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Chapter One

Playing by the Rules

After the Industrial Era

Over the past half-century, the United States and other economically advanced countries have gradually made the shift into what has been called an "information society," the "information age," or the "postindustrial era." Futurist Alvin Toffler has labeled this transition the "Third Wave," suggesting that it will ultimately be as consequential as the two previous waves in human history: from hunter-gatherer to agricultural societies and then from agricultural to industrial ones.

This shift consists of a number of related elements. In the economy, services increasingly displace manufacturing as a source of wealth. Instead of working in a steel mill or automobile factory, the typical worker in an information society has a job in a bank, software firm, restaurant, university, or social service agency. The role of information and intelligence, embodied in both people and increasingly smart machines, becomes pervasive, and mental labor tends to replace physical labor. Production is globalized as inexpensive information technology makes it increasingly easy to move information across national borders, and rapid communications by television, radio, fax, and e-mail erodes the boundaries of long-established cultural communities.

A society built around information tends to produce more of the two things people value most in a modern democracy: freedom and equality. Freedom of choice has exploded, whether of cable channels, low-cost shopping outlets, or friends met on the Internet. Hierarchies of all sorts, whether political or corporate,come under pressure and begin to crumble. Large, rigid bureaucracies, which sought to control everything in their domain through rules, regulations, and coercion, have been undermined by the shift toward a knowledge-based economy, which serves to "empower" individuals by giving them access to information. Just as rigid corporate bureaucracies like the old IBM and AT&T gave way to smaller, flatter, more participatory competitors, so too did the Soviet Union and East Germany fall apart from their inability to control and harness the knowledge of their own citizens.

The shift into an information society has been celebrated by virtually everyone who has written or talked about it. Commentators as politically diverse as George Gilder, Newt Gingrich, Al Gore, Alvin and Heidi Toffler, and Nicholas Negroponte have seen these changes as good for prosperity, good for democracy and freedom, and good for society in general. Certainly many of the benefits of an information society are clear, but have all of its consequences necessarily been so positive?

People associate the information age with the advent of the Internet in the 1990s, but the shift away from the Industrial era started more than a generation earlier with the deindustrialization of the Rust Belt in the United States and comparable moves away from manufacturing in other industrialized countries. This period, from roughly the mid-1960s to the early 1990s, was also marked by seriously deteriorating social conditions in most of the industrialized world. Crime and social disorder began to rise, making inner-city areas of the wealthiest societies on earth almost uninhabitable. The decline of kinship as a social institution, which has been going on for more than two hundred years, accelerated sharply in the last half of the twentieth century. Fertility in most European countries and Japan fell to such low levels that these societies will depopulate themselves in the next century, absent substantial immigration; marriages and births became fewer; divorce soared; and out-of-wedlock childbearing came to affect one out of every three children born in the United States and over half of all children in Scandinavia. Finally, trust and confidence in institutions went into a deep, forty-year decline. A majority of people in the United States and Europe expressed confidence in their governments and fellow citizens during the late 1950s; only a small minority did so by the early 1990s. The nature of people's involvement with one another changed as well. Although there is no evidence that people associated with each other less, their mutual ties tended to be less permanent, less engaged, and with smaller groups of people.

These changes were dramatic, they occurred over a wide range of similar countries, and they all appeared at roughly the same period in history. As such, they constituted a Great Disruption in the social values that prevailed in the industrial age society of the mid-twentieth century, and are the subject of Part One of this book. It is highly unusual for social indicators to move together so rapidly; even without knowing why they did so, we have reason to suspect that they might be related to one another. Although conservatives like William J. Bennett are often attacked for harping on the theme of moral decline, they are essentially correct: the breakdown of social order is not a matter of nostalgia, poor memory, or ignorance about the hypocrisies of earlier ages. The decline is readily measurable in statistics on crime, fatherless children, reduced educational outcomes and opportunities, broken trust, and the like.

Was it just an accident that these negative social trends, which together reflected weakening social bonds and common values holding people together in Western societies, occurred just as economies in those societies were making the transition from the industrial to the information era? The hypothesis of this book is that the two were in fact intimately connected, and that with all of the blessings that flow from a more complex, information-based economy, certain bad things also happened to our social and moral life. The connections were technological, economic, and cultural. The changing nature of work tended to substitute mental for physical labor, thereby propelling millions of women into the workplace and undermining the traditional understandings on which the family had been based. Innovations in medical technology like the birth control pill and increasing longevity diminished the role of reproduction and family in people's lives. And the culture of intensive individualism, which in the marketplace and laboratory leads to innovation and growth, spilled over into the realm of social norms, where it corroded virtually all forms of authority and weakened the bonds holding families, neighborhoods, and nations together. The complete story is, of course, much more complex than this, and differs from one country to another. But broadly speaking, the technological change that brings about what economist Joseph Schumpeter called "creative destruction" in the marketplace caused similar disruption in the world of social relationships. It would be surprising were this not true.

