ECONOMIC SOCIOLOGY Theory: Theories be construed as propounded abstract structures serving as models for sets of interpreted sentences that

constitute the linguistic formulations . Theories are formulated to characterize a class of phenomena known as the intended scope of the theory. The theory does not attempt to characterize the phenomena in all their complexity, but only attempts to do so in terms of a few parameters abstracted from the phenomena. In fact, however, other unselected parameters usually do influence the phenomena; so the theory does not characterize the actual phenomena, but rather characterizes the contribution of the selected parameters to the actual phenomena, describing what the phenomena would have been had the abstracted parameters been the only parameter influencing them. In effect, then, what the theory does is directly describe the behaviour of abstract systems whose behaviour depends only on the selected parameters. Such system are thus an abstract replica of phenomena on which certain idealised conditions are imposed, which actual phenomena cannot ever met. In such cases, the systems still are characterization of what the phenomena would be were certain conditions met. (The Semantic Conception of Theories and Scientific Realism; P-83, G-book.)

Law: Laws are just relations which determine temporal simple orderings of state occurrence of systems. Laws are relations which determine possible sequences of state occurrences over time that a system within the laws intended scope may assume. Laws often are component of scientific theories. Both scientific laws and scientific theories are produced from the scientific method through the formation and testing of hypotheses, and can predict the behavior of the natural world. Both are typically well-supported by observations and/or experimental evidence. However, scientific laws are descriptive accounts of how nature will behave under certain conditions. Scientific theories are broader in scope, and give overarching explanations of how nature works and why it exhibits certain characteristics. Theories are supported by evidence from many different sources, and may contain one or several laws. A common misconception is that scientific theories are rudimentary ideas that will eventually graduate into scientific laws when enough data and evidence has been

accumulated. A theory does not change into a scientific law with the accumulation of new or better evidence. A theory will always remain a theory; a law will always remain a law. Theories and laws are also distinct from hypotheses. Unlike hypotheses, theories and laws may be simply referred to as scientific fact. Naturalism- The belief that all phenomena are covered by laws of science , and that all teleological explanations are therefore without value.

Teleology-the doctrine that phenomena are guided not only by mechanical forces but that they also move toward certain goals of self-realization. A thing, process, or action is teleological when it is for the sake of an end, i.e., a telos or final cause. In general, it may be said that there are two types of final causes, which may be called intrinsic finality and extrinsic finality.

A thing or action has an extrinsic finality when it is for the sake of something external to itself. In a way, people exhibit extrinsic finality when they seek the happiness of a child. If the external thing had not existed that action would not display finality. A thing or action has an intrinsic finality when it is for none other than its own sake. For example, one might try to be happy simply for the sake of being happy, and not for the sake of anything outside of that.

Empiricism in essence holds that genuine knowledge of the external world must be grounded in experience and observation.

Positivism- a strong form of empiricism, esp as established in the philosophical system of Auguste Comte, that rejects metaphysics and theology as seeking knowledge beyond the scope of experience, and holds that experimental investigation and observation are the only sources of substantial knowledge.

Metaphysics

(Phylosophical study of being and knowing)

Ontology
(The branch of metaphysics that studies the nature of existence or being as such.)

Cosmology
(The branch of philosophy dealing with the origin and general structure of the universe.)

Epistemology
(A branch of philosophy that investigates the origin, nature, methods, and limits of human knowledge.

Economic Sociology involves a body of study and research aimed at establishing the links between economic and social phenomena.

Institution: One can define institutions as a set of social norms which orient and regulate behaviour and which are based on sanctions which seek to guarantee compliance on the part of individuals.

Norm-a principle of right action binding upon the members of a group and serving to guide, control, or regulate proper and acceptable behaviour.

These sanctions can be either positive, in the sense that they encourage a certain kind of behaviour through approval or material incentives, or they can be negative, tending to prevent a certain type of action. And again, they can be informal when they are based on the disapproval of others, or they can be formal, as when they are established by the law (in this case one can speak more specifically about legal rules). For example, in economic behaviour, there may be ethical standards in business which are based only on social approval in a certain environment, or else there may be norms which are based on formal sanctions (those of civil and labour law) which regulate the market exchange of goods and capital, or of labour. Other kinds of norms no less important define the aims of the actors rather than the ways in which they are pursued, as illustrated in the previous examples. In other words, they can involve the way in which labour is conceived or, more generally, the commitment to economic activities as opposed to those in other areas of activity, e.g. military activity (in traditional societies) or leisure and consumption (in contemporary societies).

These distinctions will be discussed in greater detail further on; at this point it is simply useful to note that the concept of institution refers in sociological language to a set of phenomena which is usually wider than everyday usage would suggest. In common language, when one talks about institutions, one is usually referring to public institutions (parliament or government) or judicial or military institutions. The term institution may also sometimes be used to indicate the concrete collectivities that institutions regulate; for example firms, unions or business organizations. However, the sociological meaning of institution is wider because it includes the

system of rules on which these collectivities are based and which make possible their functioning for example, the norms which regulate the right to property and labor relations. It is therefore useful to keep the concept of institution distinct from that of organization, using the latter term to indicate the concrete collectivities which co-ordinate a set of human and material resources to achieve a certain end (examples of economic organizations are firms, unions, chambers of commerce, etc.). While organizations may be actors, institutions cannot.

