2014 12 17 Economic Sociology - Summary With Comments - 1

Economic Sociology summary Marta Karcz
Chapter 1
Science and pseudo-science
a) Internal consistency
b) Evidence
c) Reduction of error
d) Social organization
Science is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions
about the universe. Science helps to understand and control the material and biological reality. So called Dead ends the
scientific researches that dont find explanation, are referred to as pseudo-science for example Astrology, homeopathy, i.e.
herbal healing.
a) Internal consistency: logical statements, no contradictions, conceptual clarity. For example mathematic language is
consistent.
b) Evidence: A good theory and a confrontation with data and facts. In natural sciences this includes experiments.
This cycle consists of theory and evidence in

continual confrontation.
Deductive reasoning works from the more general to the more specific ("top-down" approach). We might begin with
thinking up a theory about our topic of interest. We then narrow that down into more specific hypotheses that we
can test. We narrow down even further when we collect observations to address the hypotheses. This ultimately
leads us to be able to test the hypotheses with specific data -- a confirmation (or not) of our original theories.
Inductive reasoning works the other way, moving from specific observations to broader generalizations and
theories. Informally, we sometimes call this a "bottom up". In inductive reasoning, we begin with specific
observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that we
can explore, and finally end up developing some general conclusions or theories.
Reduction of error: it is not about making no mistakes, but about reducing the number of errors. In science, errors
become less frequent and less fundamental. A very strong indicator of pseudo-science: its a new/ancient
knowledge, therefore its valid.
1
2. Can sociology be scientific?

a) Difference 1: the experimental design
b) Difference 2: human action
c) Behaviour, action and social action
Sociology can meet scientific standards, but it can also turn pseudo-scientific. It differs from natural sciences because:
1. Sociology can hardly be built on experiments, 2. Sociology deals with humans and their interactions.
An experiment is historically the oldest technique to come to scientific judgements. It is also the purest and most
certain way to arrive to valid and reliable conclusions.
An experiment is an orderly procedure carried out with the goal of verifying, refuting, or establishing the validity of
a hypothesis.
Experiment in its pure form: OXO model.
1. Randomized distribution in 2 groups (experimental vs control group)
2. Former gets stimulus, and the latter does not
3. Observation (measurement) before and after stimulus
The data is randomly distributed into two groups. The first data is stimulated,
and afterwards based on observation, we compare the two, before and after the stimulus.
TheOXO model leads to reliable and valid conclusions. Experiments are the best way to testing casual relationships. The
reason why OXO model is good, is that it isolates the effect of the stimulus.
Quazi experiment an empirical study used to estimate the causal impact of an intervention on its target population. Quasiexperimental research shares similarities with the traditional experimental design or randomized controlled trial, but they
specifically lack the element of random assignment to treatment or control. Instead, quasi-experimental designs typically
allow the researcher to control the assignment to the treatment condition, but using some criterion other than random
assignment (e.g., an eligibility cut off mark). In some cases, the researcher may have control over assignment to treatment
condition.
Quasi-experiments are subject to concerns regarding internal validity, because the treatment and control groups may not be
comparable at baseline. With random assignment, study participants have the same chance of being assigned to the
intervention group or the comparison group. As a result, differences between groups on both observed and unobserved
characteristics would be due to chance, rather than to a systematic factor related to treatment (e.g., illness severity).
2
Quasi-experiments
Departs in at least one respect from experimental ideal type
Often: experiments in the real world (=field experiment), so with diminished control
Also: non-randomized distribution of groups
Differences with survey:
Intervention by the researcher
Mimics experimental design
Control group in a scientific experiment is a group separated from the rest of the experiment where the independent variable
being tested cannot influence the results. This isolates the independent variable's effects on the experiment and can help rule
out alternate explanations of the experimental results.
Control groups can also be separated into two other types: positive or negative. Positive control groups are groups where the
conditions of the experiment are set to guarantee a positive result. A positive control group can show the experiment is
functioning properly as planned. Negative control groups are groups where the conditions of the experiment are set to cause
a negative outcome. Control groups are not necessary to all scientific experiments. Controls are extremely useful where the
experimental conditions are complex and difficult to isolate.
Solomon experiment Solomon Asch, an American psychologist, conducted what is now considered a classic experiment in
social psychology about conformity (social pressure).
Asch told the participants that the purpose of the experiment was to test ones visual abilities. The real purpose was to test
levels of conformity in group situations. There was a group of eight participants in each trial; however, seven of these were
confederates, meaning that they knew the real purpose of the experiment but they pretended to be participants. The group
was then given two images. One was an image of three lines of varying length and the other was an image of one line which
matched the length of one of the lines in the first picture.
Placebo-controlled studies are a way of testing a medical therapy in which, in addition to a group of subjects that receives
the treatment to be evaluated, a separate control group receives a sham "placebo" treatment which is specifically designed to
have no real effect. Placebos are most commonly used in blinded trials, where subjects do not know whether they are
receiving real or placebo treatment. Often, there is also a further "natural history" group that does not receive any treatment
at all. The purpose of the placebo group is to account for the placebo effect, that is, effects from treatment that do not
depend on the treatment itself. Such factors include knowing one is receiving a treatment, attention from health care
professionals, and the expectations of a treatment's effectiveness by those running the research study. Without a placebo
group to compare against, it is not possible to know whether the treatment itself had any effect.
Human action:
The object of sociology is: conscious sentient beings. Action of people is fundamentally different from logic of laws in
nature. Illustration: water boiling and people in a sauna. Basically explanations in sociology are: accounting for reasons
(and therefore beliefs, values, motives, intentions). Sociology does less but also more than natural sciences. Illustration: a
railway station. Basic strategy: ask people.
Definition: Sociology is the science of social phenomena, made up of social actions.
Sociology is the scientific study of human social behaviour and its origins, development,
organizations, and institutions. It is a social science that uses various methods of empirical
investigation and critical analysis to develop a body of knowledge about human social actions,
social structure and functions. A goal for many sociologists is to conduct research which may
be applied directly to social policy and welfare, while others focus primarily on refining the
theoretical understanding of social processes.
3
Spurious correlation - a correlation between two variables (e.g., between the number of electric motors in the home and
grades at school) that does not result from any direct relation between them (buying electric motors will not raise grades)
but from their relation to other variables
Action is what an agent can do.
Social action refers to an act which takes into account the actions of and reactions of individuals (or 'agents'). According to
Max Weber, "an Action is 'social' if the acting individual takes account of the behaviour of others and is thereby oriented in
its course".(Secher 1962)
Types of social actions:

Instrumental rational: a social action pursued after evaluating its consequences and consideration of the various
means to achieve it. They are usually planned and taken after considering costs and consequences.
Value rational: is a social action which is taken because it leads to a valued goal, regardless of other consequences.
(The end justifies the means.) It is one of Max Weber's four action types.
Affectual (emotional): is a social action caused by an emotion (revenge, love, loyalty, etc.). Those actions are taken
due to one's emotions, to express personal feelings. For example, cheering after a victory, crying at a funeral would
be emotional actions.
Traditional (habitual): is a social action taken by tradition. They are actions which are carried out due to tradition,
because they are always carried out in such a situation. An example would be putting on clothes or relaxing on
Sundays. Some traditional actions can become cultural artefacts
Chapter 2
Two approaches of a scientific
discipline, e.g. economics:
1. Object: the economy
2. Basic assumption: maximizing
behaviour
In sociology, this is also the case:
3. Object: social action and social
structures
4. Basic assumption: reality is
socially constructed
Starting point: in biology, the main thing that kept us alive was instinct. Humans, developed preferences and societies, like
for example food, coffee, chilli peppers (hedonic reversal)
Hedonic reversal : when people get addicted to (or get to like) something they didnt like at first. Very few people like coffee
or chilli peppers or cigarettes at the beginning, but they get addicted to it anyway.
4
World openness: people can become totally different from each other, even though they bear the same genetic code.
Problem: freedom from instinctual control may create infinite desires, like for example consumption.
Regulation in culture is helpful as it defines what to desire and provides rules on how to handle it. The social construction
plays a crucial role here.
Social construction: The culture is above us, coordinating out actions and aspirations, creating order, and it is also within
us, creating perception that the order around us is natural.
Role: is a set of connected behaviours, rights, obligations, beliefs, and norms as conceptualised by people in a social
situation. It is an expected or free or continuously changing behaviour and may have a given individual social status or
social position. It is vital to both functionalist and interactionist understandings of society.
The sick role is a term used in medical sociology regarding sickness and the rights and obligations of the affected
The general idea is that the individual who has fallen ill is not only physically sick, but now adheres to the specifically
patterned social role of being sick. Being Sick is not simply a state of fact or condition, it contains within itself
customary rights and obligations based on the social norms that surround it. The theory outlined two rights of a sick person
and two obligations:
Rights:
o The sick person is exempt from normal social roles exempted if legitimised by a medical doctor
o The sick person is not responsible for their condition - innocence
Obligations:
o The sick person should try to get well duty to see sickness as undesired
o The sick person should seek technically competent help and cooperate with the medical professional duty
to seek competent, professional help.
There are three versions of sick role: 1. Conditional 2. Unconditionally legitimate 3. Illegitimate role: condition that is
stigmatized by others.
Thomas theorem: Behaviour is based on our interpretations of reality, not on reality itself. The reality as we see it is a result
of our collective work.
The Thomas Theorem can help us understand how everyday aspects of our society are socially constructed. For
instance the country you live in doesnt actually exist (in the sense that there arent lines on the ground). It only
exists in our minds. However, where you live has huge consequences on your life. Think of some other examples of
everyday social constructions.
Have you ever done something because you misunderstood the reality you were in? All of have at one point or
another. Describe one experience in your life.
Quintessential: social constructions are inter-subjective, both

personal and objective. Social construction is dependent on
existence in our heads and out there (with others).
However: physical reality may bite back! Cases:
Tenskwatawas vision and the virgin cleansing myth
5
Case 1:
Tenskwatawa, charismatic religious Indian leader
7/11/1811, battle of Tippe-canoe. Orders to kill the American military commander

Harrison, promising that the warriors would become invulnerable from bullets. Attack partly fails,
dozens were killed.
Case 2: the virgin cleansing myth is the mistaken belief that having sex with a virgin girl cures a man of HIV, AIDS, or
other sexually transmitted diseases. Anthropologist Suzanne Leclerc-Madlala has recognized the myth as a potential factor
in infant rape in South Africa., but also in 16th-century Europe (syphilis). Discussion about the incidence, but the
mechanism is clear: certain definitions of the situation determine behaviour.
Holly trinity:
Internalization is what makes social constructions robust (e.g.
conscience)
Externalization
Internalization
Core of social construction is: humans become social when the external
contours of their culture are replicated inside their minds and
their personalities
Learning is process of mirroring how we think the others perceive us:
Objectivation
The looking-glass self

Strong self-fulfilling mechanisms between self and significant others (cfr. the looking-glass self)
Externalization means to put something outside of its original borders, especially to put a human function outside of the
human body. In a concrete sense, by taking notes, we can externalize the function of memory which normally belongs in the
brain. In a more abstract sense, by making excuses, we can externalize the guilt associated with our actions.
Internalization is the process of consolidating and embedding one's own beliefs, attitudes, and values when it comes to
moral behaviour. The accomplishment of this may involve the deliberate use of psychoanalytical or behavioural methods.
Objectification means treating a person as a thing, without regard to their dignity. Like for e.g., ownership of a person.
Looking-glass self is a social psychological concept, created by Charles Horton Cooley in 1902, stating that a person's self
grows out of society's interpersonal interactions and the perceptions of others. The term refers to people shaping their selfconcepts based on their understanding of how others perceive them. Because people conform to how they think others think
them to be, it's difficult, or arguably impossible, to act differently from how a person thinks he or she is perpetually
perceived. Cooley clarified it in writing that society is an interweaving and interworking of mental selves. The term "looking
glass self" was first used by Cooley in his work, Human Nature and the Social Order in 1902.
Deviance describes actions or behaviors that violate social norms, including formally
enacted rules (e.g., crime), as well as informal violations of social norms. Norms are
rules and expectations by which members of society are conventionally guided.
Deviance is an absence of conformity to these norms. Social norms differ from culture
to culture. For example, a deviant act can be committed in one society that breaks a
social norm there, but may be normal for another society. Viewing deviance as a
violation of social norms, sociologists have characterized it as "any thought, feeling,
or action that members of a social group judge to be a violation of their values or
rules "or group" conduct, that violates definitions of appropriate and inappropriate conduct shared by the members of a social
system. The departure of certain types of behaviour from the norms of a particular society at a particular time and "violation
of certain types of group norms, where behavior is in a disapproved direction and of sufficient degree to exceed the tolerance
limit of the community.
Merton's strain theory

