The Dark Side of Social Capital Re-examined from a Policy Analysis Perspective: Networks of Trust and Corruption

Abstract

This work deepens the analysis of the “dark side” of social capital proposed by Alejandro Portes and Patricia Landlot and revisited by Peter Graeff. For this purpose, it combines the individualistic approach of economic theory with the social perspective of other social sciences to study the economics of corruption embedded in a social structure (a network of trust). It assesses the importance of social relations as a necessary condition to achieve corrupt objectives. To do so, a model of corrupt public contracts embedded in networks of trust is built. Theoretical evidence is found on the importance of networks of trust for the success of corrupt deals between officials and recipients. In addition, seeds are sown for future research and analysis of the role of institutions and monitoring agencies. Finally, the foundation is laid for research in the field of experimental economics to conduct an empirical examination of this proposed model and some policy implications are derived.