ABSTRACT
Approach The logic of estab lishing com mun ity de velopment finance institutions is to sup port not only indi viduals, with whom the ana lysis of the previous chapter has been preoccupied, but also, as their title implies, com munit ies. The incoming Labour gov ern ment of 1997, in its quest for a view of soci ety which might replace the divisive tendencies of conservatism, put com mun ity in pride of place as an organ ising prin ciple, as a ‘third way’ al tern ative to both socialism and the prin ciple of social Darwinism, or survival of the fittest, associated with some versions of conservatism and in par ticu lar the conservatism of Margaret Thatcher (Affleck and Mellor 2006; Hudson et al. 2008). Although, in its election cam paign, the Labour Party had put little emphasis on redis tribu tion as a pol icy ob ject ive, once in power it made clear that it was a key pol icy ob ject ive by whose success it should expect to be judged, both at home and abroad. In the fight against do mestic pov erty, child pov erty was prioritised, and, as will be recalled from Chapter 1, a new Social Exclusion Unit was set up within the Office of the Deputy Prime Minister, with a remit to rebuild deprived and fractured com munit ies, in par ticu lar within the inner-city areas which are the focus of this book. Financial exclusion was quickly identified as a prime mover among the various forms of discrimination and institutional failure which constitute social exclusion, and, as de scribed in Chapter 1, gov ern ment money was provided through the Department of Trade and Industry (now the Department of Business, Innovation and Skills, BIS) in the form of a ‘Phoenix Fund’ to enable CDFIs to sup port fin an cially excluded businesses. The intention was that through these loans jobs could be created in deprived com munit ies, and the initiative was given Treasury sup port in the shape of Community Investment Tax Relief for CDFIs, with the intention of levering additional investment into the sector. The pro posi tion that com munit ies and social networks were good for de velopment and pov erty reduction was, as we have already seen, not based purely on in tu ition or ideo logy. Around the millennium, the idea that mem bership of social groups might be key to both eco nomic and polit ical de velopment gained leverage around the world, initially through the thesis of Robert Putnam’s book Making Democracy Work that it was a higher level of parti cipa tion in
‘networks of civic engagement’ (1993: 175), or social capital,1 rather than a higher level of phys ical investment and human capital, which was respons ible for the faster growth and higher living stand ards of northern by comparison with southern Italy. Inspired by Putnam’s finding, quantitative cross country studies, typ ic ally using intra-community trust as an indic ator of social capital rather than seeking to meas ure the density of social networks directly, were published soon after Putnam showing that social capital across the world had a signi fic ant influence on growth even when phys ical and social capital were controlled for (Knack and Keefer 1997; Whiteley 2000). The idea that social capital might be a crux for pov erty reduction then spread to the de veloping world through the efforts of the World Bank, notably through the pages of the World Development Report 2000 (World Bank 2000). In our own case study cities, we have observed that affinity group mem ber ship is pos it ive for savings and thence for pov erty reduction being a member of a vibrant and sup portive com mun ity normally adds, as we have already dem on strated (Tables 4.8 through 4.10), to what CDFIs are able to achieve with clients on their own. Is this additional com mun ity impact something which simply has to be accepted as it is, or can it be enlarged and de veloped by the right kind of pol icy initiatives, including by CDFIs themselves? There is a variety of views on this. One approach is to suggest that social integration cannot be created by any kind of extraneous pol icy effort but arises rather from spontaneous group action at neigh bour hood level. ‘In this model of soci ety’, as Forrest and Kearns note, ‘social cohesion is viewed as a bottom-up pro cess founded upon local social capital, rather than as a top down pro cess’ (2001: 213). However, there is an al tern ative view, which suggests that some forms of social capital, at least, can be created. The Joseph Rowntree Foundation research programme on Changing Neighbourhoods, for example, argues that the quality of social inter action and neighbourhood-level cohesion can indeed be changed for the better by judicious inter ven tion. Indeed, they argue, one way of doing this is through microcredit itself: ‘small amounts of unrestricted money’ they claim, ‘can make a big dif fer ence, par ticu larly to smaller com mun ity groups and those just starting out’ (Taylor et al. 2007b: 2, 13). However, they stress that the way in which this is done is im port ant, preferring indirect ‘light touch’ approaches over comprehensive area rede velopment programmes, and stressing that some elements of social capital are more in need of building up than others:
Policy makers often speak of the need to de velop ‘social capital’ in com munit ies, on the as sump tion that com mun ity ties are weak. But many com munit ies do have these strong bonding ties already. What they lack is the ‘bridging’ social capital ties across social groups/com munit ies, both within a neigh bour hood and between neighbourhoods.