Robert K. Merton discussed deviance in terms of goals and means as part of his
strain/anomie theory. Where Durkheim states that anomie is the confounding of
social norms, Merton goes further and states that anomie is the state in which
social goals and the legitimate means to achieve them do not correspond. He
postulated that an individual's response to societal expectations and the means
by which the individual pursued those goals were useful in understanding
deviance.
Specifically, he viewed collective action as motivated by strain, stress, or
frustration in a body of individuals that arises from a disconnection between
the society's goals and the popularly used means to achieve those goals. Often,
non-routine collective behavior (rioting, rebellion, etc.) is said to map onto
economic explanations and causes by way of strain. These two dimensions
determine the adaptation to society according to the cultural goals, which are
the society's perceptions about the ideal life, and to the institutionalized means,
which are the legitimate means through which an individual may aspire to the
cultural goals.
Cultural goals: depend on the society and the time frame. Right now the most common cultural goals in Belgium are
finishing university, get a master and start working, earn money and buy a house.
Merton described 5 types of deviance in terms of the acceptance or rejection of social goals and the institutionalized means
of achieving them:
1. Innovation is a response due to the strain generated by our culture's emphasis on wealth and the lack of opportunities to
get rich, which causes people to be "innovators" by engaging in stealing and selling drugs. Innovators accept society's goals,
but reject socially acceptable means of achieving them. (e.g.: monetary success is gained through crime). Merton claims that
innovators are mostly those who have been socialised with similar world views to conformists, but who have been denied the
opportunities they need to be able to legitimately achieve society's goals.
2. Conformists accept society's goals and the socially acceptable means of achieving them (e.g.: monetary success is gained
through hard work). Merton claims that conformists are mostly middle-class people in middle class jobs who have been able
to access the opportunities in society such as a better education to achieve monetary success through hard work.
3. Ritualism refers to the inability to reach a cultural goal thus embracing the rules to the point where the people in question
lose sight of their larger goals in order to feel respectable. Ritualists reject society's goals, but accept society's
7
institutionalised means. Ritualists are most commonly found in dead-end, repetitive jobs, where they are unable to achieve
society's goals but still adhere to society's means of achievement and social norms..
4. Retreatism is the rejection of both cultural goals and means, letting the person in question "drop out". Retreatists reject
the society's goals and the legitimate means to achieve them. Merton sees them as true deviants, as they commit acts of
deviance to achieve things that do not always go along with society's values.
5. Rebellion is somewhat similar to retreatism, because the people in question also reject both the cultural goals and means,
but they go one step further to a "counterculture" that supports other social orders that already exist (rule breaking). Rebels
reject societys goals and legitimate means to achieve them, and instead create new goals and means to replace those of
society, creating not only new goals to achieve but also new ways to achieve these goals that other rebels will find
acceptable.
Chapter 3
Structure of chapter 3:
1. Introduction: sociology and
modern times
2. The concept of modernity
3. Effects and correlates of modern
society
There is a paradoxical two-sided relation between the discipline of sociology and the modern world:
the modern condition is a quintessential focus of sociology
sociology is a product of modern society
Illustrations of sociological observations in the pre-modern societies (Ibn Khaldun, ancient Greeks) However, sociology in
the contemporary sense only emerged around the turn of the 18th-19th century (Scottish Enlightenment, Tocqueville, Marx)
Sociology in modern times. This implies that sociology has a privileged relation with modern times in two ways:
1. Without the modern view of society (as a man-made social construction), sociology were unthinkable
modern worldview is a necessary condition for sociology to emerge
2. Sociology emerged as an attempt to remedy the typical ills of modern times
sociology can be understood as an attempt to understand / manage modern social problems
The emergence of modern society? Basic intuition is that contemporary society differs fundamentally in comparison to
traditional one:
1.
2.
3.
4.
5.
6.
7.
Science and technique

Universal and sustained education
Division of labour
Market expansion
New attribution of political power (e.g. democracy)
Urbanization
A strong individual conscience (individualism)
Modernization theory - is a theory used to explain the process of modernization within societies. Modernization refers to a
model of a progressive transition from a 'pre-modern' or 'traditional' to a 'modern' society. The theory looks at the internal
factors of a country while assuming that, with assistance, "traditional" countries can be brought to development in the same
manner more developed countries have. Modernization theory attempts to identify the social variables that contribute to
social progress and development of societies, and seeks to explain the process of social evolution.
Modernization ratio:
The social consequences of an increase in the ratio of inanimate to animate power
Animate power: manual labour, energy from animals
Inanimate power: power from other sources (wind, water, coal, fossil fuel, nuclear energy,)
The ratio is a simple equation:
R
World Openness is an overarching concept or philosophy that is characterized by an emphasis on transparency and free
unrestricted access to knowledge and information as well as collaborative or cooperative management and decision making
rather than a central authority.
We will sketch 4 interconnected characteristics of modern society:

1. Specialization
2. Change of inequality
3. The modern class structure
4. The nation state
Specialization:
Individual level: division of labour and tasks. People who perform them become more specialized longer chains
of interdependence
Illustration: products, e.g. clothes, used by medieval man versus contemporaries
Alternative definition: An agreement within a community, group, or organization under which the members most
suited (by virtue of their natural aptitude, location, skill, or other qualification) for a specific activity or task
assume greater responsibility for its execution or performance.
Institutionally: differentiation. Also the institutions of society have become more specialized, clustered in social
systems
Illustration: the loss of the church of power in civil administration
Differentiation is a term in system theory (found in sociology.) From the viewpoint of this theory, the principal feature of
modern society is the increased process of system differentiation as a way of dealing with the complexity of its environment.
This is accomplished through the creation of subsystems in an effort to copy within a system the difference between it and
the environment. The differentiation process is a means of increasing the complexity of a system, since each subsystem can
make different connections with other subsystems. It allows for more variation within the system in order to respond to
variation in the environment. Increased variation facilitated by differentiation not only allows for better responses to the
environment, but also allows for faster evolution (or perhaps sociocultural evolution), which is defined sociologically as a
process of selection from variation; the more differentiation (and thus variation) that is available, the better the selection.
Social Roles refer to the expectations, responsibilities, and behaviors we adopt in certain situations. The ideas for expected or
normal behavior are reinforced both by the individual and by society. Each of us takes on many different roles, and we
shift among them throughout our lives and throughout each day. For example, a working mother starts her day in the role of
a mom, in which she is expected to feed her children and get them ready for school. At the office she shifts to the role of
project manager, where she oversees projects in a timely and professional manner. On her lunch break she may take on the
role of friend, in which she listens to a co-workers problems. If she fails to fulfil any of these roles she may face
consequences, such as the loss of a relationship or loss of a job.
Change of inequality: industrialization destroyed the great pyramid of feudal social order
Status distance decreased, social distance increased
Occupational mobility: job opportunities no longer attributed by birth
Separation of home and work possibilities to take up different social roles at home and work
Allowed for the rise of autonomous individuals
Egalitarianism: many cultural transformations (Reformation, Enlightenment, 18th century revolutions) laid the
foundations of the idea that people had intrinsically the same (equal) rights
Important side-effect and condition of many modern inventions, e.g. of democracy: literacy
Egalitarian society coincides with simpler and more fluid differences, mainly based on wealth:
from feudal reciprocities to the contract
10
Egalitarianism is a trend of thought that favours equality for all people. Egalitarian doctrines maintain that all humans are
equal in fundamental worth or social status. The term has two distinct definitions in modern English. It is defined either as
a political doctrine that all people should be treated as equals and have the same political, economic, social, and civil rights
or as a social philosophy advocating the removal of economic inequalities among people or the decentralization of power.
Some sources define egalitarianism as the point of view that equality reflects the natural state of humanity.
Modern class structure
Marx saw a fundamental division between owners of the means of production (bourgeoisie) and those
who had to sell their labour (proletariat)
He saw all proletarians to be in the same boat, eventually leading to their acting together to
revolutionize economic relations
Weber saw considerable differences in power and life chances between wage earners
He created a more differentiated class scheme
Also, the occupational and therefore class structure changed dramatically, e.g. agricultural workers in
20th century evolved in most European countries from > 50% to <5% of the active population
Weber approached class as group who had a similar position on a market in terms of profit, leading to
similar life chances
Best scheme today: EGP class scheme
Distinction between service class, working class and self-employed
The proletariat is a term used to describe the class of wage-earners (especially industrial
workers) in a capitalist society whose only possession of significant material value is
their labour-power (their ability to work); a member of such a class is a proletarian.
Bourgeoisie is a word from the French language, used in the fields of political economy,
political philosophy, sociology, and history, which originally denoted the wealthy
stratum of the middle class that originated during the latter part of the Middle Ages (AD 5001500).The utilization and
specific application of the word is from the realm of the social sciences. In sociology and in political science, the noun
"bourgeoisie" and the adjective "bourgeois" are terms that describe a historical range of socio-economic classes. As such, in the
Western world, since the late 18th century, "the bourgeoisie" describes a social class "characterized by their ownership of
capital, and their related culture"; hence, the personal terms "bourgeois" (masculine) and "bourgeoise" (feminine) culturally
identify the man or woman who is a member of the wealthiest social class of a given society, and their materialistic
worldview.
Literacy is the ability to read and write. Visual literacy also includes the ability to understand visual forms of
communication such as body language, pictures, maps, and video. Evolving definitions of literacy often include all the
symbol systems relevant to a particular community. Literacy encompasses a complex set of abilities to understand and use
the dominant symbol systems of a culture for personal and community development. In a technological society, the concept
of literacy is expanding to include the media and electronic text, in addition to alphabetic and number systems. These
abilities vary in different social and cultural contexts according to need, demand and education.
Social class (or simply "class"), is a set of concepts in the social sciences and political
theory centred on models of social stratification in which people are grouped into a set of
hierarchical social categories, the most common being the upper, middle, and lower
classes. In common parlance, the term "social class" is usually synonymous with "socioeconomic class," defined as "people having the same social, economic, or educational
status" e.g., "the working class"; "an emerging professional class." However, academics
distinguish social class and socioeconomic status, with the former referring to ones
relatively stable sociocultural background and the latter referring to ones current social
11
and economic situation and, consequently, being more changeable over time. The precise measurements of what determines
social class in society has varied over time. The term "class" is etymologically derived from the Latin classis, which was used
by census takers to categorize citizens by wealth, in order to determine military service obligations. In the late 18th century,
the term "class" began to replace classifications such as estates, rank, and orders as the primary means of organizing society
into hierarchical divisions. This corresponded to a general decrease in significance ascribed to hereditary characteristics, and
increase in the significance of wealth and income as indicators of position in the social hierarchy.
EGP class scheme:
The nation state :

Modern world is a world governed by state authority
Central characteristics: (1) violence monopoly, (2) controlling a territory
Created a stark division between the public and the private world
Illustration: changes in how we see patronage
personal bonds and taste are not allowed to dictate the public sphere any more
At the same time, the personal sphere has become more free
The nation state is a geographical area that self-identifies as deriving its political legitimacy from serving as a sovereign
nation. The state is a political and geopolitical entity, while the nation is a cultural and ethnic one. The term "nation state"
implies that the two coincide, but "nation state" formation can take place at different times in different parts of the world,
and has become the dominant form of world organization. The concept of the nation state can be compared and contrasted
with that of the multinational state, city state, empire, confederation, and other state formations with which it may
overlap.
12
Violence monopoly: in sociology, the concept which states that the state alone has the right to use or authorize the use of
physical force. It is widely regarded as a defining characteristic of the modern state. In his lecture Politics as a Vocation
(1918), the German sociologist Max defines the state as a human community that (successfully) claims the monopoly of the
legitimate use of physical force within a given territory. Under feudalism, no lords, including the king, could claim a
monopoly over the use of violence, since their vassals promised to serve them but remained free to exercise power in their
fiefdoms. Moreover, the king and the landed nobility had to share power or compete with the Roman Catholic Church. The
modern state, according to Weber, emerged by expropriating the means of political organization and domination, including
violence, and by establishing the legitimacy of its rule.
Chapter 4
II. Capitalism, markets and firms
Economic organization
Structure of chapter 4;
1. The concept of economic organization
2. Capitalism
a) Definition
b) Other forms
c) Types of capitalism
3. Corporate (industrial) districts
a) Definition: the regional perspective
b) Flexible specialization or Fordist regimes?
4. Globalization
Two feasible approaches:

