Friday, June 11, 2010

Social Capital, The Modern MALAYsian Dilemma and Economic Models

I've been wanting to write about this subject for a while......perhaps today I shall start.......the time seems right for us to discuss this subject

KAMI, umat Melayu beragama Islam pada hari ini berjanji tidak akan berhasad dengki, khianat dan iri hati, bertelagah dan berbalah sama sendiri. KAMI berjanji akan bersatu padu dan patuh menegakkan agama Islam. KAMI juga berjanji akan bekerja kuat untuk menyara diri dan keluarga kami.
KAMI sedia bersaing sesama umat Melayu dan kaum-kaum lain dengan jujur dan terhormat.
KAMI umat Melayu bersumpah setia untuk:
Mempertahankan kepentingan dan hak Melayu;
Mempertahankan kedaulatan Raja-Raja Melayu;
Memperjuangkan ikhtisad dan pelajaran bangsa Melayu; dan
Mempertahankan maruah Negara supaya aman sejahtera.
Look at us today.........

Just take a good look of what we have achieved.......

Especially on the KAMI part..........

Does this KAMI even exist? or is it Aku, Engkau, Lu, Gua, Suku Sakat Aku, Anak Beranak Engkau, Proxi Moxsi Aku kinda thing going on?

Ke Orang Melayu ni dah kena Sumpah?

Gua pun pening kepala pikir siut.....apekebenda la yang buat kita kelam kabut sangat ni.....


There must be something missing..........

the gel......the glue.....the lubricant..............Anwar don't get overly apahal lu punye Gay boy collection semua muka pecah....camsial aje....

anyway folks let me introduce to you the potential missing component....

Social Capital....


panjang gua nak cerita ni......

lets us start by defining what in the world is this thing called the Social Capital.....

There is growing empirical evidence that social capital contributes significantly to sustainable development. Sustainability is to leave future generations as many, or more, opportunities as we ourselves have had. Growing opportunity requires an expanding stock of capital. The traditional composition of natural capital, physical or produced capital, and human capital needs to be broadened to include social capital. Social capital refers to the internal social and cultural coherence of society, the norms and values that govern interactions among people and the institutions in which they are embedded. Social capital is the glue that holds societies together and without which there can be no economic growth or human well-being. Without social capital, society at large will collapse, and today’s world presents some very sad examples of this.


From a sociological point of view the term is nothing new, Emile Durkhiem put forward the logic of group life of a community as an antidote to the anomie but from an economic point of view, especially in the areas of development economics it is a relatively new variable which is very hard to quantify.

Social capital can be understood most usefully by distinguishing two interrelated categories of phenomena: (a) structural, and (b) cognitive. These categories are as fundamental for understanding social capital, I would propose, as the distinction made between renewable and non renewable resources is for natural forms of capital.
The structural category is associated with various forms of social organization, particularly roles, rules, precedents and procedures as well as a wide variety of networks that contribute to cooperation, and specifically to mutually beneficial collective action (MBCA), which is the stream of benefits that results from social capital.
The cognitive category derives from mental processes and resulting ideas, reinforced by culture and ideology, specifically norms, values, attitudes, and beliefs that contribute cooperative behavior and MBCA. 
The elements of social organization in the first category of assets facilitate MBCA, in particular by lowering transaction costs, having already established patterns of interaction that make productive outcomes from cooperation more predictable and beneficial.
 Ideas in the second category predispose people toward MBCA, in part because once they are widely shared they make cooperation more likely. Norms, values, attitudes, and beliefs that constitute cognitive social capital are ones that rationalize cooperative behavior and make it respectable. While it is possible in the abstract to have structural forms of social capital without cognitive ones, and vice versa, in practice, it is unlikely and difficult for either to persist without the other.
Norman Uphoff :Understanding social capital:  learning from the analysis and experience of participation

Let us now look at the attributes of Social Capital and also the differences of Social Capital Vs Physical Capital (Batu, Kayu, Duit, Mesin, Orang dan lain lain lagi)

While social capital does take on many forms, there are underlying similarities among all of the diverse forms. In all forms, individuals who devote time to constructing patterns of relationships among humans are building assets whether consciously or unconsciously. Further, all forms of social capital share the following attributes:

Social capital is formed over time and is embedded in common understanding rather than in physically obvious structures;

Common understanding is hard to articulate precisely in language; and

Common understanding is easily eroded if large numbers of people are concerned or if a large proportion of participants change rapidly-unless substantial efforts are devoted to transmission of the common understandings, monitoring behavior in conformance with common understandings, and sanctioning behavior not in conformance with the common understanding.

