MEMORIALUNIVERSITY OF NEWFOUNDLAND

DEPARTMENT OF SOCIOLOGY

Sociology 2110

Fall 2006

Slot 18: Tuesday & Thursday, 10:30-11.45, Room SN 2105

Instructor:

Dr. Anton Oleinik, Associate Professor

Office hours: A-3094, Tuesday & Thursday, 3:15-4:15

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Course title:

Economy and Society

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The principal task of the course consists in exploring different links that exist between economy and society. Emphasis will be put on embeddedness of economic processes in a broader social context. Several approaches to the study of the embeddedness will be discussed: economic sociology, institutional economics, law and economics, and others.

Does the model of homo œconomicus have a universal explanatory value, i.e. behavior in any situation could be explained with its help? Do we really live in a network society, where the most important thing is to ‘get connected’? How important is to trust people in everyday life and to what extent? What could be said of the firm, the state and the household from a sociological point of view? What role do power and coercion play in our everyday lives? The course will provide guidelines for finding tentative answers to these questions.

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Required text:

Sociology 2110 Readings, 2nd edition

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Method of Evaluation:

Evaluation will consist of

  • Classattendance and participation (10%),
  • Two mid-term quizzes (5% and 20%),
  • Oneindividual writing assignment (25%),
  • A final examination (40%).

Course description:

[This outline might be subject of changes]

Introduction

  1. 7.09Economy and society: can one speak of them separately? Standard textbooks in sociology: norm-obedient behavior as a starting point.Standard textbooks in economics: rationality as a starting point. Real life: sometimes we cannot achieve our rationally chosen goals without obeying the rules. E.g., to increase your sales, you have to understand and respect the norms and values structuring everyday life of your prospective customers. Interpretative rationality (an experiment).

Readings 1:

The Beurger King Muslim (Clichy-sous-bois, France) case [stable URL:

DOBBIN Frank (2004), ‘Introduction: The Sociology of the Economy’, in Dobbin F., ed., The Sociology of the Economy, New York: Russel Sage Foundation, pp. 1-25 [stable URL:

  1. 12.09Economic way of thinking: basic principles. Homo œconomicus and the model of rational choice. Theory of consumer behavior (microeconomics). Theory of general equilibrium (macroeconomics). The ‘hard core’ of mainstream (neoclassical) economics.

Readings 2:

McCONNEL Campbell, BRUE Stanley and POPE William (1990), Economics: Principles, Problems and Policies, Toronto: McGraw-Hill Ryerson Limited, 5th Canadian edition, pp. 101-105,540-541

  1. 14.09Economic imperialism: ascription of a universal explanatory value to the model of homo œconomicus. Examples of the application of an ‘extended’ version of economics. Advantages and shortcomings of such an approach.The case of fast-food: economic interpretation of the McDonaldization.

Readings 3:

BECKERGary (1993), ‘The Economic Way of Looking at Behavior’,The Journal of Political Economy, 101, 3: 385-409(esp. pp. 395-402)[Stable URL:

Definition of the McDonaldization [stable URL:

  1. 19.09Basic notions of game theory. Nash equilibrium. Stakelberg equilibrium. Dominant strategy.

Readings 4:

  1. 21.09Sociological way of thinking. The notion of social action. Is there the sociological theory, i.e. can we outline the ‘hard core’ of the sociological way of reasoning? The case of fast-food: sociological interpretation. The Mary Brown’s puzzle: 15 out of 32 restaurants in Canada are located in Newfoundland.

Readings 5:

SCHAEFER Richard and Edith SMITH (2004), Sociology, Toronto: McGraw-Hill Ryerson Limited, 1st Canadian edition, pp. 10-11, 17-21

The Mary Brown’s Famous Chicken and Taters case [stable URL:

  1. 26.09‘Sociological imperialism’: economic actions as a subset of social action. The new economic sociology and its ‘hard core’. The concept of embededdness. The Newfoundland case: doing a community-embedded business (cf. the Mary’s Brown puzzle).

