Content provided in partnership with
Business Services Industry
Post-classical political economy: Polity, society and economy in Weber, Mises and Hayek - Austrian School Perspectives - Max Weber, Ludwig Von Mises, Friedrich A. von Hayek
American Journal of Economics and Sociology, The, Jan, 2002 by Peter J. Boettke, Virgil Henry Storr
I
Introduction
INCREASINGLY, scholars are becoming dissatisfied with economic theories that fail to consider the social, political, historical and cultural context in which actors find themselves and that fail to endow individuals with customs, values and beliefs. Economic anthropologists, for instance, have been deeply critical of economics' "vain search for generalizations" and have instead stressed the superiority of ethnographic over statistical data and of context-specific analysis over attempts of universal theorizing. (1) Although economic anthropologists have done a great deal of meaningful and important work, (2) this methodological attack, at least as it is often articulated, runs the risk of throwing the epistemological baby (the insights to be gained from economic theorizing) out with the methodological bathwater (the naive psychology of homoeconomicus and the fiction of a frictionless, institution-less, culture-less economic environment). (3)
- Most Popular Articles in News
- The Ten Best Laptop bags
- Tata plans cheapest-ever car for Indian market
- GLOBALIZATION AND THE DEVELOPMENT OF UNDERDEVELOPMENT OF THE THIRD WORLD
- Corn is good for you; Corn is not only a tasty treat, but also a cereal that ...
- THE 50 BEST STYLISH HANDBAGS TO CARRY
- More »
The economic sociologists, on the other hand, have attacked economics not for its attempts at theory making (theorizing is entirely consistent with the sociological perspective) but because it ignores the social and institutional context in which all human activity (including economic activity) takes place. In attacking, they have articulated a compelling alternative to the textbook neoclassical framework. While textbook economics "assumes that actors are not connected to one another," economic sociology "assume[s] that actors are linked with and influenced by others" (Smelser and Swedberg 1994, p. 5).
Economic sociologists, particularly those rooted in the Weberian tradition, have also articulated a far more sophisticated form of methodological individualism than that employed by most neoclassical economists. In standard economics, methodological individualism often degenerates into an atomized conception of the individual. When utilized by economic sociologists, however, it becomes a method of infusing their analysis of the social structures that influence individual activity with "meaning." "Sociology," Weber argues, "is a science concerning itself with the interpretive understanding of social action and thereby with a causal explanation of its course and consequences." To Weber, concrete human action is intelligible to the sociologist because of the subjective meaning that actors themselves place on their behavior. Economic sociologists, following Weber, must understand that "[a]ction is 'social' insofar as its subjective meaning takes account of the behavior of others and is thereby oriented in its cou rse" (Weber 1922, p. 4). sociological analysis strives not for prediction but understanding, and this understanding is achieved by tracing all social phenomena back to the purposes and plans of the actors whose actions resulted in the phenomena to begin with. Weber, in fact, argues that sociological knowledge, "namely the subjective understanding of the action of component individuals" (1922, p. 15), was privileged in comparison with the natural sciences because we can never truly understand the behavior of cells. We do, however, have access to interpretive understanding in the sciences of human action because we are what we study.
Unfortunately, standard economics techniques seem to be unable to aid us in gaining an appreciation of these subjective meaning aspects of social action. And, in spite of economic sociologists' compelling critique of mainstream economic thought and the clear improvements over the rarified neoclassical mode of theorizing that they have articulated, economic sociology's effort to replace standard economics with their alternative framework remains an incomplete project. One reason is that the "new sociology of economic life" (modern economic sociology) has failed to evolve "a sophisticated sociology of money and markets" (Swedberg 1991, p. 270). Another is that many of the insights of Weber's cogent formulation have been lost. A third, and perhaps the most damaging reason, is that economic sociology has failed to find the necessary allies within the disciplinary borders of economics.
Rational choice sociology in the tradition of Gary Becker and James Coleman offers a bridge between economics and sociology, but not one that leads to a correction of either the institutional or behavioral deficiencies that economic sociologists have sought to address in their critique of standard economics. As an alternative to strict rational choice economic sociology, "new institutionalists" economists, following in the tradition of Ronald Coase, Douglass North, Herbert Simon and O. E. Williamson, represent the most likely intellectual accomplices in a shared research program for the study of the sociology of economic life. It is our conjecture, however, that the Austrian economists (Menger, Mises, Hayek, Schutz, Lachmann and Kirzner) are far more natural intellectual fellow-travelers along the road to constructing a sociology of economic life that successfully melds the study of individuals, institutions and the interpretive meaning attributed to both (see Boettke 1998a). While the Austrians construct the ir economics on a socially embedded foundation from which institutional questions naturally evolve, the "new institutionalists"--often referred to as transaction cost economists for their emphasis that institutions evolve to reduce the cost of doing business in a world of uncertain and unknowable futures--tend to graft a theory of institutions (and institutional evolution) onto the neoclassical frame.
