Economy and Society
Economy and Society
The economy and cultural factors
The economy and solidary groupings
Role differentiation and stratification
The economy and political factors
The discipline of economics commonly focuses on only one aspect of social life—how people employ scarce resources to produce, distribute, and exchange goods and services for consumption. Economists acknowledge that there are other aspects—political, legal, educational, for instance— and that these aspects influence economic life significantly. However, they usually assume that, for purposes of economic analysis, these influences are constant and thus do not modify economic processes; or, as it is often put, tastes and institutions are “given.” By thus limiting the number of variables they study, economists have been able to advance their science, but they have also greatly oversimplified the relations between economic and other types of social variables.
The field of economic sociology relaxes, as it were, these stringent assumptions about the relations between economic and other types of social variables and explicitly focuses on explaining variations in the ways these different types of variables impinge on one another. For example, in studying wages the economist concentrates mainly on the features of the market that influence and are influenced by wage levels, whereas the sociologist inquires into a wider range of causes and consequences. If management, for instance, persistently tinkers with wage levels, the sociologist may find out that this strengthens informal cliques of workmen and inclines them to subvert the authority of management; or it may foster the formation of a labor union or excite activity on the part of an existing one. Both these social consequences may then themselves “feed back” and influence the level of wages.
Economic sociology. The relations between economic and other social variables may be studied at three levels. At the most concrete level, the economic sociologist applies the standard tools of sociology to the study of roles and organizations that specialize in economic activities. He may, for example, study the sources of recruitment, career patterns, life styles, and role strains of skilled workers in an industrial firm; or he may study the organization of the firm itself, analyzing the status systems, power and authority relations, patterns of deviance, cliques and coalitions, and the relations among these phenomena.
At the second level, the economic sociologist analyzes the relations between economic structures and other structures. The work of Max Weber, especially, exemplifies this level of analysis. In particular, Weber was preoccupied with the conditions under which industrial capitalism of the modern Western type could arise and flourish. Initially, he was careful to distinguish between industrial capitalism and other forms, such as finance capitalism and colonial capitalism; industrial capitalism refers to the systematic and rational organization of production itself. Having identified industrial capitalism, Weber sought to identify the historical conditions most conducive to its rise and continuing existence. One of his most famous arguments is that the rise of ascetic Protestantism, especially Calvinism, established social and psychological conditions conducive to this particular form of capitalism (1904–1905). Another well-known argument developed by Weber is that bureaucracy provides the most rational form of social organization for perpetuating industrial capitalism (1922). He also found in the political-legal complex, especially in property laws and monetary systems, many other institutional structures conducive to industrial capitalism.
Weber never developed his economic sociology into a full theoretical system. Rather, he remained at the level of generating historical insights about the pattern of institutional structures surrounding important economic phenomena. Even so, it is possible to see his distinctive contribution to economic sociology. Unlike traditional economists, Weber was not interested in the regularities produced within the capitalist system of production (regularities such as the business cycle); instead, he was interested in establishing the important institutional conditions under which capitalist systems —and their regularities—came into being.
At the third, most abstract, level the economic sociologist considers the economic and other types of social variables as organized into analytic systems, which cut across concrete social structures, and he studies the relations among these systems. This approach is exemplified in the works of Talcott Parsons and Neil J. Smelser (see Parsons 1937; Parsons & Smelser 1956; Smelser 1963). The economic system, for example, consists of suppliers of factors of production, producers, and consumers, none of which should be identified with any particular social structure but all of which can be viewed, at this abstract level, as interacting with one another in a network of markets. Furthermore, the economic system interacts with other social systems. For example, the economy provides wage payments and consumer goods and services in exchange for the motivation and skills, so necessary for a viable labor force, that are generated by the “pattern-maintenance” social system, which includes familial, educational, and specialized-training structures.
The economy and cultural factors
By culture is meant that complex of existential and evaluational symbols which provide meaning and legitimacy to the conduct of social life. Concrete cultural items are cosmologies, values, ideologies, aesthetic productions, and scientific knowledge. The economic sociologist is concerned with the ways in which these symbols facilitate or inhibit various types of economic activity and the ways in which economic behavior leads to modifications of cultural symbols.
Little research has been conducted on the role of cultural factors within economic organizations. What has been done focuses mainly on problems of effective communication. One of the persistent problems of bureaucracies, for example, is the disruption that occurs when necessary information is altogether lacking, withheld, distorted in passage, or too slow in arriving. Numerous studies of industrial bureaucracy have uncovered typical points of distortion and omission: subordinates “cover up” information they do not wish their superiors to know, and foremen “soften” orders from above out of sympathy with workmen. [SeeOrganizations, article onorganizational intelligence.]
