significant research results, which we now present and set in perspective. Economic sociology has peaked twice since its birth: in 1890–1920 with the classic theorists (who were all interested in and wrote on the economy), and today, from the early 1980s onwards. A small number of important works in economic sociology—by economists as well as sociologists—were also produced during the period in between. A major thread in the tradition of economic sociology is that investigation must combine the analysis of economic interests with an analysis of social relations.
Classical Economic Sociology and Its Predecessors
The first use of the term economic sociology seems to have been in 1879, when it appears in a work by British economist W. Stanley Jevons ([1879] 1965). The term was taken over by the sociologists and appears, for example, in the works of Durkheim and Weber during the years 1890–1920 (sociologie économique, Wirtschaftssoziologie). It is also during these decades that classical economic sociology is born, as exemplified by such works as The Division of Labor in Society (1893) by Durkheim, The Philosophy of Money (1900) by Simmel, and
Economy and Society (produced 1908–20) by Weber. These classics of economic sociology are remarkable for the following characteristics. First, Weber and others shared the sense that they were pioneers, building up a type of analysis that had not existed before. Second, they focused on the most fundamental questions of the field: What is the role of the economy in society? How does the sociological analysis of the economy differ from that of the economists? What is an economic action? To this should be added that the classical figures were preoccupied with understanding capitalism and its impact on society—“the great transformation” that it had brought about.
In hindsight it is clear that several works published before the 1890–1920 period in one way or another prefigure some of the insights of economic sociology. Important reflections on, for example, the role of trade can be found in The Spirit of the Laws by Montesquieu, as well as a pioneer comparative analysis of the role of various economic phenomena in republics, monarchies, and despotic states (Montesquieu [1748] 1989). The role of labor in society is emphasized in the work of SaintSimon (1760–1825), who also helped to popularize the term industrialism (cf. Saint-Simon 1964). That the work of Alexis de Tocqueville (1805– 1859) is full of sharp, sociological observations is
Introduction 7
something that most sociologists would agree on. That he also made contributions to economic sociology is, however, less known (Tocqueville [1835– 40] 1945, [1856] 1955; cf. Swedberg 2003, 6–8). Of these various precursors we will concentrate only on Karl Marx, a towering figure in nineteenthcentury thought, even though he was active before the birth of modern sociology.
Karl Marx
Karl Marx (1818–1883) was obsessed with the role of the economy in society and developed a theory according to which the economy determined society’s general evolution. What drives people in their everyday lives, Marx also argued, are material interests, and these also determine the structures and processes in society. While Marx wanted to develop a strictly scientific approach to society, his ideas were equally infused by his political desire to change the world (e.g., [1843] 1978, 145). The end result was what we know as “Marx- ism”—a mixture of social science and political statements, welded into a single doctrine.
For a variety of reasons much of Marxism is erroneous or not relevant to economic sociology. It is far too tendentious and dogmatic to be adopted as a whole. The task that confronts economic sociology today is to extract those aspects of Marxism that are useful. In doing so, it is useful to follow the suggestion of Schumpeter, and distinguish between Marx as a sociologist, Marx as an economist, and Marx as a revolutionary (Schumpeter [1942] 1994, 1–58). We now turn to a preliminary effort to pull out the relevant ingredients for economic sociology.
Marx’s point of departure is labor and production. People have to work in order to live, and this fact is universal (Marx [1867] 1906, 50). Material interests are correspondingly universal. Labor is social rather than individual in nature, since people have to cooperate in order to produce. Marx severely criticized economists for their use of the isolated individual; and he himself sometimes spoke of “social individuals” (e.g., [1857–58] 1973, 84– 85). The most important interests are also of a collective nature—what Marx calls “class interests.” These interests will, however, only be effective if people become aware that they belong to a certain class (“class for itself,” as opposed to “class in itself”; Marx [1852] 1950, 109).