These commonalities are not shared with physical capital and are the source of substantial differences between these two forms of human-made capital.
Differences between social and physical capital

The similarities among diverse forms of social capital lead to some key differences between social and physical capital. 

Social capital does not wear out with use but rather with disuse; Social capital may, in fact,improve with use so long as participants continue to keep prior commitments and maintain reciprocity and trust. Using social capital for an initial purpose creates mutual understandings and ways of relating that can frequently be used to accomplish entirely different joint activities at much lower start-up costs (Putnam, Leonardi, and Nanetti 1993). It is not that leaming curves for new activities disappear entirely. Rather, one of the steepest sections of a learning curve-learning to make commitments and to trust one another in a joint undertaking-has already been surmounted. A group that has learned to work effectively together in one task can take on other similar tasks at a cost in time and effort that is far less than that involved in creating an entirely new group out of people who must learn everything from scratch.

It is not easy to see and measure; Social capital, by contrast, may be almost invisible unless serious efforts are made to inquire about the ways in which individuals organize themselves and the rights and duties that guide their behaviour sometimes with little conscious thought

It is hard to construct through external interventions; A donor can provide the funds to hire contractors to build a road or line an irrigation canal. Building sufficient social capital, however, to make an infrastructure operate efficiently, requires knowledge of local practices that may differ radically from place to place. Organizational structures that facilitate the operation of physical capital in one setting may be counterproductive in another. Local knowledge is essential to building effective social capital. Creating social capital that makes physical capital operational over the long run is something that individuals who successfully use physical capital repeatedly do, but it is not as well understood as the technology of constructing physical capital. For private sector activities, an important aspect of entrepreneurship is bringing relevant factors of production together and relating them effectively from one to another. Aspects of these skills are taught in schools of management and learned in the workplace through experience. The incentive to create social capital related to private enterprise is attributed to the profit motive. A great deal of what private entrepreneurs do is to create networks of relationships that increase the profits that can be obtained, and 
National and regional governmental institutions strongly affect the level and type of social capital available to individuals to pursue long-term development efforts.Larger-scale governmental institutions can facilitate the creation of social capital by citizens trying to solve coordination or collective-action problems or make it more difficult. They facilitate the creation of social capital when considerable space for self-organization is authorized outside of the realm of required governmental action. However, when national or regional governments take over full responsibilities for large realms of human activities, they crowd out other efforts to enter these fields. When national governments take over the ownership of all forests or other natural resources or close down schools and hospitals run by religious groups in an attempt to provide all health and educational services themselves, they destroy an immense stock of social capital in short order. Rarely can this be replaced rapidly.Creating dependent citizens rather than entrepreneurial citizens reduces the capacity of individuals to generate capital.

Well how does all of this fits into the picture of economic development, you may now ask?

Xiangming Chen of University of Illinois at Chicago in Magic or Myth? Social Capital and Its Consequences in the Asian, Chinese, and Vietnamese Contexts came up with a pretty nice table to provide an overview of the various forms of Social Capital, and of how it works in the overall structure of Economy and the probable outcomes, refer table below

All of you would probably want to know where is this monkey heading?

Worry not, the above merely sets the theoretical framework of this berjela jela post.........

