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Friday, October 10, 2008

Financial Markets and Social Capital

At a time when Financial Markets worldwide are going crazy, you get depressed if you look at your portfolio: the capital you had accumulated in there is vaporising.
What you have left, and I love the words, is your social capital, the one that describes "trust and giving between family, friends and communities". Hopefully you have accumulated some of that if you want to be able to go through the bad times without too much hardship.
This social capital is one that grows when you give, rather than when you take, and it does not decrease when you use it right: a really wonderful thing.
What is interesting is that the same words also describes "a business serving a community purpose", and I see a lesson here that this is what we should focus on if we want to avoid going over and over again through these bubbles and busts.
The answer has been here always, in the definition of the concept itself, but we forgot to pay attention: Social Capital is where we need to look for an answer to get us out of this cycle of crisis. The success of microfinance has shown us that it is working for poverty in developing countries, it will help resolve our other issues in other places...