Measuring Social Capital: The Danish Co‐operative Dairy Movement

What are the roots of social capital and how can it be measured and built? Social capital is considered as a new production factor that must be added to the conventional concepts of human and physical capital. Social capital is productive because it increases the level of trust in a society and allows more transactions to take place without third‐party enforcement. Theory and lessons from empirical evidence lead to the general recommendation that any loss in social capital must be deducted from the economic gain following market forces. For example, the voluntary organization of small‐sized groups in the Danish Co‐operative Dairy Movement was eliminated due to economies of scale. It may be so that an alternative way of production, taking social capital into ac‐count, could have increased economic growth further.