How do private entrepreneurs transform local social capital into economic capital? Four case studies from rural Denmark

The Journal of Socio-Economics 39 (2010) 631–644

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How do private entrepreneurs transform local social capital into economic capital? Four case studies from rural Denmark Gunnar Lind Haase Svendsen a,∗ , Chris Kjeldsen b , Egon Noe b a b

University of Southern Denmark, Center of Rural Research, Niels Bohrs Vej 9, DK-6700 Esbjerg, Denmark Aarhus University, Faculty of Agricultural Sciences, Denmark

a r t i c l e

i n f o

Article history: Received 26 August 2009 Received in revised form 5 May 2010 Accepted 21 June 2010 JEL classification: D01 D23 D24 D85

a b s t r a c t Bourdieu’s (1986) General Theory of the Economy of Practices assumes that people perpetually transform tangible and intangible forms of capital according to certain ‘laws of conversion’. On this background, and combining sociology and micro-economics, we analyze specific strings of capital conversion in time and space. More specifically, we raise the question: How do private entrepreneurs transform local social capital into economic capital? We combine in-depth interviews with four private entrepreneurs in rural Denmark with Prisoner’s Dilemma game theory. Thus each of our cases illustrates one of the outcomes in the PD matrix. In this way we explain why only one of the four entrepreneurs succeeds in capitalizing social capital. © 2010 Elsevier Inc. All rights reserved.

Keywords: Forms of capital Social capital Economic capital Private entrepreneurs Local communities Repeated Prisoner’s Dilemma game Rural Denmark Bourdieu

“It’s fun to be the sucker – If you can afford it” (John Steinbeck, Sweet Thursday, p. 20). 1. Introduction In economic sociology, Bourdieu’s neo-capital theory (Bourdieu, 1986) has regularly been applied by sociologists eager to reject the rational action theory (Anheier et al., 1995). Similarly, sociologists have worried about political scientists and economists monopolizing the popular concept of ‘social capital’ – broadly defined as network cooperation based on trust and regular face-to-face interaction – and including it in the neoclassical economic vocabulary. We however find it fruitful to unite the Bourdieusian and rational action approaches. In this way, we abstain from choosing between an exogenous approach (cultural–historical constructions) and an endogenous approach (universal human mind) (cf. Jackman and Miller, 1998). Rather we seek to analyze complex capital conversion within a rational action framework, that is, within specific games.

∗ Corresponding author. Tel.: +45 6550 4227; fax: +45 6550 1091. E-mail address: [email protected] (G.L. Haase Svendsen). 1053-5357/$ – see front matter © 2010 Elsevier Inc. All rights reserved. doi:10.1016/j.socec.2010.06.012

Following Bourdieu, it is not erroneous to claim that individual agents are simultaneously driven by genuine (altruistic) interests – by him termed social libido – and pure (utilitarian) self-interest. There is simply no such clear cut between non-economic and economic purposes. Human action is per se socioeconomic. Thus, according to Bourdieu people exchange tangible and intangible resources in a social world that is near empty of a one-dimensional Economic Man. An intellectual invention (or monster), who – should he or she actually exist – would totally fail to participate in a socially constructed passion play, an illusio, and therefore would be an incredibly lonesome and unhappy stranger in this world, like the misers in Dickens’ literary universe. Methodologically, we think that the laws of conversion (Bourdieu, 1986, pp. 252–255) can best be observed at the microlevel, by analyzing specific strings of capital conversion in time and space done by concrete persons. Therefore, in the following we draw on in-depth interviews with four private entrepreneurs in rural Denmark, in an attempt to go deep into their biographies in order to grasp their whole worldviews. Our key contribution is to combine this qualitative ‘bottom-up’ methodology with a rational action framework from micro-economics, namely Prisoner’s Dilemma game theory, illustrating each of the four pay-off outcomes in the matrix with ‘flesh and blood’ so to speak.

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Indeed, we think the combination of Bourdieu’s capital theory and game theory is appropriate. Bourdieu himself often used the ‘game’ metaphor – for example actors playing cards, some having better cards than others (quantity and quality of their capital stock) and others playing their cards better than others – stressing that each game always is a historically constructed social game. Our overall question, then, becomes: How do private entrepreneurs transform local social capital into economic capital? We try to answer this question by analyzing capital accumulation and conversion in situ, that is, following concrete actors within specific time–space contexts (Svendsen, 2006). This means that we abandon an often used ‘one-capital’ approach, implying a onesided focus on either physical, economic, human, cultural or social capital, and instead include many forms of tangible/intangible capital that are inextricably intertwined and mutually convertible (cf. Waldstrøm and Svendsen, 2008). This takes place in repeated games of long duration (10–15 years) where an entrepreneur strives to obtain win–win cooperation with other entrepreneurs in a local area, evaluating the pay-off obtained after each round. This however with varying success and strongly contingent upon incentive structure and the overall socio-cultural context, including, e.g. degree of obligations of reciprocity among players, local traditions, personal acquaintance, inter-personal trust and the range of possibilities to punish free-riders (Herreros, 2004, 44ff; Poulsen, 2009, 40ff). In such specific time–space contexts, a person’s ‘credentials’ appear particularly important for economic success, in the form of possession of a harmonious mix of tangible and intangible capital (e.g. tools, skills, money, connections, social networks) that function as a credit in the broadest sense of the word – that is, giving access to more capital, which hitherto has been out of reach for the entrepreneur in question. In line with our findings, it is probable that social capital here should be seen as a ‘master capital’ as, without this capital form, it simply becomes impossible to get access to all the other capitals and, ultimately, to credibility and credit in the local area. Seen from the perspective of the individual entrepreneur, then, accumulating capital becomes synonymous with getting access to capital through local networks – that is to say, if networking with other local entrepreneurs pays the individual entrepreneur (rather than, say, cultivate national or international networks). However, if cooperation is non-productive or even counter-productive for the entrepreneur, due to various cooperative barriers including culture, communication, individual traits, degree of personal knowledge, level of trust, etc., the entrepreneur’s costs (time spending, work and money) will exceed the profits he can obtain, and he will ultimately be tempted to defect. Thus the game ends up in a Nash equilibrium where all players’ dominant strategy is non-cooperation in a lose–lose game, that is, what in behavioral economics has been regarded as the most dominant strategy, meaning a strategy that “produces better results no matter what strategy the opposing player follows” (Frank, 2006, p. 455). Using iterated game theory, we have chosen four cases that may well illustrate four typical outcomes for rural entrepreneurs investing in local networks over a fairly long period of time (5–10 years). 2. Theory and models In the following, we present Bourdieusian neo-capital theory, as well as compare it with ‘old’ capital theory. This leads to a listing of the main characteristics of ‘capital’, i.e. a taxonomy. Then a social capital taxonomy is proposed, followed by the PD model. 2.1. Bourdieu and neo-capital theory Bourdieu’s forms of capital were placed in a completely new framework, compared to traditional economics. We might term

Fig. 1. Conversions of capital: two lines of conversion.

this framework neo-capital theory – that is a theory aimed to break with formerly positivistic capital theory (Waldstrøm and Svendsen, 2008). Bourdieu’s theory, termed a General Theory of the Economy of Practices, asserts that power relations are determined by the unequal distribution of capital among social groups and individuals (Bourdieu, 1984, 1986). Furthermore, both tangible and intangible capital (e.g. physical, economic, social, cultural, symbolic) are being perpetually accumulated and converted by individuals in social ‘games’. Fig. 1 illustrates the main differences between ‘old’ and ‘new’ capital theory. In the positivistic model (actor 1 to the left), only tangible forms of capital are converted by the actor, resulting in need satisfaction in the form of buying a bread. In contrast, in the arguably more realistic neo-capital or Bourdieusian model (actor 2 to the right) both intangible and tangible forms of capital are converted by the actor in order to get his bread. Say, he uses his cultural capital (knowledge of cultural codes) to build networks (social capital), which then give access to a job and earnings (economic capital), which finally makes him able to buy a bread. Following Bourdieu, forms of capital are powerful – indeed, they are near identical with power (Bourdieu, 1986, p. 243). If a person or a group succeeds in accumulating the right mix of capital, he/they can simply rule their surroundings. This is because the various forms of capital are accumulated, historical labor (labor-time) in either materialized or incorporated form. In Table 1, we have listed 10 properties characterizing forms of capital, where the first one is taken from old capital theory, while the 9 others are deducted from the works of Bourdieu (1986, 1989). As is shown in Table 1, forms of capital are productive for the single actor, who gets economic profits from them, cf. Adam Smith’s seminal definition: “A wealth that accrues its owner revenues” without being destroyed itself. They are mutually convertible, i.e. one form of capital (e.g. human) can be converted into another (e.g. economic) at a certain transaction cost, including a certain amount of transfer labor-time invested by a person; transmissible in either materialized or incorporated form, as tangibles or intangibles. Further, they are capitalizable, i.e. can all immediately be converted into the most liquid capital, economic capital (money,

