyond the personal.  The greatest engine of growth for the world economy was the Industrial Revolution of the late 18th century.  The cylinders powering this engine were physical, human and financial capital.  They combined forces to power business, commerce, innovation, job creation and, ultimately, growth and prosperity.

Yet there was a crucial fourth cylinder firing this growth story:  social capital.  The societal stresses created by the Industrial Revolution – homelessness, loneliness, family separation – risked tearing the social fabric and scuppering economic success without the emergence of a formal charitable sector in the mid-19th century.  That provided the glue to society and the key to economic success, every bit as much as innovation and commerce.[2]

More recently, the depletion of such social capital has been a cause of mounting concern.  Twenty years ago, Robert Putman published Bowling Alone, a lament to the loss of community capital in the United States.[3]  Last year Raghu Rajan published The Third Pillar [4], in which he attributed much of the blame for the fracturing of society on the lack of focus on community and civil society.

Yet despite this evidence of its importance – socially, economically, historically – social capital tends to remain on the side-lines of many policy debates.  It does not figure in mainstream models of the economy.  Nor does it score in economies’ measures of success, such as GDP.  Those NHS volunteers and those community and charitable groups continue to receive a low or zero weight in the National Accounts.

That is a glaring measurement gap.  It has been estimated that there are around 1 billion volunteers globally and around 20 million in the UK alone.[5]  I have estimated that the social sector in the UK may contribute over £200 billion in social value each year in the UK – or around 10% of GDP – almost none of which currently finds itself into measures of GDP or wealth.[6]

At a time when social capital is rising, and its importance never greater, this begs two questions.  First, how can we better recognise and measure the societal contribution of the social sector and social capital?  Second, how best do we to invest the endowment of social capital created by the COVID-19 crisis, to resurrect Rajan’s Third Pillar and avoid people Bowling Alone?[7]

On measurement, progress has been made over recent years.  At the level of the whole economy, the UK’s Office for National Statistics publishes measures of social capital, based indicators covering personal relationships, social network support, civic engagement, and trust and cooperation.  These complement their suite of indicators tracking societal well-being, which are now being published on a weekly basis.

At the level of companies, there has been a progression towards a more expansive set of reporting requirements for businesses.  For example, so-called “integrated reporting” provides a means of companies reporting their contribution across a broader set of capitals than physical and financial, importantly including natural, human and social capital.[8]

Despite this good progress, it remains the case that all mainstream reporting, whether of economic performance through the National Accounts or company performance through company accounts, ignores social capital and significantly understates the contribution of volunteering and the social sector to the value businesses and societies create.

What better time than now, with social capital propping up our economies and societies, to recognise its role when keeping score on success.  We should use this opportunity to broaden our measurement horizons, perhaps putting well-being and broader conceptions of capital at the very centre of how we measure success, whether as companies, economies and societies.  The Campaign for Social Sciences, with its explicitly cross-disciplinary focus, is ideally placed to help lead that charge.

If better measuring and recognising the role of social capital and the social sector is a necessary condition for success, it is far from being sufficient.  To be successful, social action does need to be both voluntary and local.  But these actions, if they are to be effective and well-directed, also need a supporting infrastructure, often operating nationally.  It was the absence of such infrastructure that led to most of those NHS volunteers being unused, a valuable endowment of social capital squandered.

There are many options worth considering here to develop a new infrastructure for the social sector.  One would be to develop a formal system of National Civic Service, embedding the new model army of volunteers in a structured programme.  The National Citizen Service has since 2009 offered a 3-4-week programme for 16-17 year olds.  This could be expanded, in both duration and age coverage, to provide a foundation for lifelong civic service.[9]

To support that, national civic service would need improved reporting, perhaps through a lifelong digital civic passport.  And with that passport, the door is then opened to thinking imaginatively about ways in which volunteer activity might be encouraged, including by providing “digital credits” for the time spent volunteering.  Such a programme already exists in Scotland and in some parts of England.

In a report in 1948, William Beveridge made the case for an enhanced programme of co-operation between the public sector and civil society – “a fruitful co-operation between public authorities and voluntary agencies”.  Unlike the words in this 1942 report, which saw the creation of the NHS and the welfare state, Beveridge’s words were never acted on.

Now is the time to do so.  The social sector is society’s institutional immune system.  Its foundations need strengthening, to tackle the coronavirus pandemic in the near-term and to rise to the other medium-term challenges facing our economies and societies, including the climate crisis and rising inequalities.  The Campaign for Social Sciences could help turn Beveridge’s words, belatedly, into actions.

Visit the hub of the social science community’s response to COVID-19

[1]  Bregman, R (2020), Humankind:  A Hopeful History, Bloomsbury Publishing.
[2]  Haldane, A (2018), ‘Ideas and Institutions – A Growth Story’, speech.
[3]  Putman, R (2000), Bowling Alone:  The Collapse and Revival of American Community, Simon & Schuster.
[4]  Rajan, R (2019), The Third Pillar, William Collins.
[5]  Haldane, A (2014), ‘In giving, how much do we receive?  The social value of volunteering’, speech.
[6]  Haldane, A (2019), ‘The Third Sector and the Fourth Industrial Revolution’, speech.
[7] This blog by Matthew Whittaker discusses why it is importance to reverse the depletion of social capital in recent decades
[8]  Simnett, R and Huggins, A L (2015), ‘Integrated reporting and assurance: where can research add value?’, Sustainability Accounting, Management and Policy Journal, Vol. 6, No. 1, pp. 29-53.
[9]  Haldane, A (2019), ‘The Third Sector and the Fourth Industrial Revolution’, speech.

 

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