Friday, February 27, 2009

Is there something wrong with our math?

Final Edition from Matthew Roberts on Vimeo.

Watch this video at the Rocky Mountain News. Clearly, this was more than a business idea (and no apologies are necessary).

It seems to me all of us have put too much emphasis on financial and physical capital. Where did our attention to social capital go? In the words of Robert Putnam "By 'social capital', I mean features of social life--networks, norms, and trust--that enable participants to act together more effectively to pursue shared objectives." Somewhere along the line we lost sight of the first piece of the capital in the equation.

social capital + (financial capital + physical capital) = value

The financial crisis has become a social crisis because the latter is distinct and contingent on the former. I'm not proposing socialism, I am just suggesting that social capital is worthy of being part of the real value equation. Economists would like to interpret jobs as a measure of 'the social', when if fact 'the social' should be some kind of measure of the job. For example, I would like to think that writing is an important social act, first and foremost.

So if the numbers don't make a business, if I can't get a bigger car, if the newspaper doesn't get enough advertisers because of an economic downturn, if inflation makes premium education inaccessible, if you can't pay me..., then the idea is by definition "of too little value", it fails and another good thing comes to an end.

1 comment:

kerrjac said...

I'm never sure what "social capital" means, but a distinction that I would make between that & the financial type is that the latter taps into economies of scale, which is why our emphasis on capital only increases with time, as the world gets bigger, and the economy expands as well.