Economics and

Society
a.a. 2013/2014
Dr. FIAMMETTA CORRADI
Dipartimento di Scienze Economiche e Aziendali
Universit degli Studi di Pavia
Teachers contacts
Email: fiammetta.corradi@unipv.it
Phone (office): 0382-986137

COURSE OVERVIEW

COURSE OVERVIEW : PART I

A History of Economic Sociology

COURSE OVERVIEW: PART

II

READING LIST
Handbook:

Richard Swedberg, Principles of Economic Sociology,

Princeton University Press, 2003; sec. ed, 2007.
Suggested additional readings:
Carlo Trigilia, Economic Sociology, State, Market and Society
in Modern Capitalism, Blackwell Publishing, 2002; pp. 1735.
Mark Granovetter, Economic Action and Social Structure: The
Problem of Embeddedness, American Journal of Sociology,
Volume 91, Number 3, November 1985, pp. 481-510.
Available on-line for free.

PART I

INTRODUCTORY ISSUES
Why this course is titled Economics and

Society ?
What is Economic Sociology? Possible

Definitions
Swedbergs proposal: an economic sociology

of interests
hystory of the concept of interest

The birth of Economics as a science

(and first contributions to economic sociology)
ADAM SMITH
1723 - 1790

The Dismal Science:

Malthus & Ricardo
1772 1823

1766 1834

The Marginalist
Revolution

STANLEY JEVONS
1835-1882

LEON WALRAS
1834-1910

CARL MENGER
1840-1921

Predecessors of Economic Sociology

ALEXIS
DE TOCQUEVILLE
1805 - 1859

TOQUEVILLE ON SLAVERY

Upon the left bank of the Ohio labor is confounded with

the idea of slavery; while upon the right bank it is identified
with that of prosperity and improvement; on the one side it
is degraded, on the other it is honored (Tocqueville,
Democracy in America).

KARK MARX
1818 1883

Key Issues about Marx

Formation, context and aims:

The philosophers have only interpreted the world

the point, however, is to change it (1845).
The critique to Classical Economists
The Law of the Falling Rate of Profit (Capital, vol,
3, chapter 13) & comments
Sociolocultural factors fostering the passage from
a class in itself to a class for itself / comments

GEORG SIMMEL
1858 - 1918

Key Issues about Simmel

The man, his friends, and his academic career
A Sociological Interest Analyisis (Soziologie,

1908)
The Philosophy of Money (1900)
The consequences of the Money Economy on

individuals (positive and negative effects)

METHODENSTREIT (1890s)
The initial spark: MENGER vs SCHMOLLER abstraction vs emprical

committment of economics
A Dispute about method?
Geisteswissenschaften vs Naturwissenschaften
Monism vs Pluralism
Against Monism and in favor of Epistemological Pluralism:

RICKERT and HILDEBRAND: idiosincratic vs nomothetic disciplines.

DILTHEY: different objects: the role of empathy in human and social
sciences; different goals: Erklren (Explanation) vs Verstehen
(Comprehension)
The Half-way solution: WEBER Verstehende Soziologie

MAX WEBER
1864 1920

Key Issues about Weber

Formation and the juvenile studies on German Society
Methodology
The definition of Modern/Rational Capitalism as an Ideal Type
The Origin of Capitalism: Warum nur in Okzident?
The Protestant Ethic and the Spirit of Capitalism (1904-1905)
Cultural and Institutional Possibility Conditions: the role of the

Western City
Webers forecast: the future of Capitalism (Iron Cage)

EMILE DURKHEIM
1858 - 1917

Key Issues Durkheim

Durkheim vs Weber context, aims and method
Critics to Neoclassical Economics
The Division of Labor in Society, 1893: Mechanical and

Organic Solidarity
The Social Consequences of the Division of Labor (Anomic

and Coercive Division)

Durkheims proposal: Corporations

WEBER VS DURKHEIM
ABOUT METHOD
Fundamental
aspects
characaterizing
each method

WEBER
The Objectivity of
Social Sciences
and other essays
(1890s)

DURKHEIM
The rules of
Sociological
Method (1895)

General purpose and

technical name of the
Methodological
approach

To comprehend
(understand) and
verify hypothesis
Methodological
Individualism

To explain

Object of inquiry and

instruments

Regularities in
individual actions
(socially oriented)

Institutions as Social
Facts
Antecedent Social
Facts as Causes
(general laws)
Categories and types

Conditions of
possibility
Ideal Types

Olism/Positivism

KARL POLANYI
1886 - 1964

Key topics about Polanyi

2 Definitions of Economics
3 Forms of Economic Organization

(reciprocity, redistribution, self-regulating

market).
The Great Transformation (1944).

JOSEPH SCHUMPETER
1883 - 1950

Key topics about

Schumpeter
Sozialkonomik: economics and economic

sociology
The Theory of Economic Development

(1912): Growth and Development; the role of

Entrepreneurship
Capitalism, Socialism and Democracy

(1942).