But there is a bright side too: social order, once disrupted, tends to get remade once again, and there are many indications that this is happening today. We can expect this to happen for a simple reason: human beings are by nature social creatures, whose most basic drives and instincts lead them to create moral rules that bind themselves together into communities. They are also by nature rational, and their rationality allows them to create ways of cooperating with one another spontaneously. Religion, often helpful to this process, is not the sine qua non of social order, as many conservatives believe. Neither is a strong and expansive state, as many on the Left argue. Man's natural state is not the war of "every one against every one" that Thomas Hobbes envisioned, but rather a civil society made orderly by the presence of a host of moral rules. These statements, moreover, are empirically supported by a tremendous amount of recent research coming out of the life sciences, in fields as diverse as neurophysiology, behavioral genetics, evolutionary biology, and ethology, as well as biologically informed approaches to psychology and anthropology. The study of how order arises, not as the result of a top-down mandate by hierarchical authority, whether political or religious, but as the result of self-organization on the part of decentralized individuals, is one of the most interesting and important intellectual developments of our time. Thus Part Two of this book steps back from the immediate social issues raised by the Great Disruption and asks the more general questions, Where does social order come from in the first place, and how does it evolve under changing circumstances?

The idea that social order has to come from a centralized, rational, bureaucratic hierarchy was one very much associated with the industrial age. The sociologist Max Weber, observing nineteenth-century industrial society, argued that rational bureaucracy was in fact the very essence of modern life. We know now, however, that in an information society, neither governments nor corporations will rely exclusively on formal, bureaucratic rules to organize the people over whom they have authority. Instead, they will have to decentralize and devolve power, and rely on the people over whom they have nominal authority to be self-organizing. The precondition for such self-organization is internalized rules and norms of behavior, which suggests that the world of the twenty-first century will depend heavily on such informal norms. Thus, while the transition into an information society has disrupted social norms, a modern, high-tech society cannot get along without them and will face considerable incentives to produce them.

Part Three of the book looks both backward and forward for the sources of this order. The view that society's moral order has been in long-term decline is one long held by certain conservatives. The British statesman Edmund Burke argued that the Enlightenment itself, with its project of replacing tradition and religion with reason, is the ultimate source of the problem, and Burke's contemporary heirs continue to argue that secular humanism is at the root of today's social problems. But while conservatives may be right that there were important ways in which moral behavior deteriorated in the past two generations, they tend to ignore the fact that social order not only declines, but also increases in long cycles. This happened in Britain and America during the nineteenth century. It is reasonably clear that the period from the end of the eighteenth century until approximately the middle of the nineteenth century was one of sharply increasing moral decay in both countries. Crime rates in virtually all major cities increased; families broke down and illegitimacy rates rose; people were socially isolated; alcohol consumption, particularly in the United States, exploded, with per capita consumption in 1830 at levels perhaps three times as great as they are today. But then, with each passing decade from the middle of the century until its end, virtually each one of these social indicators turned positive: crime fell; families began staying together in greater numbers; drunkards went on the wagon; and new voluntary associations sprouted up to give people a greater sense of communal belonging.

There are similar signs today that the Great Disruption that took place from the 1960s to the 1990s is beginning to recede. Crime is down sharply in the United States and other countries where it had become epidemic. Divorce rates have declined since the 1980s, and there are now signs that the rate of illegitimacy (in the United States, at any rate) has begun to level off, if not fall. Levels of trust in major institutions have improved during the 1990s, and civil society appears to be flourishing. There is, moreover, plenty of anecdotal evidence that more conservative social norms have made a comeback, and that the more extreme forms of individualism that appeared during the 1970s have fallen out of favor. It is far too early to assert that these problems are now behind us. But it is also wrong to conclude that we are incapable of adapting socially to the technological and economic conditions of an age of information.

Gemeinschaft and Gesellschaft, One More Time

The disruption of social order by the progress of technology is not a new phenomenon. Particularly since the beginning of the Industrial Revolution, human societies have been subject to a relentless process of modernization as one new production process replaced another. The social disorder of the late eighteenth and early nineteenth centuries in America and Britain can be traced directly to the disruptive effects of the so-called first Industrial Revolution, when steam power and mechanization created new industries in textiles, railroads, and the like. Agricultural societies were transformed into urban industrial societies within the space of perhaps a hundred years, and all of the accumulated social norms, habits, and customs that had characterized rural or village life were replaced by the rhythms of the factory and city.

This shift in norms engendered what is perhaps the most famous concept in modern sociology, the distinction drawn by Ferdinand Tönnies between what he called gemeinschaft ("community") and gesellschaft ("society"). According to Tönnies, the gemeinschaft that characterized a typical premodern European peasant society consisted of a dense network of personal relationships based heavily on kinship and on the direct, face-to-face contact that occurs in a small, closed village. Norms were largely unwritten, and individuals were bound to one another in a web of mutual interdependence that touched all aspects of life, from family to work to the few leisure activities that such societies enjoyed. Gesellschaft, on the other hand, was the framework of laws and other formal regulations that characterized large, urban, industrial societies. Social relationships were more formalized and impersonal; individuals did not depend on one another for mutual support to nearly the same extent and were therefore much less morally obligated.

