The author, a contributing editor to the FT, is chief executive of the Royal Society of Arts and former chief economist of the Bank of England.
The world is more diverse and intertwined than ever before, economically, culturally, ethnically and generationally. This is largely a result of the postwar explosion in cross-border flows of goods, money, people, and information. For most of that period, the benefits of globalization were taken for granted and attracted widespread public and political support.
Those days are over. The question now is whether increased economic openness and connectivity are causing economic and social vulnerability rather than economic and social prosperity. This is an important starting point between progressives (emphasizing benefits) and populists (emphasizing vulnerabilities). There’s a point to both.
There is no ecosystem on earth that would not be enriched by increased diversity. The complexity of the rainforest and ocean explains its richness. In social systems, the cross-pollination of ideas, cultures, and practices in diverse communities has been a driving force for innovation and dynamism for millennia.
However, this is a double-edged sword. Rainforests and oceans are vulnerable to hostile invaders such as humans seeking timber and fish. Diverse communities exhibit similar vulnerabilities when cultures clash instead of merging.
All complex systems face this balancing act, but it can be improved by strengthening the bonds and trust that Harvard political scientist Robert Putnam calls social capital. The depletion of social capital over the past half century that Putnam chronicles has decisively tipped the scales toward vulnerability. Today’s open and connected economies are embedded within fragile and divided societies. Neither can prosper like this.
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One policy response is to reverse economic flows and tighten restrictions on cross-border flows of people, goods, technology, and information. Economists (like me) say that doing so would undermine economic dynamism, but given that these policies address the insecurity felt by many, especially immigrants, It is no wonder that they are gaining support when it comes to trade.
However, there is another way to achieve the same goal, perhaps lower cost, and certainly less explored. It is about strengthening social policy rather than rolling back economic policy. Social capital can be the golden thread woven throughout public policy, from health to housing to education to place-making.
Many organizations already have programs in place to build social cohesion and curb anti-social behavior. U.S. Sen. Chris Murphy has proposed a national strategy for social connections. However, no country has yet introduced a comprehensive, cross-cutting national program for social cohesion with an ambition commensurate with the challenge.
A better map of the territory is very important. Too often policy actions take place in the dark and data on social capital is patchy. What is first needed is a new set of national accounts that focus on social capital. Recent research by Raj Chetty, who has developed a highly detailed map of social capital, provides a glimpse of what is possible.
Social connections are best established early in life. As Chetty et al.’s research shows, networks built early in life are the key to unlocking upward mobility. However, our current education system is often a recipe for social stratification rather than mixing. This will require a fundamental rethinking of curricula, extracurricular activities, and standards of access to education, making social connections a priority rather than an afterthought.
Second, unplanned urban sprawl contributed significantly to the balkanization of communities. In the future, social cohesion should be at the heart of spatial planning. LSE’s Professor Richard Sennett proposed social housing that connects divided communities through mixed housing, communal spaces and improved public realm. There are already examples in Japan and Scandinavia.
Social capital is built on strong social infrastructure such as faith-based institutions, youth clubs, community centres, parks, sports and leisure facilities, libraries and museums. However, investment in social infrastructure is small compared to physical and digital infrastructure. Reprioritization and reinvestment are overdue.
New governance models are also needed to rebuild public trust. Citizen panels and juries are effective in building trust and unity in diverse communities. However, they are far from mainstream democracy. In a return to the original Greek democratic model, community-led coalitions could play a central role locally.
Additionally, mainstream media and social media have become important channels for social connection and, increasingly, social division. Many countries are developing legislation to help protect against online harm. But too little is being done to support online goodness that fosters social cohesion. Public broadcasters and regulators have a key role to play in this regard.
Finally, every revolution (even policy revolutions) requires leadership. The Office of the President or Prime Minister, charged with strengthening social cohesion through policy, should be integrated into the government structure.
In The Upswing, Putnam showed how social capital was built in the first half of the 20th century and depleted in the second half of the 20th century. We can repeat this success with a cross-cutting national program of social cohesion that speaks directly to the anxieties felt by so many. This will mark a decisive change in capitalism itself, a shift towards a “social capitalism” that can bridge divided communities, progressives and populists, me and us. .
