1. THE MOST DEVELOPED PLACE ON EARTH
Social capital investment
for fostering community development
Augusto de Franco
2004
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2. The most developed place on earth: social capital investment for fostering community
development
2004 by Augusto de Franco
Obra entregue ao Domínio Público.
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3. Index
Foreword
Introduction
Chapter 1 | Social Capital and community development
Chapter 2 | Overcoming myths and prejudice for fostering local development
Chapter 3 | The pillars of local development
Chapter 4 | A glocal reference: “Earth Charter”
Chapter 5 | Social innovation
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4. Foreword
The purpose of this book is to propose an investment in human development by investing in
social development. In other words it is the investment in people in order to improve their living
conditions by themselves. There is however an important difference. The proposal hereto is that
this should be done through investment in the local community to improve their social
interaction conditions.
Thus, the proposition is an investment in the social environment to generate the necessary
“energy” for human and social sustainable development.
This “energy” can also be understood as a kind of “social power”. This “social power”, which
flows from the collective to the individual, is called empowerment. Without this “power” there is
no development for the collective (social development), nor the individual (human
development). There can be even a spur of growth, but it will not bring improvements to the
quality of life or social interaction in the long run (i.e., it will not be a sustainable development).
This “energy” – the source of resources that calls for development – has been studied lately as
the new kind of “capital”: the so called social capital.
This book proposes that you become a different kind of investor: “a social capital investor”.
The results of its applications will be visible in the very first year, but you should be a little
patient and wait for the process to pick its own dynamics and be able to “stand on one’s own
legs”.
In average you will not get any results before a three years period in terms of local autonomy and
projection. For those who invest in other means of non-speculative capital, we must say, it is a
very reasonable time considering the return on investment. And indeed, the investment in social
capital is very rewarding.
The investment proposed aims to transform the community that lives in an area you have chosen
to live in, work or spend time at, into a community that shares a common dream – a collective
dream of a new future. Strictly speaking, the investment proposed seeks to build a project
community.
What for? To transform the place you want to live in into the best place in the world; to build the
most developed place on earth for you. In fact, it is an ambitious but doable target, and it
depends only on what we want to understand by development.
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5. Introduction
A new trend is arising in Brazil and in several other countries around the world to combat
poverty:
• Investing in the permanent capacities of the people and in favorable social environments
instead of just offering resources.
• Fostering a sustainable human and social development instead of practicing
assistencialist and clientelist programs.
• Building partnerships between individuals and social organizations, companies and
governments at all levels, to execute innovative programs of investment in human and
social capital instead of just waiting for the State to provide them.
• Focusing on assets the community has instead of acting by sectors to meet the needs of
the populations.
• Starting from mapping the latent potentialities that can boom raising new resources
instead of starting from bureaucratic diagnostics and complaining about the lack of
budget.
• Solving the problems of the community, taking initiative, adding competence and
assuming responsibilities to foster local development instead of waiting for someone
from outside or above to come and solve the problems.
It is a new wave getting bigger in the last years: the wave of local development.
It can deeply change the way governments, companies and social organizations act, increasing
efficiency and effectiveness combating poverty.
The traditional programs to fight poverty are not effective. Most of the times, these programs
feed on poverty, feed poverty and maintain poverty.
The governments must understand that centralized, assistencialist and clientelist programs do not
achieve good results. It’s high time such actions were surpassed.
Companies are aware that the exercise of corporate social responsibility or private social
investment cannot be based on assistencialist or sectored and disjointed program.
What is best: adopting 200 children from a poor community catering for their needs concerning
health and education, or building conditions so that this community can take care of their own
underprivileged children?
What is more sustainable? What is more viable?
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6. Civil society has been taking the initiative – most times in partnership with governments and
companies - in fostering integrated and sustainable development processes in thousands of places
in the country.
What is DLIS?
In the last few years several strategies and methodologies regarding local development induction
have been taken. There is a variety of experiences in process at the moment: local economic
development, sustainable local development, Local Agenda 21, social-productive systems and
alternative and solidary social economic network on a local basis. In Brazil, the widest
experience since last decade is the DLIS – Sustainable and Integrated Local Development.
Different from other methodologies of local social development promotion, the DLIS is,
fundamentally, a strategy of investing in the social capital. This strategy is applied through
innovative social technologies of network articulation and consolidation of the democratic-
participative processes performed in local scale. There is a methodology which guides the use of
these technologies and thus, puts the DLIS strategy in operation.
The DLIS methodology basic steps are the following:
1) Each community makes a participative diagnosis to get to know their reality, identify
their problems and uncover their calling and potentials.
2) A development plan is formulated based on this diagnosis, also in a participative way.
3) From this plan, an agenda of priority actions is drawn and then it should be carried out by
several partners: the local community, the City Hall, the state government, the federal
government, the companies and social organizations.
4) All this is organized by a democratic forum formed by local leaderships.
5) These local leaderships participate in a qualification process to be able to carry out an
entrepreneurial community management of their development process.
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7. CHAPTER 1
Social Capital and community development
This chapter deals with a very important subject: how it is possible for any community to start
fostering its own development, on its own way, focusing on their own potential, making use of
their capacity to invest in their own human and social assets.
We have to start with two fundamental questions:
1- What is development?
2- What is community?
It will all depend on the answers we give to these two questions.
If you think of development as the automatic result of the economic growth of a community –
which can be evaluated, for example, by the number of buildings, automobiles and other things
usually associated with progress – I am sorry to say this book is not going to help you.
If you think that community means any human collectivity, this book will also have no use for
you.
In this chapter and in the ones to follow, you will find the pillars of local development, construed
as the development of groups of projects stemming from the communities themselves.
A silence that explains a lot
You have probably, when in a car or bus is traveling along the roads in the country, passed by
many poor underdeveloped towns. This town could even be the one you live in.
In general, what do you see in these occasions? Many flower beds? Stone benches surrounded by
well kept gardens? A fabulous portal where the young welcome the visitors, hand over flowers
and brochures telling the story and describing the geography of the place and the good things it
has, the products they produce, the celebrations they have?