By examining institutions, one may create a bridge between economy and society. Economic phenomena are situated in a historical context in a specific period of time and in a particular territory. Thus, one can evaluate how economic behaviour and structures that is, the set of stable relationships between a specified set of actors are affected by the institutional context, and how they affect it in turn . This does not mean that individual choice does not count, but that it does not take place in a void, that it is socially oriented and may take place within wider or narrower margins depending on the type of society. Therefore, economic sociology does not study the economy in general, but instead analyses specific economic systems, for example, capitalist economies, feudal economies, the economies of primitive societies, and so on, together with the specific characteristics that these take on in particular cases. The concept of economic system is crucially important in this perspective; it tends to underline the different ways, over space and time, in which institutions orient and regulate economic activities.

2 Economic Sociology: Schumpeter and Weber The difference of perspective between economics Economic Sociology also emerges in a famous definition by Joseph Schumpeter, an economist who was very sensitive to relations between economics and social analysis. Schumpeter (1954) attributed to economic sociology the task of explaining how people came to behave as they do. Economic Sociology thus focuses its attention to institutional issues and historical and evolutionary phenomena. Schumpeter specified that actions must be related to the institutions which affect economic behaviour, such as the state or private property and contracts. For its part, economics deals with the questions how people behave at any time and what the economic effects are.

This distinction is useful in clarifying the research perspectives of the two disciplines in the sense that has already been discussed. However, it requires further specification and qualification. First, it should not be used too rigidly. A sociologist or an economic historian who wishes to evaluate how a particular country has developed will tend to consider both economic variables such as the availability of capital and labor and non-economic variables such as political and sociocultural structures together. Moreover, it is clear that an economist who seeks to bring his analysis closer to empirical reality will have to consider the role of institutions whether explicitly or implicitly to improve his hypotheses. For example, it is difficult to study the labour market in contemporary capitalist societies without taking the role of unions into account.

The Economic Sociologist should not simply limit his enquiry to the influence of the institutional context on the economy, as the previous definition might seem to suggest. As we have already noted, he/she would examine causal relations running in the opposite direction, taking an interest in the social, political, and cultural consequences of economic development. The bi-directionality of research from society to economy and vice versa should not be presented simply as an extension of the field of analysis, but as having its own intrinsic motivation.

Max Weber, who made a crucial contribution to the scientific agenda of economic sociology, highlights the bi-directionality of sociological research on the economy very clearly. For him, a socialeconomic science was in substance a science of the relations of interdependence between economic and social phenomena. While economics above all involves the technicaleconomic problems of prices formation and markets in the modern exchange economy, the main aim of economic sociology is to shed light on economically relevant and economically conditioned phenomena. The economically relevant phenomena concern the influence of noneconomic institutions, such as religious or political institutions, on the functioning of the economy; the economically conditioned phenomena illustrate how not only political orientations, but also aspects of social life which might seem very far removed from economic issues, such as aesthetic or religious phenomena, are in fact influenced by economic factors.

Another aspect of the Weberian approach also needs to be recalled. The study of issues which are economically conditioned or economically relevant leads as in all sciences to the search for regularities and causal links between the phenomena under investigation. Weber believed that this tendency in sociology should under no circumstances lead to a search for general laws that would establish causal links between economic and non-economic features of social life beyond a specific context. 4 The Scientific Status of Economic Sociology (Page-17/295) There is wide consensus that the search for general laws connecting phenomena is an essential objective of scientific activity. As we have seen however, Weber held that this aim was impracticable when he outlined the scientific agenda of the discipline. We may confront this question directly by examining the problems that a monist perspective on scientific activity faces when applied to social phenomena.

According to the monist viewpoint, there are no qualitative differences between the natural and social sciences. Four unifying points can be identified within this perspective: (a) there is only one scientific method, based on the formulation of hypotheses and empirical testing; (b) conceptual activity seeks to develop causal explanations of the phenomena, that is, to set out the conditions under which it is likely that a certain event will take place; (c) scientific activity is nomological: it tends, over time, and through the increase in knowledge, to formulate general laws; (d) the differences in the respective objects of the physical and natural sciences on the one hand, and the social sciences on the other, only involve particular technical problems. Thus, if it is easier or more common to identify regularities in natural than social phenomena, this implies only that observation is more difficult in the social sciences; certainly, it is more difficult to apply the experimental method. This explains why the social sciences lag behind the natural sciences, although it is possible to catch up over time through accumulating knowledge. The more controversial points here are (c) and (d). Let us address them through examining Raymond Boudons reasoning (1984), as elucidated in several examples

that he lays out, which I have simplified for the purposes of exposition. The first comes from economic theory. It predicts that if the price of a product rises (A), the demand for that product will fall (B). As can be seen, this is a classic example of law in the sense of (c), i.e. it is a good example of a conditional law of the type every time a certain phenomenon A occurs, another phenomenon B will follow. However, it is also easy to discern that the validity of this law is linked to certain conditions, K, when we limit ourselves to the same product. We must suppose that product P is substitutable with another, Q, with the same characteristics but less expensive than P, and that it is equally familiar to consumers. In a situation of this kind there is a high probability that the consumer will move his demand towards the less expensive product. The aggregate effect of individual decisions of this kind will in turn lead to an overall fall in the demand for P.

