The Formation and Destruction of Social Capital - Lessons from East German Rural Restructuring

Twenty years after German unification, rural East Germany still remains in deep economic crisis. The fact that the physical, social and private infrastructure have improved significantly, but with seemingly little effect on the economic performance and negative demographic trends, raises the question of alternative, institutional and social explanations for the current crisis. In this context this paper explores the concept of social capital and its relation to rural development in order to understand the current rural crisis in East Germany. It describes the process of agricultural restructuring after unification and analyses the processes of formation and destruction of different forms of social capital in this process.

It is argued that social capital is connected with particular institutions and activities. In the case of Rural East Germany it was difficult for many actors to draw on network relations, simply because those networks vanished after having lost their meaning, institutional and physical basis. However, the new institutional framework, which has been transferred from the West, does not offer suitable incentives for the formation of other, new forms of social capital that are necessary to overcome the rural crisis.

A generalization from the East German experience is that it is important to identify the base of social capital and thereby its likely durability in times of change. If an economic, social or cultural function is lost, it is likely that social capital related to this function will also be destroyed. However, this also gives room for careful optimism, due to the fact that new economic, social or cultural activities may serve as a basis for new social capital.