Mom and Pop and Skin in the Game

A 2006 study by sociologists Stephan Goetz and Anil Rupasingha documented a decline in civic participation, including voter turnout and the number of active nonprofit organizations, after Walmart moves into a community. Those behaviors are markers for social capital, the connections citizens have to each other, characterized by what scholars call “norms of trust and reciprocity.” The importance of social capital had been studied by others, but was most prominently  highlighted by Robert Putnam, the Harvard political scientist, in Bowling Alone, published in 2001.

The Goetz and Rupasingha study also showed that with each Walmart store that opens in a city, social capital further erodes.

I was intrigued when I came across this study, so I did a bit more research.

It’s not just that cities with more social capital are better able to foster local enterprises and resist corporate consolidation, although they are. According to the research, the causality may actually go the other way as well. Where economic power is diffused, political power is more widely and democratically exercised. As economic power becomes more concentrated, civic engagement slumps.

This research tends to support what most economic development professionals believe–a city or town with a widely diversified economic base is healthier. That belief is grounded in a very practical calculus: in cities where there are many employers, the failure of one business is far less consequential than in cities where a substantial percentage of the workforce depends on one or two large employers. That logic is persuasive (and pretty self-evident), but it turns out that there is a substantial body of research supporting the thesis that a diversified economy composed of many relatively small enterprises is not only better able to withstand downturns, but also better able to generate higher levels of civic engagement and a higher quality of life.

According to an article in Grist,

In 1946, Walter Goldschmidt, a USDA sociologist, produced a groundbreaking study comparing two farming towns in California that were almost identical in every respect but one: Dinuba’s economy was composed mainly of family farms, while Arvin’s was dominated by large agribusinesses. Goldschmidt found that Dinuba had a richer civic life, with twice the number of community organizations, twice the number of newspapers, and citizens who were much more engaged than those in Arvin. Not surprisingly, Dinuba also had far superior public infrastructure: In both quality and quantity, the town’s schools, parks, sidewalks, paved streets, and garbage services far surpassed those of Arvin.

At about the same time, two other sociologists, C. Wright Mills and Melville J. Ulmer, were undertaking a similar study of several pairs of manufacturing cities in the Midwest. Their research, conducted on behalf of a congressional committee, found that communities comprised primarily of small, locally owned businesses took much better care of themselves. They beat cities dominated by large, absentee-owned firms on more than 30 measures of well-being,including such things as literacy, acreage of public parks, extent of poverty, and the share of residents who belonged to civic organizations.


Residents of communities with highly concentrated economies tend to vote less and are less likely to keep up with local affairs, participate in associations, engage in reform efforts or participate in protest activities at the same levels as their counterparts in economically dispersed environments,” sociologists Troy Blanchard and Todd L. Matthews concluded in a 2006 study published in the journal Social Forces. In studies of both agricultural (2001) and manufacturing (2006) communities, the late Cornell sociologist Thomas Lyson also found that those places with a diversity of small-scale enterprises had higher levels of civic participation and better social outcomes than those controlled by a few outside corporations.

When you think about it, this makes sense. Here in Indianapolis, many of us have expressed concern at the loss of the traditional business and banking headquarters from which so many of our civic leaders were drawn. Even our major law firms are merging with others to form “national” enterprises; their lawyers are likely to be less involved in the civic life of Indianapolis when it is just one of their many locations.

At some point, we need to consider the “big box” stores headquartered who-knows-where, and ask ourselves whether those cheap tube socks are really such a bargain.