G.L. Haase Svendsen et al. / The Journal of Socio-Economics 39 (2010) 631–644 Table 1 Properties of forms of capital – Bourdieu inspired taxonomy. Property

Explanation

1. Productive

Accrue its owner socioeconomic profits without immediately being destroyed Mutually convertible Can be historically transmitted in physical objects or inside/between human beings Exist in either material or immaterial forms Can be immediately converted into economic capital Guarantee the credibility of the owner Help the owner to obtain credit, e.g. loans Valued by individual actors or groups and hence seen as scarce goods worth achieving The objects of people’s investments of labor-time Constructed in specific time–space contexts characterized by particular power relations

2. Convertible 3. Transmissible-storability

4. Tangible/intangible forms 5. Capitalizable 6. Credentials (symbolic capital) 7. Credit 8. Valued

9. Objects of investment 10. Social constructions

stocks, bonds), by Bourdieu (1986, p. 253) called the “brutal fact of universal reducibility to economics”; act as credentials and hence guarantee the trustworthiness of the owner1 – i.e. increases his or her symbolic capital – and accordingly serves as credit for the single individual in the broadest sense of the word. Forms of capital are subjectively valued by the agents as rare goods worth achieving, and who therefore invest time and energy in accumulating and cultivating them. Finally, they are socially constructed, that is, at play in specific cultural–historical games, i.e. time–space contingent ‘markets’ where certain forms of capital are seen as more legitimate and containing more status for the single individual (symbolic capital) than others, and with specific power relations and rules pertaining to each specific field, where the capitals are in play (e.g. the education system, business life, the family, the world of art). 2.2. Social capital The notion of social capital implies a recognition of the power inherent in network cooperation. These networks are invisible, but they arguably have visible socioeconomic effects for single actors as well as, it has been proposed. As formulated by Putnam (2000, p. 19) social capital has value in line with the other, more traditional forms of capital: “Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective), so too social contacts affect the productivity of individuals and groups”. As such, Putnam defines social capital as economically productive “social networks [among individuals] and the norms of reciprocity and trustworthiness that arise from them”, beneficial not only to single agents and groups but to whole societies Putnam (2000).2 As already mentioned, we will argue that social capital’s productivity does not solely reveal itself in the purely economic capitalization of network resources, but in many kinds of capital being accumulated and capitalized at the same time. Also we will argue that, at the micro-level, social capital does not always lower

1 Thus, all forms of capital include symbolic capital, i.e. (legitimate) recognition in line with the power structure of a specific society (Bourdieu, 1997, p. 115). 2 Recent works (Sobel, 2002; Uslaner, 2002; Herreros, 2004; Svendsen and Svendsen, 2009) suggest that multidisciplinary approaches to social capital should be carried out by operationalizing social capital as trust, that is, trust in, and consequently, willingness to co-operate with other people – of course, depending on the degree of trustworthiness of these people.

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transaction costs and lead to economic prosperity–social capital indeed has a ‘downside’ (Portes and Landolt, 1996), and it may not pay the single individual to invest in networks that are decisively non-productive or even counter-productive in an economic sense, particularly not a private entrepreneur (Kadushin, 2004). In that case, networks cannot be considered as capital and should not be analyzed as such (cf. the capital taxonomy above). Rather than Putnam’s macro level approach (social capital as a collective good), we will therefore use Bourdieu’s seminal micro-level definition of social capital (social capital as a private good extracted from the group): Social capital is the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition – or in other words, to membership in a group – which provides each of its members with the backing of the collectivity-owned capital, a “credential” which entitles them to credit, in the various senses of the word (Bourdieu, 1986, pp. 248–249). Note here that social capital – i.e. the aggregate of actual or potential network resources available for a group member – in many ways differs from the other forms of capital. Like them, it can be accumulated, stored and converted. It accrues its owner benefits without being destroyed, in fact it increases by usage. And it facilitates action just as they do. However, unlike the other forms of capital social capital exists neither in objects nor in people, but between human beings; is not taxed; is increased by usage/cultivation; and is wholly informal. Besides, social capital has the following unique properties: it is extremely flexible in that, for example, resources (services, information) can be tapped from the network by the owner immediately or in the far future and repayment does not necessarily happen immediately and 1:1, if ever3 ; it is accessible for all, including the poor (all you have to do is to invest life time and energy) and in combination with threats of punishment for cheating and free-riding (e.g. Feld, 2009), it helps to solve collective action dilemmas. Finally, it gives access to all the other forms of capital (‘master capital’)4 . (See also Table 2 below). Take, for example, a respected business director rich on human, economic, physical and social capital (connections, colleagues, friends, family). It is this man’s mix of valuable forms of capital that makes him powerful and trustworthy among people, here not least his network of resourceful connections, who give him important information, render him services, etc. – not only his material wealth or his position. Thus, in this understanding Economic Man, characterized by narrow economic interests, becomes an incomprehensible, irrational actor rather than a universal standard rational actor. 2.3. Social constructivism versus rationality On the other hand, that people spend time and energy on accumulating and converting many forms of visible tangible and invisible intangible capital does not mean that these activities are less economic or ‘rational’. They should not at all be considered ‘disinterested’ or ‘non-economic’, as Bourdieu often expressed it, using gift giving and the world of art as the most illustrative examples (Bourdieu, 1977, 1984, 1990a,b). Admittedly, the unequal distribution of forms of capital among groups in specific, historically constructed fields does further

3 Although, arguably, the willingness to pay back in a certain, future situation should exist, hence social capital seems also to function as a form of collective insurance at the long sight. 4 “For reciprocity to prevail as patterns of social interaction, trustworthy individuals need not only to overcome the temptation to free-ride, but they also need to coordinate their actions successfully” (Ostrom and Ahn, 2009, p. 27).

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Table 2 Specific properties of social capital. Property

Explanation

‘In-between’ capital

Embedded in invisible human relations, hence existing between human beings Like human and symbolic capital, it is not and indeed cannot be taxed by the state Unlike tangibles and like human and symbolic capital, social capital is not destroyed by usage but rather increased Not regulated by formal rules and contracts (as, e.g. physical capital) Resources can be extracted from the network immediately or in the far future with flexible repayment Is accessible for all, including poor people Helps people within a group or nation to trust each other, cooperate on equal terms and thus overcome collective action dilemmas Gives access to other forms of capital (‘master capital’), e.g. human, economic and symbolic capital made possible by one’s aquaintances

Not taxed

Increases by usage

Informal

Flexible

Accessible Helps solve collective action dilemmas

Access to resources

See also Bourdieu (1986), Putnam (1993), and Light (2001).

sociologize (read: complicate) the analysis. Despite the dynamic complexity and uncertainty of capital accumulation, distribution and conversion we do however not find that Bourdieu’s stance excludes a rational action approach. For example, Bourdieu indicates in an article on the genesis of groups in Rationality and Society that – although affected by historical symbolic struggles and ‘theory effects’ – people are information gathering, rational actors5 : “The social world is, to a large extent, what the agents make of it, at each moment; but they have no chance of un-making and re-making it except on the basis of realistic knowledge of what it is and of what they can do with it from the position they occupy within it” (Bourdieu, 1985, p. 208). Even more explicit the contradiction (or mediation) between social constructivism and rational choice appears in this passage: “[On] the one hand [there is] economism, which, on the grounds that every type of capital is reducible in the last analysis to economic capital, ignores what makes the specific efficacy of the other types of capital, and on the other hand [there is] semiologism (..), which reduces social exchanges to phenomena of communication and ignores the brutal fact of universal reducibility to economics (Bourdieu, 1986, pp. 252–253)”. Seen from this perspective, Bourdieu’s stance is close to the one held by James Coleman. Unlike Bourdieu, Coleman however took an explicit rational choice stance (Coleman, 1994), although stressing the impact of specific social structures – somewhat equivalent to Bourdieu’s field effects. In the following, we find it fruitful to unite Bourdieu and Coleman in analyzing capital conversion within a rational action framework, however (unlike Coleman) restricting ourselves to the micro-level by shedding light on the behavior of concrete persons. This framework should be seen as modified by ‘local’ social struc-

