Determining Social Capital by Social Accounting

Abstract

Although social capital has been often debated in the last 20 years, there is a widely accepted definition missing and the approaches to measuring its size are not very well-developed. Therefore, the definitions of social capital are stated and analysed, whether they are appropriately designed also for measurement purposes. The authors end up with a division between capital consisting of real capital as fixed and working capital and financial capital on the one hand, and capitals, which are referring to human capital and social capital in a narrow sense on the other hand. Based on the willingness to pay approach a commercial bookkeeping system and an additional social bookkeeping were designed where the respective "private" and additional social capital were verified. Both together show the total social capital related to an economic subject. The result is illustrated by such a social accounting for the Faculty of Economics and Business Administration of the University of Tartu for 2006.

Headnote

JEL Classification: D1; D6; D61; M41; O15; Z130

Keywords: social capital; social success; social accounting; ex-post analysis

Abstract: Although social capital has been often debated in the last 20 years, there is a widely accepted definition missing and the approaches to measuring its size are not very well-developed. Therefore, the definitions of social capital are stated and analysed, whether they are appropriately designed also for measurement purposes. We end up with a division between capital consisting of real capital as fixed and working capital and financial capital on the one hand, and capitals, which are referring to human capital and social capital in a narrow sense on the other hand. The last two are named here as social capital. The stock of the first kind of capital can be expressed as net capital when the liabilities are deducted is booked to the final social balance, as well as the remainder of the stock accounts. The stock of the second one can be identified as social assets reduced by social liabilities.

Non-commercial values of economic activities are gathered in social accounting. With social accounting there are several approaches, however most of them are not developed to such an extent that the social capital can be determined through an adequate ex-post analysis. A welfare economic oriented approach comprising a bookkeeping system helps to determine social capital. Based on the willingness to pay approach a commercial bookkeeping system and an additional social bookkeeping were designed where the respective "private" and additional social capital were verified. Both together show the total social capital related to an economic subject. The result is illustrated by such a social accounting for the Faculty of Economics and Business Administration of the University of Tartu for 2006. The author discusses the limits and possibilities of this kind of social capital determination.

Introduction

In many publications on development social capital is discussed as a development factor (OECD, 2001). However, it is a rather vague concept (Bichmeier, 2002; Robinson, et al., 2002; Parts, 2009; Dill, 2014) stemming from various sciences (Westlund, 2006; Parts, 2009), e.g. sociology, political science and economics, which implies extraordinary measurement problems (Franzen & Pointner, 2007). Many measurement approaches are directed to measure social networks by network size indicators (Fukuyama, 1997; Parts, 2009), but they are not very useful for economic analysis, because of aggregation problems and missing economic evaluation (Dasgupta, 2002).

Therefore, the following questions are tackled:

- Which definitions of social capital make sense for economic analysis?

- How can they be measured?

- How to measure social capital in the framework of social accounting?

- Which bookkeeping system of social accounting leads us to measured social capital?

The first section of the article turns to the definitions and types of social capital. The second one deals with the difficulties of measurement. The third section tackles the possibilities of measurement by social accounting. The fourth section shows the measurement of social capital of a university faculty within a welfare oriented social accounting bookkeeping approach. A discussion of the possibilities and limits of this measurement approach brings our investigation to an end.

Methodology of Research

The article is based on a literature review of definitions of social capital and attempts of its measurement. The literature on social accounting is examined in order to detect whether a welfare oriented social accounting ap- proach exists, which allows a measurement of social capital to be developed. Recently, such a welfare oriented social accounting approach was developed that comprises an ex-post analysis, an appropriate accounting and bookkeeping system (Schmitz, 1980; Tsimopoulos, 1989; Friedrich 1991, 2010; Eerma & Friedrich, 2012; Eerma, 2014). This approach was developed by the author and his fellow researchers. An ex-post analysis was formulated, the charts of accounts were defined, and evaluation methods for social benefits and social goods were determined and bookkeeping procedures elaborated. The approach was applied to the Faculty of Management and Economics of the University of Tartu to identify social success of the faculty for 2006. The reader is introduced into this approach and the measurement techniques to determine social capital.