Individual choices are not always so easy nor are the aggregate effects always so clearly cut. In fact, the opposite is more often true. We can also hypothesize that product Q is not as well-known as P; that although it might be as well-known, it does not have the same characteristics; that Q does not exist and that P is therefore the only product available on the market. In each of these cases we successively increase the margins of uncertainty for individual choice. One must evaluate whether it is better to spend more on the old product, or whether one can save a bit of money but lose a little in terms of quality, or whether one may continue buying P. But this process of evaluation brings the criteria of choice which are called preferences in economics and normative orientations in sociology to centre stage.

Let us turn to a second, more sociological example, also suggested by Boudon. Linking economic and social phenomena may lead one to formulate a law as follows: if economic conditions deteriorate (A), collective violence (revolts, unrest, strikes, etc.) will increase (B). Historical and empirical research does not in fact support this relationship, at least not on such a general level. This helps us to understand how difficult it is to formulate laws for society which are similar to those of the natural sciences. In other words, one can claim that a uniform deterioration in living conditions does not determine a parallel willingness to participate in forms of collective discontent. This choice is influenced by the resources available and the normative orientations of actors, which, in their turn, will condition the degree to

which they are prepared to tolerate a worsening of living conditions, and the extent to which they perceive collective violence as legitimate.

However, even supposing that these factors increase individual willingness, they do not necessarily lead to an immediate collective effect. For this to occur other conditions must be taken into account too for example, the availability of leaders to organize the protest. For their part, the potential organizers will evaluate the chances of success and will consequently be influenced by the prevailing institutional arrangements (for example, whether there is a right to demonstrate, or, where there is not, the strength of the police, etc.). In sum, it is not possible to establish a general causal connection between a worsening of economic conditions and collective violence. These simple examples demonstrate the difficulty of formulating laws of the type if A, then B in the study of social phenomena. Two points emerge i n particular: the complexity of the conditions which influence action and the importance of actors normative orientations. The latter may enormously complicate the set of factors which must be taken into consideration when formulating conditional laws because they introduce a strong degree of variability. They may in fact change in space and time according to the context in which they are formed. In such a situation it is still possible to formulate general laws but as we have seen in the first example these need to be based on restrictive conditions and this clearly limits their empirical applicability.

A path of this type is frequently followed by economics. The tendency of the discipline is to overlook the role of institutions and their influence on individual action, instead searching for ideal situations in which choice is objectively rational in which, that is, any individual would be likely to react in the same way (in the above example this would be to cease consuming product P).

For its part, economic sociology attaches more importance to the institutional forms of the economy in determining individual behaviour. This gives rise to a more complex and variable picture of the actor, whose motivations can no longer be

reducible to simple utilitarian orientations. The scope of generalization is more limited and confined to more strictly defined spatial and temporal boundaries. The scientific status of economic sociology and of the social sciences in general is however based on a conception that is different from that of both monism and dualism. The application of the scientific method, based on the verification of hypotheses, does not necessarily require the formulation of general laws. Indeed, this is not the aim of the social sciences; they instead aspire to the formulation of models. While laws are expected to be generally applicable, models are ideal reconstructions of specific situations, defined by particular conditions limiting their validity in space and time. They are elaborated on the basis of a historicalempirical situation, but do not treat it exhaustively. Instead, they serve to interpret it. While Boudon called this approach to the social sciences formal theory, recalling Simmel, it also comes close to Webers ideal types. Weber proposed these last in a methodological debate where he sought to set out a scientific programme for economic sociology, envisaging a specific space for research that would break free of the limits of historicism and positivism.

This discussion should by now have made clear the most fundamental factor limiting the possibility for deriving general laws from social phenomena. It is necessary to take account of the normative orientations of actors, which may vary over time and space, in order to reconstruct their aggregate effects. This view can be defined as methodological individualism, insofar as it attempts to explain social phenomena from the starting point of individual motivations. It should however be noted that, despite these variants, methodological individualism can be contrasted as a whole with collectivism, or better, with methodological holism. The latter is more typical of those monistic approaches that seek their inspiration in positivism and argue that the social sciences must follow the methods of the natural sciences. These approaches do not specifically take individual motivations into account, but link them to the conditions which influence them. A simple, but common, example of this procedure can be seen in many of the analyses which try to establish correlations between aggregate variables a method which is typical of the natural sciences. Thus one may study the influence of the general level of education on

economic development or that of economic growth on political behaviour, etc. Naturally, such work can lead to useful results, but it may be difficult to generalize, because it is ill-suited to taking account of actors motivations, which may lead these actors to react differently to changes in the conditions under which they operate.