Economics as a social science

“New economic sociology” is a research movement carried out since the 1980s by sociologists who consider that the theoretical models of neoclassical economic science are not satisfactory, and that economic activities must be studied by mobilizing the resources of the social sciences as a whole, in particular the analysis of social networks (understood as the study of concrete relationships between people or groups).

Already known for a remarkable thesis on the labor market and a major article on the strength of weak ties, Mark Granovetter became a founding figure of this movement with an article published in 1985 on the embedding of economic activities in social structures. Granovetter has written extensively since then, exploring the beginnings of the electrical industry in the United States, the functioning of Silicon Valley, and addressing many other subjects, but he had announced the project of this book in the early 1990s, the title of which intentionally reversed the terms of Max Weber’s classic. This book is finally appearing, in the form of two volumes, of which this one constitutes the theoretical part, the second to present more empirical case studies.

Economic action and social structures

In the first chapter, which is a general introduction, the author presents his project as going beyond economic sociology alone: ​​”I hope to contribute to an understanding of economics in a way that transcends disciplinary boundaries and, consequently, is not concerned with the intellectual origin of useful ideas” (p. 1).

He distinguishes three levels of economic phenomena to be explained: individual economic action, action models beyond the level of individuals and economic institutions. Social networks provide the link between these levels of deployment of phenomena.

He symmetrically criticizes purely individualistic or, on the contrary, holistic conceptions, showing that beyond their contradictions, they converge on an atomistic conception of social action: “both share a conception of action as produced by atomized actors. In the under-socialized narrative, atomization results from a narrow pursuit of personal interest; in the over-socialized narrative, from behavioral models that have been internalized and therefore little affected by lasting social relations” (p. 13). To define his position, he specifically takes word for word two sentences from his 1985 article:

“(Individual) actors do not act or decide as atoms outside of any social context, nor do they slavishly adhere to destinies written for them by the intersection of the social categories to which they belong. Their attempts at intentional actions are rather embedded in the concrete system of social relations” (p. 14).

For him, networks are resources as well as constraints for individuals, with embeddedness being neither a dissolution nor a determinism, but a dependence. He distinguishes three forms of embeddedness: relational (“the nature of the relationships that individuals maintain with other specific individuals”, p. 17); structural (“the impact of the overall structure of the network in which individuals are embedded”, p. 18) and temporal (“In social relations, human beings do not start from scratch every day, but engage in each new interaction the legacy of previous interactions”, p. 19).

This dense introduction ends with a conception of individual behaviors which can be “instrumentally rational or not, selfish or not, and oriented towards the economy or society” (p. 20), which leads him to criticize point by point the classical conception of thehomo economicus.

Mental constructs, confidence and power

The chapter on mental constructs discusses social norms, values, and the idea of ​​”moral economy” taken from historian Edward P. Thompson. Norms are distinguished from values, which are considered more general: “‘Norms’ are principles that people recognize, and sometimes follow, about the right, proper, or ‘moral’ way to behave, and these principles are socially shared and informally applied by others. ‘Values’ are more general conceptions of what constitutes the good life and the good society, from which one can, in principle, deduce the more specific and situationally oriented norms” (p. 27). The “moral economy” is a coherent set of norms concerning the economy.

In the following chapter, the author distinguishes and comments on trust based on personal relationships, that which results from “membership in groups or networks”, that which has institutional sources, and finally that which is based on norms. He insists on the fact that trust always presents a part of unpredictability and on the importance of distinguishing the levels of deployment of phenomena. Returning to the importance of networks in the construction and maintenance of trust, he resolves the problem of levels of action by introducing what could be called relational chains:

a little confidence goes a long way : if people can trust those with whom they have indirect ties, then the size of the structures in which trust is extended far beyond what would be possible if only direct ties could be effective. (p. 87)

He then distinguishes different types of power according to whether they are based on dependence, legitimacy, or the ability to influence the definition of the situation by the actors, the three being combined in concrete situations. To analyze power situations, he emphasizes interactions, position in networks and socio-historical contexts:

People who exercise power based on dependency (control over resources that others deem critical), legitimate authority, or control of public agendas often appear to those under their control to have unique skills and effectiveness, and indeed this may be the case. But if we step back from the immediate situation, we can see that historical, political, and economic circumstances have played a considerable role in placing these people, however competent, in situations that allow them to deploy their power. (p. 126).

Institutions

The last two chapters deal with institutions, defined as “sets of persistent patterns that define how specific social actions are and should be carried out” (p. 136).

Granovetter refuses to define a typology of institutions or standard criteria: “In given contexts, we can see empirically how activities are grouped and we can take these concrete groupings as a starting point for analysis.” (p. 139). He then addresses the question of the link between these institutions and individual action and presents a model of action. The latter is constrained by structural configurations that produce a restricted set of relatively equivalent possibilities on which the actors, relying on their resources and networks, can weigh in to favor one or the other. The objective is then to

to determine for a country or region what alternative frameworks or “logics” actors are likely to choose in organizing economic activity and which seem conceptually available, to determine the extent to which they are separate and autonomous from one another or overlap, to explain how this particular range or “menu” of options has emerged, and to theorize the process by which actors develop from these available materials solutions to the economic problems they face. (p. 192)

A robust analysis framework

I have tried to summarize in broad strokes the general outline of the book, drawing as much as possible on the author’s own words. But I have not mentioned the very many works, theoretical or empirical, which are meticulously examined and discussed to support the propositions presented in the chapters. Each assertion is thus argued with precision in the sober, luminous and precise style known to those who are familiar with Mark Granovetter’s texts. We find there the ideas defended for a long time by the author, with clarifications, additions, in particular on institutions, and the presentation of an overall framework which should be extremely valuable for all those who carry out research on economic activities.

Could the author improve this framework of analysis? Perhaps not to the level at which he situates his argument in this book, but if we place ourselves in a perspective of more complete explanation of the categories of analysis in social sciences, three avenues come to mind. The first concerns collectives, that is to say groups of people sharing resources, which have more or less explicit boundaries. The activity of organizations is more or less embedded in networks of interpersonal relations, but these relations are themselves more or less embedded in collectives, organized or not. This would justify theorizing the dynamics of these embeddings, and of the processes of autonomization that can restrict or dissolve them.

Another avenue concerns the material dimension of social life. Institutions are not purely cognitive, as the work seems to suggest a little too often, in my opinion. It would be useful to take more systematically into account technical objects and other material elements that frame social activities (for the economy, calculation instruments for example). This is the whole contribution of the work of sociology of science and technology such as that of Michel Callon.

Third track, institutions are often maintained and developed by professionals. As for economics, he could have dealt with management schools, teachers and books dedicated to this subject, the sphere of consultants and experts, and of course economists themselves, who have such a strong influence on political choices. The limit of the book is not a lack of consideration of these three aspects in concrete analyses but rather their non-conceptualization in the theoretical system.

Society and economy

Posthumous work resulting from a project to collect works on political economy, Economy and society by Max Weber has become a classic of sociology but is hardly known to students of economics in the most standard courses. Society and Economy is written by an author identified with economic sociology, but his project goes far beyond this specialty.

A day will come when economists will emerge from the dead ends into which their dream of imitating the natural sciences by too hastily rigidifying extremely fragile hypotheses has led them, and when they will join forces with their colleagues in sociology, anthropology or history to construct a genuine social science of economics (of Economic Studies as there are Science Studies). That day, Society and Economy will be a reference work and Mark Granovetter will be considered one of the main founders of this robust science of economics which the world so badly needs.