The limits of this kind of social accounting to determine social capital - in particular related to the welfare theoretical basis - are mentioned and discussed. The author indicates further developments of this social capital measurement approach.

Problems of applying this approach as a management tool, the ways how it could influence the management decisions in a university, CGEimpact models etc. are not tackled in the framework of this article.

Definitions of Social Capital

The definitions of social capital are manifold. Westlund (Westlund, 2006, p. 8) defines social capital as "social, non-formalized networks that are created, maintained and used by the networks' nodes/ actors to distribute norms, values, preferences and other social attributes, and characteristics, but which also emerge as a result of actors sharing some of these attributes". Therefore, social capital constitutes of a network with links and nodes. It is like an infrastructure (Westlund, 2006, p. 8). Information, goods, etc. (flows) are transmitted and the nodes can represent actors (Westlund, 2006; Grüb, 2007). In economic terms, they may consist of economic units (households, private or public firms, public offices) or groups of economic units as the household sector, firms sector, state sector, etc. or groups defined according to other criteria. It also may refer to the whole economy. Alternatively, it might be examined more generally through individuals in society, groups of them, organisations or the civic society or the society as a whole. One of the problems is that some authors concentrate on non-formalised networks. However, most important networks are formalised ones reflected in private and public law. On the one hand, they are not totally open and accessible to everyone because one needs knowledge and education to cope with them, there are preconditions to use them and, on the other hand, they are path dependent and in steady development. At the very least, the part of them in change should be included. There are similar definitions like culture concentrating on shared values and beliefs (Casson & Goodley, 2000; Kaasa, 2013; Kaasa & Parts 2010) or by North (1990) on institutions reflecting the rules of social cooperation and organisations the players, without emphasising networks. Other authors include both and call them institutional capital (Hardin, 1999; Krishna, 2000). However, these attempts to define social capital are even vaguer. A special approach not often mentioned in literature was developed by Walter Isard and his fellow researchers (Isard, et al., 1969). They defined a good more generally as a social good, and transmitted microeconomics to social and political phenomena showing supply and demand for social goods such as votes, values, information, etc. thus including social capital as well. In the literature different kinds of social capital are mentioned, as well such as human capital, social capital of different economic units, internal social capital of economic units and external ones, which are in special sectors like the public sector, civic society, and different spheres like political, social, and physical sphere (Westlund, 2006, p. 39; Kaasa & Parts, 2010; Kaasa, 2013). With respect to the social sphere, social capital is interpreted as access to network-based resources, generalized trust, or norms and values (Franzen & Pointner, 2007). Social capital has also a regional dimension which is institutionally related to and reflected in industrial districts (Paniccia, 2002), cluster (Steiner, 1998; Porter, 2000), regional information systems (Asheim & Gertler, 2005), and triple helix (university-industry-government relations) (Etzkowitz, 2002). Social capital shows many effects on: the mentioned regions, civic society, markets, economic growth (Parts, 2009), groups, and single economic units, their establishment and development (Grüb, 2007; Tödtling & Trippl, 2012) on sectors, the public sector, shadow sector, resources like venture capital, environment, etc.

Social capital can appear in all parts of society, such as civic society, governments, firms, households, and it can be treated as a stock such as an investment. (Westlund, 2006, p. 4). As mentioned above, it causes many difficulties if it were to be treated as a capital stock. Networks are difficult to measure and to add them up in total or in parts. There are inhomogeneous factors in links and nodes such as beliefs, values, etc. (Dasgupta, 2002) and there seem to be no prices to make the items to be aggregated comparable. Aggregation (Dasgupta, 2002) is mentioned as one of the main problems with social capital. Moreover, there are vertical networks between actors of higher and lower order such as EU, EU-member state, regional state, municipality, firm, or horizontal networks between actors of the same decision level (Westlund, 2006, p. 33), which greatly hamper aggregation of social capital. On the other hand, social capital has some features, which allows to talk about social capital. It shows vintages, it has to be maintained (Prusak & Cohen, 2001), and it enables positive or negative impacts (Grüb, 2007) on economic units and change of social capital (Riemer, 2005) and rewards (Glaesner, et al., 2002). At least time has to be allocated to maintain or establish social capital. These time expenses (Friedrich, 1978) lead to utilities from social capital and its use, and to disutility because of opportunity utility losses.