No. What you see are the rusty car parts, old tires, rubble, dirty facades, cracked and peeling
walls, broken awning window glasses; and, besides all that, debris and garbage, a lot of
accumulated garbage.
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8. It is really a very sad picture.
If you enter this town and ask the people who live there why they do not take care of the entrance
of their own town, they will look at you in surprise and say: “Well, because it is none of my
business.” Or, maybe they will say: “It is the responsibility of the politicians who do not do
anything.”
And if you respond: – “If the politicians don’t do anything, why don’t you do something?
Wouldn’t it be possible for you to gather twenty or thirty people and on a Sunday morning start a
team work to remove the garbage, paint the facades and replace broken glasses? – silence would
probably be the aswer. Pay close attention to this silence; it explains a lot.
The silence that explains why a community is considered
underdeveloped
Well, then you enter the city and look for the local leaderships: the mayor, the town council
members, community leaders, the rural and urban union presidents, the owner of the bakery and
the drugstore, the priest and the pastor, the judge, the bank manager. You look for these people
to talk to them about the development of that community.
Let’s say you manage to have a meeting with some of these people, and that during the meeting
you ask them if in that community there are illiterate young adults who dropped out of school
before learning how to read and write. You ask them how many illiterate young adults there are
and if it is possible to know who they are. There will probably be some discussion, nobody will
know the exact number and after a quick exchange of opinions the answer will come: “Well, we
may have here approximately three hundred illiterate young adults.”
You keep asking: “And do you know these young adults, where they live?” They will answer
yes, and may even start listing names: the son of Toinha, who helps his father in the plantation,
there are also three kids of Esmenia’s, who lost her husband last year…” and the list keeps going
on indefinitely with the contribution of the other surrounding people .
At this point you interrupt them and ask: “But why did you let the situation go this far?”
Their first reaction will be defensive; they will try to justify with something of the sort (and it
doesn’t matter if you are in the state of Para or Bahia or in the Ribeira Valley, in Sao Paulo):
“The government (state or federal) doesn’t help. We are not strong enough and alone we can’t do
much. Besides that, there is so much to be done… The Town Hall doesn’t have a cent, can’t even
pay the workers’ payroll and the people don’t want to do anything, they are not united, every
only mind their own business, their lives”.
Then you ask: “But, come on people, is it possible that in this town, which has almost twenty
thousand inhabitants (let’s assume it is the case), does not have a retired teacher, a bank manager
with some spare time, a more advanced student with some free nights or any other person who
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9. can teach these young adults? Is it so difficult to organize some classes every day from 7 to 9 pm
in a room in the church or in the union headquarters?
The answer will be be “No”, they will say that it is not possible to do this; that it has already
been tried once by Mr. So and So, but the thing died down when Mr. so and so moved to the
state capital.
You keep insisting and ask: “But if it is so easy, why don’t you do it?”
Then you will receive silence again as an answer; a thick, deep silence which explains
everything. Explains why that community is considered underdeveloped.
The right question
To understand what development is, the question we have to ask cannot be why a certain
community was able to develop; or where the resources to foster this development came from; or
even, who had the ingenious idea of investing there, in this or that economic sector, which
prospered and boosted the development of the community as a whole.
To understand what community development is, the question we have to ask is why the
community is not able to develop, what is preventing the community from developing; or, in
other words, why the people are not, collectively, having the initiative to foster their own
development.
This is the right question.
The answer to this question will lead us straight to a new concept, to a new idea that tries to
explain why, in certain social environments, the people feel they have enough power to foster,
collectively, their own development and why in other environments the people are not
empowered enough to do so.
And also why, in certain societies, people believe in one another and trust each other when they
decide to do something together; from a joint action to clean the entrance of the town to a local
literacy program for young adults. And, on the contrary, why in other communities people
always think they are weak to do anything, that they always need somebody from outside –
stronger, more powerful, with more resources – to solve their problems; that alone they will
never be able to solve anything. In these communities people do not believe in one another, they
do not risk anything with the other because they think he/she will let them down when they need
them the most. They are afraid of committing themselves to helping somebody and later, when
they need help, nobody will do the same for them.
The name of the new concept, which was built to explain this difference, is social capital.
To understand what social capital is, it is not enough to have a definition to the term. Social
capital is an idea that has to do with people’s power to do something collectively; but it is a
“social power”. It is the society that bestow this power (i.e., empowers) on its individuals. It is
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10. the social environment that blows this kind of “energy” which explains, for example, why certain
communities seem to be “alive” while others seem to be dying or withering.
That is, this “social power” depends on the way the political power is organized and how it acts.
If the political power is vertically, hierarchically structured as a pyramid – with few on the top
and many at the bottom with few connections among them – this “political power” will be highly
reduced and people will be afraid to risk. They will be untrustworthy of one another and will not
do much as a group. And if the political power acts in a centralized and authoritarian way, if it
does not try to create conditions to encourage the collective participation, to help people make
collective decisions democratically, this political power will be low.
On the contrary, if there are lots of social networks – i.e., if the people are connected with one
another and if they can have multiple ways to reach one another – and if, besides that, there are
several democratic-participative processes taking place (councils, forums, and development
agencies with the presence of people from the government, the companies and the organizations
from the society), this “political power” will be high.
In other words, the more networks and participative democracy there is, the higher the level, the
stock or the flow of social capital in a society. And, the fewer networks and democratic-
participative processes there are, the lower the social capital of a community will be.
Well, the lower the social capital of a community is, the lower its development will be - there is
no mistake or exception. A community with insufficient level of social capital will have
insufficient level of development. It does not matter if you bring to this community a huge
company which will hire everybody. From a development point of view this people will keep on
being poor and the community will remain poor, because from this point of view – and contrary
to what is so often repeated – poverty is not the insufficiency of income but it is the insufficiency
of development.
If we are in agreement, we have to go back to our fundamental question to understand what
community development is. The fundamental question is: why isn’t a community developing,
what is preventing it from happening? Or, in other words, why aren’t people collectively taking
the initiative of fostering their own development?
