INEQUALITY , SOCIAL COHESION AND SOCIAL CAPITAL

The socio-economic profile of Britain

This essay is about some crucial issues affecting contemporary developed societies. There is a growing schism between countries that follow free-market principles and those that regard the market as being at the service of society. One feature that seems to differentiate the two societal types is inequality - the United States and Britain, both examples of countries that have followed free-market philosophies have far greater levels of inequality of wealth and opportunity that 'social market' countries like the Nordic nations and the Netherlands. Research seems to show that inequality is at the roots of many ills; including high crime, high prison populations, poor health and education and low social mobility. These malaises in turn cause a lack of social cohesion. Further research indicates that the level of 'social capital' in a society has a marked impact on the general wellbeing.
We explore the issues of inequality and social capital.

Britain as a case

Britain is an economically successful country. Its long-term rate of GDP growth equates to most other developed countries. At the aggregate level, it also features amongst the richer countries with an average Gross Domestic Product per head of $31,800 in 2006. This lines up alongside most Northern European and Scandinavian countries and is only significantly behind the United States and in Europe, Ireland, Norway and Luxembourg.

Britain has experienced several different politico/economic philosophies since World War Two. The immediate post-war period saw a social democratic revolution that resulted in the National Health Service and the nationalisation of many public service and basic industries. There followed a period described as one of a 'mixed economy', which was an uneasy compromise between statist and free-market enterprise. Since the early 1980's there has been an emphatic swing towards free-market economics. This period has seen the privatisation of much of the public sector and the entry of the private sector into public services such as health, prisons and education. New Labour, in power since 1997, has emphatically espoused free-market policies, despite some unease in the party. This followed the period of 'Thatcherite' policies, which saw the dismantling of many elements of the public services and a handover to the private sector.

Massive growth in the financial services sector, based mainly in London, and in other services, has masked a marked decline in technology and manufacturing, historically major sources of skilled and semi-skilled employment.

Our leaders often take comfort in the fact that Britain is the 4th (or 7th, depending on how it is measured) largest economy in the world, a centre of global finance and legal services, and an attractive location for inward investment and immigration. They can point to an improving health service, and an education system, which at its best, rivals anything in the world. Serious crime and public disorder are lowish by world standards and we can congratulate ourselves on adapting to a multi-cultural society without 'rivers of blood'.

British arts, culture and media are world class, and the national take-up of new technologies such as digital and satellite TV, mobile telephony, personal computing and home video are all relatively high. Britain is also an international air transport hub, with worldwide access to and from London and many other airports. Additionally, the country is culturally open, receiving people, ideas and fashions from the outside world easily.

This relatively benign picture provides a cheerful front cover for Britain, especially when multiplied by a varied and beautiful geography, and range of cultural richness. Those in a position to participate fully in all that Britain has to offer can congratulate themselves on living in a 'good' country. For them, even the climate creates relatively low risks of drought, freezing to death, heat exhaustion, skin cancer and exposure to dangerous fauna and flora!

But behind the aggregated numbers and headlines lies a very different range of stories. The UK contains a vast range of differences and extremes.

Still (at least) Two Nations

Life at the top

Britain is a wealthy country and growing more so. The last twenty years or more have seen a massive increase in the gross and relative wealth of those in the top socio-economic groups. It is now the case that the richest 1% of the population own 25%, the top 10% over half and the top 50% a staggering 94% of national wealth. So we can assume that at least half the population can be regarded as relatively well off, with a further middling group above the one third who are categorised as poor. People in these upper brackets have experienced substantial increases in income and financial wealth - and also in the range of levers they can grasp and pull.

Despite noises by some politicians and the media, taxation is moderate in international terms, and those with the wherewithal can access excellent education for their children either through private education or the best state schools. A mix of private insurance and improving public health provision ensures access to excellent medical facilities. For upper middle and upper income citizens, especially those already on the ladder, good housing has been relatively easy to access, with the prospect of a second house in a cheaper location, such as the Dordogne. There is a huge range of consumer goods available, from luxury foods to summer holidays in exotic locations and ski resorts in winter. Recent immigration from 'New Europe' has been a boon to the wealthy, providing ample supplies of labour for services and domestic help and support.

