Social Structure in Economic Theory

Article excerpt

Social structure is a core concept in most social sciences, but it has never quite had this status in economics. Much economic theory, especially the orthodox variety, keeps away from structural methods and makes little or no reference to social structure: the word structure is used only rarely and casually, so that its sense remains unclear. This puts economics out of step with other academic disciplines, which are more amenable to structural ideas, and broaches the issue of whether social structure has been unduly neglected in economic theory.

Orthodox economists, committed to methodological individualism, have been wary of social structure, lest it would undermine their individualistic stance and promote a "non-economic," sociological outlook. Neoclassical economics begins with rational agents who have fixed preferences defined from the outset. Social structures either are absent or have a subordinate place as market imperfections that must be explained through individual behavior. Any structure bringing people together to form a larger whole will contradict the atomism of neoclassical thought. Heterodox economists, by contrast, have no such commitment to individualistic methods and should be comfortable with social structure. It does indeed feature in heterodox economics, but it often stays implicit and has less prominence than one might expect.

Modern concepts of structure are based on relationships among parts of a whole: for structural analysis to be relevant, the parts must be internally related such that they are necessary to the whole and each part could not exist without the others (Sayer 1992, chapter 3). If the parts have no interdependence and only external relationships, then the whole is at most an aggregate (perhaps not even that), and structural analysis ceases to be relevant. The hallmark of a structural method is its reliance on internal relations among parts making up a whole. Structural theory can sometimes turn into holism and give the whole precedence over the parts, yet the original aim of structural ideas--as against holistic ones--was to ensure that the whole could always be transformed, or else the whole-part relationship would be redundant. A structural method, if handled properly, should never congeal into structural wholes that overshadow their component parts.

The word structure has acquired unhelpful connotations from the analogy with physical structures. Comparison with a building suggests something hard, permanent, and complete, as if it were built from solid materials and to a predetermined plan. Social structure would then enter economics as a rigid constraint that restricted human behavior. The static analogy is misleading and offers at best a partial view of structure. In its earliest English language uses, structure was a noun of process which referred to the act of building, not the end product; only later has structure become static (Williams 1983). Even when seen as a state rather than a process, structure still has a capacity for change.

This paper argues that economics might gain from a richer, more fluid treatment of social structure, as proposed in recent social theory. After considering the structural content of heterodox economics, the paper examines how current approaches might be developed to yield new structural concepts capable of accommodating economic diversity and change. An enhanced definition of social structure could provide a structural foundation for economics without denying human agency or historical evolution.

Social Structure in Heterodox Economics

Most heterodox economics--notably institutionalism, Post Keynesianism, and the Marxian/classical tradition--has shown awareness that economic behavior is embedded in social structure. This may be expressed indirectly, but it underlies the theoretical arguments being made and the rejection of methodological individualism; structural methods are at the heart of a heterodox approach. …