Readings 6:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, pp. 33-37 [the excerpts from this book are put together in the end of the Readings]

GRANOVETTERMark (1985), ‘Economic Action and Social Structure: The Problem of Embededdness’, American Journal of Sociology, 91, 3: 481-510 (esp. pp. 481-487)

GRANOVETTER Mark and Richard SWEDBERG (1992), ‘Introduction’, in: GRANOVETTER Mark and Richard SWEDBERG, editors, The Sociology of Economic Life, Boulder, CO: Westview Press, pp. 1-26

The Newfoundland case: WESTCOTT Craig (2004), ‘Smooth Sailor: The trails and triumphs of Fraser Edison’, The Express, December 15-21, pp. 21-23

In search for a compromise between economics and sociology

  1. 28.09Reasons for searching a compromise between economics and sociology? J. M. Keynes and his analysis of the stock market. Speculative bubbles (including those on the real estate market). Studies of economic agents’ expectations: Consumer Confidence Index, CCI and Business Confidence Index, BCI

First quiz (5%)

Readings 7:

KEYNESJohn Maynard (1964), The General Theory of Employment, Interest and Money, San Diego: Harcourt, Brace, Jovanovich, Chapter 12 ‘The State of Long-Term Expectation’[stable URL:

DOBBIN Frank (2004), ‘Introduction: The Sociology of the Economy’, in Dobbin F., ed., The Sociology of the Economy, New York: Russel Sage Foundation, pp. 9-10 [stable URL: – from Readings 1

The indicators of confidence:

  1. 3.10Different outlines of the compromise: the ‘old’ institutionalism, the new institutional economics, economics of conventions, socio-economics. Visualizing them in the form of a ‘tree’.

I. The ‘old’ institutional economics. K. Polanyi and the initial non-differentiation of the two disciplines before the ‘iron curtain’ between economy and society fell.Modernization and the emergence of autonomous functional subsystems: the society, the market, the politics, the mass media, etc. M. Weber and the development of economic sociology as a distinct discipline.

Readings 8:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 1

  1. 5.10Different outlines of the compromise II:the new institutional economics. Behavioral assumptions:bounded rationality andopportunism. Opportunism and the drift into delinquency of homo œconomicus. Transaction costs. Measuring the transactions costs related to the choice of a course.

Readings 9:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 4 (pp. 79-83)

MÉNARD Claude (2005), ‘Transaction Cost Economics: From the Coase Theorem to Empirical Studies’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 48-53. Series ‘Transition and Development’

10.10Fall semester break

  1. 12.10Different outlines of the compromise III:the economics of conventions.Theorizing a ‘complex’ society with clearly differentiated functional subsystems. Reasonable behavior. Justification as a precondition of successful coordination. Worlds of justification.

Readings 10:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 2 (pp. 49-51)

THÉVENOT Laurent et al. (2005), ‘Values, Coordination and Rationality: The Economy of Conventions’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 21-35. Series ‘Transition and Development’

  1. 17.10Different outlines of the compromise IV: socio-economics.Plurality of factors influencing human behavior. Interests. Moral. Power. Affects. Tradition. In the search for an equilibrium between utility maximization and moral commitments, individual and collective interests. Attempts to map particular configurations of the motives.

Readings 11:

WEBER Max (1968), Economy and Society: An Outline of Interpretative Sociology, edited by G. Roth and C. Wittich, New York: Bedminster Press, Vol.1, pp. 3-26;

ETZIONI Amitai (2003), ‘Toward a New Socio-Economic Paragim’, Socio-Economic Review, 1, 1: 105-118

SCHMID Allan (2002), ‘Using Motive to Distinguish Social Capital from Its Outputs’, Journal of Economic Issues, 36, 3: 753-760

Key concepts

  1. 19.10Key conceptsI: economic organization. Capitalism and its types. Socialism as a particular case of economic organization. The idea of multiple socio-economic equilibria.