TALCOTT PARSONS
1902-1979

Modello
AGIL
A

Written Exam Facsimile for

attending students
Choose only 4 topics among the following 6

and try to illustrate them in the most precise

way.
Malthus theory of catastrophe
The law of decreasing rate of profit
What is an institution?
Are social sciences scientific, according to M.
Weber?
5) Polanyis forms of integration of the
economy
1)
2)
3)
4)

MARK GRANOVETTER

Economic Action and Social Structure:

The Problem of Embeddedness

in American Journal of Sociology, Vol. 91,
number 3, (November 1985): 481-510

Granovetters claim
Under and oversocialized accounts
are paradoxically similar in their
neglect of ongoing structures of
social relations, and a sophisticated
account of economic action must
consider embeddedness in such
structures
(AJS, 1985, p. 481)

OPPOSITE VIEWS OF MAN AND ECONOMIC

ACTION (with a very important common feature: forgetting the problem of SOCIAL
ORDER)

UNDER-SOCIALIZED =
ATOMIZED ACTORS,
rationally optimizing their
utility function, whose
preferences are indipendent
from otherspreferences
Supporters: Utilitarian
tradition, Formalism,
Neoclassical economics
Solution to the order problem:
authority, institutional
arrangements

OVER- SOCIALIZED =

actors overwhelmingly
sensitive to the opinions
of others (p. 483)
Supporters: Substantivism
(K. Polanyi), Sociology
Solution to the order
problem: generalized
morality

Granovetters proposal
My own view diverges from both schools
of thought. I assert that the level of
embeddedness of economic behaviour is
lower in nonmarket societies than it is
claimed by substantivists(). But I argue
also that this level has always been and
continues to be more substantial than is
allowed for by formalists and economists
(AJS, 1985, p. 483)

Granovetters solution to the

problem of social order
Phrasing of the problem of social order: how can

it be that those who pursue their own interest do

not do so mainly by force and fraud ? (p. 488)

The embeddedness argument stresses the role

of concrete personal relations and structures (or

networks) of such relations in generating TRUST
and discouraging malfeasance (p. 490)

Granovetters argumentation line

I proceed by a theoretical elaboration
of the concept of embeddedness,
whose value is then illustrated with a
problem from modern society ():
which transactions in modern capitalist
society are carried out in the market
and which are subsumed within
hierarchically organized firms?
(AJS, 1985, p. 483)

O. Williamsons claim
O Williamsons claim (typically new institutional economics):

the organizational form observed in any situation is that

which deals most efficiently with the cost of economic
transactions. Those that are uncertain in outcome, recur
frequently and require substantial transaction-specific
investments i.e. money, time and energy that cannot be
easily transferred to interaction with others on different
matters are more likely to take place within hierarchically
organized firms. Those that are straightforward,
nonrepetitive, and require no transaction specific investment
such as the one-time purchase of standard equipment will
more likely take place within firms, that is, across a market
interface (p. 493).

Granovetters criticism
1) To appeal to authority relations in order to tame

opportunism constitutes a rediscovery of Hobbesian

analysis (p. 494) which lurch individuals directly from
an undersocialized to an oversocialized state. Counter
examples businessmen avoid to recur to law and sue
each other; tips
2) Williamson vastly overestimates the efficacy of
hierarchical power withing organizations (p. 499). The
role of communication, for instance in rating labour force.
p. 505 Summary

Overview of contributions to
contemporary economic sociology
STRUCTURAL SOCIOLOGY (White, Granovetter)
ORAGNIZATION THEORY (Burt, Meyer, Powell,

Di Maggio, Fligstein)
CULTURAL SOCIOLOGY (Zelizer)
SOCIOLOGICAL INTEREST ANALYSIS (Coleman)

JAMES COLEMAN

PART II

ECONOMIC ORGANIZATION
2 meanings

BROAD:
the organization of
whole economies

NARROW:
synonimous with
the Firm

Chapter III

Chapter IV

Chapter III
Economic organization
Capitalism - Weber
Polanyis Forms of Integration of the Economy

(p. 58, fig. 3.1 . - - feedback loop of

investment/Marshall)
Industrial Districts (the Italian Experience, Silicon

Valley, Route 128).

Globalization ( M. Castells)

Chapter IV FIRMS

ECONOMIC THEORIES
OF THE FIRM

SOCIOLOGICAL THEORIES
OF THE FIRM

. Cournot & Marshall

. Theory of Behavioral Firm
(Cyert, March, Simon)
. Organizational
Economics (Transaction
Cost Analysis & Agency
Theory)

. Max Weber bureucracy

. Industrial Sociology &
Sociology of Work

Chapter V
APPROACHES TO MARKETS

ECONOMIC APPROACHES

SOCIOLOGICAL APPROACHES

. The market in classical political

economy (Smith, Ricardo, Marx)
. The Marginalist Revolution
. Alfred Marshall
. The Austrian School (Menger,
Von Mises, Von Hayek)
. John Maynard Keynes
. Industrial Organization
(Chamberlain)

. M. Weber
. Markets as networks
(Granovetter, Uzzi)

Chapter VI Markets in History

Two extreme positions: mainstream economics vs

economic sociology
Swedbergs proposal for further research: 5 key
propositions
REAL MARKETS IN HISTORY
- External/Internal markets
- Markets for merchants/National markets
- Early rational markets
- Modern mass markets
- International markets
- Money and Capital markets

Chapter XII open issues

for Economic Sociologists
The Question of Structural Holes in Economic

Sociology
The Concept of Interest and its Role in
Economic Sociology
The Role of Objectivity and Reflexivity in
Economic Sociology
Should Economic Sociology be a Policy
Science?
..THE CATS DILEMMA..