These expenses can be also expressed in a monetary form. The willingness to pay approach used in welfare theory can serve as a basis to express the advantages and disadvantages of a measure considering surpluses, external effects, distortions, etc. This is applied to identify the net-benefit of a measure or project, according to the Kaldor-Hicks test. According to such an evaluation of the advantages and disadvantages the rewards from social capital can be identified. Therefore, social capital also shows features of capital in an economic sense. This approach is similar to that of Bolton (2002) who defined a place surplus comprising a consumer surplus and a producer surplus concentrating on a firm. Westlund (2006) highlighted the influence of social capital on producer surplus through supply costs and revenues shown in Figure 1. The social capital influences human capital and both the real capital and human capital and the financial capital as well in such a way that supply costs and revenues change and producer surplus varies. Behind this there is also the idea that the willingness to pay is expressed in the surpluses that reflect a welfare change.

However, it is not clear whose willingness to pay is measured, e.g. consumers inside and outside the place, how the externalities related to social capital are expressed in revenues and cost especially those who occur outside the firm etc. and how this place surplus is separated from other place surpluses Although the willingness to pay approach deals with total welfare in a national economy, it is not shown how this place surplus is separated from those resulting from other firms or public offices the firm is cooperating with or linked in production. To differentiate between human capital and social capital is not easy. As far as human capital comprises the ability to know about and practice networks to gather information, to make decisions and communicate they are nearly not too separate. Moreover, one must exactly determine whether social capital welfare in the sense of the welfare of inhabitants of a country, region or municipality, of civic society of those jurisdictions should be identified. Social capital might also refer to the welfare of those economic units assigned to a sector such as public, private or a branch of industry, a group of firms, a group of households, to single firms, households, public offices, etc. Sometimes the authors distinguish between a firm's internal social capital, production-related social capital of the firm, environment-related social capital and market related social capital (Burt, 1992; Westlund, 2006). The place surplus concept tries to measure all of those.

The most serious problem is that there are various and different attempts of measurement of social capital. Sociologists try to measure the networkbased social capital with a name generator (Fisher, 1977; Bidart & Charbonneau, 2011). This instrument tries to measure the contacts to other persons. A position generator (Lin & Dumin, 1986) measures the contacts to persons who possess an important professional position for the person questioned. A resource generator (Van der Gaag & Snijders 2004) should serve to determine from which people he knows a person might receive resources. There are attempts to identify access to a network, to which individuals and actors pose as the function of a broker (Burt, 1984) and to which sub-groups exist (Grüb, 2007). The density of networks is also measured (Schenk, 1984). The density shows a relation between actual contacts and possible contacts (Haug, 1997). Moreover, attempts exist to measure trust (Schumacher, 2006) in other persons (Halpern, 2005) and in institutions (Paxton, 1999) by interviews or questionings. Measurement of norms, values and reciprocity happen by investigating the behaviour of players in experimental games (Diekmann, 2004).These sociological measurement procedures are mostly designed to describe social capital partly with respect to individuals.

Economists try to describe social capital by cases such as describing clusters, regression analysis with respect to the effects of social capital, and some impact analysis (Westlund, 2007) and policy investigations. Further literature exists on the wealth originating form social capital (Scrivens & Smith, 2013, Siegler, 2014) and on how technical knowledge is influenced by social capital (Gu, et al., 2013) and how networks change through economic behaviour (Jacson, 2009). An ex-post analysis including a welfareoriented evaluation is missing.