The idea that informal norms and values will be replaced over time by rational, formal laws and rules has been a mainstay of modern sociological theory ever since. The English legal theorist Sir Henry Maine argued that in premodern societies, people were tied to one another by what he called a "status" relationship. A father was bound to his family or a lord to his slaves and servants in a lifetime personal relationship that consisted of a host of informal, unarticulated, and often ambiguous mutual obligations. No one could simply walk away from the relationship if he or she didn't like it. In a modern capitalist society, by contrast, Maine argued that such relationships are based on "contract," for example, a formal agreement that an employee will provide a certain quantity of labor in return for a certain quantity of wages from the employer. Everything is spelled out in the wage contract and is therefore enforceable by the state; there are no age-old obligations or duties that accompany the exchange of money for services. Unlike a status relationship, in other words, the contract relationship is not a moral one: either party can break it at any time, provided the terms of the contract are fulfilled.

The consequences of the shift from agricultural to industrial societies on social norms were so large that they gave birth to an entirely new academic discipline, sociology, which sought to describe and understand these changes. Virtually all of the great social thinkers at the end of the nineteenth century -- including Tönnies, Maine, Weber, Emile Durkheim, and Georg Simmel — devoted their careers to explicating the nature of this transition. Indeed, the American sociologist Robert Nisbet once characterized the entire subsequent thrust of his discipline as one long commentary on gemeinschaft and gesellschaft.

Many of the standard sociological texts written in the middle of the twentieth century treated the shift from gemeinschaft to gesellschaft as if it were a one-shot affair: societies were either "traditional" or "modern," and the modern ones somehow constituted the end of the road for social development. But social evolution did not culminate in middle-class American society of the 1950s, as industrial societies soon began transforming themselves into what Daniel Bell characterized as postindustrial societies or what we know as information societies. If this transformation is as momentous as the previous one, then it should hardly surprise us that the impact on social values should be equally great.

Why Social Order Is Important to the Future of Liberal Democracy

One of the greatest challenges modern information age democracies face today is whether they can maintain social order in the face of technological and economic change. From the early 1970s to the early 1990s there has been a sudden surge of new democracies in Latin America, Europe, Asia, and the former communist world that constitutes what Samuel Huntington has labeled another "Third Wave," this one of democracy. As I argued in The End of History and the Last Man, there is a strong logic behind the evolution of political institutions in the direction of modern liberal democracy, one that is based on the correlation between economic development and stable democracy. For the world's most economically advanced countries, there has been a convergence of political and economic institutions over time and no obvious alternatives to the liberal political and economic institutions we see before us.

This same progressive tendency is not necessarily evident in moral and social development, however. The tendency of contemporary liberal democracies to fall prey to excessive individualism is perhaps their greatest long-term vulnerability, and is particularly visible in the most individualistic of all democracies, the United States. The modern liberal state was premised on the notion that in the interests of political peace, government would not take sides among the differing moral claims made by religion and traditional culture. Church and state were to be kept separate; there would be pluralism in opinions about the most important moral and ethical questions concerning ultimate ends or the nature of the good. Tolerance would become the cardinal virtue. In place of moral consensus would be a transparent framework of law and institutions that would produce political order. Such a political system did not require that people be particularly virtuous, only that they be rational and follow the law in their own self-interest. In a similar fashion, the market-based capitalist economic system that went hand-in-glove with political liberalism required only that people consult their long-term self-interest to achieve a socially optimal production and distribution of goods.

The societies created on these individualistic premises have worked extraordinarily well, and as the twentieth century comes to a close there is little real alternative to liberal democracy and market capitalism as fundamental organizing principles for modern societies. Individual self-interest is a lower but more stable ground than virtue on which to base society. The creation of a rule of law is one of the proudest accomplishments of Western civilization, one whose benefits become all too obvious when one deals with countries like Russia or China that lack one.

But although formal law and strong political and economic institutions are critical, they are not in themselves sufficient to guarantee a successful modern society. Liberal democracy has always been dependent on certain shared cultural values to work properly. This can be seen most clearly in the contrast between the United States and the countries of Latin America. When Mexico, Argentina, Brazil, Chile, and other Latin countries gained their independence in the nineteenth century, many of them established formal democratic constitutions and legal systems patterned on the presidential system of the United States. Since then, not one Latin American country has experienced the political stability, economic growth, or efficiency of democratic institutions enjoyed by the United States, though fortunately most had returned to democratic government by the late 1980s.