Firms and other organised forms
the organization of the whole economy
Definition nr 1 of capitalism:
The pursuit of profit, forever renewed profit
Central prerequisite: private property rights
Definition nr 2:
Capitalism is an economic system in which trade, industry, and the means of production are controlled by private owners
with the goal of making profits in a market economy. Central characteristics of capitalism include capital accumulation,
competitive markets and wage labour. In a capitalist economy, the parties to a transaction typically determine the prices at
which assets, goods, and services are exchanged.
Alternative form of economic organization:
13
Redistribution of income and wealth is the transfer of income, wealth or property from some individuals to others caused by
a social mechanism such as taxation, monetary policies, welfare, charity, and divorce or tort law. Today, income
redistribution occurs in some form in most democratic countries. In a progressive income tax system, a high income earner
will pay a higher tax rate than a low income earner. Two common types of governmental redistribution of wealth are
subsidies and vouchers (such as food stamps). These "transfer payment" programs are funded through general taxation, but
benefit the poor, who pay fewer or no taxes. While the persons receiving transfers from such programs may prefer to be
directly given cash, these programs may be more palatable to society, as it gives society some measure of control over how the
funds are spent.
Reciprocity is the expectation that people will respond favourably to each other by returning benefits for benefits, and
responding with either indifference or hostility to harm. The social norm of reciprocity often takes different forms in
different areas of social life, or in different societies. Responding to a positive action with another positive action;
rewarding kind actions. As a social construct, reciprocity means that in response to friendly actions, people are frequently
much nicer and much more cooperative than predicted by the self-interest model; conversely, in response to hostile actions
they are frequently much nastier and even brutal.
Exchange theory includes two approaches to social interaction and relationships. The first approach views people and
individuals in particular, as rationally trying to get what they want or need by exchanging valued resources with others. The
second approach focuses on exchanges between groups or social systems as a whole and believes that by participating in a
social system based on loyalty and sharing; individuals may contribute and derive benefits from their overall participation in
the system.
Types of capitalism:
1. Classical typology of capitalism
Rational
Free market trade and production
Speculation and finance
Political
Predatory political profits
Profit through force/domination
Unusual deals with political authorities
Traditional
Markets for some sectors
Co-existence with autarkic systems
14
2. Contemporary typologies
Esping-Andersens typology of welfare states
1.
2.
3.
Liberal regimes
Social-democratic regimes
Continental regimes
(Taken from a website commenting of the Esping-Andersens theory)

1. Liberal welfare states the main features are means-tested assistance, modest universal transfers or modest socialinsurance plans Benefits cater mainly to a clientele of low-income, usually working class, state dependants. In it; the
limits of welfare equal the marginal propensity to opt for welfare instead of work. Entitlement rules are therefore strict
and often associated with stigma; benefits are typically modest. Examples: the United State, Canada and Australia. He
does not specifically mention the UK in this section but judging from other comments, the UK is probably close to this
model.
Slides: Liberal regimes
Genesis: 19th-century English political economy
Mainly in Anglo-Saxon countries
Weak or inexistent social-democratic or Christian-democratic movements
Three core features:
1. Only bad risks not having roof over your head, etc.
2. Stress on welfare (residual systems)
3. Market oriented (ex: tax subsidies for buying HC insurance)
2. Social-democratic welfare states High levels of benefits and services provided by the state. All strata are incorporated
under one universal insurance system, yet benefits are graduated according to accustomed earnings. This model crowds out
the market [meaning the private sector providing such things as pension plans]The ideal is not to maximise dependence
on the family, but capacities for individual independence. The state opts to take direct responsibility of caring for children,
the aged and the helpless. It is committed to allow women to choose work rather than the household [presumably he
means with lots of state-provided child-care from an early age.] The Scandinavian social democrats werecapable of
building a welfare state with features of sufficient luxury to satisfy the wants of a more discriminating public [by which I
think he means those who were better off]. Examples: the Scandinavian countries.
Slides: Social-democratic regimes
Main difference: magnitude of redistribution
Concentrated in Scandinavian countries
Three core features:
1. Anti-market, strongly state oriented
2. Universalism: religious, theological, and philosophical concepts with universal application or applicability.
Universalism is a term used to identify particular doctrines considering all people in their formation.
3. Egalitarian: is a trend of thought that favours equality for all people. Egalitarian doctrines maintain that all
humans are equal in fundamental worth or social status
Consequence: active labour market policy (employment, training)
3. Conservative/corporatist welfare states These feature social insurance more than social assistance [means-tested benefits].
In other words, most of the benefits for unemployment or sickness are entitlements based on insurance contributions
previously made. Also the contributions made and the benefits received vary according to the income of the individual. This
is known as the Bismark model as opposed to the Beveridge model in which all contributions and benefits were to be at a
15
flat rate. the corporatist regimes are also typically shaped by the Church, and hence strongly committed to the
preservation of traditional familyhood. Social insurance typically excludes non-working wives, and family benefits
encourage motherhood. the state will only interfere when the familys capacity to service its members is exhausted.
Examples: Austria, France, Germany and Italy.
Slides: Continental regimes

Genesis: 19th-century conservative ideas:
Absolutist etatism
Catholic social doctrine (Rerum Novarum,
1891)
Christian democratic or conservative political
elites
Mainly in continental European countries
Two central features:

Arrangements segmented in professional groups
Familiarism When a person of a certain race is
comfortable with other people of the same race,
this is familiarism.
Consequence: passive labour market policy
(employment, training)
Industrial district was initially introduced as a term to describe an area where workers of a monolithic heavy industry (ship-building,
coal mining, steel, ceramics, etc.) live within walking-distance of their places of work. The term was used by Alfred Marshall in his The
Principles of Economics (1890, 1922). Marshall talks of a.... "thickly peopled industrial district". The term was also used in political
struggle. The 1917 handbook of the IWW states: "In order that every given industrial district shall have complete industrial solidarity
among the workers in all industries as well as among the workers of each an INDUSTRIAL DISTRICT COUNCIL is formed ..." The
term also appears in English literature. For instance, in a short story of 1920 by D. H. Lawrence, You Touched Me (aka 'Hadrian'):
"Matilda and Emmie were already old maids. In a thorough industrial district, it is not easy for the girls who have expectations above
the common to find husbands. The ugly industrial town was full of men, young men who were ready to marry. But they were all colliers
or pottery-hands, mere workmen." Recent evolution of the use of the term Within the study of economics, the term has evolved and now
implies the ways in which economic specialisation arises through clustering in a particular industry-zoned urban area. Since the 1980s,
the term has become connoted with an important element of dynamic industrial development in Central and Northeastern Italy, where
after the Second World War clusters of small and medium-sized enterprises (SME) experienced strong growth. Industrial districts in
Central and Northeastern Italy have a coherent location and a narrow specialisation profile, e.g. Prato in woollen fabric, Sassuolo in
ceramic tiles or Brenta in ladies' footwear.
16
Slides: Definition
Novelty: not national or other boundaries, as in states or federated parts
Instead: geographical and social boundaries
Groups of competing and related firms in a network
Flexible specialization or Fordist regimes?Why would firms stay apart in a network and not integrate into a hierarchical
integrated large scale structure?
Latter is called the Fordist regime (cf. Fords automobile construction)
Former may perform better in some circumstances
Observation: sometimes there is a competitive advantage in production in many small or medium-sized
firms working together, especially when one has to adjust production frequently
May also facilitate tax evasion
Flexible specialization or Fordist regimes?
Case 1: North-Italy (Emilia Romagna), knitwear
Case 2: ICT
Well-known ideal-typical comparison between Silicon Valley and Route 128
Former is example of loose network, latter of Fordist regime
In the longer run, Silicon, Valley outperformed Route 128
Globalization:
Definition: Originally: the expansion of modern capitalism throughout the world. Primarily a geographical phenomenon,
therefore: expansion. It seems to weaken the importance of boundaries of nation-states. Globalization literature emerged in
the 90s, and is interdisciplinary. New approach: distinction between world and global economy. Global economy is an
economy with the capacity to work as a unit in real time on a planetary scale
Characteristics of the global economy, in essence there are those four elements:
1. Basic idea: the emergence of a new economy, driven by new kind of infrastructure technology (how information is
processed through infrastructure)
2. Firms evolve from multinational to transnational corporations (horizontal, networked, less strict national roots)
3. Coordination through legal regimes: sets of transnational rules that govern the interaction of international
exchange, e.g. arbitration or the Americanization of international commercial legislation, Europeanization of
product regulation
4. Global culture:
Diffusion of Western models in politics, education and business throughout the world
Legal regimes: A legal regime is a system of principles and rules governing something, and which is created by law. It is
framework of legal rules.
Diffusion: is a social process through which cultural knowledge, practices, and materials spread from one social system to
another. As opportunities for interaction across cultures increases, so does the rate of diffusion.
17
Chapter 5
Ideal typical markets
& the genesis of
capitalism
1. The essence of
change: market dynamics
a. Characteristics of
markets
b. Starting point: crises
c. Ideal typical markets
1.a. Market characteristics (6)

1.
2.
3.
4.
Markets are based on a particular kind of property, i.e. control over resources
Markets tend to expand (people, goods, relationships, territory) up to a certain point
Markets tend to give rise to higher order (superordinate) and dependent (subordinate) markets
Cost-accelerating tendencies (or decreasing profits) within superordinate markets often entail crises and transition to
another leading market sector.
Two important superordinate markets tend to play a significant role:

5. Politics and warfare are superordinate and competitive markets themselves. E.g. warfare leads to growth of production
markets at a lower level.
6. Another important superordinate market consists of the production and circulation of cultural goods of distinction: status
goods.
Market expansion: a growth strategy in which an organisation targets existing products to new markets, market development
by targeting new geographic markets, new demographic or psychographic segments, or totally new users. Markets and social
structures tend to expand over long periods of time to include more people or goods or relationships, especially more territory.
Expansion in these respects may go on at the same time that participation becomes more restricted, especially for producers and
sellers as against labourers and consumers.
Extensive growth: the expansion of the quantity of inputs in order to increase the quantity of outputs, opposite to that of
intensive growth. For example, GDP growth caused only by increases in population or territory would be extensive growth.
Thus, extensive growth is likely to be subject to diminishing returns. It is therefore often viewed as having no effect on percapita magnitudes in the long-run.
Intensive growth: Increases in aggregate economic activity, or growth, may be generated by adding more labor and capital or
by improving skills and technology. Development economists call the latter "intensive growth" because labor and capital work
harder. Growth is driven by enhanced productivity (higher output per unit of input) rather than augmented factor supplies.
Theory predicts that all growth in a steady-state, long-run equilibrium will be attributable to technological progress (intensive
growth).
18
Superordinate: of higher degree in condition or rank.

