On the wealth of nations: Bourdieuconomics and social capital

Abstract

Why are some countries richer than others? We suggest in the line of political economy theory that traditional production factors cannot explain the observed differences. Rather, differences in the quality of formal institutions are crucial to economic wealth. However, this type of political economy theory accentuating the role of formal institutions cannot stand on its own. This implies a socio-economic approach in the study where we supplement the formal institutional thesis with Bourdieu's idea of material and non-material forms of capital. Such new socio-economics - which might be termed a " Bourdieuconomics" - implies the usage of a capital theory that, methodologically, operates with material and non-material forms of capital at the same level. Here, we stress the particular importance of a non-material form of capital, namely social capital, which facilitates informal human exchange, thereby "lubricating" civic society and the voluntary provision of collective goods such as trust and predictable behavior. In this way, social capital reduces transaction costs in society, thereby enhancing economic growth and the creation of differences in the wealth of nations. Future research should therefore be directed towards analyses of a new and formerly disregarded production factor, social capital, within a new field of socio-economics, namely "Bourdieuconomics".