Second quiz (20%)

Readings 12:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 3 (esp. pp. 53-65)

OLEINIK Anton (2006), ‘Socialism’, in: Beckert Jens and Milan Zafirovsky, eds., International Encyclopedia of Economic Sociology, London and New York: Routledge, pp. 627-631

  1. 24.10Key concepts II:social capital. Trust as the cement of society. Role of trust in economic transactions. Type of trust: personalized, depersonalized and institutionalized.

Readings 13:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 10 (esp. pp. 245-249)

FUKUYAMAFrancis (1995), Trust: The Social Virtues and the Creation of Prosperity, New York: Free Press, pp. 1-32

OLEINIK Anton (2005), ‘A Distrustful Economy: An Inquiry into Foundations of the Russian Market’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 177-181. Series ‘Transition and Development’

  1. 26.10Key concepts III:power andauthority. Is there any economic rationale in submitting to authority? Forced versus rational obedience.

Readings 14:

COLEMANJames S. (1990), Foundations of Social Theory, Cambridge andLondon: The Belknap Press of HarvardUniversity Press, Chapter 4 (pp. 68-87)

OLEINIK Anton (2005), ‘A Distrustful Economy: An Inquiry into Foundations of the Russian Market’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 182-187. Series ‘Transition and Development’

  1. 31.10Key concepts IV:the firm. Firms as structures saving transaction costs. Power within firms. Firms and other organizations.

Readings 15:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 4

  1. 2.11Key concepts V:networks. Types of networks. From networks of acquaintances to networks of firms. Structural analysis of networks.

Readings 16:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 3 (pp. 65-68) and Chapter 5 (pp. 123-126)

OLEINIK Anton (2004), ‘A Model of Network Capitalism: Basic Ideas and Post-Soviet Evidence’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 154-168. Series ‘Transition and Development’

  1. 7.11Key concepts VI:the market. Market as a marketplace. Market as a set of universal rules of the game. Local, national and international markets.Is there a national market in Newfoundland and Labrador?

Readings 17:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 5 and Chapter 6

  1. 9.11Key concepts VII:the State. Fiscal sociology: what the State budget tells us about the State? The law and the economy.

Readings 18:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 7

The case study: the 2006 provincial budget of Newfoundland and Labrador, [stable URL: pp. 17-23]

  1. 14.11Key concepts VIII:the household. Family and family-based business. Role of kinship ties in the economy. Can one differentiate motives guiding women’s actions from those guiding men’s actions?

Readings 19:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 11

  1. 16.11Key concepts IX: culture. The values approach to culture. Religion and economic ethics. Individualistic and collectivistic economic cultures.

Assignment deadline

Readings 20:

SWEDBERG Richard (2003), Principles of Economic Sociology, Princeton and Oxford: PrincetonUniversity Press, Chapter 9

Empirical studies

  1. 21.11Extralegal economy I: a general overview. Sectors of the extralegal (shadow) economy. Measuring the scope of the extralegal economy.

Readings21:

OLEINIK Anton (2005), ‘The Extralegal Economy and the Methods for Analyzing it’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 265-268, 281-284. Series ‘Transition and Development’

  1. 23.11Extralegal economy II: discussion of the policies aimed at reducing its scope. Can the government fight with the extralegal economy exclusively by reducing the ‘costs of formality’?

Readings 22:

SOTOHernando de (2004), The Other Path: The Economic Answer to Terrorism, New York: Basic Books,Chapter 5 ‘The Costs and Importance of the Law’

OLEINIK Anton (2005), ‘The Extralegal Economy and the Methods for Analyzing it’, in: Oleinik Anton, editor, The Institutional Economics of Russia’s Tranformation, Aldershot, Hants and Burlington, VT: Ashgate, pp. 269-277. Series ‘Transition and Development’

  1. 28.12Analyzing the transfer of institutions from one country to the other. The idea of institutional congruence or ‘elective affinity’.Post-Soviet reforms. History of Newfoundland.

Readings 23:

OLEINIK Anton (2002), ‘The Costs and Prospects of Reforms in Russia: An Institutional Approach’, Teme, 26, 4: 502-514 [stable URL:

  1. 30.11Concluding discussion. Preparation of the final examination: problems and their solutions.

Examination

1