Stimulated mainly by the Marxian and Weberian traditions, sociologists have conducted a more substantial amount of research on the relations between economic organization and cultural symbols. Some research, such as that of Robert N. Bellah on Tokugawa Japan (1957), focuses directly on Weber’s problem concerning the ways in which religious beliefs stimulate or inhibit economic development. Other scholars have inquired into the relations between ideologies and economic activity. The most thorough study of ideologies as instruments of social control in industry is the comparative research of Reinhard Bendix (1956) on managerial ideologies as they have developed in four industrializing countries—Great Britain, the United States, Russia, and East Germany. Bendix’s main concern is with the justifications that managerial classes have generated in the process of inducing workers to submit to their authority. The effects of ideology in relieving role-strains are emphasized in a study of the American business creed by Francis Sutton and his associates (1956). These investigators attribute the tenacity of the free-enterprise ideology among businessmen to strains in their roles: for example, their own ambivalence toward the phenomenon of bigness in the American economy is smoothed over by a defiant reassertion of the values of traditional free enterprise. Ely Chinoy’s study of automobile workers (1955) also stresses the frustration-reducing elements of ideology, which often serves to rationalize the discrepancies between the expectations generated by the “American dream” of equality of opportunity and the actual life situations of the workers.
The economy and solidary groupings
Solidary groupings include families, friendship groups, and diffuse collectivities, such as neighborhood, racial, and ethnic groupings. Solidary groupings, which occupy an important place in the integrative system of society, are typically characterized by face-to-face interaction and close personal understandings and loyalties among members. The economic sociologist asks how these groupings influence, and are influenced by, economic behavior.
Industrial sociology
Recognition of the importance of solidary groupings within industrial organizations is closely associated with the rise of the “human-relations” approach in industrial sociology during the interwar period. Before the rise of this school, industrial sociology in the United States was mainly under the influence of the “scientific-management” approach associated with the name of Frederick W. Taylor. According to this approach, workers in industrial organizations can be treated primarily as isolated neurophysiological organisms with definite capacities and skills; their efficiency, moreover, is largely a product of such factors as speed of work, amount of effort expended, and amount of rest allowed for recovery of strength. The scientific-management school more or less ignored the social-psychological determinants of morale and efficiency.
In the mid-1920s, when the famous Hawthorne experiments on productivity began in the Western Electric Company in Chicago, the initial emphasis was on the effects of various nonsocial factors (lighting and rest periods, for example) on worker performance. During the course of the experiments, however, it became apparent to the investigators that these “physical” factors were not nearly so important in fostering high morale and productivity as various “human” factors, such as receiving status, being accepted in a meaningful primary group, and being allowed to express grievances to a patient and responsive authority. The investigators, in short, isolated the solidary grouping as a determinant of economic behavior (see Roethlisberger & Dickson 1939). Further experiments conducted in the Bank Wiring Room revealed that cliques of workmen could also affect productivity adversely by setting and enforcing their own informal standards of production rates, which were different from those established by management. These kinds of findings have given rise to a whole tradition of research on the diverse relations between the formal and informal organizations within a bureaucracy and on how these relations affect organizational functioning. [SeeOrganizations, article Ontheories of organizations.]
Family structure
Most research on the relations between economic organization and solidary groupings concerns the ways in which certain kinds of family structure may facilitate or inhibit economic activity. For example, primogeniture may facilitate the formation of an urban-industrial labor force, since this type of inheritance system ejects younger sons from the land and makes them possible candidates for other lines of employment; thus, research by Conrad M. Arensberg and Solon T. Kimball (1940) found that younger sons constituted many of the migrants in rural Ireland. On the other hand, certain types of family life may inhibit economic activity. David Landes (1951) has argued that the peculiar structure of the French business family has kept the typical firm small and has thus inhibited economic growth. In his study of the Chinese family (1949), Marion J. Levy isolated the factors of particularism, favoritism, and functional diffuseness as features of classical Chinese kinship that tended to inhibit industrialization.
With respect to the influence of urban-industrial life on the family, most research in the interwar period—for example, the work of Ernest W. Burgess and Harvey J. Locke (see Burgess et al. 1945) —was based on the assumption that urbanization and industrialization lead to the isolation and disintegration of the family. More recent research has challenged or modified this thesis. Talcott Parsons has argued that the urban-industrial complex does not cause the family to deteriorate but rather gives rise to a more highly specialized, and in some ways more effective, family system (Parsons et al. 1955). In a massively documented study, William J. Goode (1963) has attempted to demonstrate and explain the fact that the conjugal nuclear family is the more-or-less universal concomitant of modernization.
