Interview with Wolfgang Streeck at Estudios de la Economía

The good folks over at Estudios de la Economía, a primarily Spanish-language economic sociology group blog, have an excellent interview (in English) with Wolfgang Streeck of the Max Planck Institute. The discussion of the differences between political economy and economic sociology were particularly interesting, here’s a big snippet:

Q: I have the impression that one of the cleavages between Economic Sociology and Political Economy consists in the interpretation of Polanyi, who is considered as one of the most relevant classics for both disciplines. For instance you have insisted that the central idea of Polanyi is the notion of countermovement, that is, the dialectical process between, on the one hand, commodification and capital accumulation and, on the other, socio-political regulation and social reproduction. Economic Sociology, in turns, has been based largely on the idea, attributed to Polanyi, that economic action and economic phenomena in general are embedded in social relations. Do you think this different interpretation is a source of misunderstanding between both disciplines?

A: I think the sociology that assumes that societies are self stabilized is bad sociology. So, essentially I would say that it is a functionalist misunderstanding the assumption -that only parallels the functionalism of economics- that society is divided in parcels that are self stabilized. And for my friend Fligstein [Neil Fligstein] markets expand and then, somehow, social relations build up and embed this expanded market, because society is always embedded, or economy is always embedded. Then, I say that is a misunderstanding. In Wall Street when they started to sell the toxic papers, there were not social networks in which they were embedded, it needs to be constructed and you need a very sort of vigilant political system that observes what these people do, and then embed them sometimes against their will. The assumption in this sort of voluntaristic and functionalist sociology is that people will embed themselves because they observe all norms and are delight to have friends. What you need is enough counterforces in the society that imposes obligation and risks to self-interest activities and mad activities that people sometimes engage in. So, I think Polanyi can only be read in this way. Karl Polanyi did not live in California; he lived in the first half of the twentieth century and he saw how, first of all, the progress of liberal market economies undermined social structures and how societies some successfully, some utterly unsuccessfully, tried to rebuild social structures to keep these markets productive, namely, both useful for societies and not dangerous for societies. I think the book cannot be read in other way. And people who simply take from it that economy is a social institution just as any other social institution, misread it.

There is a tendency in part of economic sociology to try to do this matters in the economies, and this cause something like this: “economists have understood the condition of successful firms, successful economics, but we can tell them that in addition to good products and good engineering and so on, you also need good social relations and if you have good social relations, your economy will be even more successful”, in other words, economic sociology becomes a sort of thing that consultant agencies could sell to capitalists. The problem is that, to some extent maybe it can be true, but only insignificantly and to a minor extent; the most important thing is that the boss of Goldman Sachs he does the sort of things that have to be embedded and he wants not to be embedded he just wants to make profits.

I have a lot of thoughts on the (mis)reading of Polanyi by economic sociologists – thoughts you can hear all about at ASA this year, at the Social Theory panel on “Counterpoint Readings!” – but for now I’ll say that I mostly agree with Streeck. For Polanyi, the central question was how economics and politics would be enmeshed, embedded or submerged in each other. Polanyi recognized that modern societies had differentiated these two systems – your boss was no longer also your lord – but that separation enabled the utopic ideal of a market system which needed no politics, and thus was completely voluntaristic and free of power dynamics. Polanyi eloquently skewers this notion in several places, especially the end of The Great Transformation, where he notes that in a market system, to have an opinion is to take part in setting prices and thus is an exercise of power. Freedom in a complex society is a difficult project, but one that requires recognizing interdependence (and thus power), not wishing it away.

Anyway, I highly recommend the interview, and for Spanish-speaking readers, the entire blog.

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