The Diminution of Social Capital and State Expansion

Key Insight

The prevailing individualistic and materialistic policy mindset has led to a series of disastrous outcomes by improving material conditions at the expense of social relationships. Examples include 1950s and 1960s urban renewal, which destroyed community bonds in decrepit neighborhoods to build new housing projects that became 'atomized wastelands.' Similarly, 1970s welfare policies, while providing material aid, enabled lonely young girls to give birth out of wedlock amidst cultural disruption, decimating intact families. Deregulation further harmed communities as giant chains like Walmart replaced local businesses, and global financial markets supplanted local banks, erasing community networks and local knowledge.

Internationally, this shallow approach led to failures like offering only privatization advice to post-Soviet Russia, neglecting the crucial need to rebuild communal trust and law and order. The invasion of Iraq also overlooked the deep psychological effects of tyranny and underlying hatreds, resulting in an ethnic bloodbath after political institutions were merely replaced. Other policy missteps include financial deregulation that ignored emotional contagions among traders, enterprise zones that assumed tax cuts alone would spur inner-city economies, and scholarship programs that failed because they addressed only financial aid, not emotional disengagement or academic unpreparedness—only 8 percent of college dropouts occur for purely financial reasons.

These policies, alongside cultural, economic, and information revolutions, contributed to a 'diminution of social capital,' as described by Robert Putnam. Society became more loosely affiliated, weakening self-restraint, respect for others, and social sympathy. This was particularly devastating for the less educated, leading to disintegrating family structures, skyrocketing out-of-wedlock births, and a collapse of trust in institutions. British philosopher Phillip Blond observed that this individualism created atomized societies where the state grows to fill social gaps; fewer informal constraints necessitate more formal state power, leading to outcomes like 4 million security cameras in Britain. Consequently, politics became polarized, identity-driven, and incapable of compromise, resulting in a 'grab what you can' mentality, spiraling public debt, and a cynical view of government.