Markets for a particular item of exchange, tent to give rise to superordinate markets that trade on terms of trade themselves.
In the LR distance exchanges become commodities that can be traded in their own market. Superorder markets may be
pyramided upon one another. Money, debts, mortgages etc can become objects of superordinate media traded in yet further
markets.
Subordinate market: means "ranks beneath." In finance, the term usually refers to the claims a creditor has on a company's
assets relative to other creditors. These markets are dependent.
Status good: production and circulation of cultural goods of distinction.
1.b. Starting point: crises
Every period has a system: a leading market sector
In the long run, markets tend to undergo crises, sometimes serious enough to end the continuation of that system
Crises also affect politics, as states are dependent on material resources
1.c. Ideal typical markets (4)
Kinship markets: Alliances through intermarriage. Property form: women
Slave markets: Slavery primarily is a form of exchange, not production. Property form: people (slaves).
Agrarian-coercive markets Patrimonial households, economy cantered around land rent.
Rational capitalism Market transactions permeate society and the economy beyond a certain tipping point.
2.a. Characteristics of kinship markets
Typical for stateless societies
Sexual property is principal form
From that follow control over children, inheritance, residence, household goods
Total relations: marriage alliance equals military, political, economic, religious alliance
Kinship capitalism is investment in relatives
Long-term tendency of increasingly male-centred system of sexual property
Basic distinction between conservative and aggressively expansive kinship strategies
Latter: dynamic based on extension of alliances by emerging elite groups
Intensified by the emergence of pseudo-kin, kinship ties by fiat.
Leads to the emergence of kinship capitalists versus kinship proletariat
Former accumulate power/wealth, giving rise to early states, households as elementary unit: patrimonialism
3.a. Characteristics of slave markets

First structural tendency toward capitalism
Historically: various forms of slavery
Greece: debt-slavery
Islamic societies: military / administrative slavery
Russia, medieval Korea: agricultural slavery
US (south): slave plantations
Primarily focus on ancient Greece & Rome,as chattel slave markets were leading sector there
Expansionary dynamic: warfare fed slave supply
19
Military/slave dynamic expands internally and geographically (conquest and barbarian entrepreneurs)
Innovations in productive sector (military):
Military hardware: bronze and iron weapons and armour, engineering, fortifications, muttered galleys,...
Military spill overs in civil economy: road building, construction industry.
Slave market drove growth through subordinate and superordinate markets
Subordinate: slaves stimulate productive sectors and bureaucracy, up to 30-40 % of Roman labour force
Superordinate markets of politics and army: politicians and generals as class investing in expeditions
Subordinate: agriculture, mining, forestry, crafts, transport, commerce: virtually all economic activity became dominated by
slaves and ex-slaves. Only exceptions: military and subsistence farming
3.b. Crisis of Roman slave markets

Soldiers evolved from small-scale entrepreneurs (own weapons, land at home) to army of proletarians working for
wages (army weapons, lost land during conscription) for entrepreneur (general)
earlier soldiers-landholders were subjugated by their own products (slaves)
Supply of slaves dried up after A.D. 200 throughend of military conquests (geopolitical cause)
Alternative: creation of semi-peripheral powers, leading to collapse through incursive migrations
3* Islamic slave markets

Differed from Roman system in bypassing the investment of slaves in the productive economy
Slaves were not used in subordinate markets, but in the military and in government bureaucracies
Origin : after 800, attempt to avert loss of power to feudal lords.
Central business was not capturing slaves; were purchased on markets strong impetus to spread of world markets
4.a. Characteristics of agrarian- coercive markets

Definition: type of society based upon agricultural production and a militarized state
Two main subtypes: rent versus tax coercion (gov. by force)
20
. Rent coercion is decentralized, gives rise to expansion due to exchange of display goods by landed military class:
1. Ceremonial gift networks or potlatches
2. Status display in supernatural dimension: aristocratic patronage of churches (become players themselves,
fuelling competition and expansion)
Coercion is essentially the overwhelming of the will of another by force or threat of force, or through less noticeable forms
such as fraud. The use of coercion is the means by which a person or group of people impose their will upon another or
others. (Coercion can also be used to forcibly or fraudulently take the property of others.). Whenever I pay "taxes", I'm being
coerced indirectly, and I'm also indirectly supporting the coercion perpetrated by terrocrats (terrorist bureaucrats or coercive
"government" agents) - by paying their wages to practice more coercion. Terrocrats use this "tax"-money to pay more terrocrats
to further coerce others through their "tax" and other "systems", and to murder people in their "wars", amongst countless other
atrocities.
Two mechanisms fuel expansionary dynamic of rent-coercion:
. Feudal dynamic
. Corporate religious capitalism
. Feudal dynamic: two mechanisms (not only in Europe, probably also in China):
1. Expansion through rising surplus extraction* Rural landlords press rent of peasants upward. Peasants respond by
increasing production, Effect: productive expansion by
(1) colonizing wastelands,
(2) intensified cultivation (technological innovation) and
(3) military expansion (landlords as military producers)
2. Expansion through status displayStatus competition between nobles (housing, cuisine, clothing &
jewellry, patronage in art,..) around household for political weight cash need led to monetization of the countryside
. Corporate religious capitalism
Monastic sectors approximated rational capitalism:
o Free factors of production,
o Political support of exchange and property rights
o Universalistic and disciplined ethic
Advantage: escaped household organization of politics and production:
o More or less freely recruited labor force
o Monasteries as firms: reinvestment of profits in production
o Reform movements: org. autonomy from aristocratic patronage
Strong superordinate markets: banking, universities, indulgences
Tax coercion Centralized state prefers to impose tax coercion directly to farmers:
If powerful enough, the state may eliminate market.
If king is weak, he will fuel competition further by status display
monasteries were often founded as agents of weak states
Potlatch: a ceremonial feast of the American Indians of the northwest coast marked by the host's lavish distribution of gifts
or sometimes destruction of property to demonstrate wealth and generosity with the expectation of eventual reciprocation
21
After AD 1300, two mechanisms:

Feudal dynamic: crisis has to be understood against the background of the rival form: state tax coercion
o Accessible land was used up, no easily accessible external territories for conquest
o Emerging power of absolutist state (tax coercion) with strong superordinate markets (e.g. venality of public
offices)
Corporate religious capitalism:
o Europe: Reformation (end of superordinate markets, monasticism,confiscation of ecclesiastical properties)
o China: confiscation of Buddhist monastic property after AD 1050
o Japan: continuation of Chinese market dynamic, ended after 1600s
5.a. Characteristics of capitalist markets
Before: large sectors of socio-economic life remainself-sufficient & autarkic.
Long and slow process, with a tipping point if certain proportion of economy is market driven
Alternative interpretation: several tipping points:
o Takeoff: early form in monastic traditions, world systemaround Middle East (12th-13th centuries), 16th
century Europe.
o Next dimension: England, 18th-19th century.
Not only a question of market penetration, even more of pyramiding of sub- & superordinate markets
Pyramiding in one integrated system:
o Financial markets, where profit is divorced from production
o Education: a currency-like inflation due to the expansion of educational participation and credentials
In modern capitalism, everything is commodified, except the most central commodities of the pre vious systems:
o Sexual property
o Slavery
o Venality of office, tax farming
Capitalist succes is its geographical diffusion
Autarky is the quality of being self-sufficient. Usually the term is applied to political states or their economic systems.
Autarky exists whenever an entity can survive or continue its activities without external assistance or international trade.
If a self-sufficient economy also refuses all trade with the outside world then it is called a closed economy. Autarky is not
necessarily an economic phenomenon; for example, a military autarky would be a state that could defend itself without help
from another country.
The failure of socialist autarky:
o Communist regimes are not a next step, rather resistance of powerful agrarian-coercive states to pulling in
world capitalist markets
o State-administered industrialism is extension of tax coercion.
o Lacks innovative and expansionary internal dynamic.
o Already before 1989 they were pulled in, opening borders to Western business.
Autarky was not perfect, as borders were never really closed:
o Military rivalry (hardware technology)
o Cultural products created demand in the East.
22
Chapter 6
Relevance
Historical character of economic systems
Interesting debate about the role of regions in
development of economic organization
Challenges the idea of the Western
invention of capitalism
Interesting discussion about the takeoff of the gap
between Europe and the rest of the world
Puts the recent changes in China into a long term
perspective
China was a forerunner in many technological innovations:

Gunpowder: 11th century invention, adopted by the West in the late 13th century
Navigation: 7 major naval expeditions (1405-1431), 1,681 ships built in the first phase alone (1404-1407)
Printing: block printing was invented in the 9th century (Europe: 15th century)
We learn that Europe / the West has not always been the forerunner (economically and otherwise)
China seems to have been ahead in economic organization, innovations, wealth
Consensus: head start under the Song (960-1279) and Yuan (1279-1368) dynasties
Some assert that development came to a standstill under the Ming dynasty (1368-1644)
Max Weber and Chinese religions:
According to Weber, West invented capitalism and its core institutions (chapter 4).
Central problem is twofold:
How and why has capitalism emerged in the West?
Why has this not taken place elsewhere
Special attention to the role of religion in societies as a hypothetical facilitator
China: especially in WEWR or The economic ethic of the world religions (written 1915-1917, published as a
whole in 1920)
Historical revisionism is the reinterpretation of orthodox views on evidence, motivations, and decision-making processes
surrounding a historical event. Though the word revisionism is sometimes used in a negative way, constant revision of
history is part of the normal scholarly process of writing history.
Two religions co-exist: Confucianism and Taoism, they were not in conflict or competition, but stratified.
Confucianism
Carried by the imperial ruling class (Mandarins)
Basic ideal: Tao, middle way, gentlemanlike way of life
23
Confucianism is an ethical and philosophical system, on occasion described as a religion, developed from the teachings of the
Chinese philosopher Confucius ( Kng Fz, or K'ung-fu-tzu, lit. "Master Kong", 551479 BCE). Confucianism
originated as an "ethical-socio-political teaching" during the Spring and Autumn Period. Following the official abandonment
of Legalism in China after the Qin Dynasty, Confucianism became the official state ideology of the Han. Nonetheless, from
the Han period onwards, most Chinese emperors have used a mix of Legalism and Confucianism as their ruling doctrine. The
disintegration of the Han in the second century CE opened the way for the soteriological doctrines of Buddhism and Taoism
to dominate intellectual life at that time.
Taoism
Magical worldview of ordinary people
Reality full of ghosts
Economic traditionalism dominates: no mining or agricultural innovations
Taoism, or Daoism, is a philosophical, ethical, and religious tradition of Chinese origin that emphasizes living in harmony
with the Tao (also Romanised as Dao). The term Tao means "way", "path" or "principle", and can also be found in Chinese
philosophies and religions other than Taoism. In Taoism, however, Tao denotes something that is both the source and the
driving force behind everything that exists.
David Landes Poverty and Wealth
Late 20th centruy attempt to take up Webers central question again: for the last thousand years, Europe (the West)
has been the prime mover of development and modernity (p. xxi)*
He broadens the original focus from religion to culture.
China
Acknowledges original head start, mainly in technology
Strongly stresses the standstill that grew out of cultural triumphalism
Examples and indicators of the statis
Capital moved inland from Nanking to Bejing early 15th century, marking a symbolic break with outward
orientation.
Gunpowder was invented in China, but never developed beyond the use of incendiaries (flame lances, fireworks).
West built its military supremacy on further innovations (corning of powder, combination with metallurgical
developments).
After 7 maritime expeditions, China turned inward: in 1525 the last oceangoing ships were destroyed and the
owners arrested.
Printing was developed in 9th century China, but never led to either the takeoff in commercial printing or the
explosion of diffusion of dissenting ideas, as it did in the West.
Technologically: ideographical writing restricted the Chinese to block printing, while movable type developed in the
West (Gutenberg, 1452)
The Revisionist view:
The classical view has been challenged, particularly in the past decades.
Starting points of the revision:
o Gap is overrated until the Industrial Revolution (ca. 1800).
o Innovation in China did not stop in the Ming dynasty, but slowed down for structural reasons
o Market systems and monetization were quite developed
o Consumption was a driving force of marketization, also in China
24
Advantage as a trap?
Technological advancement at the beginning of the Ming dynasty (14th cent.) is clearly not contested
Possible explanation for the relative stagnation is a high-level equilibrium trap (Mark Elvin):
o Fast population growth
o The relative standstill is due to a disadvantageous population-land ratio
o An oversupply of cheap labour and expensive capital favoured labour-intensive answers
o Therefore the Chinese lacked the incentive to innovate a lack of constraints hampered technological
innovations
Mark Elvin is noted for his high level equilibrium trap theory to explain why an industrial revolution happened in Europe but
not in China, despite the fact that the state of scientific knowledge was far more advanced in China much earlier than in Europe.
Essentially, Elvin proposed that pre-industrial production methods were extremely efficient in China, which obviated much of
the economic pressure for scientific progress. At the same time, a philosophical shift occurred, where Taoism was gradually
replaced by Confucianism as the dominant intellectual paradigm, and moral philosophy and the development of rigid social
organization became more important than scientific inquiry among intellectuals.
On the other hand: expansion of market transactions internally and even externally.
Strongly driven by a luxury market (see 3.c)
Production: Marketization and Modernization
Strong indicators that despite technological changes, trade pushed markets forward.
Interesting paradox: trade was despised by the elite (cfr. Weber), but the mercantile economy nevertheless grew,
finally changing the dominant culture
Economy was largely monetized during early Ming period (15th century).
Two important reasons for this market expansion and monetization:
Population increase forced some to handicraft and trade
Taxation favoured monetization.
Consumption: Commodification of a luxury culture
Some authors take a different approach, focusing on elite consumption as a driving force behind monetization and
market expansion (compare to ch. 6, expansion of markets in agrarian-coercive systems).
During Ming a refined culture of connoisseurship developed, with a strong stress on art consumption:
o Lifestyle books and prose fiction (commodified)
o Decorative arts such as painting were commercialized even during late Song (13th century)
In general, China paid more attention to luxuries than the West
China today
Communist-nationalist revolution after WWII
From 1980s on: introduction of market mechanisms in China
First: decrease of central planning 1990s: price mechanism through markets
Second: growth of marketplaces (factor 20 in volumes)
Finally: foreign direct investements
o rapid economic growth (8.6% annually since 1980)
25
Chapter 7
Structure of chapter 7:
1. Firms in economic theory
a) The firm as a black box
b) Alternative 1: Adam Smith
c) Alternative 2: transaction cost economics
2. Sociological approaches (1): Max Weber
a) The nature of the firm
b) Historical emergence
c) Entrepreneurs and bureaucrats
3. Sociological approaches (2): sociology of work
4. Sociological approaches (3): business groups
1.a. The firm as a black box

Starting points:
In early economics:
Organizations
Environment
Diversity
Firms were central actors

Importance of the internal structure
was underrated
Hardly any external relations
1.b. Alternative 1: Adam Smith

Distinction in risk-taking between private co-partner and joint stock company
Also: difference in interests between owner and manager
1.c. Alternative 2: transaction cost economics

Coase, The nature of the firm:
Two distinct ways of organizing production:
Market
Firm
[Hybrid form: long-term contractual
relationships]
1. The ex-ante costs of drafting, negotiating and

safeguarding an agreement (notary etc.)
2. the ex post costs of maladaptation and
adjustment that arise when
contract execution is misaligned as a result of
gaps, errors, omissions
and unanticipated disturbances
in short: the cost of running the economic system.
Which governance structure?