All of this good life can be played out in the context of relative safety from crime and murder, in a polity that offers considerable freedom to individuals, despite recent increases in the threat of terrorism. Richer citizens can, and do, insulate themselves from the effects of crime and hooliganism by isolating themselves physically - the incidence of gated communities and affluent neighbourhoods separated from poorer strands of society has grown rapidly. Of course, there are threats to this pleasant equilibrium. The state of the global economy, the threats from financial instability and bubble economics; the growing perception of danger from domestic crime and terrorism make some feel distinctly insecure. But, by and large, those in the upper reaches of society can look out from their workplaces and neighbourhoods and feel relatively satisfied with the current state of affairs, secure in the knowledge that governments of any colour are likely to be desperate to seek their support by pleasing them.

The view from below

The world of those in the lower echelons of the socio-economic scale is very different from that of their wealthier fellow-citizens.
For many, the world of the rich is a very distant place both psychologically and literally, as the physical segregation of rich and poor is increasing, and 'mixed' neighbourhoods becoming scarcer. To quote Danny Dorling, Professor of Human Geography at Sheffield University: "We have been sleepwalking into segregation by race, but towards even greater segregation by wealth and poverty".

The gap between rich and poorer is actually widening in Britain, despite some attempts by government to narrow it. Social mobility, the ability of people to rise in the socio-economic scale through their legitimate economic or educational efforts, is actually decreasing. The higher education system is virtually a no-go area for young people from deprived backgrounds. In this regard, the UK is unique - even in the United States, social mobility is static.

So, many people live in sinks of relative or absolute deprivation. Rates of petty crime and hooliganism are relatively high, the physical fabric of many estates has been deteriorating for decades, public health provision in these areas is less effective, leading to high incidences of stroke and heart attacks. Building programmes aimed at increasing the stock of quality affordable housing are currently (2007) at an all-time low. Local council building, once a staple provider of social housing, is nil and the slack has not been anywhere near picked up by housing associations and, in particular, private sector builders.

Poor education and diet, abuse of drugs, alcohol and smoking leads to health problems including obesity and addiction, and life expectancy amongst less priveleged sections of the population is far lower than the rich - for example, male life expectancy in parts of Glasgow is less than 60 years, about the same as Moscow after the fall of the Soviet system and the disintegration of state social provisions. This figure compares with a UK national average of about 78 years.

Education is tending also to become increasingly segregated, with, in addition to 7.5% of English children attending private schools, growing competition for access to the "better" state schools by parents able to practice "postcode privelege", thus raising housing prices far beyond the reach of below-average earners. Whatever the readers beliefs, the growth of faith schools is another force fostering segregation.

The growth of employment in the economy has increasingly been in lower skill, lower wage jobs in the service sectors. Despite the minimum wage, many are having to take more than one job to get by.

Relative poverty has two dimensions, low income and low wealth. In Britain, the two tend to elide - for example, 70% of lower income families have no savings at all. Whilst their economic and social conditions have not improved at anything like the rate of the better-off, the less wealthy have been subjected to a media bombardment exhorting people to be fashionable and trendy, to aspire to a 'celebrity' lifestyle and to 'have it all, now'.
Huge inducements have been offered by an almost unregulated financial services sector aimed at encouraging people to borrow now and pay later for housing, consumer goods, fashionable holidays and lifestyle accessories. This has led to rapidly increasing levels of consumer debt, much of it taken up by those who are least able to compute the longer term consequences of their actions. At the same time, retail banks have shown no interest in this section of the population, withdrawing banking facilities from high streets in poor locations and making it difficult for those with meager resources to access small borrowings or to have an incentive to save. From time to time, financial collapses, scams and overexposure to debt hurt the poorest members of society most. Research by the Financial Services Agency indicated that about 30% of the population was unable to cope with even relatively simple numerical problems, like percentages and APR rates.