There are many complex historical reasons for this, but the most important is a cultural one: the United States was settled primarily by Britain and inherited not just British law but British culture as well, while Latin America inherited various cultural traditions from the Iberian peninsula. Although the U.S. Constitution enforces a separation between church and state, American culture was nonetheless decisively shaped by sectarian Protestantism in its formative years. Sectarian Protestantism reinforced both American individualism and what Alexis de Tocqueville called the American "art of association" — that is, the tendency of the society to be self-organizing in a myriad of voluntary associations and communities. The vitality of American civil society was crucial for both the stability of its democratic institutions and its vibrant economy. The imperial and Latin Catholic traditions of Spain and Portugal, by contrast, reinforced dependence on large, centralized institutions like the state and church, consequently weakening an independent civil society. There are similar contrasts between northern and southern Europe, whose differing abilities to make modern institutions work was also influenced by religious heritage and cultural tradition.

The problem with most modern liberal democracies is that they cannot take their cultural preconditions for granted. The most successful among them, including the United States, were lucky to have married strong formal institutions to a flexible and supportive informal culture. But there is nothing in the formal institutions themselves that guarantees that the underlying society will continue to enjoy the right sort of cultural values and norms under the pressures of technological, economic, and social change. Just the opposite is the case: the individualism, pluralism, and tolerance built into the formal institutions tend to encourage cultural diversity and therefore have the potential to undermine moral values inherited from the past. And a dynamic, technologically innovative economy will by its very nature disrupt existing social relations.

It may be, then, that while large political and economic institutions have been evolving along a long-term secular path, social life is more cyclical. Social norms that work for one historical period are disrupted by the advance of technology and the economy, and society has to play catch-up in order to renorm itself under changed conditions.

The Value of Rules

The cultural connections between the shift to an age of information and social disruption were symbolized by a series of television commercials that blitzed the airwaves during the 1996 Summer Olympic Games in Atlanta, Georgia. Sponsored by a major American telecommunications company, they showed a series of muscular, well-conditioned athletes doing some rather extraordinary things, like running up the sides of buildings, jumping off cliffs into thousand-foot canyons, and bounding from the roof of one skyscraper to another. The commercials were built around the theme that flashed on the screen at the end: "No limits." Consciously or not, the athlete's superb physique evoked the philosopher Nietzsche's Superman, the godlike being unconstrained by ordinary moral rules, as he might have been lovingly portrayed by the Nazi filmmaker Leni Riefenstahl.

The telecommunications company that sponsored the commercials and the ad agency that produced them clearly wanted to create a powerful, positive, and future-oriented image: in the new age of information technology, old rules were breaking down, and the sponsoring company was at the forefront of the destruction. The implicit message said that the old rules — presumably the ones governing pre-Internet communications and regulated telephone monopolies — were unnecessary and harmful constraints, not just on telephone service but on the human spirit more generally. There was no telling what heights of human achievement could be reached if only these rules were lifted, and the sponsoring company would be perfectly happy to help its customers reach this promised land. Like the athletes, we might then become Godlike.

Whether consciously or not, the producers of these commercials were building on a very powerful cultural theme: that of the liberation of the individual from unnecessary and stifling social constraints. Since the 1960s, the West has experienced a series of liberation movements that have sought to free individuals from the constraints of many traditional social norms and moral rules. The sexual revolution, the women's liberation and feminist movements, and the movements in favor of gay and lesbian rights have exploded throughout the Western world. The liberation each one of these movements seeks concerns social rules, norms, and laws that unduly restrict the options and opportunities of individuals — whether of young people choosing sexual partners, women seeking career opportunities, or gays seeking recognition of their rights. Pop psychology, from the human potential movement of the 1960s to the self-esteem trend of the 1980s, sought to free individuals from stifling social expectations. Each one of these movements might well have adopted the slogan "No limits" as its own.

Both the Left and Right participated in this effort to free the individual from restrictive rules, but their points of emphasis tended to be different. To put it simply, the Left worried about lifestyles, and the Right worried about money. The former did not want traditional values to constrain unduly the choices of women, minorities, gays, the homeless, people accused of crimes, or any number of other groups marginalized by society. The Right, on the other hand, did not want communities putting constraints on what they could do with their property -- or in the particular case of the United States, what they could do with their guns. It was not an accident that the commercial promulgating the message of "no limits" was produced by a private, high-tech corporation trying to maximize its profits, for modern capitalism thrives on the breaking of rules wherein old social relationships, communities, and technologies are discarded in favor of new and more efficient ones. Both Left and Right denounced excessive individualism on the part of the other. Those who supported reproductive choice tended to oppose choice in buying guns or gas-guzzling cars; those who wanted unconstrained economic competition were appalled when they were mugged by unconstrained criminals on the way to the low-priced Wal-Mart. But neither side was willing to give up its preferred sphere of free choice for the sake of constraining the other.

As people soon discovered, there were serious problems with a culture of unbridled individualism, where the breaking of rules becomes, in a sense, the only remaining rule. The first had to do with the fact that moral values and social rules are not simply arbitrary constraints on individual choice; rather, they are the precondition for any type of cooperative enterprise. Indeed, social scientists have recently begun to refer to a society's stock of shared values as social capital. Like physical capital (land, buildings, machines) and human capital (the skills and knowledge we carry around in our heads), social capital produces wealth and is therefore of economic value to a national economy. It is also the prerequisite for all forms of group endeavor that take place in a modern society, from running a corner grocery store, to lobbying Congress, to raising children. Individuals amplify their own power and abilities by following cooperative rules that constrain their freedom of choice, allow them to communicate with others, and coordinate their actions. Social virtues like honesty, reciprocity, and keeping commitments are not choiceworthy just as ethical values; they also have a tangible dollar value and help the groups who practice them achieve shared ends.

