Explain the meanings and usefulness of how James Coleman dealt with the concept of social capital.

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amarang9 eNotes educator| Certified Educator

Capital is typically considered to be physical: goods, assets, or other things that contribute to the production of services and goods. Capital could be a factory, machines, materials, etc. In Coleman's context, social capital is similar in that it provides the means for which to be productive. Typical capital (machines, etc.) is utilized to produce goods. Social capital is more the interaction of interpersonal relations. Such interpersonal interactions can help facilitate economic activity but it can also corrupt it (i. e. price-fixing and insider trading). 

Coleman gives a few examples. The close-knit community of Jewish citizens of New York City who are in the wholesale diamond market. Through this social capital of interpersonal relations and interdependence, a communal trust and tradition is formed. Coleman also mentions radical groups and churches or Bible study groups. In each case, there is a focused group of people whose interaction constitutes social capital. That is to say, their communicating and organizing establishes a structure: a structure of social capital. Just as capital contributes machines and factories to produce goods, social capital produces organizations and ways of communicating which can be used to create a political/social statement, a revolution, a community outreach program, etc. Social capital makes these things possible. 

Coleman describes the differences between physical, human, and social capital in his article "Social Capital in the Creation of Human Capital":

If physical capital is wholly tangible, being embodied in observable material form, and human capital is less tangible, being embodied in the skills and knowledge acquired by an individual, social capital is less tangible yet, for it exists in the relations among persons. 

In short, social capital is useful because it allows individuals in a community to organize and communicate in a way that is not necessarily dictated by the market; rather, in economic terms, social capital can be used to make markets more fluid. For example, consider that a woman, Violet, owns a model train shop and she has a friend, Greg, who fixes model trains. If Violet refers customers to Greg's shop for repairs, and he in turn refers his customers to Violet's store, this interaction is a form of social capital. It enables and facilitates certain types of economic activity that would not occur without that social capital. In addition to economics, social capital can be useful in politics, art communities: any discipline or area of human interaction.