5 Notice that Bourdieu himself preferred to use the word reasonable (Fr. raisonnable) rather than rational.

Fig. 2. Cooperation between local entrepreneurs: simple Prisoner’s Dilemma matrix.

tures (Coleman, 1988) and, hence, characterized by uncertainty and risky investments – an environment that, as we mentioned, leaves little space to an abstract Economic Man deemed to failure in real life. 2.4. The model We now combine Bourdieu’s neo-capital theory with a rational action analytical framework, namely game theory. More specifically, we will – and admittedly in a very simplistic way – operate with repeated plays in the multi-player Prisoner’s Dilemma (Axelrod, 1984), including a well-described ego as the player (local entrepreneur) vis-a-vis a much less well-defined group of coplayers (other local entrepreneurs). Thus we assume that the single entrepreneurs (1) accumulate, use and convert many forms of tangible and intangible capital (cf. Bourdieu) and that (2) they do it in an economically rational way, that is, seeking to administer their capital in a way that increases – or, at least, not decreases – their personal incomes (cf. rational action theory). The latter in order to, simultaneously, secure both recognition by others (symbolic capital) and physical welfare. Thus, at stake is not only a person’s physical survival but also her self-esteem, self-image and reputation (Herreros, 2004, p. 46). Moreover, interaction with other people naturally contains a personal-existential dimension – it simply makes life worth living (Argyle, 1991). Hence we get a kind of multi-dimensional game including many forms of capital – social, economic, physical, cultural, symbolic, etc. – which are simultaneously cultivated, accumulated, converted and used, leading to various outcomes for the cooperative partners. However, to make the analysis as simple as possible we have selected cases that enable us to: (1) focus on the specific conversion processes between social and economic capital, only including the other forms of capital when relevant, (2) focus on single persons, in a micro-sociological perspective and, finally (3) apply the simple, parsimonious PD matrix (Fig. 2), illustrating how social capital is, or is not, turned into private, pecuniary gain – however stressing that many forms of capital besides social and economic capital have an impact on cooperative outcomes. 3. Cases 3.1. Method One of the greatest advantages of what we here broadly have termed neo-capital research has been to gather researchers from many disciplines within the human sciences. Today, capital research tends to trigger cross-disciplinary research rather than

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Fig. 3. Map of Denmark.

narrow economic research. Not least, recent social capital research has sought to unite disciplinary forces – theoretically as well as methodologically. In this vein, we have chosen a socioeconomic and crossdisciplinary approach, linking economic theory with qualitative methodology within the humanities (long semi-structured interviews with interview guide, transcribed in full length, coded in sections and headlines, and analyzed). In order to make the analysis simple and parsimonious, we only include four, in-depth interviews with a duration of 1.5–2.5 h. Apart from covering all four outcomes in the PD matrix, we had three simple selection criteria in order to secure comparability, namely that the enterprises should be: (1) small, (2) innovative and (3) situated in peripheral rural areas. The reason for choosing entrepreneurs in rural communities stems from an assumption that small local communities enhance mutual acquaintance and networking, allow social sanctioning and, in sum, contributes to solve collective action problems (Lichbach, 1996).6 Therefore, we might also expect that a small group size gives rich possibilities for personal acquaintance and knowledge, mutual trust, and organizational efficiency (Olson, 1965). Hence, small rural communities might be expected to nurture a preference for the strategy of investing labor-time in increasing one’s symbolic capital (reputation, trustworthiness) as well as in local networks, in order to economically capitalize on local social capital. Overall our purpose is then to – by paying attention to how real, living persons accumulate, utilize and convert many forms of capital in their economic transactions – account for four typical outcomes in our game theoretic matrix. In this way we attempt to

6

The three other solutions suggested by Lichbach (1996) are market, contract and hierarchy.

reach a more deep understanding of successful entrepreneurship than the one we find in traditional analyses, which solely measure successful entrepreneurship as economic success. We hurry to stress that our aim is not to contribute to develop game theory but, rather, to illustrate the four outcomes in the Prisoner’s Dilemma matrix in a new way by drawing on long, qualitative interviews. To analyze the relation between social capital and economic capital, we have selected four cases representing four different scenarios of the game situation, as shown in Fig. 2 above. We start with game 1, where the entrepreneur (Iver Gram) by using a tit-for-tat strategy actually succeeds in obtaining a win–win situation, that is, converting social-to-economic capital for the benefit of all collaborative partners. Then follows game 2, in which the entrepreneur (Per Kølster) chooses not to cooperate at all, game 3 in which the entrepreneur (Kai Winther) for various reasons gets too high costs from cooperating and consequently defects. Finally, in game 4 (Günther Lorenzen) we present the case of an entrepreneur who creates a win–lose situation, that is, winning himself while leaving his co-players with the sucker’s pay-off. Fig. 3 shows the location of our four cases. 3.2. Game 1: Iver Gram The first enterprise, Danish Nature Safari (Dansk Natursafari) was established in 2004 by school teacher and formerly ministerial ranger, Iver Gram, about 55 of age. It is situated in the village of Møgeltønder in the southern part of Denmark, in a peripheral rural area near the German border. 3.2.1. Introduction: Danish Nature Safari As the name indicates, Danish Nature Safari is a tourist business. It offers guided tours to the seaside and the adjoining marsh areas,

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primarily for Danes coming from urban areas. Tours include ‘black sun’ (huge flocks of starlings) and ‘grey sun’ (geese), ‘white sun’ (swans) seal safari and cultural–historical tours to Northern Germany. In 2008, Gram hired his first permanent employee, however for years he has run Danish Nature Safari as a one-man business (and still does). Besides, over the year Gram hires on a contract basis 10–15 guides to run his tours. In 2008 the yearly turnover amounted 750.000D , generating a surplus about 130.000D . 3.2.2. Altruism and economic calculation Several times during the interview, Gram describes himself as a “naive dedicated soul” (ildsjæl, lit. ‘soul of fire’). Altruist and nature lover as he might be, he nonetheless shows an astonishing, almost callous economic rationality in practice, for example when strategically planning how to obtain an increased share of that trade in the local area his business has conveyed. Or when exploiting contemporary trends in nature consumption. Thus the peculiar mix of altruism and cool calculation is also found in his self-image of a dedicated “opener of nature” (“Try to make your fellow men love nature, pay you to show it to them – then you’re well on your way”) and an Economic Man like attempt to exploit a contemporary trend: The need to have one to (re)tell and (re)present a magnificent nature: “If I am to really cut things down to basics, eh. . . then it’s simply about experiencing things. Then it’s about fascination and naiveté. Well, now I’m really there where I normally don’t want to be cited [pause] But I guess that, in most of us. . . as human beings, there is a need to experience something. . . something originally, something big, something very emotional. And this I use consciously, innovatively, right?” In fact, Gram sees his ability to establish new collaborative constellations between local partners as the key to his economic success – the most important innovation that gives him great advantage compared with similar tourist enterprises. INTERVIEWER: “Well, it looks like the machinery is already there. As soon as you get a new idea then. . . then the machinery just starts running. . .” GRAM: “True, yes! I’ve tried to establish cooperation. I succeeded to get a media business [the newspaper]. I have the conveyer. And then I deliver the event and the idea you see. And everything is a roaring success. Simply roaring. Eh. . . these products with ships, with adventure. . . they are a new trend. Then, in short: Last year we had 45.000 visitors in our business. And that’s far more than I ever expected. And it has been incredibly exciting and profitable.” In this way we see that Gram has simply specialized in designing win–win cooperation, leading to reputational effects and the conversion of social capital into private income. “[That’s] one of these ways I’ve tried to think: Try to find a cooperative partner, who is an expert within his field, a communicator who is an expert within his field, and then I find a history, which is an experience – right? Well, that’s quite an elementary way to do business. Quite elementary.” 3.2.3. Converting social capital into economic capital: win–win cooperation According to Gram, his economic success is due to an ability to create win–win situations. Thus he has worked together, for mutual profits, with, e.g. the Danish State Railways (DSB), public and private enterprises, newspapers, a German shipowner, the German Ministry of Environment, researchers in Denmark and abroad, local and regional tourist enterprises (in particular hotels and restaurants) as well as interest groups such as the Danish Society for Nature Conservation and the Danish Ornithological Association.