The second problem with a culture of intense individualism is that it ends up being bereft of community. A community is not formed every time a group of people happens to interact with one another; true communities are bound together by the values, norms, and experiences shared among their members. The deeper and more strongly held those common values are, the stronger the sense of community is. The tradeoff between personal freedom and community, however, does not seem obvious or necessary to many. As people were liberated from their traditional ties to spouses, families, neighborhoods, workplaces, or churches, they thought they could have social connectedness at the same time, this time the connections being those they choose for themselves. But they began to realize that such elective affinities, which they could slide into and out of at will, left them feeling lonely and disoriented, longing for deeper and more permanent relationships with other people.

The "no-limits" message is, then, a problematic one. We want to break rules that are unjust, unfair, irrelevant or outdated, and we seek to maximize personal freedom. But we also constantly need new rules to permit new forms of cooperative endeavor and to enable us to feel connected with one another in communities. These new rules always entail the limitation of individual freedom. A society dedicated to the constant upending of norms and rules in the name of increasing individual freedom of choice will find itself increasingly disorganized, atomized, isolated, and incapable of carrying out common goals and tasks. The same society that wants "no limits" to its technological innovation also sees "no limits" to many forms of personal behavior, and the consequent growth of crime, broken families, parents failing to fulfill obligations to children, neighbors not looking out for each other, and citizens opting out of public life.

Social Capital

Even if we agree in a general way that human society requires limits and rules, the question immediately arises, "Whose rules should prevail?"

In the rich, free, and diverse society constituted by the United States at the end of the twentieth century, the word culture has come to be associated with the concept of choice. That is, culture is something that artists, writers, or other imaginative people choose to create on the basis of an inner voice; for those less creatively inclined, it is something they choose to consume as art, cuisine, or entertainment. Culture is superficially but also commonly associated with food, particularly of an ethnic variety: what it means to have cultural diversity is to have a great choice among Chinese, Italian, Greek, Thai, or Mexican restaurants. More important cultural choices are up for grabs as well, as in the case of the Woody Allen character who, upon learning that he has terminal cancer, frantically tries to decide whether he will seek solace as a Buddhist, Hare Krishna, Catholic, or Jew.

We are taught, moreover, that in negotiating among these competing cultural claims, none can be judged to be better than any other. In the hierarchy of moral virtues, tolerance ranks high and moralism — the attempt to judge people by one's own moral or cultural rules — ranks as the vice among vices. De gustibus non est disputandem — there is no accounting for tastes — and like the taste for ethnic food, there is no way of judging whether one set of moral rules is better or worse than any other. This is a lesson taught not just by proponents of multiculturalism on the Left, but by libertarian economists on the Right, who boil down all human behavior to the pursuit of irreducible individual "preferences."

It is to get around the problem of cultural relativism that this book concentrates not on cultural norms writ large, but on a certain subset of norms that constitute social capital. Social capital can be defined simply as a set of informal values or norms shared among members of a group that permits cooperation among them. If members of the group come to expect that others will behave reliably and honestly, then they will come to trust one another. Trust is like a lubricant that makes the running of any group or organization more efficient.

The sharing of values and norms does not in itself produce social capital, because the values may be the wrong ones. Look, for example, at southern Italy, a region of the world that is almost universally characterized as lacking in social capital and generalized trust, even though strong social norms exist. The sociologist Diego Gambetta tells the following story:

A retired [mafia] boss recounted that when he was a young boy, his mafioso father made him climb a wall and then invited him to jump, promising to catch him. He at first refused, but his father insisted until finally he jumped — and promptly landed flat on his face. The wisdom his father sought to convey was summed up by these words: "You must learn to distrust even your parents." The mafia is characterized by an extremely strong internal code of behavior, l'omerta, and individual mafiosi are spoken of as "men of honor." Nonetheless, these norms do not apply outside a small circle of mafiosi; for the rest of Sicilian society, the prevailing norms can be described more as "take advantage of people outside your immediate family at every occasion because otherwise they will take advantage of you first" — and as Gambetta's example suggests, even families may not be that reliable. Obviously such norms do not promote social cooperation, and the negative consequences for both good government and economic development have been documented extensively. Southern Italy has been the source of the extensive corruption plaguing the country's political system, as well as one of the poorest parts of Western Europe.

The norms that produce social capital, by contrast, must substantively include virtues like truth telling, the meeting of obligations, and reciprocity. Not surprisingly, these norms overlap to a significant degree with those Puritan values that Max Weber found critical to the development of Western capitalism in his book The Protestant Ethic and the Spirit of Capitalism.