Marx severely criticized Adam Smith’s idea that individual interests merge and further the general interest of society (“the invisible hand”). Rather, according to Marx, classes typically oppress and
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fight each other with such ferocity that history is as if written with “letters of blood and fire” ([1867] 1906, 786). Bourgeois society is no exception on this score since it encourages “the most violent, mean and malignant passions of the human heart, the Furies of private interest” ([1867] 1906, 15). In various works Marx traced the history of the class struggle, from early times into the future. In a famous formulation from the 1850s, Marx states that at a certain stage the “relations of production” enter into conflict with “the forces of production,” with revolution and passage to a new “mode of production” as a result ([1859] 1970, 21). In Capital Marx writes that he has laid bare “the economic law of motion of modern society” and that this law works “with iron necessity towards inevitable results” of revolutionary change ([1867] 1906, 13–14).
A positive feature of Marx’s approach is his insight into the extent to which people have been willing to fight for their material interests throughout history. He also contributed to understanding how large groups of people, with similar economic interests, under certain circumstances can unite and realize their interests. On the negative side, Marx grossly underestimated the role in economic life of interests other than the economic ones. His notion that economic interests in the last hand always determine the rest of society is also impossible to defend; “social structures, types and attitudes are coins that do not readily melt,” to cite a famous quote from Schumpeter ([1942] 1994, 12).
Max Weber
Among the classics in economic sociology Max Weber (1864–1920) occupies a unique place. He proceeded furthest toward developing a distinct economic sociology, laying its theoretical foundation and carrying out empirical studies (Swedberg 1998). The fact that he had worked as a professor of economics was no doubt helpful in these efforts to build bridges between economics and sociology. Also helpful was the major research task that occupied Weber throughout his career, which was economic as well as social in nature: to understand the origin of modern capitalism. Weber drew heavily on the theoretical work on interests of his time and extended that line of work by making it more sociological.
Weber’s academic training was broad in nature, and its main emphasis was on law, with the history of law as his specialty. His two dissertations—one on medieval trading corporations (lex mercatoria) and the other on the sale of land in early Rome—
were relevant topics for understanding the rise of capitalism: the emergence of private property in land and of property in the firm (as opposed to individual property). Those works, in combination with a commissioned study of rural workers, earned him a position in economics (“political economy and finance”) in the early 1890s. In this capacity he taught economics but published mainly in economic history and in policy questions. Weber wrote, for example, voluminously on the new stock exchange legislation.
Toward the end of the 1890s Weber fell ill, and for the next 20 years he worked as a private scholar. In these years he produced his most celebrated study, The Protestant Ethic and the Spirit of Capitalism (1904–5), as well as studies of the economic ethics of the world religions. In 1908 Weber accepted a position as chief editor of a giant handbook of economics. From the very beginning Weber set aside the topic of “economy and society” for himself. The work that today is known as Economy and Society consists of a mixture of material that Weber had approved for publication and of manuscripts found after his death (see, e.g., Mommsen 2000). In 1919–20 Weber also taught a course in economic history, which, pieced together a few years later on the basis of students’ notes, was published posthumously as General Economic History. Though primarily a work in economic history, it contains much interesting material for the economic sociologist.
Much of what Weber wrote in economic sociology can be found in Collected Essays in the Sociology of Religion (1920–21) and Economy and Society
(1922). The former contains a revised version The Protestant Ethic, “The Protestant Sects and the Spirit of Capitalism” (1904–5; revised 1920) and voluminous writings on the economic ethics of the Chinese, Indian, and Judaic world religions and a few other texts (for the latter see Weber [1920] 1958, [1915] 1946a, [1915] 1946b). According to Weber, the material in Collected Essays concerns mainly the sociology of religion but is also of interest to economic sociology.