The most recent initiative is the implementation of a discount scheme in 2008, connecting Danish Nature Safari with other local and regional tourist actors such as restaurants and hotels, and including a shared booking system. Over and over again in the interview, Gram stresses the importance of what he terms “unconventional cooperation” – that is, cooperation between partners, who have never cooperated before and, besides, never were expected to cooperate. It is his firm belief that, as a businessman in a peripheral area, you “need to work together across normal alliances”. Indeed, Gram has specialized in inventing and cultivating these so-called “win–win projects”, and with great economic success as well. The cooperation with a regional newspaper, Jyske Vestkysten, is a good example of such a win–win situation. Gram gets free advertisement and the newspaper provides an extra service for their subscribers in the form of a price reduction for those who wish to buy an event. Hence, the innovative power in network cooperation and social capital consists in making two or more partners – all experts within their own fields – join and together develop a unique product. A product, which exactly due to the peculiarity and complexity of the collaboration cannot be easily imitated by competing businesses. A good example is Gram’s cooperation with the German shipping company, Adler Schiffe, which the ministry had forbidden him. This was one of the first partners after Gram’s switch from a very entrepreneurial ministerial employee to a full-time private entrepreneur. Gram remembers: “[My] business was developing slowly and smoothly. I immediately reestablished the connection to Adler Schiffe – this shipowner who had been left rather disappointed [after the interruption of a very profitable collaboration with Gram, due to the Danish ministry of Environment]. And in only two months, we succeeded to build up a seal safari. And then we started up in 1994. And it has been a regular success history. It has become a small. . . eh. . . nature product, which eh. . . to an exceeding degree has become a little quality product. And for me, it has been crucial to start this, because exactly in that field I cannot be copied.” The crown of his networking achievements Gram sees as the realization of the abovementioned discount card for Danish Nature Safari tourists, knitting all major tourist actors in the region together into profitable networking, by Gram devised as a win–win game. At the same time, the discount scheme secures that Gram – this calculating win–win designer – gets a much larger share of the several millions of Euro his business has attracted to the area. That is, what he has dreamed of for years since he – as he explains in a somewhat different terminology – doesn’t want his colleagues to be free-riders but active contributors and cooperative partners. In this context, Gram talks about the ‘big net’ as a sort of ultimate win–win game within the region, solving collective action dilemmas and securing economic gain for all. Evidently, by instituting such a binding contract, forming a set of clear rules of the game, Gram wants to secure that he doesn’t get the sucker’s payoff for his collective good provision. As such, he follows a tit-for-tat strategy allowing him, on the one hand, to be ‘tough’ and punish free-riders in the next round, by excluding them from the discount card network and, hence, from economic gain; on the other hand to be ‘soft’ by forgiving defectors by allowing them to reenter the network in the next round, if they choose to follow the rules and not cheat or free-ride (Frank, 2006, p. 460). So we see that Gram wants to contribute to local and regional prosperity in his home region (“I want to contribute to regional development, I want to contribute to [local] innovative development”). However also that he definitely wants a piece of the cake himself and, preferably, a piece that stands in proportion to his efforts. He explains:

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GRAM: Clearly, I create a brand (..) That creates a flow of tourists in the area (..) But I have also engaged in this, frankly speaking, in order to get a larger share of that economy (..) The guest lives at a hotel, eats and spends, perhaps, 1000 DKK, right? I don’t see that money at all! Right? [laughter] However. . . I create an enormous sale here (..) in my own business amounting to a couple of millions [DKK] However, I also create ten more besides those two, right? And those millions I’ve been somewhat on the look for, right? [laughter]. INTERVIEWER: Well, that’s a thing one has to consider. . . GRAM: Well, it is! It clearly is! Because, if I’m going to do sustainable business and develop, then I must have something to develop with. So it’s also a question about that [laughter]. And to say to yourself: How do I get a share, a larger share of that economic flow, which is caused by my activities? Right? And here the discount card is the solution. Because, in that agreement the single enterprises have to pay to become a member. They can’t be members without paying, off course they cannot.

3.2.4. Symbolic capital as a precondition for social capital Besides from establishing a wide-spread and economically productive network in the region, Gram’s networking strategy also implies an attempt to turn potential enemies with bad-will into allies with goodwill. This he does by continuously establishing new alliances across formerly non-cooperating (and even conflicting) groups and organizations, in short, strongly inclusive (bridging) social capital. From a self-interested, calculating perspective, he provides this collective good in order to build up personal credibility and credit-worthiness in the broadest sense of the word on the one hand, and legitimate his activities on the other – as a precondition for capitalizing network cooperation and thusly provide himself the private good of increased income. Gram explains this in detail: GRAM: “Well, I know that my black sun arrangements they wear the nature. I’m one hundred percent aware of that. I try to do it as ethically responsible as possible [but] I also know that, being a professional private entrepreneur (..) I’d like to generate surplus [laughter] (..) So that’s why I’ve tried to pull them [Ornithological Association] into the group and say: I’d really like to have you join. They, on the other hand, experience that they don’t get polarized in the same direction – right? So, actually, I’ve tried to – in the same way as with the newspaper, DSB and all the others – tried to pull everybody in and say: Well, in fact there’s quite a lot more we are common about than makes us enemies.” INTERVIEWER: “They become polarized in the same direction – I didn’t get that. . .” GRAM: “They are polarized. They are polarized. For example. . . go to a farmer and ask: What is DN [Danish Society of Nature Protection] and DOF [Danish Ornithological Association]? They are those horrible ones.. out there. People who won’t accept my private property, right? And by trying to pull them into a cooperation, by giving them a platform. . .” INTERVIEWER: “. . .they become decent people?” GRAM: “Decent, that’s a silly expression, but they do become an acceptable cooperative partner, right? And I succeed to enlarge my network even more. And I succeed to eliminate. . . a critique [laughter]. That’s also important for me, right? That is to say that I make these people (..) responsible too, or partly responsible, and they also get a part of the ownership, because. they can never, never ever, they will never be able to attract as many customers as I can. So that’s why I also try to give them a part of the ownership in my business, right?”

Fig. 4. Game 1: from non-cooperation to cooperation. Converting social capital into a win–win game.

3.2.5. Investing in social capital Iver Gram is fully conscious that, above everything, it is his networking combined with love for nature (and telling people about nature) and a unique ability to conceive and realize new ideas, which is the key to the economic success of Danish Nature Safari. Therefore, he wants to invest even more of his precious time in regular face-to-face meetings with cooperative partners. Previously he considered such meetings a bit waste of time. However, recently he has realized his own “Acquaintance-structure-weakness” (not knowing exactly who knows who and what his partners looked like) – and, moreover, that in all respects it pays to cultivate these networks by spending time together with them. GRAM: “The network has to be extended to personal relations, personal agreements, because that’s what carries out here. So I have to walk into [Hotel] Tønderhus and talk with the owner of Tønderhus (..) and not the receptionist (..) I need to get to those people who are in charge at such places. And until now, I haven’t done that.” At a final question about how much time he uses on building networks, Gram answers: GRAM: “Arh, I don’t know. Probably one third on building networks. And this should be increased. It must be increased (..) There are two threads going through. The first one, that’s the naive joy of disseminating [knowledge about nature], which is the fundament of the enterprise, however there is another one, there is establishing networks as well, right? Alliances criss-cross.” INTERVIEWER: “You hint to that win–win situation you have talked so much about?” GRAM: “Yes. And. . . and it is really a rather trivial thinking, fundamentally, isn’t it? It is to give joint ownership. Eh.. that’s all there is to it, I believe. And that [thread] should have much more attention in the future, and it will. But, at the same time, money should flow through business. In other words, customers should flow through, right? But that’s not what has been our problem. The problem has largely been to keep up pace with the demand.” To sum up, the case of Iver Gram illustrates the most optimal outcome in our game theoretical matrix, namely win–win. Hence we see a private entrepreneur, who has thought out a long-sighted cooperative strategy aimed to capitalize on local networks. That is, converting invisible human relations (personal connections) into visible capital in order to secure private welfare at the benefit of others as well, cf. Fig. 4. This he has done in repeated plays with a lot of co-players stretching over several years and gradually moving from non-cooperation (lose–lose) and almost no labor-time investment in local social capital to win–win cooperation and large investment in social capital. In fact, with the implementation of the discount card system – knitting all local and regional tourist actors into ‘the big net’ – Gram has finally succeed to achieve a kind of win–win equilibrium (in the figure indicated by the position of the head of the arrow). Gram has intentionally constructed this system