Social Accounting as Tool to Measure Social Capital

Although for the last 40 years (Eerma, 2014) there have existed approaches to identify the contributions of single economic units to the success of society, the attempts to apply these instruments to measure and determine social capital are virtually non-existent. In particular, social capital as defined above has not been identified. There are social accountings for evaluations of projects using a welfare function, utility analysis or benefit-cost analysis implicitly considering the effects of social capital at present and in future (Eerma, Friedrich, 2010, 2012, 2012a). Such social accountings are performed in particular for identifications of social success in environmental accounting, health accounting and educational accounting. A comprehensive analysis of social capital is not involved. Social accountings concentrate especially on a statement of favourable and unfavourable social effects such as social audits (Schmitz, 1980). Some of them focus on special aspects of social life or factors of production such as human resource accounting in the sixties (Hermanson, 1964; Brummert, 1969; Flamholtz, 1971; Neubauer, 1974; Conrads, 1976). Other social accountings concentrate on contributions of a firm to social success such as corporate social accounting (Linowes, 1968; Abt, 1972; Monsen, 1972; Elliott-Jones, 1973, Eichhorn, 1974, Mühlenkamp, 2007). Some escape to a social indicator analysis, where the indicators signify social relevance and value (Dierkes, 1974; Mintrop, 1976; Fischer-Winkelmann, 1980; v. Wysocki, 1981; Schmitz, 1980; Friedrich, 1991; Schauer, 2007). Social capital is not explicitly detected. The human resource accounting directs the attention to human capital. However, social capital in the sense of networks is only evaluated indirectly, e.g. as special value of knowledge on social relations leading to higher human capital. Networks are considered in terms of social benefits transmitted to business partners and stakeholders, public jurisdictions, charity organisations, etc. However, there is no identification of an item symbolising social capital. Mostly a welfare economic orientation is missing. Moreover, these approaches do not provide an ex-post analysis and a bookkeeping system necessary to identify the social success in a past period (Eerma, Friedrich, 2010; 2012; 2012a; Eerma, 2014). The link between social accounting and the determination of social capital does not exist.

Recently, there have been some contributions which were not to identify social capital, but which enable to develop an ex-post analysis and bookkeeping system, thus providing a basis for a more comprehensive assessment of social impacts and values. This development started with Schmitz 1980, and developed through applications and extensions (Tsimopoulos, 1989; Friedrich, 1991; Friedrich, et al., 1993; Eerma & Friedrich, 2010; 2012; 2012a; Eerma, 2014) for public utilities, convention halls, university faculties, and other institutions like colleges and ecological banks. Moreover the bookkeeping system is welfare-oriented and a bookkeeping chart and bookkeeping and balancing rules have been developed. Therefore, we name it economic welfare-oriented social accounting

Therefore, it should be discussed whether this bookkeeping assists to identify social capital. The basic features of this social accounting approach have to be mentioned to show how the social capital is going to be identified.

Social Capital Assessed by Economic Welfare Oriented Social Accounting

The economic welfare called net-benefit is measured on the basis of the following evaluation in terms of willingness to pay1[1] in favour or against the impacts of activities of an economic unit (Friedrich, 1991; Eerma & Friedrich, 2010; 2012; 2012a; Eerma, 2014)

Net benefit = consumer surplus +turnover + value positive external effects - producer surplus as distortion on factor markets- costs - value of negative external effects

The willingness to pay can be rearranged to

Net benefit = turnover - costs (Commercial accounting) +consumer surplus + value positive external effects - producer surplus as distortion on factor markets - value of negative external effects (Additional social accounting)

A net-benefit increase means payments "social benefits" in favour of a measure show the + sign, whereas the willingness against "social costs" payments are marked by a minus sign. If the difference net benefit is positive, a measure results as welfare increasing.

This shows that the willingness to pay can be detected by commercial accounting and by a supplementary social accounting. By aggregating the two parts of accounting, one gains the total willingness to pay.

Direct social benefits and costs are measured directly by market-related items such as consumer surplus, turnover and costs related to the economic unit operations. Some social benefits and social costs are measured indirectly. Income increases, money value of time savings, decrease of costs, e.g. of self instruction, less compensation from insurance companies, reductions in contributions of other institutions, or higher values of shadow prices, higher values based on hypothetical demand functions (Dasgupta et al., 1972; Flores, 2003). Increases in the property values and higher leases express a higher ability to pay for external effects of economic unit operations because of improved services. Social costs incurred by the economic unit are determined by costs and input-oriented producer surpluses. The methods used to identify external social benefits serve to measure external social costs as well (Friedrich, 1991; Eerma & Friedrich, 2010; 2012, 2012a; Eerma, 2014).