Of course, the picture is not all gloom and misery - many people living in relative poverty are quite content, they have a good life with their peers, regarding the domain of the rich as another world. Membership of clubs and societies is quite high, and levels of association with special interest groups like football clubs and supporters groups has grown.

If this sounds an excessively grim picture, remember that these are not the experiences of the wealthier 60%, who are insulated from life at the bottom - but who nevertheless share with them a pervasive distrust of the institutions of authority. However, it is this deprived group who are least likely to be persuaded that there is any benefit in voting.

The alienation of the 'middle'

People with middle income and wealth levels located somewhere between the 30th and 70th percentiles are trapped between the two extremes of rich and poor. Despite having fared better than the relatively poor, they are beginning to react to emerging facts about the growing divide between them and the rich and their mood is becoming increasingly sour. They are assailed by stories of the wealth of those in the financial markets and top management and for those living in London and the South East. They are beginning to understand that the soaring price of housing is caused by the burgeoning wealth and investment patterns of people in the City.

It is this group that suffers most from the plethora of scandals and scams caused by the behaviour of the banking, mortgage, insurance and financial services industries. Several million people have been adversely affected by pensions mis-selling, dodgy endowments, sub-prime mortgages and a host of other well-publicised swindles and mistakes. It is again this group where the pain caused by the virtual closure of final pay pension schemes in the private sector is felt, rather than amonst top managers and politicians. Government has added to the mood of mistrust by issuing misleading guidance to pension holders and then denying any responsibility for the consequences. So as a group, the income and wealth they have, now appears to be far more stretched - housing, energy costs, provisions for old age, costs of university education and longer financial dependence of their children all eat away at what should be a comfortable life style.

At the same time, experience in the workplace is often of increasing stress and pressure, declining security of employment and apparently, work satisfaction. And in the world around them, they are likely to be most aware of and affected by those aspects of society that appear to be in decline.

On a broader canvas, this group shares with the most disadvantaged a profound and widespread suspicion and distrust of those in political, financial and business leadership. Participation in the political process has declined significantly, indicated vividly by voting patterns, which are low overall, but lowest for the more deprived members of society. The popular press is also widely distrusted and only such professionals as doctors, the military and the clergy elicit much esteem. . Is it any wonder that they are so easily influenced by the doomsayers and the culture of blame which is the one part of the traditional middle class newspapers that they tend to believe?

This same sour mood towards those above them - ('Fat cats') - and below - ('yobs, immigrants, scroungers and criminals') generates little sympathy for taking action to rectify the problems caused by inequality. "I've got enough problems taking care of myself and family in an increasingly insecure, unfair and dangerous world", might be the motto of the middle.

WHAT ARE THE IMPLICATIONS?

There is something approaching unanimity amongst contemporary politicians and researchers that the complex of inequality, relative poverty, social exclusion and 'ghetto-isation' that affects a portion of UK society is a serious problem. But when it comes to describing the nature of this problem, its roots, causes and remedies, the picture blurs and becomes more obscure.

In a sense, there is a parallel between contemporary Britain and an individual carrying a benign tumour. We all know its there, it isn't going to kill us, in time we can even become accustomed to it and put its existence out of mind. But the ailment keeps on nagging, remedies are prescribed and tried, and whilst some may have palliative effects, it becomes apparent that the problems are still with us - and in fact, are getting worse.

Thus it is with poverty and exclusion in Britain. Research shows that most people in the wealthier portions of society know there is a problem and many are capable of identifying poverty and inequality as its causes. But when it comes to confronting whether something should be done about it, especially if it would mean giving up something, enthusiasm rapidly wanes, partly because the problem is far away from the lives of the 'haves'.

The dynamics of social and economic exclusion

As already demonstrated, Britain is a very unequal society. Whilst government efforts to address the worst manifestations of poverty have shown encouraging results, the growth of relative inequality roars on. In the last ten years, about one third of all households in Britain have experienced poverty.

