Mark Granovetter: institutions and economic activities
Professor of sociology at the American university of Stanford, Mark Granovetter is a leading figure of « new economic sociology ». The recent publication of one of his works, Society and Economy, offers an opportunity for presenting some of his most significant contributions to the analysis of economic activities.
« New economic sociology » has been developed since the 1980s by sociologists considering that the study of economic activities should draw on all the resources from social sciences, particularly by analyzing social networks. The intellectual project was initiated by a group of Harvard network analysts around Harrison White who had been developing a theorization of markets from networks of ties existing between organizations, providers and subcontractors.
Among these researchers, Mark Granovetter quickly emerged as a central reference with a remarkable thesis on labour market (1974), a major article on the strength of weak ties (1975), and, above all, with an article, published in 1985, on the way all economic activities are embedded in social structures. It had a considerable influence on social sciences as a whole and Mark Granovetter came to be regarded as the founder of modern economic sociology.
Social networks as the intermediate level of the social world
In his article about embeddedness, he argues against mainstream individualistic theories as well as against « institutional » economics or the theory of transaction cost developed by sociologists associated with Harrison White at that time: « [Individual] actors do not behave or decide as atoms outside a social context, nor do they adhere slavishly to a script written for them by the particular intersection of social categories that they happen to occupy. Their attempts at purposive action are instead embedded in concrete, ongoing systems of social relations ». These key sentences were taken up again word for word 32 years later in his latest work, Society and Economy.
This position does not solely concern theories of economic activities, it actually applies to social sciences as a whole. It consists in both challenging individualistic and « holistic » approaches, the latter inferring individual behaviours from a global conception of the social world. To these two approaches, Mark Granovetter, like most of social network specialists, objects the level of interpersonal relations and of their networks, which, according to him, are the social structure of intermediate level connecting individual action to more macrosocial structures.
He has been writing a lot since 1985, explored the early stages of electricity industry in the United States, the functioning of Silicon Valley and many other subjects. But, as early as the 1990s, he had mentioned his project of Society and Economy whose title purposely reverse the words of the German sociologist Max Weber’s classical work. More than twenty years later, the theoretical part of the work was published in 2017, a sequel developing more empirical case studies is expected.
Society and economy
In the introduction, the author insists that his project goes beyond economic sociology alone: « I hope to contribute to an understanding of the economy in a way that transcends disciplinary boundaries and thus has little concern about the intellectual origin of useful ideas ». He distinguishes three economic levels to be explained: individual economic action; patterns of action beyond the realm of individuals; economic institutions.
Social networks connect these three levels: « I will try to understand how micro and macro levels of analysis are connected and how what some have called a « meso » level of analysis is critical in understanding the dynamics of such relationships. It is only because of the criticality of this middle level of analysis that « social networks » occupy at times a pivotal role in my argument. I want to emphasize that they are not a privileged causal concept and by themselves have only modest explanatory value in most situations ». Therefore, networks are not a « last instance », they connect micro and macro levels.
The next three chapters deal with those aspects which the author considers as significant for understanding economic activities (mental constructs, trust and power) before devoting the two final chapters to the central issue of institutions.
After furthering his analysis from the individual level to the level of small groups and self-contained communities, the two final chapters of the book deal with institutions defined as « sets of persistent patterns defining how some specified collection of social actions are and should be carried out ». The word « pattern » is broad enough to include formal rules (law, for example) as well as more implicit norms.
Going back to his discipline, he recalls that « Sociology as a discipline (…) emphasizes all the major aspects of social life, economic, political, social, religious/ideological and others and assumes that no one such aspects has causal priority (…) any such claim of priority (….) [would forgo] the intellectual and analytical flexibility needed to explain social life. Institutions that impinge on the economy are invariably more than purely economic ».
While exploring the various ways of defining institutions, he alludes to Luc Boltanski and Laurent Thévenot, already mentioned in previous chapters, and whose work he seems rather close to. Nevertheless, he refuses to define types of institutions or standard criteria as the latter had done with their six « cities » : « In given contexts, we can see empirically what set of activities cluster together and can take that as a starting point for analysis. This is not merely an ad hoc criterion but corresponds to my preference for a pragmatist view of human action that sees people as problem solvers who are not wedded to a particular set of institutional logics ».
After discussing the various definitions of institutions and presenting his own empiricist conception, he finally addresses the question of the link between these institutions and individual action. According to him, individuals choose between the different institutions actually available in real-life situations, « institutional realms are intertwined, and actors are not infinitely clever in imagining abstract solutions, but gravitate instead to patterns familiar from other arenas of their lives. So, innovation and invention rarely arise de novo, but are built instead with materials that already exist ».
Drawing from a few examples, among which that of electricity industry, he presents a pattern of action which is constrained by configurations which provide a restricted set of rather equivalent possibilities, leading actors to rely on their resources and networks to choose one of them: « How (…) can we find a position that balances the need to accommodate problem-solving action (in the pragmatist tradition) and not overestimate the coherence of institutions (…)? I argue the way to thread this needle is to analyse for a country or region what the likely alternative frames or « logics » are that actors are likely to choose along in organizing economic activity and that seem conceptually available, determine the extent to which they are separate and autonomous from one another or overlap, explain how this particular range or « menu » of options arose, and theorize the process by which actors assemble solutions for the economic problems they face from among these available materials — that is, to understand what in the social and economic environment keys actors into the frame and logics that they do use ».
But this does not mean giving in to some kind of radical historicism: « there is a danger of theorizing such menus, which is that of falling into historicism, where every case is unique and anything can happen. To avoid this requires us to explain where and why institutional menus originate ».
Social Sciences of economic activities
In this book, Mark Granovetter is developing ideas that he has long advocated, with further explanations and additions, particularly about institutions, and the presentation of a framework that should prove extremely valuable to all those who carry out research work on economic activities.
This brief account focuses on the issue of institutions as the latter seemingly represents a step forward compared to the author’s previous works. Institutions come out as emerging, more or less stabilized and enduring constructs, integrating the effects of multiple actions (among which, of course, that of political bodies) and which contribute to aligning economic activities. The latter cannot be understood without these framing effects which imply accounting for social structures and for their historical construct.
It gives us the broad outlines of what could be a social science of economic activities that would not be restricted to economic theories, but would integrate contributions from sociology, history and from the other sciences of human activities.
Crédits images en CC : Pixabay Clker-Free-Vector-Images, Mondes Sociaux, Thenounproject Bence Bezeredy, Wikimedia Commons Martin Grandjean, Patrick Mignard pour Mondes Sociaux