Sociology 355
Fall 2005
Economic Sociology

Marc Schneiberg
Office: Vollum 241, ext. 7495
Schneiberg@reed.edu

MW: 3:10-4:30, Vollum 228
Office Hours: TBA

 

Course Description: This is a rigorous course on the sociology of markets and economic activity in capitalist societies. Its core problem is to understand how rational, economic activities are facilitated, modified or impeded by collective commitments, social relations and social institutions. We address how variation and change in the social structures of economic life are produced, and the consequences for cooperation, rationality, economic competition, justice, and economic development. Topics to be covered include the social, political and cultural construction of markets; the role of networks, institutions, and states in economic development; cooperative alternatives to for-profit corporations; cross national differences in capitalism; economic transitions in post socialist societies; globalization; and the shift from mass production economies to systems based on learning, innovation and flexibility.

The course comes in five parts. Part one introduces the foundational arguments about embeddedness, institutions, and the social construction of markets, and traces how those concepts distinguish economic sociology from neo-classical economics and its vision of actors, firms, and markets.

Parts two begins to develop these arguments in depth, focusing on the social, political and cultural construction of markets. Markets are the pivotal institutions of economic life. Yet their emergence, reproduction and development are typically either taken for granted or understood as a natural or inevitable outgrowth of individuals’ dispositions or utility maximizing behavior. Such presumptions and understandings are sociologically naïve, as they effectively bracket how markets, like other institutions, are products or accomplishments whose constituent elements and understandings, institutional foundations, agents, rules and day-to-day practices have to be articulated, assembled, defended, legitimated and routinized. As we shall see, this work is fundamentally collective, political and constitutive, and occurs at multiple levels, including the social construction of those calculative practices and economically rational individuals which conventional neo-classical accounts invoke as explanatory principles,

Parts three, four and five develop arguments about the social context of economic activity, development and enterprise, examining, respectively, the embeddedness of firms and market actors in networks, organizationalforms, and institutions. For much of the last century, economists, political scientists and sociologists have taken markets and firms or contracts and corporations as the twin pillars of economic modernity, effectively stripping economic actors and practices from their social context, and viewing competitive markets and autonomous corporations as the central engines of development, growth and efficiency in capitalist economies. In contrast, economic sociologists and others have gone beyond these dichotomies to recontextualize economic activity and to consider the full range of social structures, organizational forms and institutions that shape, constrain, and enable economic behavior in capitalist societies. And, in moving beyond markets and firms, economic sociologists have found that social relations, non-market institutions and organizational alternatives to for-profit firms contribute to development, efficiency, and growth in fundamental ways.

Thus, as we see in part three, social networks figure centrally in sociologists’ efforts to go beyond conventional dichotomies and understand the social embeddedness of economic life. Moreover, where traditional analyses often dismiss networks and other forms of association as “pre-modern” holdovers that impede progress and growth, economic sociologists, operating from different sensibilities, have found that such forms promote the trust, flexibility and capacities for innovation that are necessary for economic success in today’s increasingly globalized capitalism. Similarly, as we see in part four, economic sociologists have also considered the embeddedness of economic activity in a wide range of organizational forms, tracing, among other things, the importance of cooperatives, mutuals and public enterprise for solving market failures and fostering local and regional economic development, and the growth of the non-profit sector as an alternative or supplement to private, for-profit provision. And in part five, we follow how economic sociologists have examined the embeddedness of firms and markets in broader institutional systems, paying particular attention here to the marked and enduring institutional diversity of advanced, developing and post-socialist capitalist societies, and the effects of institutional embeddedness on the wealth and growth of nations. Indeed, enduring cross-national differences in the social and institutional structures of capitalism not only foster divergent possibilities and pathways for development, transition, and prosperity, creating or destroying comparative economic advantage in increasingly competitive international markets. They also highlight the importance of social, political and cultural contingency in the development of capitalism, calling into question claims about the existence of “one best way” to structure an economy and the convergence of capitalist countries on a single, Anglo-American model under the pressures of globalization.

Course prerequisite: Introduction to Sociology (Sociology 211) plus one upper division course in sociology is required for taking this class.

