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A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Sparsam, Jan Article Understanding the 'Economic' in New Economic Sociology economic sociology_the european electronic newsletter Provided in Cooperation with: Max Planck Institute for the Study of Societies (MPIfG), Cologne Suggested Citation: Sparsam, Jan (2016) : Understanding the 'Economic' in New Economic Sociology, economic sociology_the european electronic newsletter, ISSN 1871-3351, Max Planck Institute for the Study of Societies (MPIfG), Cologne, Vol. 18, Iss. 1, pp. 6-17 This Version is available at: http://hdl.handle.net/10419/156080 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Understanding the ‘Economic’ in New Economic Sociology 6 Understanding the ‘Economic’ in New Economic Sociology By Jan Sparsam modern economies in all three approaches inhibits an ex- haustive understanding of economic facts as social facts. 2 University of Munich, [email protected] From embeddeembeddednessdness to (non(non----)economic)economic Since the 1970s, New Economic Sociology has constantly motives: Mark Granovetter challenged economics by criticizing its conceptualizations, models, and explanations of economic phenomena. Sub- Granovetter’s oeuvre comprises three well-known major sequently, it has provided a plethora of sociological alter- theoretical innovations: Getting a Job (1974) pioneered natives. The main controversial subject is the realism of the sociological analysis in the terrain of economics by uncov- depiction of the economy: the protagonists of New Eco- ering the social mechanisms of job hunting and hiring; The nomic Sociology claim that neoclassical economics is unre- Strength of Weak Ties (1973) showed how network analy- alistic and propose sociology as the adequate instrument sis can reveal the pathways of information flows channeled of inquiry into economic phenomena. What was a bold through networks; and, finally, the concept of embed- objective in the 1980s is an established and vivid field of dedness (1985) became the founding metaphor for what is research today, as a vast number of now “classic” studies now called New Economic Sociology. In retrospect, the first bear witness. Following the self-description of its protago- two paved the way for the third, which was groundbreak- nists, the career of New Economic Sociology has been ing for the methodological and institutional development virtually unprecedented in “post-Fordist” sociology, rising of economic sociology after Parsons. With his notion of from underdog status during the supremacy of structural embeddedness Granovetter intended to find the middle functionalism to the forefront of the discipline. 1 ground between “undersocialized” and “oversocialized” explanations of economic action (Granovetter 1985: 485) Against this canonical background it is more than surpris- and thus explored sociological grounds beyond the isolated ing that disputes about the differentia specifica of eco- economic actors of neoclassical economics and the deter- nomic sociology in theoretical terms can be counted on the mined “cultural dopes” (Garfinkel 2011: 68) of structural fingers of one hand. Instead, theoretical developments in functionalism. New Economic Sociology primarily resemble the kind that Andrew Abbott (2001: 16) polemically mentions as “Bring- But embeddedness is not the end of the road for Grano- ing the Something-or-other Back In.” The few exceptions, vetter. In the overall context of his theoretical considera- such as Greta Krippner’s (2001) considerations, emphasize tions embeddedness is just one element in explaining eco- an insufficient understanding of the research object – the nomic phenomena by sociological means. 3 In the first economy – in economic sociology. In what follows, I want place, the notion of embeddedness highlights the role of to take a closer look at the categorical apparatus of New decision-making in social situations and is opposed to the Economic Sociology and the understanding of its protago- idea of individual preferences found in (neoclassical) eco- nists of what is “economic” from a sociological perspec- nomics (Swedberg/Granovetter 1992: 9). This definition is tive. For this purpose, I will, in all possible brevity, delineate intrinsically linked to the network approach: “personal the conceptualizations of the emergence, order, and func- relations” gain center stage for the explanation of eco- tioning of markets in three of the most prominent ap- nomic decision-making (Granovetter 1985: 496). Despite proaches in New Economic Sociology, those of Mark S. its striking simplicity and the virtual indisputability of its Granovetter, Harrison C. White, and Neil Fligstein. Follow- empirical adequacy – no economic actor in modern socie- ing the description, these approaches will be challenged ties resembles Robin Crusoe, obviously – the notion of regarding the main objective of New Economic Sociology: embeddedness has not been unopposed. Relevant critiques to conceive of economic facts as social facts . I claim that range from constructive-minded suggestions to extend the the explanatory omission of the capitalist dynamics of notion of embeddedness from personal networks to cul- ture, politics and cognition (Zukin/DiMaggio 1993) to sub- economic sociology_the european electronic newsletter Volume 18, Number 1 (November 2016) Understanding the ‘Economic’ in New Economic Sociology 7 stantial reservations about its implications. Greta Krippner, ic motives in Granovetter’s conception fall outside both the for example, argues: “The concept of embeddedness pos- social context and the scope of his explanatory agenda. its that the world of the market exists apart from society This is particularly puzzling because profit maximization, even as it attempts to overcome that divide” (2001: 798). accumulation, and investment as generalized economic This means that Granovetter’s understanding of embed- goals are clearly features of modern capitalist economies dedness does not fulfill the goal of conceptualizing eco- with a complex institutional background. Therefore, it is nomic facts as social facts because he does not tackle the questionable to assume them to be pre-social motives that entity “market” as conceptualized by economics at all, just are altered or challenged only if embeddedness applies. its social constraints. Nevertheless, substantive economic motives are not within the range of the institutionally extended embeddedness Because of these conceptual restrictions Granovetter ex- approach. tends his perspective, combining the idea of embed- dedness with two other notions: the “social construction See appendix, Figure 1 of economic institutions” 4 and the distinction between “economic” and “non-economic motives” for economic According to his numerous efforts to define the role of action. 5 Institutions demarcate the broader social and economic sociology, his ambition to draft “general princi- cultural context of empirical social networks, thus locating ples, correct for all times and places” (Granovetter 1992a: them at a more societal level (Granovetter 1990, 1991). 5) has, in his eyes, not been successful (Granovetter 1990: One of his examples is the institution of ethnicity, which 106). 7 This certainly has something to do with the missing sets the normative boundaries for the possibility to partici- explanation of substantive economic goals in the architec- pate in networks. Migrants often form their own economic ture of his theory. Ultimately, the only generality in modern networks with individual rules and thus create network- economies are economic goals that are pursued whether specific opportunities for economic gains (Granovetter non-economic motives are also present or not. But these 1995). goals are not part of Granovetter’s understanding of social context and therefore fall through the cracks of his ap- Non-economic motives – the second notion Granovetter proach. He only offers the capability for descriptions of adds to his approach – denote the social reasons for eco- specific socio-economic constellations and the differences nomic decision-making. The open list for such reasons in their normative configurations. This capability is surely contains “social status, affiliation, sociability, approval, not to be underestimated, but its limitations are obvious: identity, and power” (Granovetter 1999: 160). According economic facts exist as objects out of reach for sociology.