Studies of consumption
In one respect the economists’ traditional concern with personal consumption reflects a preoccupation with the relations between solidary groupings and the economy, since this type of consumption commonly refers to the demands made by the household sector on the production sector. Throughout most of the history of economic thought, scholars have postulated some rather simple psychological principles that are assumed to govern consumers’ behavior—principles such as the hedonistic calculus, diminishing marginal utility, or indifference-curve maps. Manifestly, however, as the work of Thorstein Veblen has so well demonstrated, social position and attitudes directly affect tastes and, by implication, make for variation in individual and aggregate consumption functions (Veblen 1899). In recent decades economists and sociologists have attempted to mobilize a number of social and psychological variables to explain differential consumption and saving patterns. James Duesenberry, for example, formally incorporates a principle of imitative spending into his theory of consumer behavior (1949). Milton Friedman posits age and composition of family as determinants of tastes, which in turn affect the consumption function (1957). George Katona, using the survey method, has undertaken to study consumer attitudes extensively and to predict consumer behavior from these attitudes (1951; 1960). Finally, sociologists and economists have produced a plethora of empirical studies showing how social-structural variables such as age, stage in family cycle, race, home-ownership status, and degree of urbanization determine spending and saving patterns. On the whole, these efforts have not produced a formally adequate theory of consumption that systematically incorporates social-structural variables. The closest approximation to such a theory is found in the work of Guy H. Orcutt and his associates (1961), who have introduced variables such as marital status and duration of marriage, as well as age, education, and race of head of household, into probability models of spending and saving behavior.
Role differentiation and stratification
From at least the time of Adam Smith, who paid particular attention to the division of labor as a determinant of the wealth of a nation, economists have recognized the importance of role differentiation in economic life. By and large, however, their concern has been restricted to the relations between the specialization of labor and economic variables, such as productivity, wage differentials, the distribution of the shares of income, and selected aspects of labor—management relations. Sociologists have introduced more and different kinds of variables into the analysis of occupations and, in particular, have focused explicitly on the organization of differentiated roles into stratified systems.
Economists’ versions of the attitudes and behavior of individuals in occupational roles generally follow the logic of supply and demand. They assume that the amount of work a person offers in the market is some function of the economic rewards available to him. While a number of different labor-supply functions have been advanced, most of these ignore the effects on the worker of social factors other than economic incentives. By contrast, sociologists conceive of roles (including occupational roles) as organized clusters of activities involving interaction with the physical, social, and cultural environments. These activities are structured and regulated by values, norms, and sanctions. Economic rewards and deprivations are important, but they constitute only one of several types of sanctions. Roles, furthermore, are subject to a number of types of strains, reactions to which influence the incumbent’s attitudes and behavior. In analyzing the foreman’s role in industry, for example, sociologists have discovered that his role is subject to considerable strains because it has been emasculated in past decades in two important ways: first, centralized management of control has made him less an independent authority over production and more an implementor of ready-made decisions; second, the centralization of the handling of grievances in the unions has relieved him of certain “human-relations” functions. The foreman, caught in a role that is simultaneously limited in function and beset by cross-pressures, often wavers between identification with management, with workers, and with other foremen (Leiter 1948). Contemporary sociological research has yielded similar types of descriptions and analyses of behavior in executive, professional, worker, and miscellaneous service roles.
Above and beyond wage conditions and level of prosperity, which are perhaps the most important determinants, economists and sociologists have un-covered a number of variables that influence labor turnover and absenteeism (for example, see Parnes 1954). Social factors influencing turnover are occupation (the average turnover of teachers, for instance, is much lower than that of factory workers); age (older workers tend to change jobs less often than younger workers); sex (women move in and out of the labor force more than men but probably do not move geographically and occupationally so much); and race (Negro men tend to change jobs more often than white men). Some of the conditions that affect absenteeism, besides wages, are distance of residence from plant; size of firm (which is undoubtedly related to morale); occurrence of holidays (absenteeism drops just before holidays); age (young men display absenteeism more than old); marital status (single men are absent more than married men); and arduousness of work (which encourages absenteeism). [SeeLabor Force, article onmarkets and mobility.]
Stratification systems
Much of the sociological research on role differentiation within economic organizations has concerned the relations between formal and informal organization (reviewed above). In addition, sociologists have studied status systems of industrial organizations and their relations to behavior. As a general rule, status in an organization is determined by the degree of skill, the level of authority and responsibility, and the level of remuneration of an occupational position. however, additional criteria that are imported from “outside” the workplace, such as age, sex, and racial or ethnic background, affect the status of the individual in the organization.