Let me give you a few examples of Social Capital at work

The Diamond Trade:Wholesale diamond markets exhibit a property that to an outsider is remarkable. In the process of negotiating a sale, a merchant will hand over to another merchant a bag of stones for the latter to examine in private at his leisure, with no formal insurance that the latter will not substitute one or more inferior stones or a paste replica. The merchandise may be worth thousands, or hundreds of thousands, of dollars. Such free exchange of stones for inspection is important to the functioning of this market. In its absence, the market would operate in a much more cumbersome, much less efficient fashion. Inspection shows certain attributes of the social structure. A given merchant community is ordinarily very close, both in the frequency of interaction and in ethnic and family ties. The whole- sale diamond market in New York City, for example, is Jewish, with a high degree of intermarriage, living in the same community in Brooklyn, and going to the same synagogues. It is essentially a closed community. Observation of the wholesale diamond market indicates that these close ties, through family, community, and religious affiliation, provide the insurance that is necessary to facilitate the transactions in the market. If any member of this community defected through substituting other stones or through stealing stones in his temporary possession, he would lose family, religious, and community ties. The strength of these ties makes possible transactions in which trustworthiness is taken for granted and trade can occur with ease. In the absence of these ties, elaborate and expensive bonding and insurance devices would be necessary- or else the transactions could not take place.

Chinese Merchants in South East Asia :
Chinese merchants in Southeast Asia, JT Land developed a theory of the ethnically homogeneous Chinese middleman group (EHMG) as a club-like arrangement in which Chinese traders within the group cooperated by providing themselves with club goods/local public goods such as contract enforcement, capital and information, in response to an environment lacking basic infrastructure such as legal infrastructure, banking and credit-rating institutions. By cooperating with each other, members of the EHMG were able to enforce contracts,mobilize information and capital, thereby reducing transactions costs, hence outcompeting other ethnic groups to appropriate the role of middleman-entrepreneur. Of the various club goods provided by members of the EHMG, the most important is contract enforcement. Landa developed a theory of the emergence of the EHMG as a club-like institutional arrangement for coping with the problem of contract uncertainty (Landa 1981, reprinted in Landa 1994, Chap. 5). Under conditions of contract uncertainty, Chinese merchants will not randomly enter into transactions with anonymous traders, but will have the incentive to preferentially choose traders whom they trust, hence particularizing exchange relations on the basis of kinship, locality and ethnic ties. This is because embedded in these particularistic exchange relations are shared social norms of behavior (Confucian ethics of reciprocity) which function to constrain traders from breach of contract; any trader who violates the ethics of the group will be punished, including being ostracized from the group. The effects of many individual trader’s discriminatory choice of trading partners is the emergence of an ethnically homogeneous middleman group (EHMG), a club-like arrangement alternative to contract law for economizing on contract enforcement costs in an environment characterized by contract uncertainty. The ethnic boundary of the Chinese middleman group represents the outer limits of a Chinese trader’s discriminatory choice of trading partners because of the Confucian code of ethics which prescribes rules of the game—mutual aid obligations/reciprocity—for members of the same ethnic/dialect group, while not extending mutual aid to outsiders. Constraints on behavior thus exist among members of the Chinese EHMG because of shared rules of the game; members of the Chinese middleman group thus form a moral community. Confucian code of ethics serves as an informal institution, an extralegal institutional arrangement for the enforcement of contracts.

Those are just some examples, there are more that I could cite such as Farmers who cooperate for irrigation to ensure that everyone get the best out of the cooperation arrangement.Closer to home perhaps Felda Settlers cooperative activity may fall within the same category.

Gua sekarang mau kornar baring ......back to my Kasut Atas Kepala post..........

In that post, i introduced the concept of Inclusive Growth waaaaaayyyyy back before that poorly constructed New Economic Model thinggy came there I talked about the Opportunity Curve and of how we should view the original New Economic Policy and NDP, in that post as well I touched a little bit on the negative effects of Social Capital.........more specifically about the Economic Dominance of the Chinese in Malaysia

When the distribution channel is controlled by a particular community who acts in the interest of its own community rather than the general interest of the population, naturally they have the ability to make other communities economically uncompetitive vis-à-vis their own community

And you wanna know the best part about this whole eco-system…..collaboration happens, they who are in-control systematically sells at a higher price especially to the Bumiputras to ensure that the other ethnic community is unable to compete from price perspective…….