The most influential study is The Protestant Ethic. This work is centered around Weber’s general preoccupation with the articulation of ideal and material interests and ideas. The believer in ascetic Protestantism is driven by a desire to be saved (a religious interest) and acts accordingly. For various paradoxical reasons the individual eventually comes to believe that secular work, carried out in a methodical manner, represents a means to salva- tion—and when this happens, religious interest is
combined with economic interest. The result of this combination is a release of a tremendous force, which shattered the traditional and antieconomic hold of religion over people and introduced a mentality favorable to capitalist activity. The thesis in The Protestant Ethic has led to an enormous debate, with many scholars—probably a majority— arguing against Weber (for an introduction to this debate, see especially Marshall 1982).
While he was writing The Protestant Ethic Weber published an essay, “ ‘Objectivity’ in Social Science and Social Policy,” that summarized his theoretical views on economic sociology. In this work he argued that the science of economics should be broad and umbrella-like (Sozialökonomik; Weber [1904] 1949, 64–65). It should include not only economic theory but also economic history and economic sociology. Weber also proposes that economic analysis should cover not only “economic phenomena” but also “economically relevant phenomena” and “economically conditioned phenomena” (64–65). Economic phenomena consist of economic norms and institutions, often deliberately created for economic ends—for example, banks and stock exchanges. Economically relevant phenomena are noneconomic phenomena that under certain circumstances may have an impact on economic phenomena, as in the case of ascetic Protestantism. Economically conditioned phenomena are those that to some extent are influenced by economic phenomena. The type of religion that a group feels affinity for is, for example, partly dependent on the kind of work that its members do. While economic theory can only handle pure economic phenomena (in their rational version), economic history and economic sociology can deal with all three categories of phenomena.
A somewhat different approach, both to economic sociology and to interests, can be found in Economy and Society. The first chapter of this work contains a general sociological analysis. Two concepts are important building blocks: “social action” and “order” (Ordnung). In the former, “action,” defined as behavior invested with meaning, is qualified as “social” if it is oriented to some other actor. An “order” is roughly equivalent to an institution, and it comes into being when social actions are repeated over a period, regarded as objective, and surrounded by various sanctions. Economists study pure economic action, which is action exclusively driven by economic interests (or “desire for utilities,” in Weber’s formulation; [1922] 1978, 63). Economic sociologists, however, study social economic action, which is driven
Introduction 9
not only by economic interest but also by tradition and emotions; furthermore, it is always oriented to some actor(s).
If one disregards single actions, Weber says, and instead focuses on empirical uniformities, it is possible to distinguish three different types: those inspired by “convention,” by “custom” (including “habit”), and by “interest” ([1922] 1978, 29–36). Most uniform types of action presumably consist of a mixture of all three. Actions that are “determined by interest” are defined by Weber as instrumental in nature and oriented to identical expectations. An example would be the modern market, where each actor is instrumentally rational and counts on everybody else to be so as well.
Weber emphasized that interests are always subjectively perceived; no “objective” interests exist beyond the individual actor. In a typical sentence Weber speaks of “[the] interests of the actors as they themselves are aware of them” ([1922] 1978, 30). He also notes that when several individuals behave in an instrumental manner in relation to their individual interests, the typical result is collective patterns of behavior that are considerably more stable than those driven by norms imposed by an authority. It is, for example, very difficult to make people do something economic that goes against the individual’s interest.
A sketch of Weber’s economic sociology in Economy and Society yields the following main points. Economic actions of two actors who are oriented to one another constitute an economic relationship. These relationships can take various expressions, including conflict, competition, and power. If two or more actors are held together by a sense of belonging, their relationship is “communal”; and if they are held together by interest, “associative” (Weber [1922] 1978, 38–43). Economic relationships (as all social relationships) can also be open or closed. Property represents a special form of closed economic relationship.
Economic organizations constitute another important form of closed economic relationships. Some of these organizations are purely economic, while others have some subordinate economic goals or have as their main task the regulation of economic affairs. A trade union is an example. Weber attaches great importance to the role in capitalism of the firm, which he sees as the locus of entrepreneurial activity and as a revolutionary force.