We will insist on this question. If we do not answer it, we cannot understand why a certain
community is considered well developed and another is considered underdeveloped.
The big exterminators of the social capital
The question is to discover what is preventing the people from exercising the leading role in the
solution of their own problems and why they are not able to use the several opportunities that are
daily open before their own eyes.
Why?
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11. The answer has to do, as we have said, with the way political power is structured and how it acts.
It has to do, in other words, with the organizational standards and the ways to regulate (conflicts)
in practice.
If people keep waiting for the things that can get better in their lives to come always from above,
from some greater power and, believing in that, they remain paralyzed, so, they cannot develop,
neither individually nor collectively. However, people are not born with these beliefs (that is,
they are not born believing that good things come from above and disbelieving themselves); this
came to their heads at some moment, somebody put it there, some kind of political system
interested in making people think this way and preventing them from acting by themselves, from
walking with their own legs.
What for? To make them always dependent on an intermediary, dependent on somebody to act as
a middleman of the public funds and also as a godfather to offer protection, give directions, give
advantages, favor, and privileges and that in return for these services will get the votes and the
several kinds of support necessary to keep them where they are or to conquer another position of
power. A vertical chain is formed this way – a chain where the lower links are the town
representatives and the mayor, but that passes through the state representatives and the governor,
the federal representatives and the senator and reaches the president. But that also involves
several other people, such as part of the state bureaucracy and the people holding positions of
trust – the main auxiliaries such as the ministers and the state and municipal secretaries and a
crowd of assistants – who work, direct or indirectly, to fulfill the political intentions of those who
appointed them.
In general, the political systems vertically organized and mostly acting autocratically can only
keep their position if they deactivate the will to risk, the leading role, the collective participation.
They do that through three main practices: the centralization, the assistencialism and the
clientelism.
These three practices are the great exterminators of the social capital. The more centralism,
assistencialism, clientelism are practiced in a community, the lower its social capital will be, and
therefore, the lower the development level of the community will be.
What is necessary to explain
A community – if it is really a community and not only a collectivity of people settled in one
territory – will not develop only if there is something preventing it from happening. And a
collectivity settled in one territory will not become a true community only if there is something
preventing it from happening.
To say this means to assume the following: that human beings in society, left to their own
devices, are able to generate spontaneous order from their interaction, but only if this interaction
is – to some degree – cooperative.
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12. But it means to say, besides that, that this interaction will always be – to some degree –
cooperative, unless something prevents the social amplification of this cooperation, inducing a
systematic competition, a competition so strong that it will make the social amplification of this
cooperation impossible.
This is social capital: cooperation socially amplified; cooperation that reproduces itself socially.
There wouldn’t be any human society if the human beings did not spontaneously cooperate with
one another.
It is not necessary to explain cooperation. What is necessary to explain is the lack of cooperation.
According to this point of view, the human being is intrinsically cooperative; if not, it is not
human. There is here, obviously, an anthropological bet which puts itself at a distance from the
Darwinian biological views which say that the human beings (or their genes, or their memes) are
intrinsically competitive.
Those who work with community development have to make that bet; if they don’t, they had
better stop working with communities. Communities are the result of human being’s capacity to
cooperate when put together in interaction for a certain period.
Somebody may say that such a bet is not a very scientific thing; science could never prove that
human beings are able to cooperate spontaneously, and they will be right. This bet is not at all
scientific; as the bet on democracy is not scientific either. Nobody can scientifically show that
democracy is a better system (or less worse) than the others. There is, by the way, a lot of
evidence in contrary.
For example, how can those who know something be governed by those who don’t?
How can somebody who does not have sufficient knowledge about the ecological implications of
an enterprise (for example the construction of a dam or the transposition of a river) be able to
make key decisions about these enterprises, decisions which can bring about serious
environmental consequences?
However, notwithstanding all that, we would rather bet on democracy; bet on democracy also
means, deep down, to bet on human beings’ capacity to establish, by themselves, coexistence
pacts which do not make collective survival impossible. It means to bet that human beings when
left to their own devices will not enter a war of all against all.
A philosopher called Hobbes did not bet on democracy because he thought that when left to their
own devices, the human beings would destroy one another, because each one would permanently
fight the others to satisfy their own selfish interests. Taken to the limit, this would make human
coexistence and their survival in society impossible. But many people today, who call
themselves democrats, as it is not politically correct to be called something else, still think like
Hobbes. The States are, to some extent, hobbesian; they organize themselves to impose to the
societies a certain order standard to “pacify” the human beings and prevent them from fighting
continuously and destroying one another.
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13. The ones who believe in the participative democracy, on the contrary, think that order standard
can sprout form the free interaction of human beings. Thus, those who bet on democracy also bet
on human society’s capacity to generate order spontaneously from cooperation.
In other words: those who bet on community development, bet on democracy. This does not
mean, obviously, that those who bet on democracy necessarily bet on community development,
but it means that those who do not bet on democracy cannot bet on community development.
To win we have to bet
There is only one way to foster community development: to invest in the social capital, but if the
social capital is spontaneously produced, why is it necessary to invest in it? It is a good question,
isn’t it? For this good question we also have a good answer. The social capital is only produced
spontaneously under certain “environmental” conditions. If we organize the people hierarchically
as in a pyramid, and if we forbid their democratic participation, so the social capital stops being
spontaneously produced, better saying, it stops being produced in the necessary quantity and
quality to build a well developed community. Why? Because, under these circumstances, the
cooperation cannot increase and reproduce socially.
If we organize a society as, for example, a military order, the production of social capital goes
down to near zero.
And if we make it impossible for people to get together in cooperation to decide their own
collective destiny and act accordingly to decide on a way towards the future they want to
achieve, the social capital will not be produced and reproduced in society in the necessary
quantity and quality to foster human and social sustainable development of that community.
