Economic Sociology Reformulated: The Interface between Economics and Sociology

I The Social Framework of Economic Processes The realm of economic sociology is rarely well defined. Confusions abound, as exemplified by the sketchy boundaries between economic sociology and economics, sociology, and rational choice theory (Coleman 1994; Davern and Eitzen 1995; Smelser and Swedberg 1994; Swedberg 1987). Spurious distinctions such as that between economic sociology and sociological economics or socioeconomics can also be found (Etzioni 1991; Smelser & Swedberg 1994; Swedberg 1987; 1991). A reformulation of the field of economic sociology is in order. The subject matter of economic sociology can be defined as encompassing economic actions, relations, and processes within their social setting. Thus, economic sociology differs from economics, which deals with economic behavior per se (though some economists use the concept of "social framework" often too narrowly, in the sense of the economic system and policy, c.f., Hicks 1959). Economic sociology also differs from general sociology in Weber's (1968) sense where sociology deals with all four types of social action (aim-rational, value-rational, traditional and emotional). And, economic sociology differs from rational choice theory, which focuses on the economic variables of social life. By contrast, economic sociology examines the sociological categories of economic life. Whereas, rational choice theory proposes the economic determination of society, economic sociology posits the social construction of the economy. Too often, conceptual relations between the disciplines have been confused or overlooked, not just by rational choice theorists but even by many economic sociologists themselves. One prominent example of this is the Handbook of Economic Sociology in which the perspective of economic sociology and that of rational choice theory (including the "new institutional economics") are juxtaposed to each other without providing any criteria for what belongs to economic sociology proper and what does not (for a general critique, cf. Piore 1996). As defined, economic sociology tends to consider economic phenomena as "only particular cases of the general states of the sociological system" (Pareto 1932: 13135). Within neoclassical economics the economic system is defined by the relations between economic goals ("tastes") and the "obstacles" to attaining these goals (Pareto 1927), or between demand or utility and supply or scarcity (Walras 1952; Wicksell 1951), or between aggregate production and aggregate consumption (Keynes 1960; Samuelson 1983). However, as Pareto observed, the "social system is more complicated" for it includes not only such rational actions but nonrational ones as well. In other words, the social system incorporates the economic system as a constituent part. This conception prefigures modern systems theory in sociology (Luhmann 1995; Munch 1990; Parsons and Smelser 1965) and the embeddedness principle of economic behavior (Granovetter 1985, 1990; Polanyi 1968; also Baum & Oliver 1992; Fligstein and Brantley 1992; Montgomery 1994; for a critique cf. Barber 1993). Not just the social system but the economic system can also be viewed holistically and characterized as a "whole of which all the parts are connected and react to each other" (Cournot 1960: 127). To the extent that this economic whole is seen as a self-sufficient or self-referential system (Luhmann 1995), this definition demonstrates the familiar tendency of most economists to reduce the total social system to its economic subsystem. (There are also exceptions, such as Pareto, Schumpeter, Myrdal, Boulding, Wieser, von Mises.) The realm of economic sociology is equivalent to that of socioeconomics (sometimes called social economics or sociological economics), only if the latter is understood in the properly narrow sense of a study of the sociological categories of the economy. Socioeconomics, however, is oftentimes defined more broadly in the sense of all of economic analysis, thus swallowing economic sociology (Schumpeter 1955). …