Capitalism as a System of Expectations

TLDR

Political economy and economic sociology have evolved largely separately, with the former focusing on macro phenomena and the latter on the embeddedness of economic action, yet the former also offers a unifying framework for explaining capitalist dynamics. The article argues that economic sociology can supply a microfoundation for political economy by centering on actors’ expectations about future states, thereby shifting focus to the management of expectations and their institutional, political, and cultural foundations. The authors develop this microfoundation through a discussion of the four Cs of capitalism—credit, commodification, creativity, and competition—arguing that under uncertainty expectations are contingent, fictional, and rooted in humans’ imaginative capacity, which underlies macroeconomic dynamics. They find that macroeconomic dynamics are anchored in these fictional expectations, creating motifs for potentially profitable but ultimately incalculable actions, and that capitalism’s reproduction is precarious because of the contingency of such expectations.

Abstract

Political economy and economic sociology have developed in relative isolation from each other. While political economy focuses largely on macro phenomena, economic sociology focuses on the embeddedness of economic action. The article argues that economic sociology can provide a microfoundation for political economy beyond rational actor theory and behavioral economics. At the same time political economy offers a unifying research framework for economic sociology with its focus on the explanation of capitalist dynamics. The sociological microfoundation for understanding of capitalist dynamics should focus on the expectations actors have regarding future states of the world. Based on a discussion of what I call the four Cs of capitalism (credit, commodification, creativity, and competition), I argue that under conditions of uncertainty, expectations are contingent and should be understood as “fictional expectations.” The capability of humans to imagine future states of the world that can be different from the present is the central basis for a sociological microfoundation of the dynamics of economic macro phenomena. Macroeconomic dynamics are anchored in these “fictional expectations,” which create motifs for engaging in potentially profitable but ultimately incalculable outcomes. This shifts attention to the “management of expectations” as a crucial element of economic activity and to the institutional, political, and cultural foundations of expectations. The reproduction of capitalism is precarious also because of the contingency of expectations conducive to its growth.