Poor or relatively poor people face an unappealing complex of problems.
They live in worse housing, have poorer health facilities, worse schools and a more degraded physical environment. But even if all the above were world-class, there is still a complex cycle of deprivation at work amongst the poorer members of society.

Poverty is usually the result of unemployment or inadequate pay. In turn, access to better employment prospects tends to be blocked by a lack of literacy, numeracy - and even worse, critical thinking and appraisal skills. All of this leads to poorer mental and physical health fuelled by an inadequate environment, the struggle to make ends meet, unhealthy lifestyles and poor diet. In such environments, crime burgeons, often caused by young men who have little respect or connection with the other world outside, with poor employment prospects and little to do. Crime leads to punishment and a growing prison population. Male prisoner re-offending rates are over 60% and some 70% of young offenders are shown to suffer from mental disorders, exacerbated by incarceration. Thus a descending spiral becomes established.

In turn, crime fuels fear and distrust. People are suspicious and fearful of others and social isolation ensues, with many people frightened to go out and lead a normal social life. Thus social cohesion deteriorates, especially where vandalism degrades the physical fabric and drives out retailers, social and cultural facilities and other businesses that act as societal glue.

Alienation from the wider society becomes endemic - the institutions of that society are rejected and a portion of the populace become immunised from the well-meaning attempts of officialdom to help. The knock-on effects of this physical degradation are multi-fold - for example, the very acts of buying food and other essentials become expensive and difficult. There are stories of people doing without electricity, because the costs of getting to an electricity shop exceed the value of the electricity card. Because too many people are poorly educated, they find difficulty in managing their affairs in an increasingly complex world. Many people take on obligations that they cannot afford, often using loan sharks and are susceptible to the blandishments of a consumer society that bombards them with the message that they deserve the best and can have it now by running up debt.
As poverty and exclusion become established, so the problems become passed down the generations. Children of deprived parents tend to follow their parents into a cycle of poor diet, poor health, poor education, poor employment prospects, poverty and, too often, crime and poor mental health.

So the problems that Britain faces as a society are long-established, complex and circular. They are difficult to address because sustainable improvement will take generations to achieve, because the problems are multifaceted and intertwined and because politicians have a critical constituency of 'haves' to please, and only a short time to the next election.

We believe that the people who need to be persuaded that these problems are real, causing material damage, not only to some theoretical 'society', but to their own interests, are the haves - the 50% of the community that own 96% of the wealth and have most of the influence. Here are some facts that might be persuasive in convincing that these problems are of significance to us all, not just to those in our society who live within the deprived groups:

In summary

The effects of poverty and social exclusion are well-researched and extremely disquieting. The human and economic consequences are massive and greatly affect the UK economy and the wealth of all. Low levels of social trust, cohesion and social capital are all fuelled by rising inequality. But equally, Britain - a wealthy country - is degraded by the extremes of wealth and poverty in its body politic.

SOCIAL COHESION AND SOCIAL CAPITAL

What is Social Capital?

The World Bank believes that: 'Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions... Social capital is not just the sum of the institutions which underpin a society - it is the glue that holds them together' (The World Bank 1999).

The central thesis of social capital theory is that 'relationships matter'. The salient idea is that 'social networks are a valuable asset'. Interaction enables people to build communities, to commit themselves to each other, and to knit the social fabric. A sense of belonging and the concrete experience of social networks (and the relationships of trust and tolerance that can be involved) can, it is argued, bring great benefits to people.

Trust between individuals thus becomes trust between strangers and trust of a broad fabric of social institutions; ultimately, it becomes a shared set of values, virtues, and expectations within society as a whole. Without this interaction, on the other hand, trust decays; at a certain point, this decay begins to manifest itself in serious social problems... The concept of social capital contends that building or rebuilding community and trust requires face-to-face encounters. (Beem 1999: 20)

There is evidence that communities with a good 'stock' of such social capital are more likely to benefit from lower crime figures, better health, higher educational achievement, and better economic growth.

