The economy through social ties

With a work of synthesis, Mark Granovetter, leader of the new economic sociology, offers a global framework for analyzing economic phenomena based on their embeddedness in the structure of social relations.

Certain theoretical models make the social world an object to be purified of its complexity, to reveal an unequivocal truth that it would conceal. Faced with this form of understanding tending towards simplification, or even reductionism, the work Society and Economy by Mark Granovetter intends to propose a multidisciplinary theoretical apparatus, capable of analyzing so-called “economic” actions and institutions in what they have. equivocal, multidimensional and, ultimately, profoundly human. To do this, it is the social network which is mainly mobilized, as a theoretical tool and social phenomenon at the intersection of the individual and society.

Conceived as a first theoretical part of a diptych to accommodate a second volume exploring detailed empirical cases, the book crowns a major work in the disciplinary field of “new economic sociology”, which the author largely contributed to founding in the 1980s. This innovative current, also represented by HC White or even V. Zelizer, is based on the epistemological primacy given to concrete social relations in the formation of the socio-economic phenomena that economic science sets out to analyze: exchanges, prices, contracts, markets, etc. From his thesis devoted to the matching process on the labor market, to his programmatic article of 1985 on the “embeddedness problem”, including the highlighting – in a 1973 article which has become a classic – of the “strength of weak ties” in economic processes, Mark Granovetter has continued to demonstrate the fruitfulness of such an approach, becoming one of the most influential researchers in the social sciences applied to economics.

With this work he offers a synthesis of his economic sociology, of which he described in 1990 the two theoretical foundations which are systematized here: “(1) action is always socially situated and cannot be explained only by individual motives; (2) social institutions are not automatically produced in an inescapable form, but they are ‘socially constructed’. Thus opposing both the individualism of standard economics and the holism of “institutionalist” or “culturalist” theories which overdetermine individual behavior through the action of reified social groups, his profoundly realistic approach invites to situate the causal entanglement of individual actions and economic institutions in an intermediate level, that of “concrete and permanent systems of social relations” (p. 29).

Dense in theoretical debates and empirical cases, the book is spread over 6 chapters. The first, introductory, lays down the general epistemological framework which will be taken up in the following chapters, according to a logic of “ascent” from isolated individual economic actions (“micro” level), towards extra-individual action patterns which regularize the latter. (“meso” level), and finally towards the large institutional groups that individuals hold “for the way in which they would be suitable to do this or that” (p. 13) (“macro” level). Chapters 2, 3 and 4 thus focus on the micro and meso analysis of economic action, caught between the joint influence of norms and values ​​(chapter 2), trust (chapter 3) and power (chapter 4). The last two chapters deal – by taking up the milestones set by the analysis of the micro and meso levels – of institutions as such (chapter 5) and their interactions with individual action (chapter 6). Didactic, this presentation allows the frequent repetition of the arguments, capable of guiding the reader in a particularly ambitious theoretical project by the fundamental and detailed nature of the themes addressed.

Explaining the economy through concrete social ties

The introductory chapter, the most important theoretically, begins with a definition of the three levels of economic phenomena (micro, meso, macro) which must be understood while respecting their own explanatory specificities and by not giving causal priority to a or to the other of these strata: it is a question of providing a framework of intelligibility of their intermingling capable of revealing “how the influences exerted at a first level affect the results observable elsewhere” (p. 13). Therefore, this objective leads the author to reject reductionisms, whether these arise from individualist postulates on human nature (the figure ofhomo economicus atomized, selfish and rational of neoclassical economics being exemplary in this respect); of a functionalism which tends to make behaviors or institutions solutions to problems, denying the search for their effective historical causes; or even a culturalism which entirely transfers the cause of individual actions to an external, reified authority, which “like the God of the deists, sets everything in motion without causing other effects” (p. 24). Faced with these “under- and over-socialized” conceptions (p. 24), which have in common that they ignore the concrete context of relationships in which agents are immersed, the happy medium seems to be that of the networks of concrete relationships in which economic behavior are “embedded” (p. 29).