In the same way the social capital will not be produced and reproduced in the necessary quantity
and quality to foster community development if we draw and apply centralized, assistencialist
and clientelist policies and programs
When we practice such things – hierarchy, autocracy, centralization, assistencialism and
clientelism – we are, merely, creating social environments in which the social capital cannot
flourish, accumulate and expand as we are making it impossible the expansion of social
cooperation. From the point of view adopted here – the point of view of the community
development – we are creating anti-human environments.
But, one thing is for sure: if we do not create such environments – lethal for the social capital –
and, on the contrary, foster the existence of social networks and democratic-participative
processes, it is a done deal: the social capital will flourish, accumulate and expand. The more we
do this, the more networks and democratic-participative processes are created, the more social
capital there will be, and the more community development there will be, too.
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14. Therefore, it is necessary to really invest in the social capital, but what does it mean to invest in
the social capital? It means to invest in networks, in local democracy, that is, it means to
deconstruct the pyramidal organization models and the centralizing decision making processes.
This investment has to be put in practice and not only talked about. There is no use in making
political speeches against the hierarchies and against the lack of democratic participation; there is
also no use in blaming the centralizing political agents, who foster assistencialists and clientelists
programs. It is as if a stock market investor, instead of buying shares of a certain company,
would like to get profit only by praising this certain company and accusing the others. If the
investor wants to earn profits he has to take risks. To invest in the social capital is the same
thing; we have to bet on that society, on that community. We have to believe that by providing
the horizontal connection between people and groups, increasing the number of ways between
these knots, something will happen to trigger the production and the reproduction of the social
capital. We have to believe that by opening new spaces for citizen participation, building new
participative “institutionalities” something will happen to foster the increase of social capital in
that society.
The development is nourished by peace
There is still another way to destroy the social capital or prevent its generation: the war; any kind
of war; cold or hot war; and also politics practiced in a warlike way.
If we intervene in any community and start dividing them between who is in favor and who is
against a certain proposal or a certain organization and deal with everything from the point of
view of this division, separating people into friends and enemies, the social capital will have
difficulty to reproduce there.
Those who make politics as if they were in a war and search for the destruction of somebody and
treat them as enemies just because they are not on your side or under your influence are
exterminators of the social capital. Many times the government and the political parties behave
this way; and when they act like that they behave as exterminators of the social capital; when
they act like this, they cannot be agents of the community development.
Why? Because when they act like that, they increase people’s suspicion of one another instead of
encouraging them to cooperate with each other. By establishing in the societies an adverse and
anti-human environment such agents make the spontaneous production of social capital
impossible.
Social Capital is a precious asset but it is like a delicate flower that needs special conditions to
flourish; in a war environment this flower will perish, wither and die. Social capital needs peace;
peace is the nourishment for human and social sustainable development.
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15. Chapter 2
Overcoming myths and prejudices to foster local development
In order to foster the community development from inside the community it is necessary to
overcome some myths and prejudices that are still present in many people’s heads – from people
in the government and technicians from government and non-government agencies, people
studying the development, business people, journalists and leaderships in the society.
Unless we prevent our minds from being contaminated by these myths and prejudices, we will
not reach enough confidence to become development agents.
Let’s examine ten myths with one or more corresponding prejudices. In order to last and spread,
the old political culture needs to reinforce some of these myths. This is only possible because
some myths fit perfectly in some prejudices that have impregnated the people through their
families, school, religion and, sometimes, through the community itself.
The first myth is that only someone from outside can solve the problems of a community.
The second myth regards technical competence.
The third myth states that a poor community has no resources.
The fourth myth is that a lot of money is necessary in order to foster development.
The fifth is that development necessarily means economic growth.
The sixth myth is that fostering development of a community doesn’t mean much if the country
is not growing as a whole.
The seventh myth is that the place is too small, lacking importance, and therefore would need
regional development.
The eighth myth is that those in the vanguard pull those that are behind.
The ninth myth is that social development is for the poor, and only after improving their income
will they be able to dedicate themselves to what really counts: economic development.
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16. The tenth myth is that development can only be induced by the State and produced by the
market.
Let us now examine each of these myths more deeply.
No one is a prophet in his own country
The first myth is that only someone from the outside will be able to solve the problems of a
community. It goes with the preconception that says that people within the community – same as
us – do not have the skills or competence to solve problems and to take chances. This is the
prejudgement that no one is a prophet in his own country.
The problem is that this preconception is present in every less developed community. The people
say over and over again the same things: “we are weak, we need help but no one comes to help
us, we have no resources to do anything”.
Those that say such things cannot see their own human potential and the social potential of the
community they live in.The fact of not being able to see one’s own potential – human and social
– is the first sign of poverty or insufficient development.
However, every human being has skills and competences to solve their problems and seize the
opportunities in their own way. The issue is the development of such potential. As a matter of
fact, what we call development is exactly the development of this potential which is always
present, in general dormant, as resources to be developed.
Thus, fostering the development is to make these potentials dynamic.
Not being able to see their own wealth, the people tend to promptly look outside and think that
only an outsider, that is, a person who is different from them, can be able and capable of solving
their problems.
Poor people don’t know anything
The second myth is about the technical competence. It goes with the preconception that if the
poor are poor, it is because they don’t know anything. Thus, the poor dwellers of a community
imagine they don’t know enough to foster their own development and think that they need the
help of a specialist – the person who knows how to do things. Faced with this technical
knowledge, the people tend to think their opinion isn’t worth much.
There is a serious problem regarding a mix up between knowledge and opinion. Of course we
will always need people with technical knowledge to do a lot of things. Some of these people
live in the community, others don’t. We must consult them in several cases: to build a bridge, for
example, we may need an engineer that lives in another area, but to build a wooden house we
may count on practical knowledge of a local carpenter.
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17. This technical knowledge – useful in several areas – isn’t worth much more than our own
opinion on which ways the development of our community should take. The opinion cannot lose
value before knowledge. When this happens, we are not exercising democracy.
However, many specialists imagine their knowledge entitles them to say which way a
community should go or what it should do and how it should go. As they are competent in a
specifc area of study or in a determined activity, they believe they are more competent than
others in everything. That is where the technical competence myth stems from.