The one with the lowest transaction
cost:
26
In general three types of transaction costs (North):

1. Information costs are costs such as those incurred in determining that the required good is available on the market, which
has the lowest price, etc. Cost of research. Reduced thanks to internet.
2. Protection costs are the costs of making sure the other party sticks to the terms of the contract, and taking appropriate
action (often through the legal system) if this turns out not to be the case
3. Measurement costs decreased when states introduced standardized measures
In general the firm when transactions are:
1. Frequent
2. Uncertain
3. In need of special investments
Critiques:
1. Power is disregarded - Firms are first and foremost a distinctive manner of division and attribution of power.
2. The functionalist - fallacy - The effect of arrangements (efficiency) is at the same time its cause.
Fallacy - a mistaken belief, especially one based on unsound arguments.
What is the functionalist fallacy?
Starting point is the functional explanation: beneficial consequences B explain phenomenon A
This type of explanation can only be valid if one of two mechanisms is shown to be present:
1. A feedback loop explaining why B reinforces A. Example: natural selection
2. The presence of an intention to produce B, whereby the intention is the real cause of A.
Example: a successful marketing strategy
Sociological approaches: Max Weber

1. The nature of the firm.
Firm is closed economic relationship (as opposed to
market relations)
Oriented toward the economy
Central goal: profit making
Opposed to household
Rational-legal domination (not traditional)
2. Historical emergence
The slow invention of firms
Alternative institutional inventions:
Household as trade unit
27
Commenda: Economic relationship between two merchants, one investor and one selling abroad. Necessitated
early form of capital accounting.
A form of trust in use in the middle ages in which goods are delivered to another for a particular enterprise (as
for marketing abroad)
Rational firm is Western invention:

Separation of individual and firm property (Florence, 14th century)
Juristic personality
3. Entrepreneurs, bureaucrats, owners
Entrepreneur:
Different mentality from
bureaucrat
Methodical and leading
spirit
Bureaucrat:
Specialization and training
Duty and status honour
Managers and clerical workers
Interest difference with
owners
Workers:
No property, dependent on
employment
Methodical and disciplined
Sociology of work
Informal relationships:
Different responses to individual incentives
Weak impact of morality on behaviour
Professions: a paid occupation, especially one that involves prolonged training and a formal qualification.
Professional groups become professions
Application of social closure: is a concept that was first introduced by Max Weber and refers to the
practice of preserving privilege by restricting other peoples access to resources and rewards. It can take
many forms, from residential segregation to marriage rules that forbid unions with anyone from
outside the privileged group to keeping women out of old boys networks.
Entrance dependent on abstract knowledge
Entrance dependent on institutionalized cultural capital
Business groups
Definition:
Approach inspired by network theory, applied to firms (not individuals)
a collection of legally separate firms that are bound together in some formal and/or informal ways
Is a collection of parent and subsidiary corporations that function as a single economic entity through a common source of
control. The concept of a group is frequently used in tax law, accounting and (less frequently) company law to attribute the
rights and duties of one member of the group to another or the whole.
Sources of ties:
ownership relations
principles of solidarity
authority structure
moral economy, Finance
relations to the state
Applications:
Keiretsu (Japan), chaebol (Korea)
Ties between firms through members of
boards
Industrial districts
28
Keiretsu: A keiretsu (, lit. system, series, grouping of enterprises, order of succession) is a set of companies with
interlocking business relationships and shareholdings. It is a type of informal business group. The keiretsu maintained
dominance over the Japanese economy for the last half of the 20th century.
Chaebol: (from chae: wealth or property + pol: faction or clan) refers to a South Korean form of business conglomerate. They
are typically global multinationals owning numerous international enterprises, controlled by a chairman who has power over
all the operations. The term is often used in a context similar to that of the English word "conglomerate". The term was first
used in 1984. There are several dozen large Korean family-controlled corporate groups which fall under this definition. The
chaebol has also played a significant role in South Korean politics. In 1988, a member of a chaebol family, Chung Mong-jun,
president of Hyundai Heavy Industries, successfully ran for the National Assembly of South Korea. Other business leaders
also were chosen to be members of the National Assembly through proportional representation. Since 2000, Hyundai has
played a role in the thawing of North Korean and South Korean relations.
Chapter 8
1. The birth of modern organizations
2. Non-competitive forms of homogeneity
3. Mechanisms of isomorphic change
3.1.Coercive isomorphism
3.2. Mimetic processes
3.2. Normative pressures
In general, organization studies often focus on differences between organizations and firms
DiMaggio & Powells influential approach turns the question around: what makes organizations converge, become
more alike? This question is grounded in a more historical foundation
Starting point: the immense success of organizations in modern life
Thought experiment: core differences between your day and that of a random medieval (wo)man
ubiquity of organizations in our daily lives
These questions indeed refer to the diffusion of one modern type of organization rather than the differentiation of
organized types
We call these modern organizations bureaucratic
From this apparent historical success of bureaucratic organizations in modern life follow a number of questions:
What distinguishes modern organizations from earlier organized forms?
What makes these modern organizations so successful that they have come to permeate modern societies so
thoroughly?
The dominant answer to these questions makes use of the concept of bureaucracy and the difference in meaning
between the everyday use of the word and its social-scientific denotation
In everyday use it refers to inefficiency and lack of effectiveness; historically the opposite is the case
Bureaucracy: concept developed by Max Weber, referring to a specifically modern type of organization
29
According to Weber, the following characteristics of bureaucracies are quintessential:

1. Fixed jurisdictional power in official duties or functions
2. Principle of office hierarchy in an ordered system of super- and subordination
3. Separation between the private life and professional activities, physically (the office) and regulatory (e.g.
monies)
4. Expert training, technical learning and specialization
5. General rules as the guiding basis of action
The accepted idea is that the bureaucratic form has become universal because of its advantages over alternative
forms: it is more precise, speedy, stable, less ambiguous and even cheaper
In short, it is competitive advantages that fuelled bureaucratization of the world
DiMaggio & Powell assert that in contemporary society, homogenization is also driven by non-competitive causes
Bureaucratization: to cause to become bureaucratic or to resemble a bureaucracy.
Organizational field is defined as "sets of organizations that, in the aggregate, constitute a recognized area of institutional
life; key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services
or products".
Social connectedness is the measure of how people come together and interact. At an individual level, social connectedness
involves the quality and number of connections one has with other people in a social circle of family, friends, and
acquaintances. Going beyond these individual-level concepts, it involves relationships with beyond one's social circles and
even to other communities. This connectedness, one of several components of community cohesion, provides benefits to both
individuals and society.
Structural equivalence refers to the extent to which two nodes are connected to the same others -- i.e., have the same social
environments. It is often hypothesized that structurally equivalent nodes will be similar in other ways as well, such as in
attitudes, behaviors or performance.
2. Non-competitive forms of homogeneity
Central thesis: organizational innovations (e.g. management techniques or financial reporting procedures), tend to
distribute throughout organizational fields
When innovations are invented, diffusion follows a non-linear pattern (e.g. quadratic)
Diffusion: the process of the dissemination (broadcasting) of a phenomenon throughout the population
Result: within organizational fields, organizations homogenize over time
To disseminate in terms of the field of communication, means to broadcast a message to the public without direct feedback
from the audience.
Organizational field: a recognized area of institutional life, with organizations related through
30
These forms of diffusion are not primarily inspired by competitive pressures

They may have beneficial effects, to the extent that conformity of organizations creates advantages, e.g.
access to a standardized labour market
compliance to formal and informal rules
status advantages for its management, etc.
3. Mechanisms of isomorphic change
Ideal typically three mechanisms exist that push isomorphic change:
1. Coercive
isomorphism
2. Mimetic
3. Normative
Analytically these types are distinct, empirically they often blur
The types may have complicated interaction effects, mainly mutually reinforcing
Homogeneity is the state of being homogeneous. Pertaining to the sciences, it is a substance where all the constituents are of
the same nature; consisting of similar parts, or of elements of the like nature.
Cultural homogenization is the homegenisation of different cultural practices into one blended, uniform cultural practices
that do not allow easy identification of the characteristics of many cultures. It means over the years, peoples of two or more
cultures have interacted and intermingles in such a manner as to lose their individual cultural identities and merged into a
one uniform culture than does not show any trace of diversity of different cultures among the people.
Coercive isomorphism induces an organization to adopt change through
a. pressures from organizations from which the former is dependent
b. Cultural and regulatory expectations in society
A privileged factor of course is state regulation, directly and indirectly
Case: standardized reporting mechanisms, e.g. financially but also business plans
Mimetic processes occur when diffusion follows from uncertainty avoidance
One tends to mimic peers in the cases of:
a. ambiguous goals (What is the problem?)
b. unclear solutions (How to solve the problem?)
Typical central factors fostering mimetic isomorphism are textbooks, consulting firms and other media that
distribute ideas
Normative pressures
Professionalization is the final source of diffusion of innovations, denoted as normative pressure
Professionalization: the collective struggle of members of an occupation to
(a) define the conditions and the methods of their work,
(b) control the production of producers, and
(c) establish legitimation for occupational autonomy though a cognitive base
Successful case: medical doctors
Professionalization fosters isomorphism though to important and central characteristics:
(a) Production of specific knowledge though university specialists that control the emergence of innovations
(b) Elaboration of professional networks though which innovations diffuse
Universities and training institutes function as centres of the development and promulgation of legitimate practices
Important mechanism: recruitment
Recruitment tends to become homogenous to the extent that a profession is successful
Creates the homosexual reproduction of management
31
Effect: the selection effect creates a strong impetus of homogenization of management though anticipatory
socialization
Uncertainty avoidance: "a society's tolerance for uncertainty and ambiguity". It reflects the extent to which members of a
society attempt to cope with anxiety by minimizing uncertainty. The uncertainty avoidance dimension expresses the degree
to which a person in society feels uncomfortable with a sense of uncertainty and ambiguity. The fundamental issue here is
how a society deals with the fact that the future can never be known: should we try to control the future or just let it
happen? Countries exhibiting strong Uncertainty avoidance Index or UAI, maintain rigid codes of belief and behavior and
are intolerant of unorthodox behavior and ideas. Weak UAI societies maintain a more relaxed attitude in which practice
counts more than principles. People in cultures with high uncertainty avoidance tend to be more emotional.
Homogamy: marriage between individuals who are, in some culturally important way, similar to each other.
Homosexual Reproduction (Weird explanation from the internet)
From a website: "I am Kronar, Son of Man. For a hundred generations, my fathers have kept the bloodline pure. Free from
Woman's taint." Kronar, Son of Kronar, Oglaf
It's not unusual to see a same-sex couple with a child. This arrangement can happen in many ways: children informally
looked after by two same-sex platonic friends, adopted children looked after by their parent's same-sex roommate, adopted
kids of an actual same-sex couple, natural children of one (usually divorced) partner who view the other same-sex partner as
a parent, etc...
But what about the child who is born to two genetic parents of the same sex?
Theoretically it should be possible even for two women to have a biological child by a process called haploidization, or
through creating sperm cells from one of the two mother's bone marrow. This would theoretically mean that all of their
children would be female due to the lack of a Y chromosome.
For males, there is research being conducted on the creation of male eggs, which consists of removing the nucleus of an ovum
and replacing it with the nucleus of a sperm. This new egg would then be fertilized by sperm from the other father. The
process has been documented in mice and its viability in human reproduction is still being developed. It is also theoretically
possible to achieve male pregnancy by implanting an embryo in the abdominal cavity, but risk factors make it unlikely that
this will be tested.
Anticipatory socialization is the process, facilitated by social interactions, in which non-group-members learn to take on the
values and standards of groups that they aspire to join, so as to ease their entry into the group and help them interact
competently once they have been accepted by it. It is the process of changing one's attitudes and behaviours, in preparation
for a shift in one's role. Words commonly associated with anticipatory socialization include grooming, play-acting, training
and rehearsing.
When people are blocked from access to a group they might have wanted to join, they reject that group's values and norms,
and instead begin the anticipatory socialization process with groups that are more receptive to them. People doing this, for
example economically disadvantaged teenagers who aspire to become drug dealers rather than professionals, are sometimes
criticized as lacking motivation, however sociologists say they are simply making a pragmatic adjustment to the
opportunities available to them.
32
Chapter 9
Structure of this chapter
1. Introduction and definition
2. Features:
a. Sanctions
b. Distinction from other
phenomena
3. Externalities
4. Applications:
a. Codes of honour
b. Norms of etiquette
c. Norms of tipping
Social norm: A social norm is an injunction to act or to abstain from acting
Distinction
between:
Unconditional norms:
do x, not y
Conditional norms:
if others do x, then do y
Sanction direct punishment or loss of opportunities (ostracism).

