Economic Action and Social Structure: The Problem of Embeddedness

TLDR

Social theory has long debated how behavior and institutions are shaped by social relations, critiquing both neoclassical atomistic accounts and reformist attempts that still overlook ongoing social structures, underscoring the need for an embeddedness perspective. The study examines how economic action is embedded within social relations in contemporary industrial society. The paper argues that Oliver Williamson’s markets and hierarchies framework fails to account for embeddedness, illustrating this critique.

Abstract

How behavior and institutions are affected by social relations is one of the classic questions of social theory. This paper concerns the extent to which economic action is embedded in structures of social relations, in modern industrial society. Although the usual neoclasical accounts provide an undersocialized or atomized-actor explanation of such action, reformist economists who attempt to bring social structure back in do so in the way criticized by Dennis Wrong. Under-and oversocialized accounts are paradoxically similar in their neglect of ongoing structures of social relations, and a sophisticated account of economic action must consider its embeddedness in such structures. The argument in illustrated by a critique of Oliver Williamson's markets and hierarchies research program.