Social benefits existing in more than one period are stocks (social assets) and social costs existing in more than one period are stocks in the form of social liabilities. Those occurring in the period under consideration are current social benefits and current social costs (Friedrich, 1991; Eerma & Friedrich, 2010; 2012; 2012a; Eerma, 2014). An adaptation of the chart of commercial accounts (revenues and expenses) serves for the commercial accounting to identify profit and stocks assets, liabilities - serves - and to gather social benefits and social costs reflected there.

For the additional social accounts a chart has to show the current social benefits and current social costs and social benefits as stocks (social assets) and social costs as stocks (social liabilities). They are shown in Table 1. The additional social accounting also applies to double entry bookkeeping. Therefore, there is a social cash account that assembles al the counter entries. Special deferral accounts are necessary to defer the social benefits and social costs that are caused by other economic units involved in transactions that mean the part of willingness to pay which is not due to the economic unit under investigation. In the chart there are social assets, social liabilities, current social benefits and current social costs. Moreover, there are technical accounts comprising opening balances, final social balance, final total social balance, the social success operating statement, and the deferral accounts for stocks and current social benefits and current social costs. The individual accounts show equations showing the remainder of an account or variable value at the end of a period, which is equal to the initial stock plus increases minus decreases (for details see Eerma, 2014). All individual accounts reflect a whole set of equations that are the basis for the ex-post analysis of the economic unit.

The stock accounts (respective equations are defined) according to types of long-lasting benefits (e.g. social assets). The current social benefits and current social costs are defined according to the operations of the economic unit.

Figure 2 shows the additional social bookkeeping and partly the commercial bookkeeping. In both parts an opening balance starts with the final stocks of the past period. With respect to the commercial part, the revenues and expenses are entered in stock and current accounts. The remainder of the current accounts end up in the profit assessment account, and the resulting profit is transferred to the final commercial balance. The remainder of the stock accounts also end up there. In the additional social part, some commercial stocks which are not considered in commercial accounting might be added. Then the transactions with respect to stocks are entered as well and deferrals take place. The entry of the transactions implying current benefits and current accounts follow. Deferrals are made. The remainders of the current social benefits and current social costs become collected within the social success operating statement and the current social net benefit determined. The latter is entered to the final social balance as well as the remainder of the stock accounts.

In a last step, the final social balance and the commercial balance are aggregated to a total social balance. There we find the commercial assets and the social assets as well as equity capital, commercial liabilities, social liabilities, net social capital and current social success.

Therefore, this economic welfare oriented social accounting provides us with information about social capital. At first we receive information about the social capital related to the economic unit we are considering. When investigating the commercial part of the bookkeeping approach, we receive

the private capital in the form of a net private capital. The real capital (fixed and working) and the financial capital are shown in the commercial balance. We also learn the net private capital, which is the former one reduced by the liabilities ending up as equity capital, reserves and profit - the profit would then be used for investments.

Social capital of the economic unit can be detected similarly. It results from the additional willingness to pay, which is not demonstrated in commercial bookkeeping. Therefore, it is related to all additional social entries of transactions connected to rents and the indirect evaluation methods. They include on the one hand internal social capital and the willingness to pay for it and partly the external social capital. However, an explicit division between human capital and other forms of social capital is not made. Here, the distinguishing mark is the kind of evaluation method to determine the willingness to pay. In practice, human capital and other sorts of social capital are also difficult to separate. Knowledge about and integration into a network can, on the one hand, reflect human capital, but at the same time a network-oriented social capital. Therefore, it seems wise to differentiate, on one hand, between the capital forms that are private ones just stated before and, on the other hand

one hand, between the capital forms that are private ones just stated before and, on the other hand, social capital as the rest category that comprises the other forms as mentioned in Chapter II. The economic welfare-oriented approach allows for detecting social capital of the economic unit. Net social capital results as the difference between social assets and social liabilities leading to the remainder of the social cash account representing net social capital plus the current social net-benefit. The willingness to pay approach is used to aggregate the different forms of social capital. These different forms of social capital vary from type to type of economic units according to the willingness to pay identification method applied.