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in order to tap resources from local networks rather than continue to supply other local tourist actors with economic capital for free, in a one-way flow (cf. the remark “How do I get a larger share of that economic flow, which is caused by my activities”). As Gram says himself, the discount card system is the solution. Hereby he seems to have solved the collective action problem, which included asymmetric reciprocity in his disfavor. He has now found a way to penalize defectors and free-riders and, besides, legitimize his activities among a large group of people, and therefore win–win cooperation runs smoothly. 3.3. Game 2: Per Kølster About 11 years ago Per Kølster and his wife Camilla moved from Copenhagen to the northern part of Zealand to live on the farm “Fuglebjerggaard”, which they had recently bought. According to Danish standards, Fuglebjerggaard is a small farm with a total size of 17 hectares. The farm was from the very beginning turned into organic farming, and is a very diverse mixed farming system with an almost overwhelming array of agricultural produce. The main sources of income come from a farm shop where the Kølsters sell their own produce. Other important parts of the income come from arranging courses and workshops as well as sale of recipe books. 3.3.1. Making sense rather than making money As a farmer, Per Kølster has an unusual background. Per was born and raised in the Copenhagen suburb of Lyngby, where his parents worked as teachers in the local primary school. Until 1997, he was employed at the Agricultural University in Copenhagen as an associate professor. In his time at the university, he was a pioneer within the field of organic farming and was one of the founders of the first courses on organic farming to be taught at the university. During the 1990s, he became increasingly interested in participatory research in organic agriculture. Furthermore, he also began taking part in organic development projects. One example was his and Camilla’s involvement in converting all public institutions in a Danish municipality in Southern Denmark to sourcing organic produce in 1994. Following a period of frustration by what he perceived as a lack of genuine interest in organic agriculture among his colleagues at the university and a wish to work practically with organics, he left his position at the university. Per and Camilla sold their house in Copenhagen, as well as the restaurant which Camilla owned. Some of the money from the sale of these properties was then used to buy the farm. Camilla was also born and raised in Copenhagen. She comes from a family of wealthy industrialists. She has no formal education and describes herself as an unskilled cook. During the 1980s she was active within the Danish peace movement. When the Berlin Wall fell in the late 1980s, she left the peace movement and became an organic activist and entrepreneur. She has described her shift in focus as a matter of shifting over to what at the time seemed to be the next major social movement of the 1990s. Camilla has initiated a wide range of organic development projects, including an organic catering company and an organic restaurant. Several of these projects were terminated again, as only a very few proved to be economically viable. Apart from being an organic entrepreneur, she has also authored several recipe books (with a particular emphasis on organic food and food culture). Along with Camilla, Per can be described as one of the “founding fathers” and pioneers within the field of organic agriculture and organic food culture in Denmark. As in the case of Iver Gram, Per describes himself as an idealist, a dedicated soul, who plays the game for the beauty of it:

“We did not start out from the point of wanting to make money. . . It has to make sense doing what we’re doing. It has to be beautiful. And taste good. It has to be integrated somehow. We’re trying to apply a principle of agricultural development based on an aesthetic or artistic thinking. . . a matter of realizing potentials. . . It is a beautiful ecological thought of letting thousand of flowers grow. . .” 3.3.2. The formation of capital at Fuglebjerggaard The farm is a very diverse farming system, as Per and Camilla grow virtually any agricultural produce, which has ever appeared in the cultural history of agriculture in Denmark. In terms of production animals, they herd free range chickens and geese that graze a pasture within an orchard. Pears and apples from the orchard are made into cider. There are also sheep, dairy cattle, beef cattle and free range pigs. They also grow cereals which are used for brewing beer in their own brewery, flour produced at their own millery and fresh-baked bread. In the garden, they produce flowers, both edible and decorative, fruits, nuts and berries as well as various herbs, which are used for spice mixtures. At the farm, they run a Provence-type country restaurant and some of the farm buildings are also used as a visitor centre and course rooms. Per and Camilla employ roughly 3–4 people on part-time basis. A very important source of labor is volunteers or young people doing internships on the farm. A significant part of their time is devoted to course activities. Per offers courses in beer brewing as well as several other modules. Camilla offers courses on baking and cooking. She is also active in Danish media and hosts a program on baking on national Danish TV. Apart from that, she has authored several recipe books, which are written in a very distinct unconventional style and has earned her a reputation as an “alternative” cook, focusing on regional and season-specific products (and organic, of course). Running such a complex enterprise is obviously a very demanding task, given the small scale of each sector within the farm. When Per started farming at Fuglebjerggaard, he experienced that the skills required for managing some of the operations had been abandoned from Danish agriculture, both in practical as well as theoretical terms. One example is that he had to start from scratch brewing beer, as there was not a very well established microbrewery tradition in Denmark at the time. Also when he was building up a millery a distinct old-school technology, he found out that there was only one small family-based company left which had any expertise within the field. To a large degree, Per had to learn the trade in the hard way, reading relevant literature (scientific as well as practical), experimenting and adjusting his approaches continuously. In spite of the hardships experienced, Per considers this part of his occupation as the most rewarding and enjoyable, as he finds great pleasure in learning with and from competent people. “It’s just a matter of start using the inside of your head as well as your hands. . . I use all possible opportunities to gain knowledge. When I started brewing beer, I simply started with reading a book, a giant book, on the subject. I read with great enthusiasm, as reading it really made sense when I was actually performing what I read. . . I have been a bit privileged due to my past, where I have been in contact with a large number of people, who are very competent within each of their fields.” In order to learn new skills, Per has consciously utilized networks including skilled people, in order acquire the skills needed to realize his vision for the farm. Presently Per has initiated cooperation with brewers from Copenhagen, the aim of which is to exchange skills and innovations. Hence, apart from the physical capital in the form of agricultural products and the production machinery belonging to them, Per has also built up symbolic, social and human capital as, for him, there is much more purpose in

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acquiring skills than the mere usefulness of the skills themselves (Fig. 4): “It’s making a process, right? Ideas, inspirations and so on, right? And it has been like this all the way. The catch is, which I might say without bragging, that I possess so much curiosity and innovative ideas that are interesting to others. And then you get mates to play with, because you have something to offer each other. . .. It is a way of documenting to your surroundings, that you are serious.” Per’s ways of building symbolic capital is also expressed in his authoring a book on beer brewing, as well as his (though limited) activities as invited speaker at schools, night schools and associations. Recently, Per has been involved in a publicly funded development project, which aims at developing Danish or Nordic produced malt for beer production. Social capital formation can also be observed in relation to his customer base. Apart from the actual communication which takes place when customers visit the farm, at the farm shop, courses or the restaurant, Per attempts to communicate with his customers via his website and through newsletters. He terms a part of his customers “faithful followers”, that is, supporters or fans rather than mere customers. 3.3.3. Converting capital at Fuglebjerggaard In spite of the increasing stock of symbolic, social, physical and human capital at the farm, the economic performance of the farm is rather low. Then how come that the other forms of capital cannot be converted into economic capital? Per sees the poor economic performance as a result of the limited scale of the individual farm operations as well as a lack of economic capital: “We bought the farm without taking a loan, because Camilla had a restaurant. And she also had a house in Frederiksberg [central Copenhagen]. And they were worth quite a lot. . . Along the way, we have spent quite some money on developing things. This has been financed by our bank, so today there are loans in the farm, like anywhere else. . . But it has covered deficits and it has also covered the expenses of farm operations, which have not been able to finance investments and activities. . .. I would be sorry to say that the farm is bad business, but somehow it is, right? Which is evident, since everything is very small here and very labor intensive. But we did not do this to make money. We did it to make sense.” “All that we have done until now has been a question of not using money. . . All our solutions end up being a bit primitive, right?. . . It’s about needing to be systematic about doing things around here, really systematic, in an almost fascist manner.” 3–4 years ago, Per made an effort to channel external capital into the farm in the shape of public funding for a development project, even though they had decided to run the farm without any public support. This enabled him to employ two additional people. But Per (and Camilla as well) were frustrated about the administrative duties following the project funding. In their past occupations, they both developed a strong resentment towards constantly applying for project funding and the subsequent involvement of officials lacking a deeper understanding of their intentions: “We were extremely frustrated about our experiences of the public sector’s treatment of our general project as well as individual projects. They seemed much more geared for supplying funding for purely commercial projects rather than idealists like us. We spent ages rewriting and trying to address random comments from these bastards, right?” In the end, Per and Camilla terminated the project, insisting on maintaining their high degree of control over what should happen at the farm. According to Per, the lesson they learnt was that they should never again apply for funding for anything, which they

