Social Capital

+ Cardinal George Pell, Archbishop of Sydney
8 Feb 2009

We are now in the worst financial crisis since the Great Depression, which will certainly get worse before it improves.  The trouble started in the U.S.A. and we are better placed than either Britain or the U.S.A. to battle through.  But Australia is only a middle size fish in a big pond and the giants are in trouble. 

The U.S.A. is living beyond its means. On one estimate, its debt is equivalent to US$17,000 for every citizen. If the situation deteriorates in China we could see huge community stresses where already we know of thousands of crowd protests a year.

Some of the huge corporations which went bankrupt lied about their profits, recorded daily costs as capital expenditure, gave billions in loans to executives and their families, which were not recorded in the accounts.  On the other side of the coin, people were deceived into taking out loans they had no chance of repaying. More so than in the U.S.A, the courts in N.S.W. acted against this effectively.

President Obama pinpointed greed and irresponsibility as major causes of the meltdown. Dishonesty is another cause. All three destroy social capital.

Last Wednesday I spoke to the National Conference of the Australian Workers Union on this topic. The A.W.U. is one of Australia's oldest unions developing from the Shearers Union founded in 1886. 

Pope Leo XIII began the tradition of papal social teaching in 1891 and since then the Catholic Church has always recognized the rights of workers to organize in unions.  Official church teaching is that unions are an "indispensable element of social life" and Pope Benedict XVI recently spoke of the important role for unions in the present financial troubles and in forging a new synthesis between the market and labour.

Social capital is a comparatively new and mysterious term.  It has nothing to do with socialism and does not have to be anti-markets.  Indeed one of the lessons from today's mess is that economies, like communities, need solid values as a necessary foundation.

Successful societies need human capital (education, personal skills), experiences as well as financial capital (assets, income). The third element is social capital, or the positive effects which come from good moral judgements and  networks of decent hardworking people.

Another lesson is that trust is easily and quickly destroyed, often with disastrous consequences. Social capital builds trust by encouraging us to treat others the way we would like to be treated.   

Social capital includes moral capital, living according to right principles, which we learn especially from those we love and live with as children; our parents.

Families make a serious impact on their children for good or ill.  We need to stop pretending that family is only one more private lifestyle choice without long term consequences on society. Social capital depends on it.