Economic welfare oriented social accounting also enables to gather information about the social capital through the deferral accounts, which is due to the other economic units in an economy and also split into a stock component and a current component. However, it reflects social capital of total society, civic society, and of other sectors of economic units and the rest of the sector to which an economic unit belongs. The approach allows for determining absolute levels, but also changes of social capital. Through depreciation and acceleration and value adjustments, it shows vintages of social capital. This approach also assists in specifying social capital by deciding on accounting needs to determine the period of ex-post analysis and by fixing the group of citizens whose welfare and social capital should be detected. Social capital also depends on the generations to consider, the region the analysis is concentrating on, the transactions and extension of networks considered, and the effects included. Social capital differs according to the evaluation methods of willingness to pay applied and to which kind of social capital is paid attention to. Moreover, the handling of alternative situations (with and without principle with respect to the economic unit), and the delineation of the economic unit (Eerma & Friedrich, 2012a) influences the size of social capital.

Social Capital of a University Faculty - The Example of the Faculty of Economics and Business Administration of the University of Tartu

Economic welfare oriented social accounting was applied to the Faculty of Economics and Business Administration of the University of Tartu (Eerma & Friedrich, 2010; 2012; 2012a), and the Faculty of Mathematics and Computer Science of the University of Tartu (Eerma, 2014). This social accounting was also performed in the European Colleges at Tartu, and the colleges at Pärnu /Estonia and Narva/Estonia related to the University of Tartu (Eerma & Friedrich, 2014). The approach described above was developed. From the year 2009 onwards the verification of the bookkeeping approach has been taking place. The year 2006 was chosen for the empiric application for all faculties and colleges. One the one hand, that year was relatively stable with respect to the departments considered and, on the other hand, gathering objective data was not biased by ongoing managerial conflicts.

The competences, tasks, activities in teaching, research, consulting, etc. and their embeddings in networks within the university and with economic units outside the faculties and colleges were detected to delineate the basis to group the long-lasting social benefits and costs and to elaborate the current social benefit and current social cost account for the additional social accounting. The University of Tartu possesses a commercial bookkeeping system which is partly disaggregated to the faculty level and partly aggregated solely to the university level. Therefore, the commercial accounting has to be disaggregated - especially some stocks - and adapted to the faculties. A respective chart of accounts was assigned2[2]. Thereafter, revenues, expenses, stocks, etc. were entered. The profits and losses were determined as remainder in the profit assessment account and a final commercial balance was provided (see also Figure 2 and Table 2). Here, we can learn about the "social capital" reflected as net assets (see Table 2).

The additional social accounting had to be developed totally from scratch. The definition of social stocks leads to the stock accounts, which are listed in Table 2.The current social benefits and current social costs are shown in Table 3. The accounts follow the activities of the faculty. After entering the transactions and fixing the deferrals the values in Table 3 derive. The additional social net-benefit appears as a remainder, which is transferred to the final social balance and from there to the total final balance (see Table 2). The stocks result, e.g. additional social assets and their value adjustments. Moreover, one finds the additional social liabilities and their adjustments too. The social capital in stock appears as a remainder of the social cash account.42.387 EEK. However, social liabilities 0.0730 EEK are to be deducted. The additional social net-benefit shows social capital 25.084 EEK due to the activities of the faculty during 2006. It is an increase in social capital.

The social capital due to the involvement of other economic units can be learned from the deferral to the assets of additional social benefits amount to 2.875 thousand EEK. The difference between the referred current social net benefit due to the referred current social benefits and the referred current social costs amounts to 10.870 thousand EEK.

Chances and Limits to Detect Social Capital by the Economic Welfare Oriented Social Accounting

The Economic Welfare Oriented Social Accounting offers many chances to detect social capital. It combines and shows many aspects of social capital discussed in literature on social capital, such as a stock, vintages, and maintenance activities. It comprises all specifications of social capital like networks, trust, values, norms, at least if there exists a willingness to pay for it. Therefore, it can be also aggregated. There is as well the possibility to identify the firm related social or the rest of it, which is linked to the firm's activities.

How far the social capital gets measured depends much on the evaluation methods concerning willingness to pay, which are applied to stocks and activities evaluation. Different methods may lead to different volumes of social capital. Here restrictions concerning data and methodological problems arise. This is especially relevant with respect to the indirect evaluation methods (Eerma, 2014). One of the advantages concerns the comparability of the evaluations through willingness to pay.