A market, like many other economic phenomena, is centered around a conflict of interests—in this case between sellers and buyers (Weber [1922] 1978, 635–40). A market involves both exchange
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and competition. Competitors must first fight out who will be the final seller and the final buyer (“competition struggle”); and only when this struggle has been settled is the scene set for the exchange itself (“exchange struggle”). Only rational capitalism is centered around the modern type of market (Weber [1922] 1978, 164–66). In socalled political capitalism the key to profit making is rather the state or the political power that grants some favor, supplies protection, or the like. Traditional commercial capitalism consists of small-scale trading, in money or merchandise. Rational capitalism has emerged only in the West.
Émile Durkheim
As compared to Weber, Émile Durkheim (1858– 1917) knew less economics, wrote less about economic topics, and in general made less of a contribution to economic sociology (e.g., Steiner 2004). While none of his major studies can be termed a work in economic sociology, all of them nonetheless touch on economic topics (see also Durkheim [1950] 1983). Durkheim also strongly supported the project of developing a sociologie économique by encouraging some of his students to specialize in this area and by routinely including a section on economic sociology in his journal L’année sociologique. At one point he gave the following definition of economic sociology:
Finally there are the economic institutions: institutions relating to the production of wealth (serfdom, tenant farming, corporate organization, production in factories, in mills, at home, and so on), institutions relating to exchange (commercial organization, markets, stock exchanges, and so on), institutions relating to distribution (rent, interest, salaries, and so on). They form the subject matter of economic sociology. (Durkheim [1909] 1978b, 80)
Durkheim’s first major work, The Division of Labor in Society (1893), has most direct relevance for economic sociology. Its core consists of the argument that social structure changes as society develops from its undifferentiated state, in primordial times, to a stage characterized by a complex division of labor, in modern times. Economists, Durkheim notes, view the division of labor exclusively as an economic phenomenon, and its gains in terms of efficiency. What he added was a sociological dimension of the division of labor—how it helps to integrate society by coordinating specialized activities.
As part of society’s evolution to a more advanced division of labor, the legal system changes.
From being predominantly repressive in nature, and having its center in penal law, it now becomes restitutive and has its center in contractual law. In discussing the contract, Durkheim also described as an illusion the belief, held by Herbert Spencer, that a society can function if all individuals simply follow their private interests and contract accordingly (Durkheim [1893] 1984, 152). Spencer also misunderstood the very nature of the contractual relationship. A contract does not work in situations where self-interest rules supreme, but only where there is a moral or regulative element. “The contract is not sufficient by itself, but is only possible because of the regulation of contracts, which is social in origin” (Durkheim [1893] 1984, 162).
A major concern in The Division of Labor in Society is that the recent economic advances in France may destroy society by letting loose individual greed to erode its moral fiber. This problematic is often cast in terms of the private versus the general interest, as when Durkheim notes that “subordination of the particular to the general interest is the very well-spring of all moral activity” ([1893] 1984, xliii). Unless the state or some other agency that articulates the general interest steps in to regulate economic life, the result will be “economic anomie,” a topic that Durkheim discusses in Suicide ([1897] 1951, 246ff., 259). People need rules and norms in their economic life, and they react negatively to anarchic situations.
In many of Durkheim’s works, one finds a sharp critique of economists; and it was Durkheim’s conviction in general that if economics was ever to become scientific, it would have to become a branch of sociology. He attacked the idea of homo economicus on the ground that it is impossible to separate out the economic element and disregard the rest of social life ([1888] 1978a, 49–50). The point is not that economists used an analytical or abstract approach, Durkheim emphasized, but that they had selected the wrong abstractions (1887, 39). Durkheim also attacked the nonempirical tendency of economics and the idea that one can figure out how the economy works through “a simple logical analysis” ([1895] 1964, 24). Durkheim referred to this as “the ideological tendency of economics” ([1895] 1964, 25).
