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Summer 2018

ISSN 0890-913X

Volume 33, Number 2

The Perils of Buying Social Capital Locally

Ryan H. Murphy, Southern Methodist University

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TheJournalofPrivateEnterprise33(2),2018,67–81ThePerilsofBuyingSocialCapitalLocallyRyanH.MurphySouthernMethodistUniversity______________________________________________________AbstractAmongtheargumentsputforwardbyproponentsofbuyinglocalisthatitfacilitatestheaccumulationofsocialcapital.However,someresearchhassuggestedthatsocialcapitalmaynotalwaysconfereconomicbenefits.Bythis,Imeanthattoomuchsocialcapitalmayleadtoadverseoutcomesintermsofeconomicefficiencyandthequalityofthesupportinginstitutionalenvironment.Thispaperexplorespotentiallyproblematicaspectsofsocialcapital,especiallyastheypertaintothebuylocalmovement.______________________________________________________JELCodes:R11,Z10Keywords:buylocal,socialcapital,informalinstitutions,trustI.IntroductionAdvocatesofbuyinglocalarguethatdoingsoisbeneficialforinstrumentalreasons.First,forwhatcanbecharacterizedasa“mercantile”rationale,theyarguethatkeepingmoneyinthelocaleconomycanmakeeveryonericher,anargumentthatdoesnotwithstandthescrutinyofbasiceconomicanalysis(LuskandNorwood2011;Gibson2015).Advocatesalsoclaimthatbuyinglocalhasenvironmentalbenefitsviaasmallerenvironmentalfootprint,anargumentthatappearsnottobetrueempirically(McWilliams2009;Sexton2009).Thispaperexploresathirdinstrumentalreason:thatbuyinglocalcauseslocalitiestoaccumulatesocialcapital,definedasthestrengthofsocialnetworksandthenormsandtrustthatgoalongwiththem.1Itsimportance,championedifnotpioneeredbyFukuyama(1996)andPutnam(2000),istodayalmosttakenforgranted.However,recentresearch(especiallySatayanath,Voigtlaender,andVoth2017andAcemoglu,Reed,andRobinson2014)suggeststhatindicatorsweassociatewithsocialcapitalmayoftenhavenegativeeffects.Whileacademicallythefocushasbeenonthebenefitsofsocialcapital,1Itisnoteasytoidentifyanagreed-upondefinitionofsocialcapital.SeeFukuyama(2002)andBjornskovandSonderskov(2013);cf.Woolcock(1998).

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Title	The Perils of Buying Social Capital Locally
Authors/Creators:	Ryan H. Murphy, Southern Methodist University
Year:	2018
Volume:	33
Number:	2
Pages:	67 - 81
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	buy local, social capital, informal institutions, trust

Citation:
Murphy, Ryan H. / 2018. "The Perils of Buying Social Capital Locally." The Journal of Private Enterprise, 33(2): 67-81.