All societies have some stock of social capital; the real differences among them concern what might be called the "radius of trust." That is, cooperative norms like honesty and reciprocity can be shared among limited groups of people and not with others in the same society. Families are obviously important sources of social capital everywhere. Whatever low opinions American parents may have of their teenage children, it is far more likely that members of the same family will trust and work with one another more than with strangers. This is the reason that virtually all businesses start out as family businesses.

But the strength of family bonds differs from society to society, and also varies relative to other types of social obligation. In some cases, there appears to be something of an inverse relationship between the bonds of trust and reciprocity inside and outside the family; when one is very strong, the other tends to be weak. In China and Latin America, families are strong and cohesive, but it is hard to trust strangers, and levels of honesty and cooperation in public life are much lower. A consequence is nepotism and pervasive public corruption. What made the Protestant Reformation important for Weber was not so much that it encouraged honesty, reciprocity, and thrift among individual entrepreneurs, but that these virtues were for the first time widely practiced outside the family.

It is perfectly possible to form successful groups in the absence of social capital, using a variety of formal coordination mechanisms like contracts, hierarchies, constitutions, legal systems, and the like. But informal norms greatly reduce what economists label transaction costs — the costs of monitoring, contracting, adjudicating, and enforcing formal agreements. Under certain circumstances, social capital may also facilitate a higher degree of innovation and group adaptation.

Social capital has benefits that go well beyond the economic sphere. It is critical for the creation of a healthy civil society, that is, the realm of groups and associations that fall between the family and the state. Civil society, which has been the focus of considerable interest in former communist countries since the fall of the Berlin Wall, is said to be critical to the success of democracy. Social capital allows the different groups within a complex society to band together to defend their interests, which might otherwise be disregarded by a powerful state. Indeed, so close is the association between civil society and liberal democracy that the late Ernest Gellner has argued that the latter is a virtual proxy for the former.

Although social capital and civil society have been widely praised as good things to have, they are not always beneficial. Coordination is necessary for all social activity, whether good or bad. Plato's Republic is a discussion between Socrates and a group of friends over the meaning of justice. In Book I, Socrates points out to Thrasymachos that even a band of robbers must have a sense of justice among themselves, or they could not succeed in pulling off their robberies. The mafia and the Ku Klux Klan are constituent parts of American civil society; both possess social capital, and both are detrimental to the health of the broader society. In economic life, group coordination is necessary for one form of production, but when technology or markets change, a different type of coordination with perhaps a different set of group members becomes necessary. The bonds of social reciprocity that facilitated production in the earlier time period become obstacles to production in the later one, as is the case for many Japanese corporations in the 1990s. To continue the economic metaphor, social capital at that point can be said to be obsolete and needs to be depreciated in the country's capital accounts.

The fact that social capital can on occasion be used for destructive purposes or can become obsolete does not negate the widely shared presumption that it is generally a good thing for a society to have. Physical capital, after all, is not always a good thing either. Not only can it become obsolete, but it can be used to produce assault rifles, thalidomide, tasteless entertainment, and a whole range of other social "bads." But societies have laws to forbid the production of the worst social bads, whether by physical or social capital, so we can presume that most of the uses to which social capital will be put will be no less good from a social standpoint than the products of physical capital.

And so it has been regarded by most people who have employed the concept. The first known use of the term social capital was by Lyda Judson Hanifan in 1916 to describe rural school community centers. Jane Jacobs used the term in her classic work The Death and Life of Great American Cities, in which she explained that the dense social networks that existed in older, mixed-use urban neighborhoods constituted a form of social capital that encouraged public safety. The economist Glenn Loury, as well as the sociologist Ivan Light, used the term social capital in the 1970s to analyze the problem of inner-city economic development: African Americans lacked the bonds of trust and social connectedness within their own communities that existed for Asian American and other ethnic groups, which went a long way toward explaining the relative lack of black small business development. In the 1980s, the term social capital was brought into wider use by the sociologist James Coleman and the political scientist Robert Putnam, the latter of whom has stimulated an intense debate over the role of social capital and civil society in Italy and in the United States.

Perhaps the most important theorist of social capital was someone who never used the term but who understood its importance with great clarity: the French aristocrat and traveler Alexis de Tocqueville. Tocqueville observed in Democracy in America that in sharp contrast to his native France, America possessed a rich "art of association" that is, a populace habituated to come together in voluntary associations for purposes both trivial and serious. American democracy and its system of limited government worked only because Americans were so adept at forming associations for both civil and political purposes. This ability to, in effect, self-organize not only meant that the government did not have to impose order in a hierarchical, top-down manner; civil association was also a "school of self-government" that taught people cooperative habits they would carry over with them to public life. Tocqueville would, one suspects, agree with the proposition that without social capital, there could be no civil society, and that without civil society, there could be no successful democracy.

How Do We Measure Social Capital?

