1 - Why interpersonal relations matter for economics  pp. 1-22

By Benedetto Gui and Robert Sugden

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Is sociality decaying? Are the hidden foundations of society silently crumbling beneath the ever more complex institutional buildings we are busy constructing or repairing on top of them? That many people are concerned about these questions is obvious from the response evoked by Robert Putnam's (1993b, 1995, 2000) recent claims that, at least in the United States, the last thirty years have seen a steady downward trend in many different kinds of formal and informal social engagement. An explosive number of articles, books, speeches, conferences and Web pages witness that Putnam has touched a sensitive nerve. Many social scientists and politicians have taken his arguments very seriously. Others have rejected them in ways that suggest that something more than intellectual disagreement is at stake (see, for instance, Fine, 2001). Among some of Putnam's opponents, there is a fear that he is providing ammunition for a conservative or communitarian backlash against the liberal social trends of the late twentieth century. But, even if this fear is understandable, it seems to betray an uneasy sense that Putnam's arguments have some credibility.

In trying to understand these concerns about trends in social engagement, it is useful to compare the environmental concerns that began to assume salience in public debate in the 1970s. People gradually came to realise that many of the processes through which economic wealth is created – more generally, many of the processes that contribute to human well-being – depend on inputs from the natural environment; in economic and political analysis, these inputs were being treated as permanent background features of the world, but their sources were being systematically degraded by the wealth-creating processes that ultimately depended on them.