Speakers presented their reports on their respective themes, followed by commentators' remarks and an open discussion. The following is an outline of the proceedings.

1. March 24 (Monday), 14:00 - 17:30

     Address by the host

Shunichiro Ushijima (Vice President, Economic and Social Research Institute: (ESRI)
 

  Social capital is still a new concept and its definition has not yet been clearly established. It includes trusts and social networks, and research in this area involves broad social issues. This forum is attended by world-renowned guests, and we look forward to having meaningful discussions.
 

   (1) Through what channels can social capital influence the economy?

Speaker:Takashi Omori,( Executive Research Fellow,ESRI)

    -Summary, Explanation based on the summary and other papers
 

- Dr. Omori's paper examines the comprehensive economic influence of social capital-in this sense, I wholeheartedly agree with it.

- 18 channels of social capital are introduced. Social capital can be used in regional development strategy. If urban areas such as Tokyo or Stockholm expand, they could attract more migrants because large cities are well equipped with social capital and thus attract people of the younger generation. Smaller cities need to focus on specialized industries to compete with larger cities. The social capital of corporations includes their relationship with clients.

- I would like to share some criticisms on some of the papers. Negative aspects of social capital should be also pointed out. It is possible for social capital to depreciate quickly-which is, in this sense, equal to material and human capital. I cannot agree to the idea that there are some areas that are not related to social capital. It is possible to create social values out of the time that people use for social activities. There are many other measurable values.

- Furthermore, the concept of social capital includes spatial and structural elements. Education and welfare also have social capital and influence businesses. In the knowledge society, social capital will become increasingly important.

- The economy cannot be understood only from the economic perspective. It is important that the understanding of phenomena arising between economics and culture/politics is indispensable for understanding the economy. In this sense, the discussion we have had here is interesting, but I would question the appropriateness of focusing only on aspects that are economically useful.

- An important question is what meanings social capital for Japan's unique culture. For example, companies need to adjust themselves to the culture of respective countries. In many countries, education is becoming an issue-in the background are changes in family structures. When discussing the issue of this social capital, it is necessary to consider what kind of phenomena will appear in the market economy.

- The level of accumulation of social capital is different according to the region/country. What do you think of the kind of mechanism in which social capital is not constantly accumulated?

- In Japan, the financial crisis in 1997 caused trust in the main bank system to rapidly collapse. I agree that it is valuable to discuss social capital from perspectives other than the economy.
 

   (2) How social capital has influenced economic development in different countries

Speaker:Reino Hjerppe ( Director, Finnish Government's Economic Research Institute )

     -Summary, Explanation based on the summary and papers
 

- I agree that the concept of social capital exists in interpersonal relations. I would also like to call your attention to the social consciousness involved in social capital. There are three points that should not be neglected when considering social capital. First, values-good or bad-of social capital vary according to purposes. Second, a simple summation of social capital is impossible. Third, the same functions of social capital have different implications depending on the culture.

- The foundations for Japan's rapid growth in the 1960s had been established by the development of agricultural areas and the "life improvement movement" in the 1950s, which contributed to the unique development of Japan. Social capital is uniquely country-specific.

- While it is deemed that social capital in the United States has deteriorated, the country demonstrated a high level of growth in the 1990s. How can this be explained?

- Regarding regional social capital, the distinction between accumulated social capital and the social capital used for services might not have been made. Also, some social capital is built step by step and needs to be explained from such a perspective.

- Isn't it possible to consider a channel through which the links between members of the same type (bonding) can form a bridge with groups of a different type (bridging)?

- The success of the American economy in the 1990s was pointed out. There are two ways of explaining this success. One interpretation is that it takes over ten years before the effect of social capital is manifested. The other interpretation is that the development of social capital within corporations has continued. In addition, it has not been determined which indices should be used as the standards of social capital.
 

   (3) What sort of social capital is needed in a post-industrial, knowledge society?

Speaker: Eric Uslaner,( professor , University of Maryland )

    -Summary, Explanation based on the summary and papers
 

- What is the influence of trust on the performance of an economy? It is necessary to cautiously understand the relationship between trust and other variables. Trust is an internal element, and such elements as education might to cause changes in it. Regarding the question whether trust can become a policy, my idea is that there is no strong linkage between education and public administration.

- Relationships within corporate groups tend to be disadvantageous to those people who are not familiar with the internal logic. In the past, these relationships have certainly worked well, but in the future this has to change because general trust can stimulate creative ideas.

- Is social capital really capital? It might be beneficial to interpret social capital as a balanced state in the game.

- First, why are communist countries excluded from the analysis? If communism is excluded, Latin American countries should be also excluded.

- There is no trustworthy statistics available in former communist countries. Besides, chronological data are needed. The United States is well equipped with statistics and clearly demonstrates a strong relationship between trust and inequality, which supports the argument.

