Why money won’t fix the poverty problem We ignore the value of social capital at our peril

The American philosopher Michael Sandel has spent much of his career asking what is essential to wellbeing that money can’t buy. Societies in which everything is for sale, he argues, are ones that consistently fail to answer this question. Ours is arguably such a society, where politicians endlessly promise subsidies, tax credits and wage increases without asking what causes people to fall into poverty in the first place.

I’ve long made the case that alleviating poverty requires more than remunerative measures. Poverty is a complex web of addiction, debt, worklessness, educational failure and – most overlooked – family breakdown. These are the root causes of wealth inequality, and as such, none can be solved with money alone. If you want to tackle them properly, social capital is where to look.

The social scientist Robert Putnam defines social capital as the conditions under which a person enjoys access to face-to-face networks of people. These include access to nurseries, youth clubs, libraries and village halls; places where relationships among local people are forged. Yet this access really starts at home, with family.

Of course, family isn’t a universal state of affairs. The experience of family breakdown is highly unequal in our society. Many families break apart, and there are thousands of children in care, not to mention an even larger proportion of isolated adults, especially the elderly. Polling from the Centre of Social Justice shows that a significantly greater proportion of adults from blue-collar and semi-skilled labour (27%) say they have experienced family breakdown when compared to other social grades. The poll found 87% of mothers with children under the age of five from higher income groups were married, compared to just 24% of those in lower income groups.

When intact, the home is a self-replenishing fund of social capital. It invites people to come together and exchange goods and favours, the value of which is set by relationships rather than by price or labour costs.

Family is the font of all relationships – both the most essential and most formative to the relationships we form in communities later on. The famous Grant Study – a longitudinal study of almost 300 healthy Harvard students – has over several decades produced tens of thousands of pages of data. It concludes:

‘The lessons aren’t about wealth or fame or working harder and harder.  The clearest message that we get from this 75-year study is this:  Good relationships keep us happier and healthier. Period.’

But beyond family, relationships depend on strong local networks. The key to allowing these to flourish is creating the space for them to develop – from inclusive youth clubs to thriving high streets. Unfortunately, this connective tissue is being eroded as well. In the UK since the 1970s, there have been 28,000 pub closures, and 121 libraries shut in 2016 alone, with further foreclosures of 600 youth centers between 2012 and 2016. And of course, this depletion of social capital is most visible in the country’s most deprived towns.

Part of our failure to take social capital seriously is governments’ exclusive focus on Gross Domestic Product (GDP). GDP includes the estimated market value of prostitution yet excludes the unpaid work of parenting and community participation. The ONS valued this work around at £1 trillion in 2014, equivalent to 56% of GDP as currently calculated.

So social capital can generate growth, provided public spaces are given their proper role of building communities and those communities are in turn properly represented in economic data.

Another example of the measurement issue is the daily commute.

An activity that is linked to work but which is ignored in the productivity statistics, and of course goes unpaid, it is time where find ourselves alone and disconnected, and provides an example of how people are surreptitiously robbed of social capital and, subsequently, mental wellbeing. Commuting eats into the time we have for our parents, spouses, children, grandparents, leaving many of us struggling with the strain of balancing care with professional performance.

Increased mobility in society widens the geographical spread of a person’s social networks, but it also reduces their presence and participation in the local neighbourhood. Evidence from studies in the US suggests that the longer we spend on the daily commute to work, the less social we become. This includes social engagement with families – the effects are more noticeable among men than among women. According to Putnam, commuting to work alone by car is particularly detrimental to building social capital, because it denies the commuter the interaction and social spontaneity that public transport does at least partially offer.

When I began a four-hour round trip from the Midlands to London each day, my work ticked over, while my own social capital eroded. If my board and my friends hadn’t urged me to physically move home, I doubt there would be any of it left. There are millions of stories like mine, but they make no difference to the way we measure the nation’s wellbeing.

Some countries are making strides in putting social capital on the map. This year, the New Zealand treasury announced plans to produce a Wellbeing Budget with which to incorporate non-monetary analytics into its fiscal policy. Both Scotland and Wales too have devised national frameworks that place wellbeing at the centre of any act of government, from healthcare to procurement.

When a library gets closed down, governments talk about ‘making a saving’, as if we were getting richer, rather than destroying our social and cultural capital. Financial capital enables people to seek and act on meaning in life, but it cannot provide them with meaning. By pegging our very lives to the pound, we are ignoring the gold standard of wealth. It’s time we remind ourselves that social capital is that standard.

To read the rest of the Riven Britain series, click here.

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Andy founded the award-winning Charity TwentyTwenty, before being asked to head-up the leading Westminster think tank, The Centre For Social Justice. He is a trustee of a number of charities and Trusts, and a judge for the Queens award for Voluntary Service.

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