Introduction 5

action [in sociology] must. . . bring out the fact dot as 'economic' processes and objects are char­acterized as such entirety by the meaning they have far human action¹" ({1922] 1978, 64). Meanings are historically constructed and must be investigat­ed empirically, and are not simply to be derived from assumptions and external circumstances.

Finally, sociologists tend to give a broader and more salient place to the dimension of power in economic action. Weber ([1922] 1978, 67) insist­ed that “[it] is essential to include the criterion of power of control and disposal (Verfü gungsgewalt) in the sociological concept of economic action, " adding that this applies especially in the capitalist economy. By contrast, microeconomics has tended to regard economic action as an exchange among equals, aid has thus had difficulty in incorporating the power dimension (Galbraith 1973, 1984). In the tradition of perfect competition, no buyer or seller has the power to influence price or output. It is also true that economists have a tradition of an­alyzing imperfect competition —in which power to control prices and output is the core ingredient— and that the idea of " market power" is used in labor and industrial economics (e. g., Scherer 1990). Still, die economic conception of power is typically narrower than the sociologist's notion of economic power, which includes its exercise in so­cietal (especially political and class), as well as mar­ket, contexts. In a study of the power of the U.. S. banking system, for example, Mintz and Schwartz (1985) analyze how banks and industries interlock, how certain banks duster into groups, and how banks sometimes intervene in corporations in order to enforce economic decisions. More gener­ally, sociologists have analyzed and debated the issue of the political implications of wealth inequality and the extent to which corporate leaders constitute a " power elite** in the whole of society (e. g.. Mills 1956; Dahl 1958; Domhoff and Dye 1987; Keister 2000).

Constraints on Economic Action

In mainstream economics, actions arc con­st rained by tastes and by the scarcity of resources, including technology Once these are known, It is in principle possible to predict the actor's behavior, since he or she will always try to maximize utility or profit. The active influence of other persons and groups, as well as the influence of institutional structures, is set to one side. Knight codified this in the following way: “Every member of society is to act is an individual only, in entire independence of all of her persons" ([1921] 1985, 78). Sociolo-

gists take such influences directly into account in the analysis of economic action. Other actors facil­itate, deflect, and constrain individuals’ action in the market. For example, a friendship between a buyer and a seller may prevent the buyer from de­serting the seller just because an item is sold at a lower price elsewhere (e. g., Dorc 1983)« Cultural meanings also affect choices that might otherwise be regarded as " rational. " In the United States, for example, it is difficult to persuade people to buy cats and dogs for food, even though their meat is as nutritious and cheaper than other kinds (Sahlins 1976, 170-79). Moreover, a person's position in the social structure conditions his or her econom­ic choices and activity. Stinchcombe (1975) evoked the principle that structural constraints influence career decisions in ways that run counter to con­siderations of economic payoff. For example, for a person who grows up in a high-crime neighbor­hood, the choice between making a career stealing and getting a job has often less to do with the comparative utility of these two alternatives than with the structure of peer groups and gangs in the neighborhood.

The Economy in Relation to Society

The main foci for the mainstream economist are economic exchange, the market, and the economy. To a large extent, the remainder of society lies be­yond where the operative variables of economic change realty matter (see Quirk 1976, 2-4; Arrow 1990, 138-39). Economic assumptions typically presuppose stable societal parameters. For exam­ple, the long-standing assumption that economic analysis deals with peaceful and lawful transactions, not with force and fraud, involves important pre­suppositions about the legitimacy and the stability of the state and the legal system. In this way the societal parameters—which would surely affect the economic process if the political legal system were to disintegrate—are frozen by assumption., and thus are omitted from the analysis. In recent times economists have turned to the analysis of why in­stitutions arise and persist, especially in the new in­stitutional economics and game theory. They have varied the effects of institutional arrangements in various logical experiments (see, e. g. « Eggertsson 1990; Furubotn and Richter 1997). Nevertheless, the contrast with economic sociology remains. When economists talk about Institutions, norms, and the like, their vocabulary is identical to that of sociologists, but they often mean something quite different. It is still very common, for example, tor economists to treat the economic arena as lacking