Fig. 5. Game 2: sticking to non-cooperation (lose–lose game).

would not have done anyway. An alternative option for developing the farm would be to increase debt levels through loans. The question arose for Per because a neighboring farm was for sale some years back. The high level of investment due to the relatively high prices for agricultural land, left Per “very much in doubt” whether this would constitute an appropriate option for increasing the scale of the farm. Up to this day, Per is still in doubt which options to pursue for future development. He acknowledges the need for addressing the problems of the economic performance of the farm: “It is obvious that we somehow need to finance this. And it is obviously much easier when I do a baking course, to call Aurion [millery in Northern Denmark] and tell them to ship a load of grains over here, instead of growing all of it myself. It is much, much easier. . .. If all of this gets much bigger, it also becomes something different. So I am in doubt. I’m very much in doubt. . .. It’s a dilemma.” Per has been very proficient in building network relations with various actors within his own field. This has enabled him to form a sort of innovative avantgarde within the field of organic food and organic quality development (incorporating dimensions of terroir into organic quality). But remarkably few of these relations have led to lasting business alliances. When asked whether he had formed any horizontal linkages to other actors within the immediate vicinity of the farm, his reply was that this he had only done to a very limited degree. His explanation was that there were actually very few relevant partners in the local area, as it was dominated by summer residences, with only a few major attractions. Hence, one may assume that the level of local networking is highly dependent on the spatial context, which in this case was deemed less beneficial for his line of business. Per has also been considering starting up a sort of community centre function at the farm but, again, was discouraged by having to apply for project funding in order to finance the development of the product. In sum, Per has not been able to establish any lasting business alliances and thus converting his relatively high stock of social, human and symbolic capital into economic capital. This is partly due to Per’s habitus from his “earlier” life, including the negative attitude to administrative work, such as writing project applications. In relation to our analytical framework, Per’s situation is that he has not so far been able to establish any win–win situation. Instead, the game has so far produced a neutral result, leaving Per with only little loss in the form of a minor investment (in vain) in local networks. However, at the same time he misses the potential benefits from other local entrepreneurs, as do these entrepreneurs. In this way, Per Kølster never gets out of the lose–lose quadrant (Fig. 5). He never really heads at the win–win quadrant because, at an early stage in his agricultural career, he quickly realizes that local networks cannot provide him with the benefits he needs (cf. his remark that ‘there are very few relevant partners in the local area’). He therefore chooses to cultivate his – due to his academic career – many resourceful supra-local networks rather than investing in local networks with low or no human capital within his

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field. In other words, he sticks to a non-cooperation strategy, which therefore becomes the equilibrium of this game. 3.4. Game 3: Kai Winther In year 2000, Kai Winther and his family moved from a suburban in Copenhagen to the farm “Kernegaarden” at the island of Fejø. They had decided to slow down from a busy life in business by moving to a quiet, remote place like this. Their initial idea was to start with a holiday on farm and combine the income with a multitude of activities of different kinds. Fejø is a small island of 16 km2 , situated in the south-eastern part of Denmark. The soil is good and the climate is mild and gentle, and Fejø has a long history of fruit production and a good reputation for its apples and pears. Previously, the inhabitants’ main income came from agriculture and horticulture. Today, the possibilities of income have diminished, and the population has been more than halved to just about 600 inhabitants. Regional branding and high quality products seem to offer a new opportunity to increase the livelihood and sustainability of these marginal areas. As an experienced businessman, Kai Winter is one of the entrepreneurs who have tried to pursue this strategy. 3.4.1. Kernegaarden apple cider: branding and networking A small orchard belonged to the farm, and Kai saw the possibilities in branding such an apple product from a well demarcated island with a long and strong history. He was able to develop a well tasting, organic Kernegaarden Apple cider that won a medal for its qualities. He convinced 7 other small pome growers to plant in common 5000 apple trees from Normandy specially suited for apple cider. His vision was to involve more of the pome growers in developing the brand of juice and ciders from Fejø. Kai is an energetic entrepreneur and network builder. He and his wife have been strongly involved in a whole range of activities on the island, and they have strived to involve a whole range of actors in these activities – both from the island and outside. Among the most important actors are (1) the traditional pome growers on the island, (2) LF-fruit, which is a cooperative pome fruit storage and marketing association, (3) the local settlement group and their branding activities on the island, (4) the local gourmet restaurant “Clara Frijs”, (5) the “Pear craft”, a wooden boat sailing to Copenhagen every year in the autumn filled with fruit, as an event to promote the island, (6) governmental bodies, (7) chefs and restaurants and (8) catering firms. Despite his branding success, energetic networking and the good reputation of his product, Kai Winter’s apple cider business only constitutes a minor activity in the holiday on farm concept. Hence, expressed in our terminology, it has been difficult to transform a large stock of intangible capital (social, symbolic), built up in the local area, into tangible economic capital in the form of increased income. Why is that? We will try to explain that in the following. 3.4.2. Converting symbolic capital into economic capital One of Kai Winter’s main efforts has been branding and marketing, not only of his own product but of Fejø as such – not least because he is aware of the synergy effects between the Fejø brand and his own brand. Despite the reluctance from the traditional pome growers to brand their fruit, there has been a significant increase in branding activities. However, these activities have primarily been undertaken by the settlement group. One of the most important activities is the abovementioned Pear craft – a yearly event that has taken place since 1992. It is primarily run by the Fejø settlement group, whereas the commercial farmers on Fejø have only been slightly involved, despite the fact that this event clearly increases their marketing possibilities. The pear craft

activities have obtained a lot of publicity and were indirectly the reason why the small supermarket chain IRMA became interested in branding and selling fruit from Fejø. Although Fejø and Fejø products have become a good brand, the other pome producers on the island are reluctant to participate further in cooperative marketing and branding initiatives. There are two reasons for that. The first reason is the socio-cultural heritage of the Fejø islanders. As revealed in the interviews (Noe, 2007), the Fejø dwellers are close neighbors and have to be able to live with each other. Therefore, people tend to be cautious about interfering too much in each other’s private affairs. Hence it is common practice for farmers to have their own individual marketing strategies and/or let the general marketing cooperatives take care of the handling and marketing of their produces. The second reason is the productionist discourse and associated worldview within Danish agriculture. This discourse, which has been near hegemonic since the 1960s (Svendsen, 2004), clearly prioritizes volume and rationalization before quality and branding. At the micro-level, the strength of this way of thinking showed itself in the reconstruction of the experimental organic orchard on Fejø in 2007. The interview with Kai Winther clearly shows that this event became a major turning point in his entrepreneurial career, leaving him in disappointment and resignation. Until that time, the orchard had been supported by a grant from the EU. When the grant stopped, a group of actors decided to maintain organic production but, besides from this, convert the orchard into a fully conventional and commercialized agricultural production, primarily financed by the income generated by the product. A private limited company was formed, and a group of investors – primary pome growers on Fejø and Lolland. Also a large investor with a particular interest in organic farming, “Solhvervsfonden”, was putting money into the business. Originally, one of the activities aimed to finance the project had been to start up a production of unfiltered organic juice. Being one of the most engaged entrepreneurs in the reconstruction process, Kai tried to convince the other partners that they should label and brand a Fejø juice. However, the majority of the other local entrepreneurs argued that they needed more volume to compete on the market, and Kai’s proposal was therefore rejected. Instead, it was decided to produce organic apple juice under the label “Cirli” and to invite more pome growers from the much larger island of Lolland into the limited private company. In this way, Cirli became an organic label that was not directly linked to the brand of Fejø. The idea behind Cirli was to, by increasing volume, obtain a near monopoly on organic apple juice in Denmark. For Kay, however, this strategy was tantamount to ruining the idea of the Fejø brand, based on a strict local embeddedness of organic products. Moreover, it made it more difficult for him to obtain the necessary apples for the “Fejø Apple juice” production, he had planned. Thus, in spite of Kai’s large investment of labor-time in local networking and ultimately loss of money, it is evidently very difficult for him to make the traditional local stakeholders see the rationale in branding Fejø and Fejø products in a local win–win game. 3.4.3. Not wanting to get the sucker’s pay-off It should be added that it has not been possible for Kai to establish a common strategy to marketing the product and to utilize the effect of the marketing. He has only been able to obtain external funding to finance some of his marketing activities together with other voluntary actors. Attempts to make the other pome growers contribute with either money or time have failed, and Kai expresses his deep frustrations of getting so little support to all the marketing and branding activities he undertakes – activities which, he

