Economics and Sociology: A Review Essay

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For many decades, the disciplines of economics and sociology have been at odds with each other. Economists have looked down on sociology for lacking mathematical rigor; on the other hand, sociologists have criticized economics for being too abstract and formal and for making arbitrary and unrealistic assumptions about human behavior. As a result of this divisiveness, economists have missed important insights from the field of sociology, while sociologists have ignored the significant advances and insights provided by economics. The Handbook of Economic Sociology [Smelser and Swedberg 1994], a collection of essays written by both sociologists and economists, marks an important turning point in the efforts to enhance cooperation between these fields. It also marks an advance in the search for a broad theoretical synthesis of economics and sociology.

The introduction traces the origins of the New Economic Sociology, which began to flourish during the past decade. This tradition began with Marx; then extends through Weber, Durkheim, Schumpeter, and Polanyi; and more recently has moved on to Parsons and Smelser. The purpose of economic sociology, at present and in the past, has been to understand culture, social forces, and economic phenomena-not as separate domains, but rather as elements that deeply interpenetrate each other, forming a complex reality.

Unlike the methodological individualism that dominates mainstream economics, economic sociology conceptualizes economic actors as being "socially constructed" shaped and constrained by the groups to which they belong. Mathematical models are but one of a variety of methods through which the interactions of economic and non-economic phenomena can be studied; economic sociology also recognizes the validity of surveys, ethnography, and historical and comparative analyses.

In economic sociology, theoretical pluralism is as important as methodological eclecticism. History and anthropology are welcome partners in the fight against imperialistic approaches to the study of human behavior. Rationality is taken not as an assumption, but is viewed as a phenomenon whose variance can be explained by studying cultural and historical contexts. The operation of market transactions is seen not as the result of self-regulating mechanisms, but rather as something embedded in institutions, which in turn depend on cultural and social relations.

In its most recent version, economic sociology has paid special attention to the impact of social networks, ethnic and gender identities, and the international context on economic life. Underlying economic outcomes are state regulations, bureaucratic inertia, family and friendship ties, normative restrictions, and symbolic meanings. To understand variations in efficiency, labor force participation, consumption, investment, organizational survival and profitability, economic sociologists say it is necessary to look at how non-economic arrangements impinge upon these variables.

Perhaps the shortest and simplest way to describe this massive 840-page tome is to say that it is a set of 30 literature reviews, similar to the surveys regularly found on the pages of the Journal of Economic Literature. In fact, one chapter in the Handbook-Richard Nelson on evolutionary theory and economic change - has already appeared in the Journal of Economic Literature in a slightly revised form. Each chapter surveys one specific issue; it discusses how economics and sociology can learn from each other, summarizes the relevant literature on the topic, and provides some guidance on fruitful lines for future research.

Economic sociology has generally focused on three main ways that economics and sociology can connect: (1) a sociological analysis of economic processes and systems, (2) an analysis of the relationships between the economy and the rest of society, and (3) a study of how changing institutional and cultural patterns affect the economy. …