Course Assignments: This is a reading and writing intensive upper division course. In addition to the assigned readings, students will write four reading memos, submit a paper proposal, do an in-class presentation on their research, and write a 10-page research report. In weeks three through six, students will write two-page weekly critiques of assigned readings to get a feel for the issues involved in economic sociology. By week six, students will pick a topic for analysis in a 10-page research report due at the end of the term. Students may work in groups of two or three. In these papers, students must use the materials presented in class to develop and answer a “why” or “how” question about the social or institutional structure of a firm, market, industry, economic transaction, economic policy or state regulatory intervention. Students might want to explain an institutional, social structural or policy outcome. For example, why do actors in a particular industry rely on this or that institutional arrangement or combination of governance forms to manage a market, business activity or economic transaction? Why do businesses or state actors in one setting or time rely on associations or networks to manage relations with suppliers or workers, whereas those in other settings or times rely on arm’s length contracting, vertical integration or internal labor markets to manage those relations? When and why do actors pursue cooperatives, public ownership or non-profit organization as an alternative to markets, private provision and for profit corporations? What kinds of constraints and opportunities did a particular industry face in building economic institutions and solving problems of coordination, competition and control? Alternatively, students might want to analyze the effects or economic performance consequences of the social structure of markets or particular forms of economic organization. For example, how does the organization or social structure of a market facilitate or impede innovation or adaptation to economic change? When and how can state intervention promote growth and economic development rather than inefficiency, inequality or predatory behavior?

Students should meet with me to discuss their papers in week six. A three-page proposal for the paper, with a set of questions, a bibliography, and some preliminary findings or evidence, is due at the end of week seven, on Friday, October 14. Students will present their work in progress in conference in week twelve, on Monday, November 21 and Wednesday, November 23. These presentations must go substantially beyond the materials presented in the proposal and should be seen as tool for getting feedback for the write up of the final paper. The final paper is due on Wednesday, December 12 at 5 pm.

Readings: The following books are required and are available at the Reed College bookstore. Additional readings listed below are available through JSTOR, via the AJS website (www.journals.uchicago.edu/AJS/journal/available.html) or on reserve

  • Mitchel Abolafia. 1996. Making Markets: Opportunism & Restraint on Wall Street. Cambridge: Harvard University Press.
  • Peter Evans. 1995. Embedded Autonomy: States, Firms, & Industrial Transformation. Princeton : Princeton University Press.
  • Peter Hall and David Soskice. 2001. Varieties of Capitalism. Oxford: Oxford University Press.
  • David Stark and Laszlo Brurszt. 1998. Post Socialist Pathway: Transforming Politics and Property in Central Europe. Cambridge: Cambridge University Press.
  • Viviana Zelizer. 1983. Morals & Markets; The Development of Life Insurance in the United States. Transaction Publishers, 1983.

I have also ordered a few copies of the following optional resource for understanding quantitative analysis.

  • William Berry and Mitchell Sanders. Understanding Multivariate Research. Boulder: Westview Press.

 

Reading Assignments

PART I: INTRODUCTION: EMBEDDEDNESS, SOCIAL CONSTRUCTION AND THE ECONOMIC INSTITUTIONS OF CAPITALISM

Week 1: (August 29, 31)

Embeddedness and Institutionalism

  • JR Hollingsworth, P. Schmitter and W. Streeck. 1994. “Capitalism, Sectors, Institutions and Performance.” In Hollingsworth, Schmitter, Streeck eds., Governing Capitalist Economies. New York: Oxford Press. (Book on reserve plus copy in reserve folder)
  • Mark Grannovetter. 1985. “Economic Action and Social Structure: A Theory of Embeddedness.” American Journal of Sociology 91: 481-510. (JSTOR)
  • John Lie. 1997. The Sociology of Markets. Annual Review of Sociology, 23: 341-60. (JSTOR)

PART II: THE SOCIAL CONSTRUCTION OF MARKETS

Week 2: (September 7)

Cultural Construction of Markets

  • Viviana Zelizer. 1983. Morals and Markets: The Development of Life Insurance

Week 3: (September 12, 14)

Institutions, Self-Interest

  • Mitchel Abolafia. 1996. Making Markets: Opportunism and Restraint on Wall Street. Cambridge: Harvard University Press.

Reading memo 1: Due Monday, September 12th in class.