Moreover, it is assumed that the demand curve shows the willingness to pay of the buyers. This is no problem if a final consumption good is offered, e.g. a study programme to students. With an intermediate product the analysis also assumes that the demanders firms and public offices are expressing their willingness to pay in the demand curve, in which also the willingness to pay of their customers is reflected. Therefore, no deferrals, etc. have to be made. However, this problem has to be discussed in more detail4[4]. If this assumption holds, no social capital has to be considered in the framework of the commercial accounting.

The non commercial social capital not caused by the economic unit considered is expressed in the additional social accounting. The economic welfare oriented social accounting is especially applicable to measure the economic unit referred social capital.

However, some limitations are related to this tool to identify social capital. As the bookkeeping system uses welfare theory based evaluations it is related to the individualistic welfare theory (Graaff, 1963; Sen, 1982; Samuelson, 1983; Mishan, 1987, Adler & Posner, 2006). The role of social groups (e.g. administrators, trade unions, entrepreneurial associations) in determining the content of social welfare is seldom emphasized. Therefore, the values identified by the willingness to pay approaches do not necessarily reflect the true evaluation in society. Moreover, the assumption of constant marginal utility of money that means, ignoring the fact that an Estonian croon (euro) may stem from a rich or poor household, points to a strong assumption. Further debates concern the socalled compensation tests discussed in literature on welfare theory. However, the stated difficulties are also with other approaches to measure performance.

If the bookkeeping approach suggested for one Faculty should also be applied to several faculties and the University itself, or if it should be applied to other economic units the chart has to be adapted. Then, the conventions of deferral get evidently much more specific and complicated. Also the chart of social accounts needs further elaboration, when isolated social net benefits of the group of clients, such as types of students or of research clients, should be assessed. Some social benefits and costs are to be excluded. More group specific conventions to deferral of social benefits and costs have to be developed. Additional corrections of social benefits and costs, which are booked in commercial bookkeeping, have to be made and considered in the additional social accounting. Total social net benefit and total social assets and liabilities can be assessed in principle.

And last, but not least, some efforts are necessary to complete the economic welfare oriented social accounting. All the bookings in the commercial part of the social accounting have to be checked whether they reflect really willingness to pay. With respect to the additional social part more sophisticated criteria to split social benefit and costs and to allocate them to the institutions causing the social net-benefit should be available. Then the identification of social capital becomes more precise. Further research is needed to improve the identifications of effects, the determination of depreciation rates for knowledge of students, scientists, researchers, professors etc., the assessment of consumer surpluses for individual services, methods to evaluate stocks and the allocation of pre-services to linked eco- nomic units. Charts have to be developed for different kinds of economic units.

The approach can be redeveloped to kinds of different social capital identifying approach according to types of evaluations. It must be determined, which evaluation methods are linked to which social capital type. Then the bookings for which the respective evaluations are used can be summarized in special accounts, which then show the types of individual social capital involved. In this way, a supplementary bookkeeping would be introduced.

Another approach to identify social capital would be a bookkeeping system developed to measure different types of social capital. Then the chart has to be shaped according to the different types of social capital. An expost analysis of an economic unit for social capital would be designed. The transactions have then to be booked on accounts of different social capital and deferrals have to be made and booked. The different social capitals will emerge concerning social stocks, social liabilities and the current social capital caused.

A very demanding project would be to start not with the measurement of the individual social capital at the level of an economic unit, but to try to fix the total type of social capital in an economy or a region. However, as the development of national accounting has shown, this needs the development of an individual social capital accounting first in order to assign an aggregated system of accounting5[5]. That would enable also a place related determination of total social capital for a region or a location. Special deferrals or restricted aggregations criteria become necessary.

Conclusions

The social capital is a vague concept comprising networks, norms, values and actions of actors concerning these features. In literature, the characteristics of social capital are debated. Different types of social capital exist at different levels, e.g. individual level, group level, civic society level and total society level. How far it has features of capital in an economic sense is under debate. Some authors discuss a division consisting of real capital as fixed and working capital and financial capital on the one hand and capital, which are referring to human capital and social capital in a narrow sense on the other hand.