If we were to view the Malaysian economy from an ethnic perspective…I would say that the Chinese Economic Eco-System is much more integrated from an end to end perspective, and this also includes ability to raise the necessary financial resources to support the eco-system……with or without Government/Political Party Support….
satD dengan poyonye quoting himself 

In that post also I asked 
So the key question we need to know is did the NEP managed to create a strong Bumiputra Economic Eco-System within the Whole Malaysian Economy and also help the whole economy to grow without retarding the growth of other ethnic eco-system within the Economy?
I believe that question was partly answered by Blogger Darah Tuah in his presentation at the NEM congress , thank you sir!!

But on the issue on whether the Government was successful in creating A Strong Bumiputra Economic Eco-system within the Whole Malaysian Economy, I believe that is not yet answered.

In that post as well, I put forward a theory based on the opportunity curve and how liberalisation would affect the slope of the curve and on whether the Chinese was using their Social Capital to Negate the policies of NEP
that reversing the said policy is akin to changing the slope of the Opportunity Curve, when what the Government should be doing is to push the Curve Upwards by improving the implementation strategy, its delivery mechanism and building the necessary monitoring mechanism to ensure that the Original Goal and Objective is achieved.........

More importantly we must ask ourselves did NEP manage to change the original slope of the Opportunity Curve?
If it did not (this monkey thinks so!) given the fact that there is economic dominance of a particular ethnic segment of the population which could counterbalance the access to opportunities by Government policies....then why is the Prime Minister rushing towards dismantling the NEP?

So here we are today, back to the same topic, perhaps(hopefully) with a better understanding on the impact of Social Capital to our Economic Structure.

To me there is nothing wrong with harnessing Social Capital as it is essentially an informal Affirmative Action undertaken by the Selected Groups for its own benefit and it is also beyond the reach of the Law.

Anti-Discrimination Laws and Equal Competition Laws can be enacted but in reality enforcement will be emotionally charged and subject to political manipulation in a Plural Society such as Malaysia........

For hundreds of years the Malays under the feudal system have put their trust in the mobilisation of their Social Capitals in the hands of the Sultans and the Ruling Elites, I believe that it has failed to realise its full potential.

Today the initial efforts to remobilize have begun via the Malay Consultative Council and the recent announcement by the Stupid Prime Minister of ours to create the Bumiputra Development Council.

Here I would like to depart from Conventional thinking, 

Can we the Malays leave our fate in the hands of the Government?

Is their current Value System and thinking process with regards to the Bumiputra Socio-Economic Agenda high on their list of priority or is it just an after-thought?

Look at how the Chinese mobilise their Social Capital time and time again.......

Underneath the guise of meritocracy, equal opportunity, Middle Malaysia sloganeering they are in-fact harnessing their collective Social Capital irrespective of their political inclination,  just look at how they defend the Chinese Vernacular School as a "Constitutional" right when it is actually the base to build their Social Capital against the rest of us. I do not need to cite the numerous cases of how their Social Capital was used against other ethnic community in Malaysia, those who have actually experienced it first hand are welcomed to share your tots in this post for the benefits of others.

And yet, when we the Malays begin to realise the need to consolidate and harness our collective Social Capital, those who fear that we may disrupt their current "comfort zone" begin their negative labelling of our efforts.

Just look at the so-called Economic Model being introduced, to me it is a super lousy paper prepared without the proper analytical framework in Development Economics, you may read my thoughts on how it should have been done here

With this new perspective that I have introduced, I sincerely hope that you my readers would take some time to think about how we should view Malaysia's Development Strategies going forward for this beloved nation of ours.

The government on the other hand must also look into this issue seriously to ensure that we as a Nation can build a Consolidated Social Capital instead of compartmentalized ethnic based Social Capital which is at odds with one another.

I'm so proud of myself for not mencarut today!

FUCK me........dammmmmm....

Anyway folks, go back to the Sumpah Melayu, ask yourself did it not try to build our Collective Social Capital?

This Monkey will stand up and take the oath, how about you?

Technical Readings

  1. Social  Capital,A Multifaceted  Perspective
  2. Magic or Myth? Social Capital and Its Consequences in the Asian, Chinese, and Vietnamese Contexts
  3. The bioeconomics of homogeneous middleman groups as adaptive units: Theory and empirical evidence viewed from a group selection framework
  4. The Diaspora of Ethnic Economies:  Beyond the Pale?

Minds are like parachutes; they work best when open. -Lord Thomas Dewer