However, there can also be a significant downside. Groups and organizations with high social capital have the means (and sometimes the motive) to work to exclude and subordinate others.

This caveat is very important. High cohesion within powerful groups may act to the disadvantage of society as a whole. The realisation that very tightly-knit groups like the Mafia or the exclusive Conservative Carlton Club might use their cohesion to further their narrow interests and damage those of others has caused social theorists to identify different kinds of social capital.

Two perspectives on social capital

are clearly expressed by Kawachi and Kennedy:

... distinctions have been drawn within horizontal social capital, viz., "bonding" social capital (also called localized social capital) and "linking" social capital. .Bonding social capital refers to the relations within homogenous groups. In other words, these are the strong ties that connect family members, neighbours, and close friends and colleagues. By contrast, "linking" social capital is more heterogeneous by definition. The ties that link those of different ethnic and occupational backgrounds form "linking" social capital, including formal or informal social interactions

Bonding relationships act as the primary means for the transmission of behavioural norms to family members and friends. Bonding social capital is important for establishing norms, controlling out of line social behaviour and for generating mutual aid. By contrast, linking social capital is important to the success of civil society and it is also recognised as an important source of other benefits for individuals, communities, and societies. It offers members of the society opportunities for participation in heterogeneous groups of people from diverse social classes and opens channels to voice concern in favour of those who may have very little opportunity to reach more formal avenues in order to affect societal changes, e.g. change in public welfare-oriented policies.

It has been argued that healthy and effective societies possess relatively high levels of both bonding and linking social capital. There is strong research evidence to indicate that the Scandinavian countries manifest relatively high levels of linking behaviours and social cohesion.

This can be vividly illustrated by considering the high percentages of trade union membership in Scandinavia ((90% and 86% in Denmark and Sweden respectively). In the 'Nordic model' countries, and particularly Sweden, national policy on critical matters is formulated by trades unions, employers, industry representative bodies and government working in close partnership.

These countries also manifest relatively low levels of inequality in relation to income and wealth, health and education. Economically, they also perform as well as Britain. By contrast, Britain is much more unequal and as a consequence lives with about one-third of society that is increasingly cut off from the benefits experienced by the richer majority. In Britain, there is a superabundance of well-defined and well-bonded interest groups but a relative dearth of linking mechanisms by comparison with many other European countries.

Evidence for this lies in the fact that Britain has tended to a condition where the general interests of society give place to a strong representation of particular interest groups. Currently there are powerful bodies for employers and industries whose voice is coherent and highly represented; the City has a powerful voice; membership of societies and clubs is very high, and there is manifestly strong bonding behaviour exhibited by graduates of private schools, some elite universities and members of certain professions. At an earlier stage in history employee representative bodies were seen to be dominant although of late they have been virtually excluded from debate about national issues, and are frequently denigrated by other bodies and the press. Britain has simply moved from one form of polarisation to another.

In fact, Britain is relatively short of habits, practises and traditions that might serve the purpose of linking the parts of society and creating social cohesion. Examples of such practices include:

Applying this to social capital formation, it could be said that the UK needs to build on every opportunity to increase the amount of linking, cohesion and trust-building behaviours.

It is difficult to imagine in contemporary Britain that that government would freely share strategic decision-making with employers, industry and unions working closely together. Thus there are schisms between individuals, competing to optimise their interests and those of their families; between interest groups like the City, CBI and TUC, single-mindedly pushing the agendas of their members; and political parties, using every opportunity to do down opponents. The results of these Darwinian struggles are profound:

Implications for community- based action

An increasing weight of research indicates that initiatives to reduce deprivation and poor educational and health outcomes that do not aim to increase social cohesion will, as they have to date, tend to fail or lack sustainability. They do this because they will not add to the stock of social capital within and between communities.
In particular, strategies that focus on individuals, market forces and choice or are aimed at communities through uncoordinated initiatives from distant institutions, are unlikely to create the conditions for sustained community-led action for improvement. Initiatives need to create both bonding and bridging social capital.

This has several important implications for policy:

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