In Defense of Economic Sociology

Denis Colombi is making my life miserable. He keeps writing these great long posts on important sociological topics that I then feel obligated to summarize here in English because he writes on these much better than I could. The latest edition is a lecture note (HA! A note?? Goes to show that the meaning of "note" is not the same in France as it is here) on economic sociology based on Colombi’s reading of Mark Granovetter‘s La Sociologie Economique. As always, I’ll editorialize when I feel like it. So, here goes:

Sociological interest for economics is not new. The founding fathers of sociology, Durkheim, Pareto and Weber (not to mention Marx) took the economy seriously in their sociological analyses while confronting the then-dominant economic orthodoxy. Progressively, American sociology, dominated by Talcott Parsons until the 1970s, progressively abandoned the study of markets and rational actions to economists, leaving irrational actions for the sociologists to study (a bit simplistic, though, Denis… there were many currents in American sociology that covered "side" aspects of economic activities).

However, when economist Gary Becker decided to extend the economic method to all domains of social life, he broke that uneasy ceasefire. This "economic imperialism" (Colombi’s expression) triggered a backlash: the renewal of economic sociology and it is the context in which one must read Granovetter’s books as well as the "school" he initiated: new economic sociology (NES). NES took the fight to the economic terrain: markets, rational action, etc. and revealed what sociologists have to say but also that they can offer better answers through rigorous scientific analysis.

But what is NES, exactly?

Granovetter’s major critique directed at orthodox economics (and certain sociological approaches… which ones?) is its view of atomized individuals in the context of the classical sociological problem of social order. Where Hobbes’s solution was the Leviathan, economics finds the competitive market as source of trust and confidence and solution against malfeasance. In the economic framework, we see an under-socialized individual whose only interactions are economic transactions. Other types of social relations are in the background with limited impact and relevance. Similarly, for Granovetter, for structural-functionalist approaches of Parsonian affiliation, individuals behave in reaction to internalized values and norms, in which case, there is over-socialization and other forms of social relations become secondary. Market or culture, take your pick, but this leaves us with very one-dimensional views of human social behavior.

For Granovetter, action, especially economic action, needs to be embedded into the social structure, hence the now famous expression "strength of weak ties" (one of Granovetter’s most famous articles). In this article, Granovetter demonstrates that actions taking place on the labor market are deeply embedded in social relations: most people find jobs through networks and connections. And actually, weak ties – acquaintances, friends of friends – are actually more important in that respect. Such weak ties act as bridges to connect different networks and facilitate the circulation of information. And because these ties are weak, they are not just dependent upon trust, but also on mutual controls (strong ties tend to rely on trust rather than reciprocal mechanisms of control).

With this in mind, the view of markets as the locus of articulation of supply and demand processes become oversimplistic.  One needs to consider social relations in which actors are embedded and how these influence actions. Granovetter demonstrates that when orthodox economic theory hits the wall of social relations, it just resorts to fuzzy concepts such as company "culture" or "atmosphere" as account of institutional configurations. What matters, for Granovetter, is the nature of networks between individuals of different companies when it comes to explain salary levels. Where productivity is hard to measure, networks become central in the determination of salaries, norms and mobilization capacities.

On top of this instrumental layer of action where social relations can be seen as social investments (social capital?), Granovetter considers other layers of action: sociability, status, recognition, trust or power. These dimensions have to be taken into account as well as they shape the structure of incentives.

This leads to another aspect of social life that whose treatment by economics Granovetter finds wanting: social institutions. Granovetter is critical of the view that institutions are rational responses to specific problems, such as transaction costs. Institutions exist because they are efficient. Here again, Granovetter demonstrates, through the classical example of the rise of the electricity sector, that social relations matter: Edison’s model was not chosen because it was the most efficient but because his assistant was able to mobilize a set of relations (in science, industriy and politics) to push it through, at the expenses of the competitive model. Moreover, social institutions are also social constructions (see Berger and Luckmann). In other words, efficiency is not the one and only criterion of institutional evolution.

Based on these developments, Colombi summarizes NES around three principles:

  1. Economic action IS social action, in the Weberian sense, that is, not just based on economic instrumentality but also directed at others.
  2. Individuals are embedded into concrete and continuous social relations.
  3. Institutions are socially constructed.

This leaves this perspective open to the critique that it relatively ignores the larger institutional and political contexts but it has the benefits, according to Colombi, to combine sociological insights without rejecting wholesale economic ones. Granovetter does not reject the rationality hypothesis but he embeds it within a web of differentiated social relations.

Colombi finds useful the concept of social network as bridge or conduit between the micro and the macro level of sociological analysis of social relations without privileging one level over the other (like we’ve never have that debate in sociology before :-)). This seems very reminiscent of social mobilization theory of social movements where all sorts of resources and social relations contribute to the mobilization (or lack thereof) of groups. But for Colombi, this is what makes Granovetter’s work relevant beyond economics and useful for general sociology.

2 thoughts on “In Defense of Economic Sociology

  1. Well, my life is also complicated : I want to comment yours posts, but I have learned english in Terry Pratchett book’s.. so I’m a bit nervous :)

    So, thanks for making my work internationial ;)

    In that note (I agree it’s a little too long to be a “note”, even in french, but I have real problems to write short posts…), I confess I make some simplifications, about micro-macro connexion or “Pax parsonia”. I’d like to complete, but I have to read a lot of book to do so. I will probably write about economic sociology again and again, so I’ll keep yours remarks in mind.

    (et je ferais mieux de me remettre à Terry Pratchett, parce que niveau anglais, ça commence sérieusement à se voir non ?)

  2. Well, comment are welcome in English ou en francais en fonction de leur auteur.

    Et sur le theme de la sociologie economique, jette un coup d’oeil au blog Economic Sociology.

    Et il n’y a pas de meilleure maniere d’apprendre l’anglais que la science-fiction! :-D

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