Durkheim’s recipe for a harmonious industrial society is as follows: each industry should be organized into a number of corporations, in which the individuals will thrive because of the solidarity and warmth that comes from being a member of a group ([1893] 1984, lii). He was well aware of the rule that interest plays in economic life, and in The
Elementary Forms of Religious Life he stresses that “the principal incentive to economic activity has always been the private interest” ([1912] 1965, 390). This does not mean that economic life is purely self-interested and devoid of morality: “We remain [in our economic affairs] in relation with others; the habits, ideas and tendencies which education has impressed upon us and which ordinarily preside over our relations can never be totally absent” (390). But even if this is the case, the social element has another source other than the economy and will eventually be worn down if not renewed.
Georg Simmel
Simmel’s works typically lack references to economics as such. Simmel (1858–1918), like Durkheim, usually viewed economic phenomena within some larger, noneconomic setting. Nonetheless, his work still has relevance for economic sociology.
Much of Simmel’s most important study, Soziologie (1908), focuses on the analysis of interests. He suggested what a sociological interest analysis should look like and why it is indispensable to sociology. Two of his general propositions are that interests drive people to form social relations, and that it is only through these social relations that interests can be expressed:
Sociation is the form (realized in innumerable different ways) in which individuals grow together into a unity and within which their interests are realized. And it is on the basis of their interests—sensuous or ideal, momentary or lasting, conscious or unconscious, causal or teleological—that individuals form such units. (Simmel [1908] 1971, 24)
Another key proposition is that economic interests, like other interests, can take a number of different social expressions (26).
Soziologie also contains a number of suggestive analyses of economic phenomena, among them competition. In a chapter on the role of the number of actors in social life, Simmel suggests that competition can take the form of tertius gaudens (“the third who benefits”). In this situation, which involves three actors, actor A turns to advantage the fact that actors B and C are competing for A’s favor—to buy something, to sell something, or the like. Competition is consequently not seen as something that only concerns the competitors (actors B and C); it is in addition related to actor A, the target of the competition. Simmel also distinguishes competition from conflict. While a conflict typically means a confrontation between two ac-
Introduction 11
tors, competition rather implies parallel efforts, a circumstance in which society can benefit from the actions of both the actors. Instead of destroying your opponent, as in a conflict, in competition you try to do what your competitor does—but better.
Philosophy of Money (1900), Simmel’s second major sociological work, has always enjoyed a mixed reputation. Durkheim disapproved of it for its mix of genres, and according to Weber economists detested Simmel’s way of dealing with economic topics (e.g., Frisby 1978; Durkheim ([1902] 1980; Weber 1972). Simmel does mix philosophical reflections with sociological observations in an idiosyncratic manner, but Philosophy of Money has nonetheless much to give if it is read in its own frame. Simmel’s main point is that money and modernity belong together; in today’s society there does not exist one exclusive set of dominant values but rather a sense that everything is relative (cf. Poggi 1993). Simmel’s work also contains a myriad of insightful sociological reflections on the connections of money with authority, emotions, trust, and other phenomena. The value of money, Simmel observed, typically extends only as far as the authority that guarantees it (“the economic circle”; [1907] 1978, 179ff.). Money is also surrounded by various “economically important sentiments,” such as “hope and fear, desire and anxiety” ([1907] 1978, 171). And without trust, Simmel argues, society could simply not exist; and “in the same way, money transactions would collapse without trust” (179). In relation to money, trust consists of two elements. First, because something has happened before—for example, that people accept a certain type of money—it is likely to be repeated. Another part of trust, which has no basis in experience and which can be seen as a nonrational belief, Simmel calls “quasi-religious faith,” noting that it is present not only in money but also in credit.
After the Classics
Despite its foundation in the classics, economic sociology declined after 1920 and would not return to full vigor before the 1980s. Exactly why this happened is still not clear. One reason is probably that neither Weber nor Simmel had any disciples. Durkheim did, however, and the study of Marcel Mauss, The Gift (1925), should be singled out. It rests on the argument that a gift typically implies an obligation to reciprocate and should not be mistaken for a one-way act of generosity. The Gift also contains a number of interesting observa-