- In postwar Japan, "tanomoshiko," or trust networks, played a significant role in helping build the foundations for economic development. It is therefore dangerous to conclude that general trust is more important.

- Trust is a mutual concept. It is necessary to consider the borders of groups. The Japanese tend to view trust in the long term, but because trust is mutual, it is very difficult to determine standards for measuring it. Many aspects of trust belong to cultural elements.

- Bonding can be important for social capital but can also have a negative effect. If one is locked in one's own village, one cannot benefit from trade or globalization. If bonding is too deep, the community is separated from the wider world.

- General trust depends on whether to trust a passer-by on the street. It has nothing to do with trust in someone who is familiar.
 

    Free discussion
 

- Is there room to discuss social capital as a policy variable? From the state-level perspective, various levels of trust are seen as one, which could lead to self-contradiction. The issue of development over time also exists. If the situation can be easily changed with education, it could be changed with reform of the legal system. There is also a contradiction between competition and equality. Isn't economic development a product of social capital? Also, the relationship between the market and social capital needs to be examined.

- I believe it is meaningful to discuss trust as a policy issue. There may be contradictions between the regional level and the national level, but there must be room for social policies. Diversity and competition will certainly be hindered.

- Although the title of this forum includes a phrase "for economic revival," I wonder how this could relate to the economy. It is necessary to realistically analyze why trust in Japan is shaky. I believe the reason why the Japanese economy is in recession now is not because Japanese management has been proved poor but because the Japanese economy had become too strong. Isn't it beside the point to look for the cause in social capital?

- I am not trying to apply this concept of social capital to all economic problems, but I will try to examine them using social capital as one approach.

- Of course, social capital has not been the only cure for social ills. Labor organizations have also played a significant role. It is necessary to consider big events.

- In order for the discussion of social capital to be linked with future policies, it is important to try to quantify social capital. Have any attempts been made to quantify the costs of maintaining and regaining social capital?

- The government cannot control trust but it can control education. How can the effects of education be demonstrated?

- Here I am making use of statistical modeling. The higher levels of education, the more tolerant the people it fosters. Although the government cannot build trust, it can establish a system for this purpose. The content of education is important.

- Social capital encourages the participation of citizens and eradicates corruption and dependence on personal connections.

- Long-term relationships in volunteer activities can lead to trust among volunteers, but this is not general trust.

- Participating people share beliefs and this builds the foundation. It might be important to understand that the concept of social capital changes with different ideas.

- The point of my statement is that Japanese management resulted in excessive success. Economic policies through politics have failed, weakening society as a whole. To consider the revival of the Japanese economy with a focus on social capital, it is important to have realistic discussions.
 

2. March 25 (Tuesday), 9:30 - 12:30
 

   (4) How enterprises can utilize social capital (a theoretical examination)

Speaker: Huns Westland, ( Research Fellow, the Swedish Institute for Growth Policy Studies )

   -Summary, Explanation based on the summary and papers
 

   (5) How social capital expands business opportunities (A case study)

Speaker: Kumi Fujisawa,( Director, SophiaBank, Ltd.)

    -Summary, Explanation based on the summary and papers
 

- I would like to ask four questions about basic points. First, what role does each individual person of enterprise play? The ultimate carriers of social capital are individuals. Is it possible to conduct analyses of social capital among shareholders, managers and laborers? Second, what measures can improve social capital? Is social capital an issue of corporate management? I would also like to ask about the roles of the third sector. What is the driving force for the creative destruction of social capital?

- Regional communities are the places for connecting people and wisdom, but recently these are being neglected. It is important not only to accumulate knowledge but also to establish linkages. Cases similar to the one reported by Ms. Fujisawa can be seen in non-business situations too.

- For example, there is a network of breast cancer patients called VOL-Net with the purpose of helping them consider how to live their own lives as they wish. They exchange information not only on their illness but on various other topics including clothes. The information exchanged here provides very big business opportunities. If this group is connected to the supply side, it will become a beneficial network. In such a network, as members exchange information for their own sake, live information is gathered, thus creating business opportunities. Financially independent NGO corporation with new potential are increasing.

- There are also groups for enjoying movies with people with sight disabilities. In these groups, the trust relationships between the members create opportunities. Unlike enterprises, they are not in competition with each other, so the network increasingly expands with expected synergy effects. Focusing on social capital, it is necessary to review the framework of the economy, shift the perspective to the demand side, and think of a new framework.

- The focus on intra-corporate social capital was interesting. However, I doubt that the industrial society will shift to the knowledge society. Rather, I think knowledge and services will become part of industry. We will face the challenges of industrialism within the enterprise. If you have any opinions on this point, I would like to hear them.

