Social Capital and the Rosa Parks of Wall Street
What is social capital? Should you care about it?
Pramath Raj Sinha has oodles of social capital. Listening to this episode will tell you how and why.
It is easy to confuse having a large social network with having social capital. While often used interchangeably, these two terms represent distinct but related ideas shaping how we engage with the world.
A social network is a web of relationships and interactions linking individuals, groups, and organizations. The structure of someone’s network is a map that tells what their life has been like up to this point and where they are going.
If a social network is the structure of your relationships, then social capital is the value that flows through those relationships.
An Asset Class
"Social capital is an instantiated informal norm that promotes cooperation between two or more individuals. The norms that constitute social capital can range from a norm of reciprocity between two friends, all the way up to complex and elaborately articulated doctrines like Christianity or Confucianism."
It can be visualized as an asset that encompasses trust, reciprocity, and goodwill. It accrues through the quality of interactions and relationships, and thrives on continual engagement rather than transactional interactions.
Social capital functions somewhat like a communal bank account into which members of a community deposit and withdraw resources. Members of a community or network invest in this shared resource by engaging in cooperative actions, taking collective risks, and cultivating a supportive environment. The rewards, though not always equally distributed, are enjoyed by the community as a whole. The benefits one reaps depend significantly on one's contributions and the perceived value of these contributions by others.
This shared asset is vital because it not only strengthens community bonds but also facilitates the achievement of common goals that might be unattainable through individual effort alone.
The Rosa Parks of Wall Street: Vernon Jordan
These are some of his most memorable quotes:
"You are where you are today because you stand on somebody's shoulders. And wherever you are heading, you cannot get there by yourself. If you stand on the shoulders of others, you are able to see farther."
"Once something is done, you can build on it. Once you get started, momentum can grow. When you show up, you can get lucky."
"My view on all this business about race is never to get angry, no, but to get even. You don't take it out in anger; you take it out in achievement."
Vernon Jordan was the grandson of a sharecropper and grew up in the South, where deep racial divides were the norm. He went on to become one of the most connected men in America and was said to be the shortest route between any two companies on the S&P 500. Johan Chu at the University of Chicago’s Booth School of Business notes, "Jordan’s network was highly connected throughout the twentieth century, serving as a mechanism for the rapid diffusion of information and practices and promoting elite cohesion."