particular political regimes or policy programs. Because such relationships are built through
repeated interaction across a range of situations, they are unavoidably socially and spatially
“local” and tied to a community.
Accordingly, several large and seemingly unrelated literatures have documented the
relationship between social relationships and economic benefit. Streeck (1992), for example,
has theorized the possible impact of institutionally-rich social environments on high quality
manufacturing. Industrial districts in Italy, Germany, and the United States are held to be the
product of complex patterns of social relationships (Becattini 1992; Pyke 1992). Strong
societies may emerge to fill the voids left by weak states (Migdal 1988) and business
networks are thought to be a factor in Asian success (Hamilton 1991). Moreover, strong
social relationships may facilitate the emergence of new organizational forms (Powell 1990).
As empirical research accumulates, the findings often seem to be consistent with one
of several social capital arguments but the evidence remains less than convincing. Some
accounts may be categorized as self-satisfied post hoc constructions that lack explanatory
power upon closer examination. Research designs sometimes sample on the dependent
variable by investigating sites that are believed to be especially successful and rich in
relationships. Data are not always systematically collected. Empirical research almost
always observes a cross-section of an ongoing social system so that the direction of causality
must be argued, rather than demonstrated. The claims made on behalf of social capital are
sometimes mutually contradictory. Unsurprisingly, calls for greater conceptual clarity and
for more adequate empirical observation are not uncommon (Durlauf 2002; Markusen 2003).
This paper examines three distinct possible mechanisms by which social relationships
could be linked to economic transactions. All three of these arguments are consistent with an
observation of an overlap between economic exchange and social relationships but each