Many economists are convinced of its importance, because of its effects on growth, innovation, management, types of markets, knowledge, etc., but the measurement of social capital as such is mostly done by sociologists. Attempts by economists are rather descriptive turning to practical cases, policy results or market developments or they turn to regression and other statistical analysis to identify the importance of social capital for some economic phenomena. However, measurement of social capital turns out unsatisfactory.

One possibility to measure social capital is not used yet. Social accounting serves to measure social impacts of economic activities. Several approaches of social accounting exist, however most of them are not developed to such an extent that the social capital can be determined through an adequate ex-post analysis. Most of them try to show the social and economic impacts of an economic unit in particular a firm on society. Only some special types of social capital of a firm can be identified. The usual social accounting have mostly no basis to aggregate different sorts of social capital or social capital at all. However, the welfare economic oriented approach of social accounting comprises monetary evaluations on basis of the willingness to pay approach applied in benefit-cost analysis and an ex-post analysis that allows a bookkeeping of the relevant transactions occurring during a past period.

The definition of net benefit allows splitting social benefits and social costs in those which are reflected as revenues and expenses in commercial accounting and additional social benefits and social costs, which can be considered an additional social accounting which constitutes a supplementary bookkeeping. The results of both show the net commercial assets as difference between assets and liabilities plus the profit on the one side and the social capital as difference between the additional social assets reduced by social liabilities and the current social net benefit on the other side. This allows identifying social capital on the level of an economic unit.

The author demonstrates the basic features of the welfare economicoriented approach of social accounting of the Faculty of Economics and Business Administration for the University of Tartu in Estonia using data for 2006. How social capital of the faculty becomes expressed in the bookkeeping results has been explained. The social capital of the faculty turns out to be positive. It refers to networks, knowledge, values, norms and management actions. The part of social capital of the faculty that is not due to the faculty has been deferred. It refers to the additional social capital as remainder of the social cash account as a stock and the current social net benefit.

The welfare oriented approach of social accounting assists primarily to identify the social capital related to one economic unit. It also enables through the deferrals to estimate the part of social capital the economic unit is involved in that refers to activities of other economic units related to the economic unit under consideration. The approach does not inform about the total existing social capital in society, in a region or at a place. As the welfare economic oriented approach of social accounting was developed in order to detect social success, it is also not assigned to fix the amount of different types of social capital. Different social capitals are related to the different evaluation methods applied. Therefore, a next step of social capital identification, could lead to an extension of the approach by introducing a social capital oriented supplementary accounting where special remainders of accounts which are related to special types of social capital are transferred. An even more drastic extension would be when the total welfare oriented approach of social accounting is directed to entering the transaction within a chart of accounts which is defined according to different kinds of social capital. This, however, requires a totally new orientation of the whole approach.

A measurement of the total social capital in society or region cannot take place within the social accounting directed to one economic unit. On the basis of social welfare oriented accounting for one unit similar to national accounting a framework for total social capital accounting has to be developed in future.

Limits of the welfare oriented approach of social accountings are due of the individualistic welfare theoretical basis of the approach, the weakness of the so-called compensation tests, the question how far the willingness to pay expresses social priorities, etc. Moreover, the approach needs further development with respect to deferral rates and depreciation rates, etc. and in particular to evaluation methods and possibilities to apply them and impact analysis. With respect to social capital a detailed analysis concerning the kind of social capital which is going to be measured when applying those methods is necessary.

Footnote

1 See the debate on willingness to pay evaluations in the debates on welfare theory (Graaff, 1963; Sen, 1982; Samuelson, 1983; Flores, 2003; Adler, Posner 2006).

2 For details see Eerma & Friedrich (2010, 2012, 2012a, 2014); Eerma (2014)

3 The values in the tables are determined by methods stated mentioned in the 4th section according to appropriateness and availability of data. The numbers in the first and fourth column show codes of the accounts in the chart.

4 It has to be investigated whether all consumer surplus changes, turnover changes and cost changes with all economic units involved in production have to be included, whether it is sufficient to turn to value added, which in a national accounting is based on commercial accounting, by deducting the value added of the institution looked at from all economic units involved.

5 As an example serves the determination of the value added on the production account of national income accounting that results from aggregations of profit statements accounts from commercial bookkeeping.

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