Social capital is a ‘bottom-up’ phenomenon. It originates with people forming social connections and networks based on principles of trust, mutual reciprocity and norms of action.

The term social capital was first used in the 1980s by Bourdieu and Coleman.

There is a growing literature on social capital, a number of themes are emerging:

1. Participation in networks.
A key concept of social capital is the notion of more or less dense interlocking networks of relationships between individuals and groups. People engage with others through a variety of lateral associations. These associations must be both voluntary and equal.

Social capital cannot be generated by individuals acting on their own. It depends on a propensity for sociability, a capacity to form new associations and networks.

2. Reciprocity.
Social capital does not imply the immediate and formally accounted exchange of the legal or business contract, but a combination of short term altruism and long term self interest (Taylor, 1982). The individual provides a service to others, or acts for the benefit of others at a personal cost. They do this in the general expectation that this kindness will be returned at some undefined time in the future when they might need it themselves. In a community where reciprocity is strong, people care for each other's interests.

3. Trust.
Trust entails a willingness to take risks in a social context. We act this way based on confidence that others will respond as expected and will act in mutually supportive ways, or at least that others do not intend harm. Fukuyama defined trust as:

“ Trust is the expectation that arises within a community of regular, honest and cooperative behaviour, based on commonly shared norms, on the part of other members of that community. Those norms can be about deep ‘value’ questions like the nature of God or justice, but they also encompass secular norms like professional standards and codes of behaviour.” (Fukuyama, 1995: p26).

Other writers have defined trust in other ways. All discussion on social capital includes the notion of trust.

4. Social Norms.
Social norms provide a form of informal social control that remove the need for more formal, institutionalised legal sanctions. Social norms are generally unwritten but commonly understood formula. They determine what patterns of behaviour are expected in a given social context, and define what forms of behaviour are valued or socially approved.

Some people argue that where social capital is high, there is little crime, and little need for formal policing.

On the other hand, where there is a low level of trust and few social norms, people will cooperate in joint action only under formal rules and regulations These have to be negotiated, agreed to, litigated and enforced, sometimes by coercive means, leading to expensive legal transaction costs (Fukyama, 1995).

5. The Commons
The combined effect of trust, networks, norms and reciprocity creates a strong community, with shared ownership over resources known as ‘the commons’. As long as community is strong, it removes the problem of the opportunist who would use the community resource without contributing to it.

The commons refers to the creation of pooled community resources, owned by no-one, used by all. The short term self interest of each, if unchecked, would render the common resource overused, and in the long term it would be destroyed. Only where there is a strong ethos of trust, mutuality and effective informal social sanctions against "free-riders" can the commons be maintained indefinitely and to the mutual advantage of all (Putnam, 1993).

6. Proactivity
Implicit in several of the ideas above is a sense of personal and collective efficacy. The development of social capital requires the active and willing engagement of citizens within a participative community. This is quite different from the receipt of services, or even of human rights to the receipt of services, though these are unquestionably important. Social capital refers to people as creators, not as victims.

Source for above: Based on extracts from “Social Capital: Family Support Services and Neighbourhood and Community Centres in NSW” Paul Bullen and Jenny Onyx, April 1999