Week 4: (September 18: Sunday night class)

Market Making as Institutional Projects

  • Neil Fligstein and Iona Mara Dritra. 1996. How to Make a Market: Reflections on the Attempt to Create a Single Market in the European Union. American Journal of Sociology. Vol. 102, pp. 1-33. (JSTOR).
  • Neil Fligstein and Alec Stone Sweet. 2002. “Constructing Polities and Markets: An Institutionalist Account of European Integration.” American Journal of Sociology. 107: 1206-43. (AJS website)
  • Peter Miller and Ted O’Leary. 2005. “Mediating Instruments and Making Markets: Capital Budgeting, Science and Systems of Assets.” Paper presented at the Annual Meetings of the Society for Advancement of Socio-Economics, Budapest, Hungary, July 2005. (Copy via email)
  • Mark Granovetter and Patrick McGuire. 1998. “The Making of an Industry: Electricity in the United States.” Pp. 147-74 in Michel Callon, eds. The Laws of the Market. Oxford: Blackwell. (Book on reserve)

Reading memo 2: Due Sunday, September 18th in class.

Week 5: (September 26, 28)

Market Making and the Professions: Projects, Classifications, Discourse

  • Marion Fourcade-Gourinchas and Sarah Babb. 2002. “The Rebirth of the Liberal Creed: Paths to Neoliberalism in Four Countries.” American Journal of Sociology. 107: 533-79. (AJS website)
  • Peter Miller. 1998. “The Margins of Accounting.” Pp. 175-193 in Michel Callon, ed. The Law of the Market. Oxford: Blackwell. (Book on reserve)
  • Eric Abrahamson and Gregory Fairchild. 1999. “Management Fashion: Lifecycles, Triggers and Collective Learning Processes.” Administrative Science Quarterly 44: 708-40 (JSTOR)
  • Ezra W. Zuckerman. 1999. The Categorical Imperative: Securities Analysts and the Illegitimacy Discount. American Journal of Sociology 104: 1398-438 (JSTOR)
  • David McKenzie and Yuval Milo. 2003. “Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange.” American Journal of Sociology 109: 107-45. (AJS website)

Reading memo 3: Due Monday, September 26th in class.

PART III: EMBEDDEDNESS I — SOCIAL NETWORKS

Week 6: (October 3, 5)

Networks as systems of flexible production, networks as systems of learning

  • Joel Poldolny and Karen Page. 1998. “Network Forms of Organization.” Annual Review of Sociology, 24: 57-76. (JSTOR)
  • Charles Sabel. 1989. “Flexible Specialization and the Re-emergence of Regional Economies” Pp 17-70 in Paul Hirst and Jonathon Zeitlin eds. Reversing Industrial Decline? New York: St. Martin’s. (Reserve folder)
  • Walter Powell, Kenneth Koput and Laurel Smith Doerr. 1996. Interorganizational Collaboration and the Locus of Innovation: Networks of Learning in Biotechnology.” Administrative Science Quarterly 41: 116-45. (JSTOR).
  • Brian Uzzi. 1996. “The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect.” American Sociological Review. 61: 674-98. (JSTOR)

Reading memo 4: Due Monday, October 3rd in class.

Week 7: (October 10, 12)

Networks as systems of status and information flow, plus a dissent

  • Joel Podolny. 2001. “Networks as Pipes and Prisms of the Market.” American Journal of Sociology 1: 33-60. (AJS website)
  • Olav Sorensen and Toby Stuart. 2001. “Syndication Networks and the Spatial Distribution of the Venture Capital Investments.” American Journal of Sociology 106:1546-88. (AJS website)
  • Greta Krippner. 2001. “The Elusive Market: Embeddedness and the Paradigm of Economic Sociology.” Theory and Society, 30: 775-810. (online)

Research proposal: Due Friday, October 14, at 3 pm.

