[PocheStorie#1] Was Putnam wrong? The determinants of social capital in Italy around 1900

[PocheStorie#1] Was Putnam wrong? The determinants of social capital in Italy around 1900

With this post by Gabriele Cappelli (UAB) on his paper "Was Putnam wrong? The determinants of social capital in Italy around 1900" (Rivista di Storia Economica, a. XXXIII, n. 3, December 2017), we launch a new blog of short summaries from the latest issues of the Rivista di Storia Economica. Full article available here

This paper stems from the literature on the link between social capital and long-term regional economic growth in Italy. Rather than this relationship, though, I explore the determinants of the formation of social capital in the last quarter of the 19th century. The paper starts with a brief survey of the various definitions of social capital proposed in the literature. As underlined by many authors, the concept is somehow ambiguous; yet, my work underlines two fundamental features of social capital, shared by most definitions (even those apparently in contradiction): the strength of cooperative norms and mutual trust. These concepts are used as guidelines for estimating indices of social capital that can capture its productive aspects, as discussed by a recent OECD Statistics Working Paper.

After this introductory discussion, the paper offers a quick overview of existing studies on the various links between social capital and economic growth – both across Italian regions, and across countries. Despite the broad and expanding literature on the issue, I stress that historical analyses on the determinants of social capital formation are relatively scarce.

My work contributes to this literature in two fundamental ways. First, I estimate levels of social capital for some benchmark years between 1871 and 1911. By means of previously unexploited primary sources, these are estimated for all 69 Italian provinces existing at the time. Government surveys on the so-called Opere Pie (largely independent charity organisations), statistics on mutual aid societies, and data on violent crimes, are exploited to estimate two indices - the strength of cooperative norms and the level of mutual trust - representing the two most relevant dimensions of social capital, in line with the aforementioned OECD framework (figure 1).

Figure 1 – Index of cooperative norms in 1881 and 1901 (provincial values relative to Italy = 1).

Source: Cappelli (2018).

Next, the paper presents a quantitative analysis on the determinants of social capital across Italy’s provinces. According to the famous work by Putnam et al., differences in social capital accumulation between the North and the South of the country originated already in the 14th century, a period during which the Comuni, or city-states, prospered only in the areas roughly north of Rome. While this experience of self government generated an increase in political participation in Northern and Central Italian regions, the persistence of autocracy in the South led to different trajectories. In this paper, I measure the impact of communal experiences by using two measures: the share of urban population in 1300, and the Polity IV index score attributed to pre-unitary Italian states.

Following a novel interpretation by Emanuele Felice, the paper then discusses whether these indices, or rather land ownership concentration in late 19th century, are more relevant in explaining social capital levels across provinces of post-unitary Italy. According to Felice, in a period in which most of the population was still rural and employed in agriculture, the prevailing systems of land ownership were far more relevant than local democratic forms of government that affected some Italian cities. In this paper, I adopt a new proxy of inequality in land ownership: the share of ‘big owners’ as a percentage of the total population of landowners reported by the censuses.

Simple OLS regressions in a cross-section framework are estimated to test the relevance of the aforementioned variables. The two indices of cooperative norms and trust are used separately as dependent variables; the exercise is repeated with both absolute levels in 1901, and the annual variation between the latter date and 1871. Other potential explanations considered in the paper are the extension of suffrage and education, demographic variables, outward migration rates and local economic development.

The results show that land inequality is highly correlated with both the initial level and the formation of social capital over 1871 - 1901. On the contrary, the variables introduced to capture earlier historical processes, such as the Comuni experience, so relevant in Putnam’s narrative, are not greatly significant. In line with these results, the paper concludes by stressing the need of understanding social capital as a variable that can be influenced by (economic) policies, rejecting a determinist interpretation, according to which social capital is merely a persistent historical legacy.