Robert Putnam. 1993. Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press. Chapter 6 (“Social Capital and Institutional Success”), particularly pp. 167‐185.
Cooperation amongst individuals requires trust. The trust is social capital that can be lent to individuals within the same social network in order to facilitate collective action. Forms of social capital, such as trust, social norms, and networks, increase with use and diminish with disuse. Personal trust translates into social trust in modern settings through the norms of reciprocity and networks of civic engagement. Horizontal networks are more conducive to solving collective action problems than vertical networks because subordinates are less able to punish a superior for defection.
Strategic behaviors of individuals are determined by the society in which they operate. Path dependence can produce durable difference in performance between two societies, even when the formal institutions, resources, and individual preferences are similar.
Social context and history condition the effectiveness of institutions. Building social capital is the key to making democracy work.