What is worse is that in general the modest people from a community believe in this myth
because they let themselves be carried away by the preconception that for being poor, they don’t
know anything. They value more the word of a doctor than that of the community leader,
because maybe he/she is semiliterate and lives in a faraway rural area. Well, the doctor may be
an expert in medicine, but this doesn’t qualify him to know the development needs and
potentialities better than the community leader.
This example shows what usually happens. It is not by chance that many doctors in small towns
end up becoming mayors.
Another problem is that the myth of the technical knowledge ignores not only the public opinion,
but also heritage, the practical and reflexive skills and competences of the populations.
Sometimes there is a vast wisdom accumulated in every community that cannot be disregarded
by technical knowledge.
Deprived of everything, including vision
The third myth is that a poor community lacks resources. It is related to the previous myth.
This myth stems from the failure to perceive the several resources any community possesses.
Life on Earth took millions of years to get to Homo sapiens but, in general, we do not realize the
wealth that was built by a community. Some people, for instance, consider that cattle is more
valuable than people; hence, if a community has several people with different skills,
competences and gifts forming a rich, diversified, anthrop social group, which for some means
very little, others still, think that too many people pose a problem and thus they fail to see that it
may bring the solution. Singapore lacks natural resources, but its myriads of qualified people
form this human capital that is an invaluable resource driving their economic development as it
is happening, for example, to the production of software.
Every community has some hidden treasures to be discovered, but people often believe it is
necessary to travel to faraway places to find this treasure that is right there underneath their feet.
Some - blind by the lack of vision - believe they had better try to ‘attack’ the Union, for that is
where they think the money is, supposedly bringing solution to all kinds of problems.
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18. Besides people - the biggest treasure – every community has natural tourist attractions in their
waters, mountains or forests. Many of them also have gems and semi-precious stones, or are rich
in energy sources such as waterfalls, wind or sun light.
Community is an asset by itself with its unique, distinct configuration which represents a stable
human collective that shares the same territory, and also represents a tremendous potential. The
traditions, parties, handcrafts, the singular way problems are handled, the standard of living and
socialization – everything together makes up the assets which are usually disregarded by
development technicians and also by the people in the community itself.
Well, all these things are resources that impels development. There is no community so poor that
does not possess such assets. If there is, we should recommend that people leave the area since
no human being and no community deserves to live in a place deprived of resources - staying in
a place like this means to be condemned to living with no chances to develop.
Failing to detect such resources is a poverty symptom as it is not the lack of resources that
characterizes poverty in a community, but the failure to discover and use its resources.
In general we do not see the resources we have because we think resource means money. But if
we have injected money in a community that did not have human, social or environmental
resources, this money, regardless of how much it would be, would not foster development.
We have several examples of poor communities that have received large amounts of financial
resources and despite all this help continued to be poor, sometimes even poorer than before. The
money was just spent, usually unwisely, and then when it was over, it was all over – nothing
productive was generated by that money (financial capital), since it was not invested in the
permanent qualifications of people (human capital) nor in the environment favourable to
development (social capital).
Development is for the rich or to make you rich
The fourth myth is that in order to foster development we need a lot of financial resources. In a
way this has to do with the above.
It is worth mentioning an additional aspect of this myth that has to do with the preconception that
development is for the rich. It is odd, but many times we invert concepts. We imagine that to
foster development we need a lot of money when, instead, we should be thinking that the money
(the result of economic growth) should come as a consequence and not as an agent for
development. We will come back to this point.
On the contrary, the wealth that must be achieved with development, as we have seen, does not
mean only money. If the money is not used to increase the people’s and communities’ skills to
deal with their own problems and to grasp the opportunities, than it is not an input for
development.
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19. Contrary to what it is believed, we can always foster development, even with little financial
resources. Any community, not matter how poor it might be, can teach their youth that dropped
out of school to read and write, bring down children school failure, improve the town
environment , care for the streets and roads, build flowerbeds and plant flowers in the squares,
comfort the sick and protect the people at risk and with special needs.
If each one took care of their own garden and the façade of their houses, the impact in the self-
esteem of the community would be fantastic. This would be a formidable push for the
community development.
In order to reach all this, no one needs to be rich and by doing all this, no one will necessarily get
any richer (moneywise), but one will be developing himself both individually and collectively –
which means living a better life.
Development means growth
The fifth myth is that economic growth necessarily means development. This is maybe the most
crystallized myth, especially for those whose job is to foster development.
If growth automatically meant development, Brazil would be one of the most developed
countries in the world because we have been growth champions. And at the end of our glorious
record growing period (from 1850 to 1980, when we became the eighth economy in the world,
measured by the GDP), we were also champions in another area: difference, gap, distance, abyss
between economic growth and social development.
One says, in general, that this happened because we have grown concentrating income rather
than distributing it. But the only place where the income can easily be distributed is during
political campaigns, but in real life it is not possible to distribute income (one of the pillars of
development), while wealth, knowledge and power (other important factors fostering
development) remain concentrated in the hands of a few. It is the case of Brazil and of several
other countries.
Even if we wanted to distribute income, literally, physically, through regular donations to the
poor, sooner or later the income would go back to being concentrated in few hands. That is
because some – with more access to credit than others to buy a productive assets, more
knowledgeable and empowered – would use such income to generate more income, while others
would only spend what they received and would stay the same, becoming an eternal passive
beneficiary of the income distribution assistance programs. This is will be the case if there is no
simultaneous investment in human and social capitals in order to distribute, besides money,
know how and power respectively.
Economic growth is one thing; economic development another. We can, for example, have an
increase in the GDP (indicating an economic growth) and on the other hand, not have more
productive assets, more economic diversity, not having, thus, social economic growth as a whole
(indicating economic development).
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20. Besides that, development cannot be seen as economic development only as it unfolds other
fields: social, cultural, environmental and territorial, political-institutional and scientific-
technological. Development is a complex issue, a class of global social change that encompasses
all those dimensions. The problem is that we have let our conscience be overcome wtih the idea
that one of these dimensions would be the magic wand bringing all others to action, believing the
economic development would be the key that would define the behaviour of all other factors –
human, social and environmental. Even more serious than that, we didn’t even think of economic
development, but of pure and simple GDP growth.