Causal efficiency of norms is rooted in sanctions.
Multiplier: adding third-party sanctions to the second-party punishment (gossip)
General foundation of social sanctions: emotions of shame (violator) and of contempt (observer).
Problem: what motivates the sanctioned to invest a cost and a risk in punishing?
2.b. Distinction from other phenomena
Social norms are distinct from:
1. (Quasi-) moral norms: Shapes behaviour, also when the agent does not believe to be observed.
2. Legal norms: Are enforced by specialized agents.
3. Conventions: Follow from sheer self-interest of agents. Often involve habitual action.
33
Ostracism: was a procedure under the Athenian democracy in which any citizen could be expelled from the city-state of
Athens for ten years. While some instances clearly expressed popular anger at the citizen, ostracism was often used preemptively. It was used as a way of neutralizing someone thought to be a threat to the state or potential tyrant.
A modern use developed from the term is to describe informal exclusion from a group through social rejection, although the
psychology of ostracism takes this further, where it has been defined as ...any behaviour in which a group or individual
excludes and ignores another group or individual. This could therefore be a conscious act or an unconscious one.
Externalities
Behaviour with externalities, e.g. littering does not automatically generate norms. Often generated by an outside
intervention.
Probably: emerge easier in cases of common adversary (ethnic, social class or other outsiders) than in game against nature.
Moral norms are the criteria of judgement about the sorts of persons that we ought to be and the sorts of actions that we
ought to perform. As such, moral norms provide us with some consistency and stability in the moral life by bringing about
some depth and breadth to our moral judgments. They provide us with patterns for human conduct"common
denominators," if you willwhich allow us to adequately address the moral dilemmas and conflict situations that we daily
face about what is the right thing or the wrong thing to do. In short, moral norms help us determine what is right and good
within a given situation. Moral norms can be positive (do unto others each according to his own) or negative (do not kill),
general (be good) or specific (do not tell a lie).
Moral norms and sanctions (Article online)
Moral norms are generally seen as having primacy over norms of other kinds. This primacy is based on the assumption that
moral norms override other types of norms, such as juridical, cultural, or aesthetic norms in cases of conflict. Nevertheless,
there are different understandings concerning the question of what accounts for moral norms authority. While some
philosophers defend the view that the source of the moral ought is justification by reason, other philosophers suggest that
ought-ness is brought about by means of sanctions. Consequently, it is controversial whether the primacy of moral norms
is due to reason independent of sanctions or if it is due to the strength of the sanctions that accompany moral norms.
For positions that trace the existence of moral norms to sanctions, the distinction between internal and external sanctions is
crucial. External sanctions consist in punishment and reward, accomplished through social instruments; inner sanctions,
which can help explain moral behavior when violations are not perceived and punished by others, are characterized by
feelings of guilt and the loss of self-respect. However, fundamental objections are raised against a conception of morality
based on either kind of sanction. According to the rival model, moral obligation comes about by means of features of
reasons. Indicative of this position is the fact that moral demands are addressed not only to conscience but also to reason.
Convention is a set of agreed, stipulated, or generally accepted standards, norms, social norms, or criteria, often taking the
form of a custom. Certain types of rules or customs may become law and regulatory legislation may be introduced to
formalize or enforce the convention (for example, laws that define on which side of the road vehicles must be driven). In a
social context, a convention may retain the character of an "unwritten law" of custom (for example, the manner in which
people greet each other, such as by shaking each other's hands).
34
Codes of honour are a set of rules or ethical principles governing a community based on ideals that define what constitutes
honourable behavior within that community. The use of an honour code depends on the notion that people (at least within
the community) can be trusted to act honourably. Those who are in violation of the honor code can be subject to various
sanctions, including expulsion from the institution. Honor codes are most commonly used in the United States to deter
academic dishonesty.
Strong norms often are working in e.g. feuds, vendettas, honorary killings, duels
and so forth.
Examples: aristocracy in Ancien Rgime France, 19th century Corsica.
Experimental evidence of cultural production of codes of honour (US: South
versus North)
Codes of honour are conducive to violence
Example: south versus north of US
Experiment:
o Confederate of the experimenter bumps into male subject and insults him (asshole)
o Control situation: subjects not insulted or bumped into
o Situation of a chicken game: small corridor, other confederate oncoming (1.9 m, 114 kg)
o Measured: distance before subject gives way
o Southern subjects behave differently after insult, northerners not
Norms of etiquette
Examples: dress codes, table behavior,personal hygiene, greeting ceremonials.
Often very detailed, strongly emotional.
Tend to create boundaries between high and low in society, both ways.
Central conclusion: at first sight trivial, but often more important in social life than fundamental values and so
forth.
The norms of tipping
Tipping is a huge sector.
Rational in case of repeated customers.
Other tipping is mysterious: why tip in one-shot exchanges (taxi drivers, waiters abroad)?
Probably moral and customary elements are stronger than in other norms. Former supports the action, latter the
definition of services that are supposed to be tipped.
35
Chapter 10
Central conepts:
a. Religious benefits
b. Attitude toward riches
c. Religious organizations
d. Religion of classes and strata
e. Ways to salvation
a. Religious benefits:
Heilsgter: literally goods of salvation

Everything that may be desirable in religion, reasons
for being religious.
Both this-worldly and other-worldly (eschatology),
material and spiritual
General: more rationalized religions include otherworldly benefits
Does not exclude interest-driven behaviour
This worldly: Pertaining to or concerned with material
human existence, as opposed to spiritual or religious
matters.
Eschatology is a part of theology concerned with what

are believed to be the final events of history, or the
ultimate destiny of humanity. This concept is commonly
referred to as the "end of the world" or "end time".
36
b. Attitude toward riches:

In general: religious benefits include material wealth
Rationalization implies tension between religious and secular life values (consumption, wealth)
Contradiction between neighbourhood ethic of caritas and impersonality (unpersnlichkeit) of rational capitalism
Caritas = Charity
c. Religious organization:
Hierocracy: every organization enforcing order through religious benefits instead of physical coercion
Church: rationally evolved and universalistic hierocracy
Sect: religious organization one has to accede to
d. Religion of classes and strata:

Different roles between privileged and nonprivileged in society:
Privileged: theodicy of good fortuneseek
legitimisation for their position
Non-privileged
carry
hope
for
compensation: expectation of rewards
for their suffering
Theodicy: Max Weber interpreted theodicy as a social

problem, and viewed theodicy as a "problem of meaning".
Weber argued that, as human society became increasingly
rational, the need to explain why good people suffered and
evil people prospered became more important because religion casts the world as a "meaningful cosmos". Weber framed the
problem of evil as the dilemma that the good can suffer and the evil can prosper, which became more important as religion
became more sophisticated. He identified two purposes of theodicy: to explain why good people suffer (a theodicy of
suffering), and why people prosper (a theodicy of good fortune). A theodicy of good fortune seeks to justify the good fortune
of people in society; Weber believed that those who are successful are not satisfied unless they can justify why they deserve
to be successful. For theodicies of suffering, Weber argued that three different kinds of theodicy emergedpredestination,
dualism, and karmaall of which attempt to satisfy the human need for meaning, and he believed that the quest for
meaning, when considered in light of suffering, becomes the problem of suffering.
e. Ways to salvation:
Expectation and belief in salvation may affect the economy in two ways:
Explicit attitudes toward economic life (e.g. ban on usury)
Unintended consequences- the personality of the believer can be changed after salvation. They will
strengthen the economic traditionalism.
Latter is more important, e.g. inner-worldly ascetism
37
Usury is the practice of making unethical or immoral monetary loans intended to unfairly enrich the lender. A loan may be
considered usurious because of excessive or abusive interest rates or other factors, but according to some dictionaries, simply
charging any interest at all can be considered usury.
The protestant ethics

1. The origin and scope
First published as 2 journal articles (1904-5)
Debate until 1920 (Kritiken und Antikritiken)
Final publication in collected work in religious sociology (GARS, 1920)
Common misunderstandings (2) about the scope:
not: explanation of the genesis of capitalism
but: ethos of puritan Protestants lies at the basis of capitalist mentality
not: relevance of religion for the economy today
but: causal factor in the genesis
2. Stratification as an indicator
Professional statistics in religiously pluralist countries
Protestants more often skilled industrial laborer or entrepreneur than Catholics.
Remains of an older relationship.
However: alternative explanations:
Opposite causal relationship ( control for wealth)
Spurious correlation: common cause is minority position, compare Jews and Chinese ( comparing
Protestants and Catholics)
3. The capitalist spirit
Distinguishes capitalist form from mentality
No systematic account, but ideal typical illustration of Benjamin Franklin
Benjamin Franklin:
1706-1790
Founding father, entrepreneur, inventor, writer
Seen as the founder of typical American values of thrift, hard work
Published books with practical advice, from which Weber cites
Benjamin Franklin, Advice to a young tradesman:
Remember that time is money. Remember that credit is money. For six pounds a year
you may have the use of one hundred pounds. After industry and frugality, nothing
contributes more than punctuality and justice. The sound of your hammer at 5 in the
morning, or 8 at night, heard by a creditor, makes him easy six months longer. He that
spends a groat [silver coin] idly spends idly above six pounds a year, which is the price
for the use of one hundred pounds.
38
Core of the capitalist spirit: hard and efficient work to gain money, not only as a means, but also as a goal, an
ethos
Both work and money become goals, not an end
This is fundamentally different from ruthless medieval capitalist: opposed to lust for wealth
Core difference between rational capitalist mentality and e.g. medieval culture: work as a judgment and wealth as
an end for a lavish lifestyle
In a way, this ethos is pretty irrational yet modern, opposed to early capitalism (Florence e.g.)
4. Calling (Luther)
First candidate causal factor of capitalist mentality
Concept of calling (Beruf) in Bible translation by Luther
Novelty: work as a duty toward God for everyone
Catholic Middle Ages: only for a religious elite (ora et labore): other-worldly ascetism
However: Luther provided a traditionalist interpretation
Conclusion: candidate is rejected
5. Puritan Protestantism
Generic term with Protestant denominations: mainly Calvinism, but also Pietism, Baptism, Methodism
Not as much the doctrine, but the experienced religious convictions and the practice, built upon doctrine
Core: doctrine of predestination (usually a source of fatalism) extreme loneliness and uncertainty for faithful
Response in pastoral work: methodical conduct of life as a sign this-worldly ascetism Relevance: the rational
and methodical conduct of life of monks was imported in the world
Implies the emphasis on hard work
as a central incentive
Same time: aversion to the fruits of
labor (luxury, consumption)
General
effect:
capital
accumulation, possibility of auto
financing
of
entrepreneurial
activities, disciplined labor supply
The economic ethics of world religions