Neither sociologists nor economists have been happy with the spreading use of the term social capital, the former because they see it as part of the broader conquest of the social sciences by economics, and the latter because they regard it as a nebulous concept that is difficult, if not impossible, to measure. And indeed, measurement of the total stock of cooperative social relationships based on norms of honesty and reciprocity is not a trivial task. If we argue that the Great Disruption has had an effect on social capital, we need to find an empirical basis for testing whether this is in fact true.

Robert Putnam has argued that the quality of governance in the different regions of Italy is correlated with social capital and that social capital has been in decline in the United States since the 1960s. The empirical validity of his claim with regard to the United States will be addressed in the next chapter. His work, however, illustrates some of the difficulties posed in measuring social capital. He uses two types of statistical measures of social capital. The first is information on groups and group memberships, from sports clubs and choral societies to interest groups and political parties, as well as indexes of political participation such as voter turnout and newspaper readership. In addition, there are more detailed time-budget surveys and other indicators of how people spend their waking hours. The second type is survey research, such as the General Social Survey (for the United States) and the World Values Survey (for over forty countries around the world), that asks a series of questions concerning values and behavior.

The assertion that American social capital has been declining over the past two generations has been hotly contested. Numerous scholars have either pointed to contradictory data showing that groups and group memberships have actually been increasing over the past generation, or else argued that the available data simply do not capture the reality of group life in a complex society like that of the United States. This evidence will be reviewed in Chapter 2.

Aside from the question of whether it is possible to count groups and group memberships comprehensively, there are at least three further measurement problems with this approach. First, social capital has an important qualitative dimension. A bowling league or a garden club might be, as Tocqueville suggests, schools for cooperation and public spiritedness, but they are obviously very different institutions from the U.S. Marine Corps or the Mormon church, in terms of the kinds of collective action they foster. A bowling league is not, to say the least, capable of storming a beach. An adequate measure of social capital needs to take account of the nature of the collective action of which a group is capable — its inherent difficulty, the value of the group's output, whether it can be undertaken under adverse circumstances, and so forth.

The second problem has to do with what an economist would call the positive externalities of group membership, or what we might label the "positive radius of trust." An externality is a benefit or cost falling on a party outside a given activity. Mowing your lawn and keeping your house looking nice are examples of positive externalities that benefit your neighbors. Pollution is the classic case of a cost that has to be borne by people who weren't responsible for creating it. Although all groups require social capital to operate, some build bonds of trust (and hence social capital) outside their own memberships. As Weber indicated, Puritanism mandated honesty not simply toward other members of one's religious community, but toward all human beings. On the other hand, norms of reciprocity can be shared among only a small subset of a group's members. In a so-called membership group like the American Association of Retired Persons (AARP), which has a membership of over 30 million, there is no reason to think that any two given members will trust one another or achieve coordinated action just because they have paid their yearly dues to the same organization.

The final problem concerns negative externalities. Some groups actively promote intolerance, hatred, and even violence toward nonmembers. The Ku Klux Klan, Nation of Islam, and Michigan Militia possess social capital, but a society made up of such groups would not be particularly appealing, and might even cease to be a democracy. Such groups have problems cooperating with each other, and the exclusive bonds of community uniting them are likely to make them less adaptive by sealing them off from influences in the surrounding environment.

It should be clear that coming up with a believable number expressing the stock of social capital for a large and complex society like the United States based on a census of groups is next to impossible. We have empirical data, of varying reliability, on only a certain subset of the groups that actually exist and no consensus means of judging their qualitative differences.

How, then, can we get a handle on whether a given society's stock of social capital is increasing or decreasing? One solution is to rely more heavily on the second of the two data sources: survey data on trust and values. Many of the long-running social surveys query respondents directly on questions relevant to social cooperation, such as whether they trust their fellow citizens, are willing to take bribes, or are likely to lie in their own interest. There are manifold problems with survey data, of course, beginning with the fact that responses will vary according to the way the question is phrased and who is asking it, to the absence of consistent data for many countries and many time periods. A general question such as, "Generally speaking, would you say that most people can be trusted or that you can't be too careful in dealing with people?" (asked in both the General Social Survey and World Values Survey) won't give very much precise information about the radius of trust among the respondents, or their relative propensities to cooperate with family, co-ethnics, co-religionists, complete strangers, and the like. Nonetheless, such data exist and will be used here to the extent that they shed light on general trends.

There is another alternative approach as well. Instead of measuring social capital as a positive value, it might be easier to measure the absence of social capital through traditional measures of social dysfunction, such as rates of crime, family breakdown, drug use, litigation, suicide, and tax evasion. The presumption is that since social capital reflects the existence of cooperative norms, social deviance ipso facto reflects a lack of social capital. Indicators of social dysfunction, while hardly unproblematic, are far more abundant than data on group memberships and are available on a comparative basis. This strategy has been used by the National Commission on Civic Renewal to measure civic disengagement.

