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Social Capital Innate and Nurtured: The Case of Indonesia

The article examines the concept of social capital as it applies to Indonesia at the meso level aggregation, some of its manifestations and impact on socioeconomic wellbeing. The paper is based on data drawn from socioeconomic indicators published in Statitik Potensi Desa, Indonesia, 2008. Study findings confirm previous empirical studies on the subject (Miguel et al 2002 being the paper that inspired this article, being one of them) to the effect that social capital is an important people-centered resource, and takes various manifestations. Even more important, social capital, based on findings in this paper, can be nurtured or induced through actions of state and non-state actors alike. This makes social capital a highly potential community and country resource that awaits reawakening where it has been ignored, but also promoted, in social contexts, where it is innately nonexistent. Creating conditions that favor the evolution and sustainability of savings and credit unions, non-governmental organizations, and other self-help social organizations that help in voluntary resource mobilization, exchange and utilization associations enhances the ‘tangible’ benefits which members of social organizations see, obtain and derive from working and collaborating with other members in their vicinity as well as those not very near but with whom they share interests, problems, hence the natural affinity to ‘band’ together. Moreover, though not significant, study findings point to the fact that conditions are characterized by rampant violence in society are inimical to social capital. To that end, encouraging and fostering social capital is imperative to avert violence plagued conditions, which by extension shields society from associated dangers. It is also important to note that the creation and sharing of benefits of social capital, which is possible under conditions of easy transportation and communications, harmonious social relations and social stability, are very vital for nurturing and development of social capital. To that end, the West-East divide that is not only palpable but also very real in Indonesia which is manifested in the relative paucity of voluntary associations in the East compared to the level in Western Indonesia, is in part responsible for the stark disparity in development between the two regions. Marked difference in level of social capital intensity between the two regions of Indonesia, all factors remaining the same, has affected the disparity in the capacity in the two regions to take advantage of the fruits of a democratized Indonesia (with attendant observance of freedom of expression and association, including the right to demand state respect for the right to economic rights and security of property. This explains why institutions which enhance the ability and capacity of members of community to access economic resources (savings and credit cooperatives, NGOs, and Non KUD cooperatives are key factors that influence and are influenced by social capital level. To that end, social capital, by serving as an ‘enabler’ of the community to mobilize, exchange financial resources available within the community and beyond, is vital for reducing obstacles of financing, which community members either in individual and collective capacity, face in carrying out their economic activities.