India:
Hinduism is carried by leading religious caste (Brahmin)
Two religious foundations
Sansara: reincarnation
Karma: transmigration determined by respect for religious rules and rituals during life
Effects
Strongly rationalized religion
Strong personal interest in complying to the rules
Innovation and mobility (also in the economy) are punished
39
Chapter 11
1. Introduction and problem
2. Research questions
a. Properties of codes
b. Emergence
c. Effects of codes?
d. Violations?
e. Effects on economic
activity
3. Conclusions
Example:
Harry Stonecipher, Boeings new CEO (2003) introduced a new ethics code: employees will not (...) cause embarrassment to
the company. He engaged into extramarital romantic affair with employee. Was subsequently fired by the Board. Reaction:
I violated my own standards
Two uneasy relationships are exposed in questions of morality and economy:
1) Contradiction between ample corporate discourse and policy and rare research
2) The separate worlds idea
The separate worlds idea
Very popular viewpoint, reminiscent to the sectoral and artistic approaches to culture, sees it as opposed to the
economic world: mix the two and both of them suffer
This is usually denoted as separate or even hostile spheres or worlds: culture, especially regulative (norms), on the
one side, the economic logic on the other
One approach that is close to the hostile worlds view builds that market life invades the authentic world of peoples
personal, intimate or moral life: the colonization of the life sphere (Habermas)
Case: surrogacy as a commodity
In Anand in India* there is a clinic where poor women from the countryside rent themselves to be surrogate mothers
Middle class prospective parents from India and abroad order a baby
Usually the husband is the biological parent, sometimes even both prospective parents
They stay in a clinic for the whole pregnancy
Afterwards the baby is handed over to the prospective parents
This is an extreme case of commercialization / colonization of intimate life
Pande, A., 2009. It may be her eggs but its my blood: Surrogates and everyday forms of kinship in India. Qualitative
Sociology. In sum, some evidence or illustrative cases of colonization of peoples life by markets and the economic logic
However, generalizing the idea that money / the economy and morals should be set apart is a nave stance
Culture in general, and also morals / ethics in particular, are always present in economic decisions too
It is not only out there (as exemplified in Ch. 10), but also it is part of any economic act or institution (as in
ethical codes)
40
The hostile worlds view argues that money corrupts the meaning of art, but some suggest this is a dated concept in
describing the art market.
Ethical codes are adopted by organizations to assist members in understanding the difference between 'right' and 'wrong'
and in applying that understanding to their decisions. An ethical code generally implies documents at three levels: codes of
business ethics, codes of conduct for employees, and codes of professional practice.
a) Properties of codes
Four dimensions addressed in codes:
a. Categories of persons and actions to which they apply (employees, kind of behaviour or contexts)
b. Procedures to identify activities
c. Rules distinguishing between required and banned activities. These rules draw sharp boundaries between
acceptable and unacceptable activities (as opposed to rules of thumb) = legal logic
d. Penalties for banned activities. They often bear little relationship to the firms loss.
b) Emergence of codes
Usually three types of circumstances or events promote the formation of ethical codes :
a. External pressure, often resulting out of a crisis in the relation between the firm or sector and the outside
world (politics, public opinion)
b. Emulation of prestigious organizations (consultants, business schools)
c. Internal crises, which may be caused by similar problems as in 1.
c) Effects of codes
a. Display effects as an act of communication, a signal of the firms standards
b. Enforcement effects have to do with the direct influence on the organizations members actions
i.
Rewards and penalties: effects by threat and even by elimination
ii.
Selection effects: implicit (displaying ethical standards may attract of discourage certain
potential members) or explicit (recruitment strategy)
iii.
Socialization: learning process through assimilation in the organizations culture
iv.
Interpersonal relations of mutual expectation (norms)
The latter two (mutual expectations and socialization) presuppose the existence or development of social norms. Effective
codes therefore presuppose the existence or the emergence of social norms.
How Do Ethical Codes Produce Their Effects?
We must distinguish between two kinds of effects: display effects and enforcement effects. Enactment of a code almost
always involves an element of display, advertising to people inside and outside the organizations vigilance, uprightness,
and/or membership in an organizational elite. Many a code adopted for display suitably impresses the nave, but leaves
knowledgeable insiders smirking. Enforcement effects concern direct influence over behavior within the organization
Leaving aside perverse effects such as sabotage and simple dissimulation, genuine enforcement effects for ethical codes
operate through four clusters of causes:
1. Most obviously but not necessarily most effectively, rewards for good behavior and penalties for bad behavior, if actually
delivered, deter banned activities through threat, promise, or simple elimination of bad actors from the organization. Thus
the dramatic firing of a cashier who dips his fingers into the till sends a signal to everyone else who handles the
organizations money.
2. As analysts of principal-agent relations regularly point out, selection eliminates candidates for ethically sensitive
positions who lack credentials, previous records of reliability, or attributes employers associate with propensities for ethical
Uprightness. Potential cashiers generally undergo much more extensive screening for likely moral responsibility, say, than
computer programmers do.
41
3.Socialization also makes a difference. Assimilation into an organization where everyone evinces horror or fright at the
very idea of falsifying accounts re inforces the reluctance of new members to cheat in that way, almost regardless of the
likelihood of detection and punishment for falsifying accounts. As little effect as pious exhortations from CEOs are likely to
have,
daily
teaching
from
fellow
workers
increases
the
effectiveness
of
ethical
codes.
4. More subtly, ethical behavior becomes part of the mutual expectations of organization members who are engaged in
relations of reciprocity: my not breaking the rules increases the chances that in the future I will refrain from undercutting
you as well as decreasing the likelihood that I will pull you down through guilt by association. Thus multiple developers of
the same software come to owe each other protection of the softwares secrets from outside competitors.
To be sure, each of the four enforcement effects remains vulnerable to collusion by code violators within the organization:
joint concealment of violations from sanctioning agents, recruitment of confederates, socialization into code-violating
subcultures, and mutual protection among violators. Yet when organizations ethical codes do work, they do so through
some combination of sanctions, selection, socialization, and mutual investment in interpersonal relations. Visible sanctions
get plenty of attention from corporate
To the extent that displays respond to pressure from powerful external agencies, we can expect them to shift the
organizations visible performances in the directions demanded by those agencies. To the extent that the displays serve the
purposes of advertising, executive self-esteem, or organizational self-image, however, we should expect relatively superficial
effects on actual organizational performance as represented either by interactions among internal segments or by aggregate
output in the form of efficiency, productivity, profitability, or quality of goods and services produced.
d) Code violations
Fundamentally, no rule of whatever form is generally complied with, violations always exist.
Several causal factors:
i. Individual advantage / profit (e.g. in corruption / fraud or dodging work)
ii. Bonds of loyalty (backed by informal social norms)
iii. Patron-client chains
e) Effects on economic activity
Effects differ:
1) Display effects: rather superficial economic effects, mere public relations
2) Enforcement effects: significant but often contradictory effects.
3) Hypotheses:
Cost for managers in ascending order: selection, rewards & penalties, socialization, interpersonal
relations
Extent of organizational transformation have opposite order (cost and effect correlate positively)
Codes become an element in the internal power struggles: codes as a resource
Socialization also makes a difference. Assimilation into an organization where everyone evinces horror or fright at the
very idea of falsifying accounts enforces the reluctance of new members to cheat in that way, almost regardless of the
likelihood of detection and punishment for falsifying accounts. As little effect as pious exhortations from CEOs are likely to
have, daily teaching from fellow workers increases the effectiveness of ethical codes.
42
Chapter 12
Structure of chapter 12
1. Introduction: the state and the
economy
2. Economics and the state
a) Classical economics:
A. Smith
b) New Institutional
Economics
3. Classical sociology and the state
a) Marx
b) Weber: types of
domination
Major impact of non-economic institutions on the economy, or: necessary condition. Especially true for politics and law
Two central functions:
1. Violence monopoly of the state
2. Property rights
2. Economics and the state:
a) Classical economics (Adam Smith): three functions
1. Defence
2. Justice
3. Public works
b) New Institutional Economics, Central paradox:
Strong states needed
Refrain from using this force fully
3. Classical sociology and the state:
a) Karl Marx: real power is economic power
b) Max Weber Force versus legitimate domination
Violence monopoly of the state: The cartoon also reminds us of Max Webers
insight that the nation-state can be defined by its monopoly on violence. For most
of us, most of the time, violence exercised by the state is assumed to be legitimate
(unless shown otherwise). For example, police walk around with guns and can
shoot you legally. Soldiers kill as part of their jobs. This is simply keeping the
peace or following orders.
But violence exercised by individuals and other entities is (unless shown
otherwise) illegitimate. In fact, when individuals or other entities do violence, it is
often called criminality or terrorism.
Power Karl Marx used the concept of power in relation to social classes and social systems rather than individuals. He
argued that power rests in a social classs position in the relations of production. Power does not lie in the relationship
between individuals, but in domination and subordination of social classes based on the relations of production.
43
Webers Types of Legitimate Domination internet sources:

Domination = probability command(s) will be obeyed. Subtype of power and influence. Wide variation in basis. Always a
measure of voluntary compliance. D of groups takes staff. Staff obey from custom, affect, pay, or ideals & this determines
type of domination. But legitimacy also needed. D rarely relies on custom, affect, or pay alone. Everything about social
organization of D seems to depend on basis of legitimacy claim. Legitimacy is a reasonable basis for classifying types of
domination. Authority relationship is a broad category. Mere power over not same as authority. A involves command and
obedience. But there are gradations in real world. People obey for different real reasons. Whats important is how basis
for validity of authority is related to means of its exercise. Even in regime with no legitimacy vis a vis subjects, authority
relation between leader and staff will be classifiable. Obedience = action follows content of command without regard to
actors own stance. Subjective process in actor not relevant here. Effects of domination as social phenomenon extend
throughout society. Ideology of leader as servant does not change this analysis. Three types of basis for legitimate
authority: rational; traditional; charismatic. Rational = legal authority based on rules. Traditional = based on belief in
sanctity of the way its always been done. Charismatic = based on exceptional character of an individual. Variations
across types in person obeyed and what determines range of things covered.
Weber begins by defining domination distinguishing it from power and influence, which he says are bigger categories. The
German for domination here is "Herrschaft" which could be literally translated as "lordship" as in "lordship over." This heavyhanded etymology is useful here because it implies that we really are talking about a social relationship. For Weber, too, an
important component of domination or authority is that it includes a subjective role for the dominated: Weber says it
always "implies a minimum of voluntary compliance, that is an interest (based on ulterior motives or genuine acceptance" in
obedience" (Weber 2010, 116.3, emphasis in original). Weber's point here is that in the case of authority relations, there is
subjective action on both sides of the relationship.
Domination over groups of people requires a staff. The problem is how to maintain staff loyalty. Loyalty can be achieved "by
custom, by affectual ties, by a purely material complex of interests, or by ideal (wertrationale) motives" (116.5), in other
words, custom, emotional ties, pay, or beliefs. But no matter the basis, more legitimacy is needed. Based on
experience, Weber notes, different kinds of legitimacy give rise to different "type[s] of obedience," "kind[s] of administrative
staff," and "mode[s] of exercising authority" (116.7).1
1. Weber's analytical precision starts to show through here. We might note that this is a suggestion of four dimensions or
components of domination: 1) type of obedience (wdtm?); 2) kind of staff (read "organization of staff"); 3) mode of authority
exercise (wdtm?); 4) "variation in effect."
Slides:
Webers types of domination
Power is the ability to make others act the way one wants them to
Most obvious way: with the help of force (threat of or use of physical violence)
Downside: short-term, requires a lot of control resources, unstable
Most important alternative: authority
Authority is power exertion we call legitimate: with the consent of the dominated
Classical typology has three types of authority:
1. Traditional:
Obey me, for that is what people have always
done
2. Charismatic:
Follow me, for I will change you life
3. Rational-legal:
Obey me, for I have been appointed by the
proper authority and appropriate rules
44
Fundamental differences in functioning, effects and sustainability
45
Chapter 13
1. Two hypotheses on tax
burden
2. Hypothesis 1: exogenous
factors
1. Homogenization of
tax burden?
2. Homogenization of
tax structure?
3. Hypothesis 2: endogenous
factors
1. Tax burden and globalization:

Two hypotheses on tax burden
Context: globalization of the worlds economies
Hypothesis 1:
Homogenization of tax burden due to external factors of worldwide economic liberalization
Two indicators:
Race to the bottom
Homogenization of tax structure
hypothesis 2:
Tax burden is rather determined by endogenous institutional factors
Defends the idea that differences can be better explained by the political dynamics and power balances in the
countries
Two areas of power relations seem decisive:
Industrial relations: The power of a centralized labor movement creates reasons for workers (and unions) to
support a high tax burden. Business and investors often accept, buying a stable climate (long-term benefits).
Electoral power relations: Often 1 is strengthened by governments that are close to unions. Coalition systems
need more money to finance several aims.
Cultural homogenization is an aspect of cultural globalization, listed as one of its main characteristics, and refers to the
reduction in cultural diversity through the popularization and diffusion of a wide array of cultural symbols not only
physical objects but customs, ideas and values. O'Connor defines it as "the process by which local cultures are transformed or
absorbed by a dominant outside culture." Cultural homogenization in theory could lead to the development of a single global
culture and elimination of all other, local cultures.
The race to the bottom is a socio-economic phenomenon in which governments deregulate the business environment or taxes
in order to attract or retain economic activity in their jurisdictions, resulting in lower wages, worse working conditions and
fewer environmental protections. An outcome of globalization and free trade, the phenomenon may occur when competition
increases between geographic areas over a particular sector of trade and production.
46
In statistics and probability theory, the standard deviation (SD) (represented

by the Greek letter sigma, ) measures the amount of variation or dispersion
from the average.
Industrial relations is a multidisciplinary field that studies the employment relationship. Industrial relations is increasingly
being called employment relations or employee relations because of the importance of non-industrial employment
relationships; this move is sometimes seen as further broadening of the human resource management trend.
47
Chapter 14
The Informal economy: the set of economic phenomena unregulated by the formal institutions of society, i.e. the state at
large denied protection of the state.
What does:
the housewife, the junkie, the sweatshop workers, the do-it-yourselfer, the beggars, the cleaning lady and the street vendor
have in common?
All have in common
o that their activity refers to work in some way
o that they are not to be found in official statistics
o that they are called off-the-books
Some are prohibited by law, others not
Some are illegal because of the illegality of the product (e.g. drugs)
Globally: they all refer to activities that are
o economic because they are productive activities
o not (immediately) registered by formal economic statistics
Definition and typology
Origin: Keith Hart (urban Africa)
Institutionalized in ILO (negative; poverty)
Countermovement (de Soto)
Problem: a priori judgments, e.g. Hart:
o people taking back in their own hands some of the economic power that centralized agents sought to deny
them
Or de Soto: Response of real market forces in mercantilist states
Formal vs Informal economy
In economic terms, the difference between formal and informal sectors is a thing of regulation. The formal economy includes
reported payroll items, income taxes, employee taxes and any other official economic factors. The formal sector is an
increasingly complex system of economics that historically grew out of the informal sector. The informal sector refers to parts
of the economy that are not taxed, regulated, monitored or included in the gross national product. Often times called "under
the table," jobs in the informal sector are not reported to the government. Due to the fact that these jobs go unreported, they
are unable to have taxes taken out. Such jobs are paid in cash and are often times less secure or stable due to the fact that
they are not protected by government regulation. The informal sector also includes the "black market," which involves the
unregulated trade of goods and services, which includes contraband. Though difficult to measure or define, the informal
sector is an important element in the functioning of any country. Many developing countries have economies much more
48
heavily based in the informal sector simply due to the fact that regulations, firms, taxes and other such structures have not
yet been established. Governments tend to strive toward formalization for the sake of efficient international interaction;
however the process is complicated and long-term. In order for a nation to shift from an economy that is heavily based on the
informal sector towards an economy that is based primarily on the formal sector, the government of that nation would need
to seek out the parts of the informal sector and shut them down. Due to the difficult nature of this process, poverty stricken
nations find it virtually impossible to move towards a more formal sector economy to earn revenue for the nation.
Logical typology
1) The unrecorded economy
2) The illegal / criminal economy
3) The informal economy
4) The unreported economy
1) The unrecorded economy: Activities that are not recorded by governmental statistical agencies; all the added value
that is not comprised directly in national accounts.
The official economy misses some productive activities because the official statistics explicitly aim not to include them:
unpaid household work, volunteer work, community transactions (e.g. mutual assistance). Is this important? Undoubtedly.
To illustrate this point: household and related work adds up to more time spent in most societies than formal work against
pay
2) Illigal (criminal) economy: deals with illegal products like
drugs or organs.
Functional typology:
Types of informal activities according to the goal (or the intended
function they serve). More or less refer to the advantages for the
agent of engaging in informal activities. As they often exist of
exchange, the same transaction may serve more functions.
49
Three possibilities:
1. Survival:
Just to survive, the poor part of the informal economy. It happen in places where there are no jobs, e.g. Spain.
Poverty driven subsistence work, rather from lack of choice than for cost reduction or tax profit (e.g. urban farming, street
vending).
2. Dependent exploitation
Depend on cost reduction, you dont pay taxes therefore your earnings are higher.
Cost reduction through (partial) reliance on informal work (e.g. subcontracting to undocumented migrants, moonlighting)
3. Growth
Like e.g. Steve Jobs, employed bunch of people in Asia, for the sake of growth.
Advantage through efficient organization, e.g. through networks of small artisans
Embeddedness:
1.
The paradox of Embeddedness: De Soto described informal markets as true, because they are free from state
interference. This lack of state enforcement of contracts, makes pre-state mechanisms of enforcement necessary.
Typically: those mechanisms emerging from social relationships (reciprocal trust grounded in on-going relations, social
norms). The first paradox of the informal economy is that the more it approaches the model of the true market, the
more it is dependent on social ties for its effective functioning.
2.
Illustration: central Italy The historical case of the region of Emilia-Romagna is an illustrative case. Cooperation
among artisan-entrepreneurs in order to integrate the whole garment production chain with multiple small companies.
Strongly driven by ideologically founded sentiments against the central state, creating strong social ties. Supported by
a local pragmatic variant of communist ideology.
3.
Illustration: socialist regimes Under totalitarian socialist regimes, the most successful groups that can withstand
total control over the economy, are typically groups with strong intergroup trust. For example, in Cuba, large-scale
black market exchanges depend on strong personal ties of bisneros with all other parties: state factory personnel,
consumers. Example of an ethnic minority: Jews in Georgia (former USSR)
The paradox of state control:

The paradox of state control is that official efforts to obliterate unregulated activities through the
proliferation of rules and controls often expand the very conditions that give rise to those activities.
Basic idea is that the extent of regulation of an economy creates opportunities and pressure for noncompliance
However, Portes presents a more complete theoretical framework introducing two other dimensions
() The more credible the state enforcement apparatus is,

the more likely its record-keeping mechanisms will miss the
actual extent of the informal economy and, hence, the feebler
the basis for developing policies to address it.
50
Porters three stages of theory of informal activities:

At the country level, Portes explains informal activities with two hypotheses:
1.The scope of formal regulatory control of the economy is commensurate with the size of the informal sector.
The more regulation the more you provide chances to evade from taxes. More regulation (Like in communist states:
China) many things are part of the informal, so anything you do fall in the scope of informal economy.
2.Effective enforcement of formal regulation and of rights estrain the size of the informal sector.
Does the state control effectively? E.g. tax control? If there is high tax control then people wont. ( e.g. in Sweden there
is high control and no tax evasion, but in Italy there is no control, and high tax evasion). Also, if the protection is worth
it, like anything wrong happen, the state will protect you, so people have more tendency to stay in formal economy
because of the good services and justice theyd revive.
Public enforcement of government regulations is pervasive in modern societies as a method to induce conduct. A critical
feature of the rule of law is that such rules are upheld and properly enforced by authorities, particularly because public
enforcement might raise the scope for negligence and abuse by officials pursuing their own interest. Appropriate and
effective enforcement does not only mean that it occurs without public or private meddling, but also that regulatory
proceedings are conducted in a timely way that respects the due process of law.
3.Social capital: The third level refers to the social ties between citizens in a country.
When there is trust in a society, people will more likely go informal, rather than formal, like it is in individualistic
societies.
Social capital can only be generated collectively thanks to the presence of communities and social networks, but
individuals and groups can use it at the same time. Individuals can exploit social capital of their networks to
achieve private objectives and groups can use it to enforce a certain set of norms or behaviors. In this sense, social
capital is generated collectively but it can also be used individually, bridging the dichotomized approach
'communitarianism' versus 'individualism'
Imagine this case: a country where citizens have strong social ties, norms of reciprocity and mutual trust among
peers in a community
Portes expects that communities will be more able to withstand enforcement of legislation here
The opposite case: easier for a state to enforce its rules, even to a totalitarian degree
Deterrence is the use of punishment as a threat to deter people from offending. Deterrence is often contrasted with
retributivism, which holds that punishment is a necessary consequence of a crime and should be calculated based on the
gravity of the wrong done. The concept of deterrence has two key assumptions: the first is that specific punishments imposed
on offenders will "deter" or prevent them from committing further crimes; the second is that fear of punishment will prevent
others from committing similar crimes.
The indirect indicators approach
Estimating the proportion of the population performing informal activity
Assumes that certain professional categories or very small firms (VSEs) have a higher chance of informal labour
than others:
Measuring the professional categories should provide a global picture
For VSE: assumption that in industrialised countries informal labour occurs in small companies because
they are less visible for government and thus elude control
51
In the labour market approach, the main categories are:

Unemployed
Workers in micro-enterprises
Inactive population (but: bad indicator)
Domestic servants
Self-employed
Bias:
Groups cited / VSEs do not engage evenly in informal activities (comparatively speaking)
Sometimes other categories are involved in informal activities (e.g. students)
Completely informal individuals / VSEs arent registered at all
Unclear whether contradicting biases neutralize each other
With this approach you dont know the frame: less self-employed people go formal since 2000s
Macro-economic estimates
Attempts to depict the total underground economy as a proportion of GDP
Based on discrepancies between different but comparable measures
Discrepancies are supposed to indicate the informal sector
E.g. currency ratio approach: discrepancy between monetary mass and currency in circulation
How much money you need and how much is in circulation: the difference is informal.
Bias:
Cash abroad
Assumption that informal activities take place in cash
Base period without informal activities
No differentiation between informal and illegal activities
Enormous variation between calculations
The direct approach

Direct survey of consumers: the purchases of the household
Example: 1986 research in U.S.*
Result: roughly 10% of expenditures were informal
83% of the households had at least one informal supplier
Bias:
No B2B
Social desirability bias (people lie about their informal activities because they fear prosecution or assess it
undesirable)
Item nonresponse (people refuse to cooperate to the survey about informal activities)
Item nonresponse (people refrain from answering the question about informal activities)
52
Sample exam
53

2014 12 17 Economic Sociology - Summary With Comments - 1

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

2014 12 17 Economic Sociology - Summary With Comments - 1

Hochgeladen von

Copyright:

Verfügbare Formate

Economic Sociology summary Marta Karcz

This cycle consists of theory and evidence in

Economic Sociology summary Marta Karcz

2. Can sociology be scientific?

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

Types of social actions:

Economic Sociology summary Marta Karcz

Quintessential: social constructions are inter-subjective, both

Economic Sociology summary Marta Karcz

Tenskwatawa, charismatic religious Indian leader

7/11/1811, battle of Tippe-canoe. Orders to kill the American military commander

The looking-glass self

Economic Sociology summary Marta Karcz

Merton's strain theory

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

Science and technique

Economic Sociology summary Marta Karcz

We will sketch 4 interconnected characteristics of modern society:

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

The nation state :

Economic Sociology summary Marta Karcz

Two feasible approaches:

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

(Taken from a website commenting of the Esping-Andersens theory)

Economic Sociology summary Marta Karcz

Slides: Continental regimes

Two central features:

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

1.a. Market characteristics (6)

Two important superordinate markets tend to play a significant role:

Economic Sociology summary Marta Karcz

Superordinate: of higher degree in condition or rank.

3.a. Characteristics of slave markets

Economic Sociology summary Marta Karcz

3.b. Crisis of Roman slave markets

3* Islamic slave markets

4.a. Characteristics of agrarian- coercive markets

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

After AD 1300, two mechanisms:

Economic Sociology summary Marta Karcz

China was a forerunner in many technological innovations:

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

Economic Sociology summary Marta Karcz

1.a. The firm as a black box

Firms were central actors

1.b. Alternative 1: Adam Smith

1.c. Alternative 2: transaction cost economics

1. The ex-ante costs of drafting, negotiating and

Which governance structure?

Economic Sociology summary Marta Karcz

In general three types of transaction costs (North):

Sociological approaches: Max Weber

Economic Sociology summary Marta Karcz

Rational firm is Western invention:

Weak impact of morality on behaviour

Economic Sociology summary Marta Karcz