Social Capital: An Accounting View of New Media

What value is measurement of value? What’s really the point of measuring anything? Quick-to-the-chase answer: decision-making. If a measurement can’t help you to decide, it’s probably irrelevant.

We all know that not everything of value can be measured and not everything that can be measured is valuable. Social Capital has value – either positive or negative. Can it be quantified? That’s debatable, but let’s take a look at the value of understanding Capital in the age of mass connection via new media.


Cost Accountants can be cleaver about capturing the quantification of relatively vague qualities: e.g., how to allocate fixed overhead to the cost of goods sold (there’s latitude in determining methods of allocation).

Of all qualitative objects to measure, social activities and relationships are perhaps the most difficult to quantify in any meaningful way. Nevertheless, they do play a substantial, if not primary, role in the financial capital ecosystem.

We’re not going to muddle with the nuances of Cost or Financial Accounting and how to develop Social Capital Income Statements and Balance Sheets. But we can analogize and correlate segments of financial statements with Social Capital Accounting.


From an accounting perspective, the key components of a business’s financial statements follow this basic flow: Revenues are generated from Assests; Expenses are generated from Liabilities and the realization of asset-use. The net of Revenues and Expenses flows into Equity. And ultimately, it is Equity which is the home of Capital Accumulation (and ultimately of Social Capital).

Financial Equity is the result of social relations. How? Let’s breakdown the financial statements into the above components:

  1. Revenues arise out of the social relationships between a business and its customers.
  2. Expenses arise out of the social relationships among a business and its vendors, employees, governmental agencies and other stakeholders. Contracts, laws, regulations, property rights, distribution, production, labor: all processes and products of social relations.
  3. Equity, therefore, represents the manifestation of all social relations among a business and its entire ecosystem.

A business’s’ financial health depends on its mastery of social relations. The very source of currency valuation is social: where else does the price of a good arise? Money – for good or ill – is a social extraction – and monetary value is the basis for all financial accounting. Although excellence in social relations doesn’t guarantee success, poor social relations almost guarantee failure, or at least poor economic health.


Businesses are wise, then, to pay close attention to social relations. In particular they must posses a profound understanding of the deep and complex interconnections among Financial Capital, Social Relations and Social Capital.

Investing isn’t the goal of a business: it’s a vehicle towards capital accumulation. The pervasive discussions of social media’s business values continue to roll through C-wing – and it’s fundamental that executives have a framework to guide them.

The ROI of social media, therefore, is a measurement that can only have meaning in the context of Capital, especially Social Capital (read Dennis Howlett’s provoking guest post on Chris Brogan – peruse the plush treasury of comments too). It isn’t the number by itself, stupid: it’s the decision.

The proper study of any accounting is Capital in all of its forms. This is harder than it sounds.

You must understand media in all its forms, especially the social kind.


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The Rules of Tweet Club

Welcome to Tweet Club. That’s what I”m calling my little corner of the Twitterverse. Good tweeters are like good fighters: they have guts, stamina and honor.

Do you have what it takes to join Tweet Club? Know what you’re getting into.

  1. The First Rule of Tweet Club is, you do not talk about Twitter.
  2. The Second Rule of Tweet Club is, you DO NOT talk about Twitter.
  3. If someone tweets stop, tweets lame, or tweets out, the fight is over.
  4. Only two tweeters to a fight.
  5. One tweet at a time, tweeple.
  6. No spam, no bots.
  7. Tweets will go on as long as they have to.
  8. If this is your first night at Tweet Club, you have to tweet.

Join my Tweet Club or make your own. You can break the rules but there’s hell to pay (I’m doing life without parole for breaking #1 and #2). Except these two, you never break:

  1. Nobody is ever in the center of Tweet Club, except the members who are engaging.
  2. Tweet Club will always be free.