Economic Sociology and Embeddedness: How Shall We Conceptualize Economic Action?

Article excerpt

One of the most persistent themes within economic sociology has been the critical assessment of economics. More precisely, economic sociology finds a unifying denominator in its critique of modeling strategies which proceed from the notion of homo economicus acting in a world with full information, independent decision making, polypolistic competition, transitivity, and fixed preferences. Sociologists have commonly observed that actual economic decision making does not fit this model (Luhmann 1968; Weber 1985; Etzioni 1988). Over the last fifteen years, the notion of embeddedness has served as the crucial counter-concept used by economic sociologists to mark a distinctive approach to the understanding of economic processes (Granovetter 1985; Zukin and DiMaggio 1990). Embeddedness refers to the social, cultural, political, and cognitive structuration of decisions in economic contexts. It points to the indissoluble connection of the actor with his or her social surrounding.

It has been given little notice, however, that the critique of the economic model of action on one hand and the sociological concept of embeddedness on the other are situated on two different conceptual levels. While the former refers to the question of how to conceive of the structure of action, the latter tells us about external variables which influence the action process and outcome. If this observation is correct, it is not surprising that the unfolding of the notion of embeddedness did not lead to much theoretical progress in the development of a theory of action which could provide an alternative to the rational actor model of economics (DiMaggio and Powell 1991; Fligstein 1997, 2001a). This is not so much meant as a critique of new economic sociology but rather as a suggestion. My point is that new economic sociology does not put enough emphasis on proposing an alternative to rational actor theory. (1) The notion of embeddedness does not provide a theory of intentionality and strategic agency of its own. For this, economic sociology would need a microfoundation which would allow an understanding of the role of structures in interaction and the impact of "skillful actors" (Fligstein 200lb) on the stability and dynamics of economic processes.

In this article I contribute to a sociological theory of action in economic contexts. Such a theory, it is argued, should proceed from the consequences which follow from the complexity and novelty inherent in economic decision situations. Complexity and novelty are endemic features of modern, dynamic economies that create genuine uncertainty in economic action. (2) Uncertainty renders the identification and selection of optimizing strategies, as demanded by the rational actor model, impossible because the situation does not possess the characteristics presupposed by an action theory that is based on the identification of the causal relationship between the application of means (strategies) and outcomes (Beckert 1996, 2002; Dequech 2001).

If uncertainty is seen as the crucial vantage point for departing from the rational actor model, any alternative action theory, it is argued here, has to break with the teleological structure that informs both rational actor theory and normative theories of action. By "teleological structure of action" I refer to the conception of action as being split into the ideally independent elements of an actor, an end (or goal), means for achieving the end, and conditions the actor has to take into account. According to this model, ends are unaffected by means, and the molding of ends is seen as beyond the explanatory scope of the theory (Hodgson 1988; Lutz 1979). The different consequences of the application of alternative means either are known, at least probabilistically, or can be found out by experiment. The objective character of the decision process makes it possible that an outsider who knows the preferences of the actor and the constraints could predict the choices the actor will actually make. …