The result is: we have gotten ourselves in a difficult problem to solve. In a country like Brazil,
the GDP can grow and the income distribution inequalities remain (to see that you just have to
observe the behaviour of Gini Index, which has measured the income distribution inequality in
the last thirty years). Moreover, there are also other sorts of inequality such as access to public
services and benefits as well as to credit, knowledge and power.
The country’s economic growth is the solution to everything
The sixth myth is that fostering development of a community doesn’t mean much if the country
does not develop itself as a whole. Obviously, this vision couldn’t be right. The country may
grow and many communities will not develop. This has, in fact, happened many times.
But we need to understand that this is the State-Nation point of view (abstract) and not the
community development point of view (concrete). This is also the point of view of those worried
about the national GDP and that are confusing such economic growth with development.
For those who are worried about the development of a community, the economic growth itself is
not enough. It can happen that local GDP grows with no growth consequences in the community.
A large company may, for instance, set up business in the region, employing all the available
man-power and the community will still fail to develop.
It may happen that the economically active population of the place is only employed for lower
qualified posts and therefore are paid with very low salaries by the company, which manages job
offers and establishes or regulates the price to be paid to the workforce - within certain limits
(adopting the minimum wage as a base-salary, for instance). Even if the posts are qualified and
the salaries considered fair, it does not mean that the community will manage to develop itself.
That is because even if the economic development itself needs among other things, diversity in
businesses, goods circulation (including currency) and innovation, not to mention the other
dimensions of development such as human development, social development and sustainable
development – in ecological terms. The economic development may occur (measured by the
GDP) and the development of the community be held back in one or more of the other
dimensions. There are several examples to support this view.
But the most harmful aspect of this myth is to pass on the idea that doing something locally is
pointless. That everything is decided at national level and so, little peripheral places, with no
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21. significant cash or merchandize that flows from the globalised world have no autonomy to
change their quality of life. This would depend basically on alterations in the great
macroeconomic variables. Those that spread such ideas should consider the autonomy of the
States in face of the globalization process. If they reflected on this, they would see that a huge
country such as Brazil, geographically speaking, is a small community when compared to the big
financial and industrial centres, which does mean it has all that autonomy either.
In fact, Brazil is responsible for less than 1% of the world total GDP (around US$ 493 billion in
2003 at an exchange rate of R$3.07 to the dollar). Despite all this obsession and outcry
concerning growth, we fell from the 8th to the 15th position in the GDP world rank. As far as
GDP per capita (average) is concerned, our position is the 78th (behind countries such as
Argentina, Jamaica, Lebanon, Panama, the Dominican Republic and Barbados – just to point a
few). Our per capita income (of US$ 2,789 in 2003) is more than 13 times smaller than that of
the USA (of some US$ 37,312)
On the other hand, there are places in the world, subnational or plurinational communities, which
are much more relevant to the world economy than to the countries where they are located.
What is behind this myth is a state-centred ideology. All reasons that justify this ideology are
extra-economic. In general they are political, legal and normative and are related to an obsolete
sovereignty idea.
All that counts is the large scale
The seventh myth is that ‘the place’ is too small and it does not have a large scale and the
development has to be regional.
This is a very old myth. The ecstasy of grandness, the fascination for quantity, the obsession for
great numbers – all this has recurrently echoed ever since the first palace-temple-towns were
built (i.e. since the State was created) six thousand years ago. The idea that only what is great is
what really matters, leads to the Guilgamech’s saga, who, unable to achieve immortality, goes
back to Uruk, his place of birth in the old Sumeria, and dedicates himself to build colossal
monuments that were destined to his immortality and failed in his expedition to surpass human
condition.
The builders of such astonishingly large buildings from the fascist period – with huge portals
making us feel even smaller – gave expression to this myth. This state architecture obviously
missed human scale.
But very few people see that just as there is a human scale there is also a social scale, and that
this large-scale is many times anti-social and thus makes it more difficult to meet, exchange,
contact, and coexist, instead of making it easier.
From this social scale point of view we need, however, to revisit our ideas of ‘big’ and ‘small’.
21

22. Many people imagine that ‘the place’ is necessarily “the small” in terms of geography or
population. They think local development means municipal development – of small towns. And
then they conclude this couldn’t work very well because in a small municipality the market is not
large enough to sustain an economic development: the number of producers and consumers will
necessarily be small, the trading sectors will be very restricted, and the circulation of goods (and
money) will be limited, generating insufficient surplus and savings for new investments. So,
based on this point of view, there is no point in keeping insisting on this scale. It is necessary to
increase the scale, going from local to regional.
There is here the idea that the development is limited to economic development. This is the first
mix up. And there are two others. The second is to think that the place is small in terms of
territory or number of inhabitants. The place, however, is a world that has become small due to
the close weave of the social fabric. From the sustainable human and social development point of
view, the more social networks you have, the smaller the world becomes.
The third mix up is to think that the place is a synonym to municipality. The place can be a
region that comprises several municipalities. The borders of the place are established by the
reach of a development process. That’s why it is said that a place can only be defined at the end
– it depends on the “size” of the project community that it was able to involve.
Nevertheless, even if the place considered for a certain development process coincides with the
limits of a small suburban municipality, the work to foster local development cannot be replaced
by traditional projects of regional development. The reason is that, as we have seen so many
times, when we plan regional development, even when it involves regional leaderships, it means
that many local leaders will not participate. In a region composed by ten to twenty
municipalities, for example, the meetings will take place in one of these municipalities thus
preventing the participation of important leaderships. How can Dona Maria, an important leader
in her community who lives in a rural area travel to the town that is hosting the meeting? How
can a dozen of Donas Marias do it regularly? Those who imagine regional development as
opposed to local development (considering the place as a small municipality) are actually
thinking only or mainly in the economic dimension of development. If we think like this, the
problems raised here do not exist because the regional leaderships that must be gathered are, in
general, the political and business leaders in the places that comprise the region. In this case,
everything turns out easier. These people, one can assume, must have enough resources to
commute within their region.
