By Pasha Syed
As we all aim to invest in our future, we have choices of what types of investment will yield the greatest returns. As we know, human capital is an endogenous variable in the economic growth model. Policymakers in New York State have recognized this and turned this into action.
Thousands will benefit directly from “free education,” but even more will reap the positive externality of creating the educative environment.
What about social capital? Can social capital have a direct impact on economic growth and create a better lifestyle? As human capital, or education, enables creativity of ideas and solidifies economic growth, social capital has the potential to do the same with additional positive externalities.
Consider at the micro level, you and your friend are walking down the street and you recognize someone with whom you went to college, but your friend at first glance is terrified. He has never seen a person wear a dress like that and look so different in his entire life.
You, on the other hand, while investing in human capital in college, also invested in social capital. You know the person is a trustworthy and upright individual because you have developed a relationship from your college days. Your social capital has the ability to connect and leverage two different people and take them to the same wavelength.
This can enable both of them to utilize each other’s specialization and increase total output. It can also allow for the multiplier effect to take place as they pass on the word to other parties. Furthermore, social capital has the ability to bridge gaps and create mutual understanding with respect to an increase in economic growth.
So what is holding us back from attaining social capital? Sometimes it’s our prejudices, or maybe our upbringing, or fear of differences. This is where human capital’s positive externality brushes away fiction from fact, therefore allowing social capital to naturally take place.
As an imam of the Islamic faith and one who studies religion, two quotes stand out to me that are anchored by social capital. One is by Jesus and one by Muhammad (peace and blessings be on them).
“A new command I give you: Love one another. As I have loved you, so you must love one another.” – John 13:34
“You will not enter Paradise until you believe and you will not believe until you love each other. Shall I show you something that if you do it, you would love each other? Spread peace (salutations) between yourselves.” – Muslim 54
Human and social capital will yield monetary bonuses, but moreover they will create a social-economic haven that will give us the best of financial and spiritual returns.
Pasha Syed, of Buffalo, is an imam and educator who serves communities domestically and abroad. He has an M.A. in social economics from the University at Buffalo.