- Although you interpreted Trial Product Net as having no economic incentives, it might be aiming for medium- or long-term profits. Besides, aren't there free riders among the participating companies that do not get involved in equal value exchanges?

- With a system in which a number of members become leaders, how should the two media of the region and the Internet be considered? Also, what do you think about the accumulation in major cities and regions as well as other aspects of their mutual relationship?

- While it was pointed out that small and medium-sized companies lack sales capabilities, large corporations face a similar problem and are seeking solutions.

- A key point about social capital is to refer to certain values existing between individuals as social capital.

- While it is important for social capital to link people and corporations, today's speakers often voiced the opinion that such linkage is impossible without shared visions. Does this mean that there must be something to share for enterprises in order to establish their region of concentration?

- Theoretically, I believe there is an optimal combination. An important element is the awareness that changes are necessary. Advanced countries are facing the issue of an aging society where changes are not welcomed. Besides, although there are some organizations in the third sector that can compete in the market, over-expectation should be avoided because the market size is still small.

- Trial Product Net as stated that it does not seek short-term profits. There are some free riders, but every representative director has to initiate new projects, so companies that cannot do so end up leaving the Net. In addition, the relationship between utilization of the Internet and accumulations in the region will be gradually examined.
 

   (6) How do the advancement of information technology and social capital influence each other?

Speaker: Pippa Norris,( Professor, Harvard University )

     -Summary Explanation based on the summary and papers
 

- It is worrisome that the Internet demonstrates a high level of bonding influence.

- Regarding the relationship between face-to-face communications and ICT, many people believe that ICT promotes not diversification but concentration. Since the Japanese emphasize face-to-face communication and tacit wisdom, with the spread of ICT, this will promote concentration. I would like to ask Professor Norris for his views on this point. Differences in social situation lead to differences in the development of ICT. In Japan, mobile phones and the Internet are expected to supplement face-to-face communication. What do you think about this?

- Social capital is the totality of knowledge established by a society. The objective of television is to provide the people with information. Doesn't it help build more social capital?

- The Internet is certainly not effective for bridging, but I think there is a problem in the method of the survey introduced in this paper because ethnical elements are rather part of bonding.

- The use of the Internet strengthens the relationships between already familiar people, so it further facilitates face-to-face communication.

- As for television, while news reports help increase information, people who watch leisure programs tend to have a lower motivation for social participation.

- While the biggest purpose of using the Internet is for e-mail, because some mails are sent by complete strangers, the Internet is effective both for bonding and bridging. The use of the Internet is changing, and these changes should be carefully monitored.
 

(7) In the process of structural reform, what roles does social capital play, and how is social capital influenced by structural form

Speaker: Park, Cheol-Kyu ( Director, Human Resources Policy Coordination Policy, Economic Policy Bureau, Ministry of Finance and Economy, Republic of Korea )

    -Summary, Explanation based on the summary and papers
 

- While most people have neglected the importance of social capital in reform, Park focuses on this point. Currently, as there is a gap between the potential supply and demand, social capital is important for Japan too.

- I have questions about this paper: To what extent should social capital be institutionalized, how much effect has this had on social institutions, and what kind of contradiction has emerged between social integrity and pluralism. I would appreciate your responses to these points.

- Also, the labor market needs to be made more flexible. The supply side needs to make structural reforms and active adjustments. Elderly people in particular have taken lifelong employment for granted, so the labor market needs to be made more flexible. In this sense, social capital is expected to play an important role. Can social capital provide a safety net for the labor market? Can it encourage the supply side to carry out reforms? Also, I would like to ask whether NGOs have contributed to economic policy formulation.

- How is social capital built by NPOs? In Japan too, self-governing regional communities are being pressured to change, so the case of Korea provides interesting implications. It was argued that in Korea social capital decreased after the 1997 financial crisis-I would appreciate your explanation on the meaning of this.

- Although there is an analysis that Confucian culture has influenced economic growth in East Asia, I doubt this theory. I think it is important that East Asian countries were flexible in accepting value systems that are different from their own traditions.

- I think it takes time to build trust. In order to build trust, predictability is important. If one can predict other people's behavior, trust becomes possible.

- The issue of pluralism and social integrity was discussed. I believe integration can be formulated after many opinions are accumulated in a plural, modern society.

- Regarding the social capital of NGOs, because NGOs are in a sense businesses, they can provide a safety net for people who have lost their jobs.

- In response to the question on regions with a Confucian culture, the bonds of families and loyalty to companies are very strong in Asia, but transparency and predictability are weak in comparison to the West. Social capital in Japan is more advanced than in Korea. The survey conducted on social capital and trust demonstrates that trust in social institutions is high in countries such as Sweden and that trust in people is high in Korea. In Japan, both are low. I believe that social capital can be built by increasing trust in social institutions.