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informs, not only are for his own benefit but for the benefit of all the islanders. As a consequence, Kai has withdrawn from local cooperation His vision of a strong Fejø brand is fading. Instead, shifting his perspective from collective good provision to solely private good provision, he now focuses on developing his own holiday on farm business combined with culinary tourism. Besides, he attempts to earn money from professional project managing, basically financed by public money. Kai explains this shift thusly: “I have now reached the end of the line. . .. I simply cannot be bothered any longer. . .. It’s so obvious that we are making no headway. . .. This is because they, firstly, do not want to pay for the work I do, and, secondly, because they cannot do the marketing themselves. . .. Well, that’s to say, Laust can do it and he’s the one with the fruit. . .. Maybe it’s just me who believe that what I do is important. . .. The Fejø brand was created many years ago and maybe it’s so strong that what I do is completely unnecessary. Farmers are strong persons, so maybe they can manage on their own. . . but I have travelled to all these places to pave the way for the producers, while maybe losing the opportunity to become a major producer myself, I mean to be able to supply more and more juice. So there’s not the same incentive for me any longer to go out and market the produce. Now it would only be to their benefit and not mine.” In many ways the Kai Winther’s case is similar to that of Iver Gram. Like Iver, Kai is putting a lot of effort in conversion work, trying to transform intangible social capital into economic capital. And similar to Iver Gram, he possesses a lot of human capital in terms of his many skills and experiences within a particular field. Also as is the case with Gram, Kai Winther consciously pursues a win–win strategy, however – in contrast to Gram – without economic success at all. This is to say that Kai has failed to transform social capital into economic capital, contrary to the social capital success of Iver Gram. Why? An important explanation could be that Iver Gram consciously has worked out a formalized way to cooperate, i.e. collaboration regulated in a discount card system. This system secures rich possibilities to punish free-riders by excluding them from the discount card schema, as well as increasing their motivation to actively contribute (by securing more tourists and, hence, increased incomes). Thus, in contrast to Winther, Gram seems to have solved his collective action dilemma by using a tit-for-tat strategy based on effective rules of the games and possibility of sanctions (Ostrom, 2003). Per Kølster also fails to capitalize upon local social capital but – importantly – has not invested much labor-time in local networks. Therefore we may say that, compared to Kølster, Kai Winther has experienced a double loss: His investments in social capital not only turned out to be economically unproductive. They were simply counter-productive and hence led to a Pareto-suboptimal outcome at his own expense. So we see that Kai moves from the lose-lose quadrant in our matrix to the above quadrant, in which he cooperates while his local partners defect (Fig. 6). This leads to a lose much outcome for himself (no Fejø branding) but a win much outcome for his partners (benefitting from Kai’s hard work without contributing themselves, i.e. free-riding, cf. the remark “they do not want to pay for the work I do”). Kai then realizes that his efforts are in vain, that is, that they bring him no private goods whatsoever but rather the sucker’s pay-off (“to their benefit and not to mine”). He therefore defects from cooperation and withdraws to a non-cooperative loselose game, here simply understood as loss of the potential profits from local cooperation. On the other hand, he now saves expensive time–labor investments in ‘bad’ social capital (or, rather, social networks, as these networks arguably do not constitute capital). Hence, like Kølster, he ends up in a lose–lose equilibrium – how-

Fig. 6. Game 3: from non-cooperation (lose–lose game) to sucker’s pay-off to entrepreneur (lose much–win much) to non-cooperation (lose–lose game).

ever, in contrast to Kølster, in a much less self-imposed way and, metaphorically speaking, like a hurt animal crawling back into its hide, i.e. the safest and most predictable game. 3.5. Game 4: Günther Lorenzen Günther Lorenzen is, along with his wife Christa, the closest you can get to being an “organic veteran”. Their farm in the far south of Denmark, near the Danish–German border, was one of the pioneering organic farms in Denmark, as they from a very early stage of the modern history of organic farming converted to organic. As his name suggests, Günther has family roots in the Germanspeaking minority of Southern Denmark. He and his wife own and operate a mixed farm with both vegetable and other cash crops, as well as dairy cows. In the 1990s Günther and Christa made a step further into applying ecological thinking in their farming style, as they converted their farm to biodynamical farming. In 1994, Günther was one of the founders of an organic investment fund, Organic Cooperative [Økologisk Samvirke ApS]. The purpose of the fund was investment in various organic development projects (publi-com.dk, 2003) The fund became an important factor in the establishment of organic development projects within the region over the next many years. Among other projects, the fund helped establish an independent organic dairy in the town of Tinglev in Southern Denmark. In 1997, the fund also financed an organic distribution enterprise, South Denmark Eco-Trade [Sønderjysk Økohandel], which distributed organic products to public canteens within the region of Southern Denmark. After the first year of operation, the project group (including Günther) concluded that transport costs had shown to be very high, given the relatively small shipments they carried. Hence there was an urgent need for storage and distribution facilities in order to improve organic distribution within the region (Lorenzen, 1999). The project group also concluded that it was necessary to reconnect regional producers and consumers, if a viable alternative to conventional food distribution systems should be established (Lorenzen, 1999). In addition to this, the project group also wished to integrate the region’s relatively large production of organic products (Oldrup, 2000; ØT01, 2003). The Organic Freshware Terminal, which was supposed to succeed South Denmark Eco-Trade. The latter enterprise was terminated after a little more than a year of operation. 3.5.1. Development of The Organic Freshware Terminal Günther was a leading figure in the establishment of the terminal and became the chairman of the board. The aim of the terminal was to integrate both social, cultural and economic dimensions of the food system under one umbrella. The overall objective of the terminal was described as: “..to satisfy human cultural, social and physical needs within a region and create a cooperating human society distinguished by

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openness, transparency, dialogue, honesty, torance og reciprocal responsibility for each other’s needs.” (Lorenzen, 1999) The process of developing the terminal was supported by the Danish Ministry of Agriculture, who offered to pay 50% of the development costs. From an early point on, the board decided that the terminal should not be a stock-based enterprise. Rather, it should be owned and managed by an investment fund. Günther explains the main reason for this thusly: “It was very important for us to make sure that external actors, who might not share the particular values underlying the terminal, could not just ‘buy their way’ into influencing the terminal’s development. Furthermore, members of the board should be appointed by the actual board, which served as an additional mechanism to secure that it was the right values which underpinned the terminal” (ØT01, 2003) In the beginning of 1999, the development of the terminal had advanced further. A basic organizational model was developed by the board, headed by Günther. The metaphor for the model was the “round table”, signifying that all stakeholders in the regional food system, including consumers, producers, processors, distributors and retailers, should meet at a communication platform (the terminal) and through dialogue seek to work out sustainable, regionally embedded ways of circulating regional food between production and consumption. In spring 1999 a managing director was employed, and the terminal initiated its operation as distributor of organic products. 5 persons were employed at the terminal, including the managing director. Günther and the remaining board set themselves the goal of reaching a turnover of about 7 million Euro within the first year of operation (ØT01, 2003; ØT02, 2003). However, after only a few months of operation it became clear to the managing director that the number of interested regional customers was quite modest, and he perceived the need for enrolling customers outside the region of Southern Denmark if the ambitious goal should to be reached (ØT02, 2003). The terminal did succeed to make contracts with various public institutions outside the region, which they supplied with organic products. In spite of these successful projects, the economic scale of the region in terms of turnover was still inadequate. In 2001, several contracts with public institutions were cancelled due to budget cuts. The same summer other new projects failed, leading to a major decrease in turnover for the terminal. Together, all this made the terminal run out of money, and by the end of the year the terminal had to be closed. This situation left Günther and his colleagues in Økologisk Samvirke with an almost empty fund and a significant loss of credentials within the local community, since the local bank lost a large sum of money when the terminal declared itself bankrupt.7 3.5.2. Conversion of capital within the terminal In the time leading up to the breakdown of the terminal, Günther and the managing director had many discussions regarding how to make the terminal economically viable. Early on, the managing director identified several issues which he found important to resolve in order to develop the terminal (ØT02, 2003). One of the issues was that a higher quality of organic produce could be gained by sourcing from organic producers in Northern Germany, instead of solely using the regional organic suppliers in Southern Denmark. Günther strongly opposed this option. Part of Günther’s hesitation was that he found it absolutely crucial to support the

7 The bank could of course not give us information on the exact amount, but estimates from the former managing director said that the bank lost around 750.000D , which is a substantial amount for a local bank.

