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Blau extends his analysis of exchange and human interaction from individual actions to actions between social institutions, organizations, and groups. Similar to theories that follow the behaviorism of B. F. Skinner, decisions between individuals and institutions are made with rewards and costs in mind.
In the relationships of exchanges, an individual or group becomes powerful when he/she/it controls all the means of supplying a certain reward. For instance, if there were only one company that made tires, they would have an incredible amount of power in that market.
The balance of exchange, say, between a powerful CEO and her workers, stays balanced as long as the workers agree with their rewards (salary, benefits) and as long as the CEO agrees with the labor and subsequent profit she gets in return. Even if there is great income inequality, the workers might continue to sustain their mutual relationship with the CEO because those are the best jobs they can get. The social capital, their relationship/agreement, is what makes this mutual dependence possible. If the CEO or the workers disagree with the exchange deal (work - salary), then it is an imbalanced exchange and thus a power struggle occurs. In this case, the workers might band together and form a union: another relationship of social capital.
The "Free Rider" is the freeloader, one who chooses not to contribute to the group's social action but he/she still enjoys the benefits given to the group. This free rider notices that if he stops contributing, and it doesn't significantly affect things, why continue to contribute. So, he can stop and yet the group's rewards will continue to come in. However, even when this is the case, the individual does not always become the "free rider" Then the question becomes why would such an individual contribute even though his contribution, by itself, is so insignificant that it would not change things. The individual might contribute because of other incentives: bonuses, promotions, admiration, respect, and promoting a cause. Thus, an activist may be willing to go to prison because such an act would be admired and promote the political cause. Free riding can also be limited by enforcing participation, or by introducing incentives which come from being encouraged by a close-knit community. For instance, a neighbor could not participate in a neighborhood watch, knowing that someone would end up doing it. But instead of being a free rider, that neighbor might take a turn because he might want to meet people, make personal or business connections, and so on.
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