It should be noted at the outset that there is one very serious problem with using social dysfunction data as a negative measure of social capital: it ignores distribution. Just as conventional capital is unevenly distributed within a society (i.e., as measured by wealth and income distribution studies), so social capital is also likely to be unevenly distributed: strata of highly socialized, self-organizing people may coexist with pockets of extreme atomization and social pathology. Using social deviance as a proxy for social capital is a bit like using poverty data as a measure of a society's overall wealth, under which circumstances the United States would show up as one of the poorer countries in the developed world.

Taking these different considerations into account, this book will look at three major types of data to measure trends in social capital in the developed world since the 1950s: (1) data on crime, based mostly on the self-reporting of national criminal justice agencies; (2) data on families, including fertility, marriage, divorce, and illegitimacy, again from national statistical agencies; and (3) survey data on trust, values, and civil society. After the data are presented in Chapter 2, Chapter 3 considers the conventional explanations for the Great Disruption, most of which leave something to be desired. Chapters 4 and 5 discuss specific causes for each of the phenomena in question.

Inclusion of data on families in a list of indicators of social dysfunction will be controversial to many. There are those who argue that there is no "normal" type of family and that the massive changes that have taken place in family structure since the 1950s merely reflect the shift from one form of household to another. Families can constitute social capital, but as the Chinese and Latin Catholic cases cited above indicate, they can also be barriers to cooperation outside the family. It is my view that family norms both constitute social capital and are critical for propagating social capital to succeeding generations, and that phenomena like the rapid growth of households headed by single women is a very negative social development. These assertions are defended in Chapter 6.

There are other types of social capital indicators that could have been considered but are not included here. One is the level of litigation in a society. Americans are famously litigious and have a much higher number of lawyers per capita than any other developed society. To many Americans, it appears that issues that used to be settled with a handshake are now fought out in court. The apparent rise of litigation over what seem to be trivial or absurd issues, such as the woman who was awarded damages from McDonald's for having spilled coffee on herself that was too hot, or children suing parents for "wrongful life" (the failure to have an abortion), is evidence of the declining level of trust, not to say common sense, in the society.

Unfortunately, data on comparative levels of civil litigation are difficult to come by and even more difficult to interpret given the major differences between common law and civil code countries. Moreover, it is not clear that rising levels of litigation in the United States are necessarily indicators of lower levels of social capital. The United States tends to use tort law as a substitute for state regulation: instead of having a government agency monitor and inspect public swimming pools and roller-coasters, for example, it relies on the ability of private citizens to sue pool or amusement park operators for large sums of money to deter them from doing things dangerous to public safety. Rising rates of litigation in the United States may therefore actually be a positive indicator of social capital: rather than appeal to a hierarchical source of authority to resolve disputes, private parties seek to work out equitable arrangements among themselves, albeit with the help of a legion of highly paid lawyers.

A Note on Comparative Methodology

In the chapters that follow, I present social data for the United States, the United Kingdom, Sweden, and Japan, as well as draw on more extensive data for approximately ten other developed countries, including Canada, Australia, New Zealand, France, Germany, the Netherlands, Italy, Spain, Norway, Finland, and Korea. The choice of the first four countries in the book's charts is simply illustrative; readers who want to look at more detailed data for other countries should consult the Appendix. All of these countries are members of the Organization for Economic Cooperation and Development (OECD). (Data on additional countries is available at http://www.mason.gmu/~-ffukuyam/.)

In studying phenomena like sudden shifts in social norms, it is extremely important to compare data from different countries. Unlike natural scientists, social scientists cannot carry out laboratory experiments in which a procedure is run under controlled circumstances to understand precisely what cause is responsible for what effect. The closest we can come is to compare two societies that are similar in many respects, but vary in one particular area. Thus, if we want to understand the impact of lower marginal tax rates on economic growth, we might compare New Zealand to Australia during the 1980s. Comparing New Zealand to Papua New Guinea on the effects of tax policy would make no sense. Not only are the two countries culturally very diverse, they are at such completely disparate levels of socioeconomic development that any differences in economic growth would be, as the phrase goes, "massively overdetermined."

Comparative methodology has a long history in the social sciences, beginning with classic studies like Emile Durkheim's Suicide, which developed the concept of anomie by looking at suicide rates in a series of different European countries at the end of the nineteenth century. Only by comparing the experience of one country to that of others that are similar can we hope to unpack explanations for complex phenomena and avoid excessive parochialism. Americans, for example, often attribute developments like the declining respect for authority to national experiences like the Vietnam War or the Watergate scandal. Although this may be true to some extent, the explanation seems less plausible once we learn that respect for authority has been declining in virtually all other developed countries.

Since many social outcomes are strongly correlated with a society's level of development (as measured by per capita gross domestic product), it makes sense to compare developed countries only with other developed countries. As we will see in the next few chapters, Asian countries when they reached the same level of development as Britain or France have experienced very different levels of social dysfunction, which would indicate that it is culture rather than level of development that is responsible for the contrast. This also explains why I have not included data on any developing countries in this book. It is not that their experiences are not important; rather, they tend to be different from the United States and other developed countries in so many ways that their experience is not particularly helpful in interpreting our own.