Introduction   13. 14   Smelser/Swedberg

Introduction      13

ed Process" ([1957] 1971). Polanyi criticized eco­nomic theory for being essentially " formal" —a kind of logic focused on choice, the means-end re­lationship, and the alleged scarcity of things that people want. There is also " the economistic falla­cy, " or the tendency in economics to equate the economy with its market form ([1944] 1957, 270). To the formal concept of economics Polanyi counterposes a " substantive" concept, grounded in re­ality and not in logic. " The substantive meaning of economic derives from man's dependence for his living upon nature and his fellows" ([1957] 1971b, 243). While the notion of economic interest is di­rectly linked to " the livelihood of man" in sub­stantive economics, it is only an artificial construc­tion in formal economics (Polanyi 1977).

The most famous concept associated with Polanyi's work is " embeddedness, " which, howev­er, he used in a way different from its contempo­rary use. According to the current use, an eco­nomic action is in principle always " embedded" in some form of social structure. According to Polanyi, economic actions become destructive when they are " disembedded, " or not governed by social or noneconomic authorities. The real problem with capitalism is that instead of society deciding about the economy, it is the economy that decides about society: " instead of the economic system being embedded in social relationships, these relation­ships were now embedded in the economic sys­tem" ([1947] 1982, 70).

Another set of conceptual tools for economic so­ciology is Polanyi's " forms of integration. " His general argument is that rational self-interest is too unstable to constitute the foundation for society; an economy must be able to provide people with material sustenance on a continuous basis. There are three forms of integration, or ways to stabilize the economy and provide it with unity. These are reciprocity, which takes place within symmetrical groups, such as families, kinship groups, and neigh­borhoods; redistribution, in which goods are allo­cated from a center in the community, such as the state; and exchange, in which goods are distributed via price-making markets (Polanyi [1957] 1971b). In each economy, Polanyi specifies, there is usually a mixture of these three forms. One of them can be dominant, while the others are subordinate.

Talcott Parsons

Talcott Parsons (1902-79) was educated as an economist in the institutionalist tradition and taught economics for several years before he switched to sociology in the 1930s. At this time he

14   Smelser/Swedberg

developed the notion that while economics deals with the means-end relationship of social action, sociology deals with its values (" the analytical fac­tor view" ). In the 1950s Parsons recast his ideas on the relationship of economics to sociology, in a work coauthored with Neil Smelser., Economy and Society (1956). This work constitutes Parsons's major contribution to economic sociology, but both before and after its publication Parsons pro­duced a number of studies relevant to economic sociology (Camic 1987; Swedberg 1991a).

In The Structure of Social Action (1937) Parsons launched a forceful attack on utilitarian social thought, including the idea that interests represent an Archimedean point from which to analyze soci­ety. Interest theorists, Parsons notes, cannot handle the Hobbesian problem of order; they try to get out of this dilemma by assuming that everybody's interests harmonize (what Elie Halevy referred to as " the natural identity of interests"; Parsons [1937] 1968, 96-97). What is not understood by the utilitarians is that norms (embodying values) are necessary to integrate society and provide order. Interests are always part of society, but a social order cannot be built on them (405).

In Economy and Society (1956) Parsons and Smelser suggested that both sociology and eco­nomics can be understood as part of the general theory of social systems. The economy is a subsys­tem, which interchanges with the other three sub­systems (the polity, the integrative subsystem, and the cultural-motivational subsystem). The concept of a subsystem is reminiscent of Weber's notion of sphere, but while the latter refers only to values, the economic subsystem also has an adaptive func­tion as well as a distinct institutional structure. It may finally be mentioned that Economy and Society got a negative reception by economists and failed to ignite an interest in economic sociology among sociologists. Smelser's attempt to consolidate eco­nomic sociology in the next decade helped fix economic sociology as a subfield in the minds of scholars and in the curricula of colleges and uni­versities, but did not spawn distinct new lines of re­search (see especially Smelser 1963, 1965, 1976).