Fall break: October 15-23

PART IV: EMBEDDEDNESS II — ORGANIZATIONAL FORMS

Week 8: (October 24, 26)

Hierarchy, Cooperatives, Associations, Non-profits: Market Failure Approaches

  • Oliver Williamson. 1981. “The Economics of Organization: The Transaction Cost Approach.” American Journal of Sociology 87: (JSTOR)
  • Elinor Ostrom. 1990. “Reflections on the Commons.” Pp. 1-28 in Governing the Commons. Cambridge: Cambridge University. (Book on reserve)
  • Henry Hansmann. 2000. Ownership of Enterprise. Harvard: Harvard University. (Book on reserve)
  • Burton Weisbrod. 1988. The Non-Profit Economy. Cambridge: Harvard University Press. Pp. 1-87. (Book on reserve)

Week 9: (October 31, November 2)

Historical, Constructionist and Pragmatist Approaches

  • Hall, Peter Dobkin. "Historical Perspectives on Nonprofit Organizations in the United States." The Jossey-Bass Handbook of Nonprofit Leadership and Management, 2nd Edition. Ed. Robert Herman, et al. Jossey-Bass, 2004.
  • Marc Schneiberg. 2002. “Organizational Heterogeneity and the Production of New Forms: Politics, Social Movements and Mutual Companies in American Fire Insurance.” In Michael Lounsbury and Marc Ventresca eds, Research in the Sociology of Organizations. JAI Press. (pdf from author)
  • Gerald Berk and Marc Schneiberg. 2005. Varieties in Capitalism, Varieties of Association: Collaborative Learning in American Industry: 1900 to 1925. Politics and Society 33: 1-43. (pdf from author)
  • Daniel Buenz and David Stark. 2005. “How to Recognize Opportunities: Heterarchical Search in Trading Room.” Pp. 84-101 in Karin Knorr Centina and Alex Preda eds. The Sociology of Financial Markets. Oxford: Oxford University Press. (On reserve)

Week 10 (November 7, 9)

  • Historical and Ecological Approaches to Form: Hannon and Padgett Michael Hannon. 2004. “Ecologies of Organization: Diversity and Identity.” Journal of Economic Perspectives 19: 51-71. (from JEP website www.ingentaconnect.com/content/aea/jep)
  • Greta Hsu and Michael T. Hannon. 2004. “Identities, Genres and Organizational Forms.” Working paper: http://www.stanford.edu/~hannan/
  • John Padgett and Christopher Ansell. 1993. “Robust Action and the Rise of the Medici, 1400-1434.” American Sociological Review 98: 1259-1310. (JSTOR)
  • John Padgett. 2001. “Organizational Genesis, Identity and Control: The Transformation of Banking in Renaissance Florence.” Pp. 211-57 in James Rauch and Alessandra Casella eds. Networks and Markets. New York: Russell Sage Foundation. (Book and chapter on reserve)

PART V: EMBEDDEDNESS III: INSTITUTIONS AND INSTITUTIONAL SYSTEMS

Week 11: (November 14, 16)

Varieties of Capitalism: Affluent Capitalist Economies

  • Peter Hall and David Soskice. 2001. “Introduction to Varieties of Capitalism.” Pp. 1-67 in Hall and Soskice, eds, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage. Cambridge: Cambridge University Press. (book on reserve)
  • Kathleen Thelen. 2001. “Varieties of Labor Politics.” Pp. 71-103 in Varieties of Capitalism (book on reserve)
  • Margarita Esteve-Abe, Torben Iverson and David Soskice. 2001. “Social Protection and the Formation of Skills: A Reinterpretation of the Welfare State.” Pp. 144-183 in Varieties of Capitalism.
  • Bob Hancke. 2001. “Revisiting the French Model: Coordination and Restructuring in French Industry.” Pp 305-334 in Varieties of Capitalism.
  • Sigurt Vitols. 2001. “Varieties of Corporate Governance: Comparing Germany and the UK.” Pp. 337-360 in Varieties of Capitalism.

Week 12: (November 21, 23)

Presentations, no reading

Week 13: (November 28, 30)

Institutions, States and Economic Development: NIC’s in a Global Economy

  • Peter Evans. 1995. Embedded Autonomy: States, Firms and Industrial Transformation. Princeton: Princeton University Press

Week 14: (Dec 5, 7)

Institutions and Transitions: Post-Socialist Paths

  • David Stark and Laszlo Brurszt. 1998. Post Socialist Pathway: Transforming Politics and Property in Central Europe. Cambridge: Cambridge University Press.

Final research report: due Monday, December 12 at 5pm.