Lost Decades

The so-called Americanization of economics in the European countries and a focus on the technical potentialities of “high theory”, on the one hand, and the pressing problems related to the reconstruction of Europe and then the process of decolonization, on the other, channelled intellectual efforts in directions other than economic sociology.

The Keynesian revolution appeared as a further blow to economic sociology, since macroeconomic approaches were not easily assimilated with economic sociology. In his reviews of the General Theory Halbwachs was unable to understand the potentialities of the Keynesian approach, with its emphasis on the economic behaviour of specific social and economic classes. When shortly after the Second World War Georges Lutfalla went in that direction in L’Annee sociologique, he seemed to make no impact at all, which could be explained by the fact that at that time Keynesianism was not well received in France. In the famous comparison between the functioning of the financial market and the beauty contest in chapter 12 of Keynes’s General Theory, he compared a financial market with a beauty contest, where a competitor should choose not what that competi­tor thinks to be the prettiest faces, but “those faces which he thinks likeliest to catch the fancy of other competitors, all of whom are looking at the problem from the same point of view” (Keynes 1936 [1973]: 156).

Keynesianism was taken up by Takata’s (1956) “sociological economics”, focusing on the issue of money wage stickiness. The main thrust of his approach was to give power its full dimension within political economy, reassessing Friedrich von Wieser’s approach to social economy in which asymmetries of power, states and the constraints of the world economy were taken into account (Wieser 1914). The same impetus was also at the root of the work of Franςois Perroux in the same period as Takata, with a series of studies - Economie et societe: contrainte, echange, don, 1960, Pouvoir et economie, 1973 and Unites actives et mathematiques nouvelles, 1975 - on power within the economy and within eco­nomics (see Perroux 1994). Later, this issue was central to James Coleman’s endeavour to provide a general theory of social behaviour grounded on utility maximization and control over the relevant resources (Coleman 1990).

However, two important works appeared in that period. Economy and Society was written as a result of the encounter between Parsons, then a major sociologist in Harvard, and Smelser, a young scholar at the London School of Economics (LSE), who tried to connect Parsons’s sociology to recent development in economic theory, and Keynesianism in particular. Their approach was based upon Parsons’s general theory of the social system, with his famous distinction of four functional imperatives - the so-called AGIL (adaptation, goal gratification, integration, and latent-pattern main­tenance) variables - and a new hypothesis according to which economics is the theory of processes occurring within a specific sub-system - the economy - differentiated from the other sub-systems but in which, contrary to Pareto’s views, the same basic variables (AGIL) are as relevant for the economy as they are for the social system in general. As a result, they focused on the interchanges between the economy and other sub-systems.

Karl Polanyi is the second key author in this period. His landmark study published towards the end of World War II - The Great Transformation - is now acknowledged as a major achievement in the domain of economic sociology, introducing the concept of embeddedness (Polanyi 1944). Polanyi stressed that the general rule until the nineteenth century was to regulate markets by norms coming from other social spheres (politi­cal, religious and moral). The introduction of the New Poor Law of 1834 marked the abrogation of workers’ protection dating back to the Elizabethan period; Polanyi con­sidered this to be the landmark decision that opened the door to a fully self-regulated market system. He added that the spread of the classical political economy of Ricardo and Malthus had been instrumental in that political decision. As a consequence, labour (human beings), land (nature) and money (politics) were treated as commodities - or pseudo-commodities in Polanyi’s parlance -no longer regulated by any social norms, but instead by supply and demand and the price mechanism: a situation of dissembed- dedness, or the domination of society by the market system. In later work (Polanyi and Arensberg 1957), he omitted this binary distinction (embedded/disembedded economies) suggesting a more flexible approach, according to which several economic integrating principles are simultaneously at work within any given society: household (or self­sufficiency), reciprocity (social exchanges between equals), redistribution (wealth being centralized and then redistributed) and the market. A balance between these four forms of economic organization was the basis for political freedom.

The Parsonsian approach petered out and was never in a position to gain momentum among sociologists and economists; the Polanyian approach went its way but mainly among economic anthropologists, notably through the long debate opposing the sub­stantive and the formalist view of the economy in pre-modern societies. The change came from a new generation of sociologists and economists in the 1970s.