Rotating-credit associations depend on social trust to function.

Evidence

This form of social capital depends on two elements: trustworthiness of the social environment, which means that obligations will be repaid, and the actual extent of obligations held. Social structures differ in both these dimensions, and actors within the same structure differ in the second. A case that illustrates the value of the trustworthiness of the environment is that of the rotating-credit associations of Southeast Asia and elsewhere. These associations are groups of friends and neighbors who typically meet monthly, each person contributing to a central fund that is then given to one of the members (through bidding or by lot), until, after a number of months, each of the n persons has made n contributions and received one payout. — Coleman, SocialCapitalCreation-1988, 85

Categorization

• DEFINE: The passage defines a concrete social mechanism — the rotating-credit association — and ties it to the two-element theory of social capital.
• XREF: Connects to the essay on sacrifice’s theme of trust underpinning communal institutions; also parallels ethnographic work on reciprocity (Mauss’s gift economy). — connects to: Economic institutions depend on personal networks that generate trust and enforce norms — Coleman, SocialCapitalCreation-1988, 28; Trust-based obligations function as exchangeable credit within social relationships.; System trust rests on trusting that others also trust — Niklas Luhmann, Trust and Power, 261 (+7 more)

Related

• Trust-based obligations function as exchangeable credit within social relationships. (similarity 0.92)
• Trust-based reciprocal favors operate like financial capital (similarity 0.83)
• Rotating-credit associations cannot survive in socially disorganized urban settings. (similarity 0.81)
• Relying on collective trustworthiness is a collective, not merely individual, problem. (similarity 0.79)

Broader Connections

• System trust rests on trusting that others also trust #expands (0.85) — Niklas Luhmann, Trust and Power, 261
• Rotating-credit associations cannot survive in socially disorganized urban settings. #expands (0.85) — Coleman, SocialCapitalCreation-1988, 89
• Reciprocal trust creates mutual incentives for trustworthiness #expands (0.80) — Nicolas Baumard, A mutualistic approach to morality, 166
• Reciprocal trust multiplies each party’s incentive to be trustworthy #expands (0.80) — Russell Hardin, Trust and Trustworthiness, 1016
• Moral trust requires temporally stable social contexts to operate #expands (0.80)
• Building stable relations generates the incentives that produce trust #expands (0.75)