What these people think is that the result of such work to foster economic growth in the region
will benefit human and social development of every place that comprises the region. And then,
Dona Maria will be able to reach her goal and increase her family income and care for her
children’s health and education.
But we know real life is different. The results of economic growth are not translated into better
living conditions for the population who live in small places in the region and even less in
improvements in their social conditions. Besides that, the political and business leaderships that
gather for the development of the region will think and execute processes that tend to benefit
their own ambitions and their own businesses if they are not moving in tandem with the social
local leaderships where they live.
22

23. This will take us straight to the next myth.
The eighth myth is that those in the vanguard pull those that are behind.
The eighth myth is that the ones at the front pull those that are behind. According to this myth, if
we are able to energise certain key-sectors of the economy (the vanguard), all other economic
sectors will end up being energised and so we will have an improvement in the social conditions
as a consequence.
Thus, it would be a wise move to invest and work initially or preferably only in those sectors
capable of pulling all the others. For instance, if we want to foster the development of a small
municipality we will waste time and keep holding meetings with the community leaders. We
should, then, start by gathering those entrepreneurships that have the potential to start new
businesses and make them prosper. If this minority progresses, it will have the wand to foster the
development in the municipality.
Practice doesn’t follow theory, though. What happens is that, if, let’s say, 20 entrepreneurs in a
place with 20 thousand inhabitants manage to grow focusing only on their own success, they will
wish to progress even further. The well-succeeded will often move to a bigger town or to the
state capital and many times won’t even deposit their earnings in a local bank branch.
It is pointless to complain about this business dynamics. It follows the logic of the market – a
competitive logic based on a rational search performed by each one to optimize the results. It is
little use trying to appeal to the social consciousness of entrepreneurs. The most you will get out
of it is to have some of them sparing some money for a social assistance project, in general
moved by marketing reasons.
In our example, 20 economically well-succeeded people do not ‘pull’ the other 19,980
inhabitants that comprise the population of the place for intraeconomic reasons or due to the
extent of their corporate social responsibility through corporate programs of social assistance.
But even if we were able to involve a bigger part of the population, in corporate activities – for
example 200 people – even so it wouldn’t be enough to foster the development of the place,
because there is no way the market can foster this development alone.
Thus, induction development strategies must focus on the connections between economic and
social. Any sustainable economic activity that really represents economic development and not
just growth expresses socio-productive connections. It is as if the market were a manifestation of
a certain social dynamic which expresses itself in the economic domain as a corporate activity
related to production, trade, credit or service.
This matter has been strongly debated recently in view of the proposal to form the Local
Productive Arrangements. They are socio-productive systems and part of an excellent strategy to
induce local development.
However, to form real socio-productive systems, it seems that whatever the circumstance is there
must be an investment in social capital and this work can neither involve just the business
people, nor start from the gathering of individuals’ interests.
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24. Social Development is for the poor
The ninth myth is that social development is for the poor and only when they increase their
income will they be able to dedicate for real to what really matters: economic development.
This myth reveals, of course, a prejudice against the so called ‘poor’. It also reveals a
misconception in the relationship between the economic and social. In general, those who think
that way mixes up social investment (i.e. investment in social capital) with social assistance and
social development promotion strategy for social protection programs.
It is as if the investment strategies in social capital were a kind of ‘kindergarten’ or a ‘literacy
program for development’ (applicable to those who still couldn’t gather the necessary conditions
for self-emancipation – i.e. the poor little ones). Only those who have already overcome this
phase (and can have autonomy to stand on their own feet in the economic world) would be ready
to participate in development programs.
However, there will be development without resonance, correspondence, congruence and
articulation between social and economic activities. If the local economy is not connected to the
local social life, it is possible that there will be economic growth pulled by the more dynamic
sectors, but there will not be development, not even economic development.
So far economists don’t seem to have understood that markets do not come from Mars, but are
socially built here in this planet and their construction is mediated by the same institutions which
regulate the collective life in all its dimensions. Although Karl Polanyi has already written 60
years ago in the famous book “The Great Transformation” that “markets are sustainable only
when connected to social and political institutions”, how can we make them understand?
Society does not exist
The tenth myth is that the development can be induced only by the State itself and produced only
by the market. It is as if the civil society did not exist and that all social reality could be
understood by the interaction between the two spheres: the State and the market.
This myth is present, as mentioned above, in the pillars of the orthodox economy.
It is not possible, however, to explain how the contemporary societies work if we do not consider
three – and not only two – types of agency: the State, the market and the civil society (or
community). People do or do not do things for society’s reasons and not only to obey the rules of
the State, or under the influx of the market logic. People cooperate freely for the simple pleasure
in the emotion of cooperating and not always aiming at the advantage to be gained or the
satisfaction of a selfish interest. People get pleasure from being together with other people in a
community and this, no matter how much they try, economists cannot explain.
Well, civil society has a strategic role in terms of development, an irreplaceable role due to its
capacity to produce and reproduce cooperation in large scale, i.e. the social capital.
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25. CHAPTER 3
The pillars of local development
When talking about development, people usually think that it is a process to increase the
economic prosperity of a society – in general of a country – that when it develops itself it would
become poorer or less wealthier. Thus, they conclude that development has to do with the
economic activity as a whole ant that it would generate more wealth.
It’s ok, but soon after they conclude that to foster development, it is necessary to invest in factors
such as: public infrastructure to support productive enterprises; credit and special financing lines;
fiscal incentives; workforce qualification; de-bureaucratization and managerial capacity; legal
environment and governance, proposition and approval of new laws and justice enforcement
which would facilitate business activity, securing investors rights and diminish the cost of the
transactions; monetary and fiscal stability; sufficient amount of international reserves and
economic policy to stimulate growth (especially in terms of exchange rate and interests);
commercialization systems and trading agreements which protect the internal market and
products and make it possible to put such products in international markets with competitive
advantages; customs and sanitary regulations that facilitate import and export, etc., - and all that
to be, preferably, paid with a substantial contribution of the public funds. The state role as an
investor and a facilitator is to make it possible for the private capital to generate wealth, that is, to
bring productive prosperity.