Embeddedness then designates more broadly the “plane of intersection where the economic and non-economic aspects of a society meet, (where are included) not only social networks and their consequences, but also cultural, political, religious influences and institutional” (p. 30): it is the general intelligibility framework for the intermingling of the three levels of phenomena mentioned previously. Within this embeddedness plan, social networks have a central mediating position, without themselves overdetermining actions and institutions. In other words, the network approach defended here does not mean a causal approach, but an approach allowing the different levels of analysis to be linked. This global and abstract notion of embedding concretely corresponds to the specific type of embedding that networks generate: “reticular embedding”. This is itself determined both by “relational embeddedness” (the nature of the specific interpersonal links which unite individuals in the network such as friendship or hierarchical relationship for example), “structural embeddedness” ( the characteristics of the overall structure of the network) and “temporal embeddedness” (the processual nature of network relationships, causing past interactions to determine subsequent ones according to a dynamic logic) (p. 36). With these notions, the functioning of a group such as a lobbyist association for example will be able to be described according to its size and the density of the links which compose it (structural embeddedness), according to the professional nature guided by a common interest of these links (relational embeddedness), and depending on their seniority, long-standing ties requiring in particular certain loyalties stabilizing and normalizing relationships (temporal embeddedness).

A global analytical framework

The rest of the book is a vast setting in motion of the introductory theoretical framework, sweeping over an impressive thematic scope (mental constructions, norms, trust, power, institutions, etc.) and showing the entanglement that unites these different dimensions of economic activity. First, it appears that the effect of norms – “principles known and respected, sometimes” (p. 46) – on individual behavior depends largely on the relational and structural embeddedness of the networks in which they circulate. Always linked together, these norms do not only act within compact networks, but also compose larger aggregated sets (such as “cultures” or “institutions”) (p. 84), sets thereby becoming comprehensible in a constructionist framework. For its part, trust is similarly located at different levels of aggregation of economic action – trust can come from strict interpersonal relationships (p. 95), from membership in groups or networks (p. 99 ), institutions (p. 104) or the norms themselves (p. 106) – without one of the levels being privileged again, being ultimately connected by the reticular embedding of bonds of trust (p. 132).

Having noted the intertwining of trust and norms, the author then turns to power, which combines with the latter in real economic phenomena. Power is then understood less from individual characteristics or resources possessed than from the more or less privileged place in networks, and by the structural embeddedness of the latter. Therefore, the ideal level of reticular density for the exercise of power would be a median level: if the network is too fragmented, “it is impossible to sufficiently bring together these totally disconnected fragments so that they can act in concert”; if it is too dense, “no actor succeeds in enjoying brokered power in a situation where everyone is already in contact with everyone” (p. 192).

A field of application as vast as society and the economy

Given its flexibility and comprehensiveness, the analytical framework proposed by the author can easily be adapted to a host of areas of inquiry, making operational a renewed understanding of the economy “placed in its social context” ( p.43). At the micro level, he calls for enriching the motives of individual economic action with “non-economic objectives which, such as sociability, approval, status and power, are only accessible in the social context of networks linking to others » (p. 39). Through this paradigm, the decisions of Taiwanese business groups appear, for example, less as the product of an instrumental rationality than as the result of strategies for placing members of the same ruling family in different key positions in the ownership structure of the company. these firms (p. 131).

At the macro level, Mark Granovetter’s paradigm invites us to think of institutions as deeply embodied in networks, constructed by the trial and error of pragmatic actors acting according to the opportunities that their relationships offer them. A concrete example is that of not introducing an institution such as modularity (the fact of breaking down a product into different by-products by calling on other companies) in the Japanese automobile production system, which is then explained by the fact that the network of Japanese assemblers and suppliers is already sufficiently efficient for modularity “supposed to eliminate the need to interact in this way” to not be adopted (p. 241).

The absence of digital social networks

Despite the impressive thematic breadth of the work, one of its limitations is that it does not address the revolution represented by the digitization of these social networks, which is at the center of its analytical framework. Because if economic action and institutions combine and take place in the system of interindividual relations, the technologies which mediate these relations also have their own effects. In particular, the transition from relationships directly mediated by speech in an immediate context to technological mediation in a digital space – at the heart of contemporary sociability – reveals the possibility of an unprecedented control of reticular embedding, whether by the agents themselves, or by algorithms. It remains that the proposed analytical framework is sufficiently effective and flexible to be able to be applied to these new digital networks, whose growing economic and social importance heralds a bright future for the new economic sociology.