Fig. 7. Game 4: from non-cooperation (lose–lose game) to sucker’s pay-off to other local entrepreneurs (win much–lose much) to non-cooperation (lose–lose game).

regional organic producers (including his own farm) by continuing to source their products. The managing director was, however, not satisfied with the level of professionalism among the regional producers (ØT02, 2003). Another issue raised by the managing director was that the terminal was organized as a fund. As such, it could not extend its capital base (according to Danish law). Hence it was not possible to have capital injected from investment funds, banks or other private investors. At some point in early 2001, a private investor offered to invest in the terminal in return for a seat in the board (ØT02, 2003). This would have demanded a reconstruction of the terminal’s legal structure. Günther again opposed to this option, as he felt uncomfortable with the idea of an “external” actor entering the board of the terminal. This turned out to be fatal to the continuation of the terminal, which gradually was drained of capital. Both when the terminal was developed and, later on, when it became operational, a relatively high level of social and symbolic capital was formed. This included support from business associations and active institutional support from local municipalities and the county of Southern Denmark (Oldrup, 2000). In terms of economic capital, the terminal was obviously less well equipped. If the terminal should reach an economically viable scale, it needed to extend its base of economical capital. If this had occurred, it might have resulted in a loss of organizational control, something that was clearly deemed unacceptable by Günther. Instead the money from the local bank, which constituted the major part of the terminal’s initial capital base, was lost. We do not deem Günther Lorenzen a ‘bad person’, neither do we want to present him as the only responsible for the failure of the Organic Freshware Terminal. However, both interviews and written sources (such as declarations and protocols) clearly show Günther’s insistence on organizing the terminal in a specific, almost ideological way, fitting his own worldview, ultimately led to loss of other people’s money (cf. the remark “secure that it was the right values which underpinned the terminal”). To sum up, the original attention of the terminal was a win–win game in the region, and the project was entirely presented and developed as such. However, when heading towards the pareto-optimal win–win quadrant (Fig. 7), something went wrong. Günther (mis)used his power as the head of the board by outdoing the managing director, clearly prioritizing individual utility (ideology and economic gain) above the economic sustainability of the collective (the terminal and its investors, producers and consumers). Hence the case of Günther Lorenzen illustrates the case of an entrepreneur with (most probably) the very best intentions but nevertheless ending up in a problematic and short-sighted win much situation, however at the expense of his partners who all become losers. As in the case of Kølster and Winther, Günther Lorenzen therefore ends up in a lose–lose equilibrium, however not only suffering from an economic loss but also from a symbolic, namely loss of credentials in the widest sense of the word.

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4. Conclusion Bourdieu’s theory on the various forms of capital (Bourdieu, 1986), also named a neo-capital theory (Waldstrøm and Svendsen, 2008), has regularly been applied by sociologists, who reject rational action theory. In this paper we however wanted to reconcile these two powerful approaches. Hence we argued that Bourdieu’s (Bourdieu, 1986) seminal idea that forms of tangible and intangible capital (e.g. physical, economic, social, symbolic) are continuously accumulated and converted by individuals can best be explained within a rational action framework, which however takes seriously into consideration the high risks of labor-time investments made by the single actor in complex situations rich on socioeconomic considerations. Methodologically, we found that the ‘laws of conversion’ (Bourdieu, 1986, pp. 252–255) can best be observed at the microlevel, by analyzing specific strings of capital conversion in time and space. On this background, our main question was: How do private entrepreneurs transform local social capital into economic capital? We defined ‘capital’ in line with Adam Smith’s seminal definition – a wealth that accrues its owner revenues without immediately being destroyed itself – however expanding the concept within a neo-capital taxonomy. To narrow the focus, we looked at conversion work by concrete entrepreneurs seeking to transform social into economic capital. With economic capital we understood an extremely ‘liquid’ and easily convertible, tangible form of capital in the form of money, stocks, bonds and the like – in our specific cases as the monetary income of the entrepreneur. In line with Bourdieu, we defined social capital as the aggregate of actual or potential network resources available for a group member, that is, an intangible form of capital, which exists between human beings; cannot be taxed; is increased by usage and cultivation; is informal; is flexible; is accessible for all people; helps solve collective action problems; and gives access to all the other forms of capital, why we suggested to baptize social capital a ‘master capital’. To account for social-to-economic capital conversions, we used a simple Prisoner’s Dilemma model on four different cases. In this way, we tried to explain the reiterated plays of four entrepreneurs in rural Denmark, engaging in various types of cooperation with other local entrepreneurs. Our cases aimed to illustrate four typical outcomes for rural entrepreneurs investing in local networks over a longer period of time (5–10 years). An evident weakness in our approach was that our game theoretical approach was simplistic – and, indeed, we did never intend to make a contribution to game theory as such. Moreover, we may have stretched Bourdieu’s capital theory too much, reducing a framework for rich sociological analyses connecting to key concepts such as ‘field’ and ‘habitus’ to a near formalistic, micro-economic analysis. In other words, we sacrificed complexity for the sake of clarity, somewhat similar to the many attempts to formalize the theories of Keynes. The main strength of our approach was the attempt to integrate complex human strategies of capital conversion within a rational actor framework, that is to say, within fairly predictable games. We wanted to offer a simple and parsimonious illustration, and visualization, of the four outcomes in the Prisoner’s Dilemma matrix in an innovative way, by use of long, qualitative interviews. Hence, as we see it, the strength of the approach is the combination of Bourdieu’s capital theory with typical cooperative outcomes, as explicated in the PD matrix, illustrating how entrepreneurs at the micro-level act out from socioeconomic motivation and how their strategies in converting one form of capital into the other (here social into economic) may often be miscalculated and fail. As it was described, only the first game (Iver Gram) can be seen as a success. This because it ends up in a stable win–win game formalized by clear rules of the cooperative game, including

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possibilities for effective sanctioning of free-riders. Thus, in order to obtain a bigger share of the economic activities his tourist enterprise attracted to the area, the entrepreneur Iver Gram succeeded in establishing “unconventional cooperation” between local and regional partners, involving reputational effects and the conversion of social capital into economic capital. The three other outcomes, however, are all ‘conversion failures’, with incipient cooperative games returning to a Nash equilibrium, where the dominant strategy of both the entrepreneur in question and his local partners is to refrain from cooperation. Not least, the interesting case of Kai Winther seems to form a stark contrast to the Gram case. Like Gram, Winther puts his stake on social capital, cultivating local networks and building up credibility and, supposedly, goodwill and credit among the Fejø entrepreneurs – that is, intangible capital convertible to money (or at least, that’s what he expects). However, unlike Gram Winther is a bad player and simply makes a miscalculation, a kind of arithmetic error – similar to a poker player taking too high risks with too bad cards. For various reasons, then, Winther plays his cards wrongly and is therefore not able to reach the last stage of his conversion line – capitalization into economic capital. Instead, he experiences a kind of coup d’etat from the side of his co-players, despite his year-long efforts to build up a Fejø brand to the benefit of all the islanders and hereby save up credibility and credit. In the end, however, it turns out that his intangible capital is de facto unusable (in a narrow private economic sense). It is simply not capital and, as he himself realizes, he has decidedly received nothing but the sucker’s pay-off. Being a professional entrepreneur, he simply cannot afford this in the long run. He therefore acknowledges his failed investments and subsequent loss, dismisses his saved-up intangible capital and concentrates upon solely providing private goods. Hence, overall, we see that social capital is not always a ‘good’ capital for entrepreneurs to invest in, indeed at times not capital or even counter-productive. This is to say that, for a private entrepreneur (expecting future economic gains), it is extremely risky business to invest a lot of resources in social capital! However, on the other hand, for calculating master players such as Iver Gram it is in all ways profitable to invest in social capital. This is because such actors are capable to devise more or less formalized systems that forces co-partners into a game where they have to actively contribute with the prospect of considerable economic gains for all participants and, thusly, to avoid free-riding reducing these gains. In this way, master players solve their collective action problems, and their social networks actually become an important part of their capital.

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