OK, all right! – except for one reason. One does not think that fostering development is to
increase people’s ability so that they can overcome problems and enjoy opportunities exercising
their entrepreneurial qualities; the same way that, one hardly thinks it is necessary to build social
environments that are favorable to the booming of the business, i.e. to articulate and stimulate
networks which encourage people to, individually and collectively, exercise their creativity
generating new solutions.
Well, if people do not develop their skills and competences and if societies do not empower their
members so that they can rely on themselves and on their peers, or to have the courage to risk and
feel safe to innovate, how is it possible to have development? If people and society do not
develop themselves, what kind of development is it?
Besides that, in general, everything is thought of in terms of the State-nation, a unit that would
have the capacity to adopt effective measures to foster development (though in the current
globalized world its macro-economic autonomy has been greatly reduced). People do not think
this way, they do not think in the development of communities where people really live, first of
all because, as previously said, the place is looked upon as the small in territory and population
25

26. terms, the peripheral in geo-economic terms, and the irrelevant in economic-quantitative terms
(i.e., in terms of the fraction of the GDP which could be generated there).
Well, if we think that the development depends on several other factors besides income (financial
capital) and wealth (corporate or productive capital, let’s call it this way) – i.e., on extra-
economic factors (such as the human capital, the social capital and the natural capital) – thus,
such recipe for development, isolated applied, cannot work out. It can even stimulate growth, but
it won’t be able to keep such growth at a high rate for long enough to overflow society, increasing
people’s qualifications, skills and competences and strengthening an environment that is
favorable to development.
The formation of project communities
The dynamism that generates that economic, systemic prosperity – which can be construed as
economic development (and not only GDP growth) – is a social phenomenon and not only an
economic one. An active and competitive market depends on a society that is able to support and
to supply, at a low cost, the social capital necessary for the economic activities to grow, maintain
and expand, energizing life of the society as a whole and not only of part of the business people.
That is why one says that competitive markets produce more in cooperative societies; and that
systemic competitiveness depends on systemic cooperation. The word systemic refers here to the
social system and not to any other subsystem, as that established by the group of economic
agents, of business processes and entities; i.e., what is called market.
The system in question is comprised of social networks existing in each society and these
networks produce the social capital, in the absence of which, the process of (social) change we
call development cannot occur, better saying, these networks are the social capital indispensable
for the formation of environments that are favorable to development.
In order to have such networks it is necessary that project communities be formed; they are
people and organizations which share a common objective – no matter which one, except that it
has to be of public nature.
Thus the objective of the local development is the formation of project communities; it is not a
return to the past, thinking it would be possible, on the present days, to reestablish those
traditional communities, called “inherited communities”. It is the construction of new
communities from a collective dream, the common exercise of a certain collectivity to project a
desired common future and to re-interpret their past.
These new project communities are sprouting everywhere with the help of new social resistance
and identity generation movements dedicated to new themes such as environment, human rights
and citizenship, feminism, ecumenism, pacifism, strengthening civil society and fostering
voluntary work; but they are sprouting especially from the innovative experimentalism under
development in the last years as a consequence of the social networks of the participative
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27. democracy and the induction to sustainable and integrated development, the social-productive
systems and alternative and solidary social-economy rehearsed in global scale.
That is why it is possible to say that there is a movement of return to the place and a movement of
community re-flourishing following, although still invisibly, the globalization process currently
taking place. I have been calling this movement localization (in the “strong” sense of the
concept).
In a certain way we can affirm that the networks which constitute the social capital are always the
result of the localization; the social capital is, in a certain way, local. It always refers to the
restricted range where people decided to collectively bet on a common future.
We will get back to this later.
Improving the conditions of life and social coexistence
It is getting kind of boring to keep repeating the same speech: the objective of the development is
to improve people’s life conditions (or quality). OK. This is for sure an objective of the
development, but cannot be the only one if we are to face Maturana who says that the human
being is a prisoner of an inescapable duality. We human beings are individuals (and we live our
quotidian in a continuous becoming of nontransferable individual experiences) and, at the same
time, we are social beings (we live our quotidian in a continuous juxtaposition with the beings of
other human beings).
It is important to improve life conditions, but it points out at only one of these two sides of the
human being. To improve life conditions is to increase the human capital. The human capital is
important, very important, but it is not everything.
The human societies are not simple gathering of individuals. The phenomena that occur in society
– and which characterize what we can call social system – cannot be obtained from the sum of
what happens to its members. There is a social function which depends on the networks that stem
from the relations among such members (the individuals). The identity card of a society is the
map of these social networks. These networks are the social capital, which is something
completely different from human capital.
People in general have difficulty understanding such difference. As societies are comprised of
individuals, people tend to understand human capital and social capital as equivalent expressions,
but they are not; and to perceive such difference is fundamental to understand a new conception
of development and a new induction strategy based on the investment in the social capital.
In the classes I teach and in the speeches I make I have tried to show the difference between
human capital and social capital by means of the following thought experience: let’s suppose that
a family with an extremely high human capital, for example the family of the Brunei
Sultan,everybody in this family undoubtedly show a high human capital, may be one of the
highest, if not the highest in the world. They have their personal doctor to follow them when they
27

28. travel, they have an excellent nutritional profile, they studied in the best schools and they could
specialize in the world centers of excellence, not to mention the family income.
Well, let’s then imagine two thousand families of the Brunei Sultan, and let’s put these two
thousand families in one territory, creating a new society.
Question: Will the level of the social capital (or of the social development) of this new
community be as high as the level of the human capital (or of the human development) of the
families that belong to the community? Yes or no?
If we answer yes, then we do not need the concept of social capital for anything; but if we,
suddenly realize and suspect that the new imaginary “community” thus formed could not become
something good, then it is a sign that we are getting close to the understa