Because of the multiplicity of determinants of general status, individuals in organizations frequently experience a sense of ambiguity as to their actual status (Homans 1953). This leads to a focus on the symbolic aspects of status, such as the number of telephones or amount of floor space per office. Many conflicts in organizations revolve around the distribution of symbols rather than the distribution of the determinants of status underlying these symbols. Another characteristic of industrial organizations that arises from the multiplicity of determinants of status is the tendency toward “status crystallization”—that is, bringing all aspects of status roughly into line with one another. If an individual is paid much for performing a low-skill job, for example, dissatisfactions both for him and his fellow workers, as well as pressures to balance wage and skill levels, arise. This tendency for all aspects of status to be brought into line underlies many conflicts in industrial settings: for example, opposition to promoting a young executive too rapidly for his age and experience, to placing women in positions of authority, and to elevating Negroes to high-level jobs.
With respect to the relations between economic systems and stratification systems, two strands of research dominate the contemporary scene. The first, stemming from the Marxian tradition, concerns the degree to which specific types of economic systems appear to give rise to distinctive types of stratification systems. Alex Inkeles and Peter Rossi (1956), for instance, found that in a number of industrialized nations, occupations associated with industrial production (engineer, foreman, machine worker, etc.) were assigned very similar positions in the general prestige hierarchy of occupations. The second strand of research, stemming perhaps from an ideological preoccupation with equality of opportunity, concerns the degree to which rates of upward social mobility increase or decrease in industrial society. Basing their case on extensive comparative data, Seymour M. Lipset and Reinhard Bendix (1959) argued that rates of social mobility are very similar in all the industrial societies of the West and that these similarities are traceable to common features of the occupational structures of these societies. Additional research, the most conspicuous of which is the work of Natalie Rogoff (for example, 1953), concerns the degree to which opportunities for upward mobility are “closing” under conditions of advanced industrial development in the United States.
The economy and political factors
The term “political” here refers to the creation, institutionalization, and utilization of power in a social setting. Defined this broadly, the term encompasses the study of authority systems in organizations, the study of governments, and the study of competition and conflict among groups. The economic sociologist is concerned with studying the mutual relations between economic activities and these diverse political phenomena.
Most studies of authority systems within industrial firms involve the relations between the types of supervision (typically described in terms of an authoritarian-democratic dimension) and worker morale, productivity, and receptivity to innovations. The most common finding is that worker morale and productivity are higher under “employee-centered” leadership than under leadership oriented to technical standards of efficiency (Viteles 1953). Most of the experiments and field studies on supervision have been carried out in countries with democratic traditions, especially the United States and Great Britain; obviously, studies of societies with different political traditions might show different results.
Research on the political relations between economic organizations and other social units has advanced on a variety of fronts. Under the heading of “the economics of imperfect competition,” economists have studied a variety of political involvements of business firms: ways in which large firms are able to control, and perhaps dominate, prices and output under monopolistic conditions; ways in which wealth and power become concentrated in the economy; and ways in which government policies (e.g., antitrust policies) influence the structure and behavior of firms (for example, Mason 1959). Economists and sociologists have devoted a modest amount of research to the power relations between stockholders and managers and between consumers and business firms, but far more research has been done on the power relations and conflicts between business firms and labor unions. In particular, scholars have devoted much study to the causes of labor disputes (see Korn-hauser et al. 1954; Knowles 1952). Some causes have been fairly well established: strikes occur more frequently under conditions of prosperity, more frequently in isolated industries with homogeneous worker populations, and less frequently under totalitarian governments and in periods of national crisis.
Finally, much contemporary research and discussion focuses on the relations between business and government. This research is shrouded in ideological controversy and confused findings. One school of thought, advanced by the late C. Wright Mills (1956), argues that national political power in the United States has become increasingly concentrated in recent decades and that the holders of power and makers of important decisions are a small group of corporate executives and military officials; this view, however, has been challenged on both methodological and substantive grounds. The empirical research on economic controls over local politics also shows a mixed picture. For example, in a study of a Southern community, Floyd Hunter (1953) concluded that the major decisions were guided by a small group of economically dominant individuals. Other research—for example, that of Delbert Miller (1958) and Robert Schulze (1958)—indicates that the degree to which business groups dominate local politics varies considerably from community to community and over time.
Neil J. Smelser
[Directly related are the entriesEconomic Thought; Industrial relations; Industrialization; Systems Analysis, article onsocial systems. Other relevant material may be found inConsumers; Economy, dual; Peasantry; and in the biographies ofBarnard; Durkheim; Keynes, John Maynard; Le Play; Marshall; Marx; Pareto; Smith, Adam; Sombart; Weber, Max.]
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