Sociological Approach to Economy Essay

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The general problem of how to conceptualize and explain the relations of the economy to wider contexts of human behavior has been one of the main themes of major theorists in the sociological tradition. In the classical phase of the tradition, Marx, Weber, and Durkheim each treated the problem. Marx postulates that the economy as the base or foundation of social life that gives rise to social classes is rooted in the social relations of production, as in his analysis of capitalism. Weber took a more multidimensional approach that, for example, showed how cultural orientations and legal systems have an impact on economic phenomena, including capitalism. Durkheim took up Adam Smith’s analysis of how the division of labor enhanced economic productivity and supplemented it with a corresponding analysis of how social differentiation led to an organic form of integration of modern societies through webs of interdependence of units.

Two successive developments or phases characterize later sociological analysis of the economy. The central contribution in the first phase occurred in the 1950s, an era in which functionalism was the dominant theoretical paradigm in sociology and Talcott Parsons was its leading advocate. In Economy and Society (1956), Parsons and his collaborator built on prior sociological and economic theoretical analyses to set out a functional systems analysis of the economy in relation to its various conceptualized environments. The basic idea is that any system of human behavior must have social structures and processes that perform four functions, namely, adaptation to environment, attainment of system goals, integration of parts, and maintenance of common meanings. For a societal system, these are identified as, respectively, the economic, the political, the social integration, and the culture maintenance (e.g., education) function. In many tribal societies these functions are all performed by the kinship system. But in more differentiated societies, there are structures and processes that tend to be specialized by function. This leads to the model of society as a system of four interrelated function subsystems. The economy is the subsystem that accomplishes the societal adaptation function in terms of provision of primary and acquired human needs in a particular habitat. Similarly, a polity or political subsystem consists of social organization that deals with societal goal attainment, interpreted as the need for collective decisions. There are input-output or ”interchange” relations among the four function subsystems, through which each pair of subsystems obtains resources from the other, more or less adequate to perform its function for society under the given conditions. The notion of interchange makes it clear that the state of the economy is dependent upon the state of the other subsystems that constitute its societal environment.

Given its conceptual complexity involving, for instance, nested series of functional analyses of subsystems within subsystems, the model was difficult for other sociologists to grasp. As a consequence it did stimulate much research and when functional-ism declined as a theoretical paradigm in sociology, economic sociology went into a kind of hibernation until the mid-1980s when a second phase emerged. Initially it was termed ”the new economic sociology” to distinguish it from the earlier approach. Its key theme is the embeddedness of economic phenomena in culture and social structure, including interpersonal relations in social networks. By contrast with the earlier approach, the new phase has many more empirical investigators and a variety of specific lines of research and theory.

Sociologists have generalized the concept of capital to employ such notions as social capital in reference to the use of social connections as in the above example, and cultural capital, defined in terms of knowledge (e.g., art and music) and education. In empirical studies, Bourdieu (1984) proposes that economic and cultural capital are two dimensions of a space, called a field, such that consumer lifestyle choices depend upon position in the space and ”habitus,” an internal structure of dispositions acquired in socialization. Bourdieu claims this field-and-habitus model overcomes the limitations of both the rational choice assumption of standard economic theory (choice comes from the habitus) and the Marxian reduction of class conflict to economics (competitive struggles arise in a multi-dimensional field).

Bibliography:

  1. Bourdieu, P. (1984) Distinction: A Social Critique of the Judgment of Taste. Harvard University Press, Cambridge, MA.
  2. Dobbin, F. (ed.) (2004) The New Economic Sociology: A Reader. Princeton University Press, Princeton, NJ.
  3. Granovetter, M. (1985) Economic action and social structure: the problem of embeddedness. American Journal ofSociology 91: 481-510.
  4. Smelser, N. & Swedberg, R. (eds.) (2003) Handbook of Economic Sociology, 2nd edn. Russell Sage Foundation and Princeton University Press, Princeton, NJ.

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