Today, while reading Martha Poon’s excellent piece on how credit scores reshaped the US mortgage market, I re-read a nice, succinct quote that describes much of the recent STS approach to economic sociology. The quote is from Callon, Muniesa and Millo’s edited volume Market Devices, where the editors argue “Calculation is neither a universally homogeneous attribute of humankind, nor an anthropological fiction.” (5) This quote quickly summarizes several important theoretical points by focusing on the existence and historical specificity of actually occurring calculation. That is, people do calculate (or “behave rationally”), but they do so under different conditions in different times and places, using different tools. As Callon writes elsewhere, homo economicus is neither a universal truth, nor an absolute lie, but rather a contingent (and thus fragile, imperfect) accomplishment.
What struck me this morning about the quote was how well it lines up with Herbert Simon’s early work on bounded rationality, at least as interpreted in Bendor’s (2003) review. Simon argued that rationality is an organizational accomplishment because being rational is costly – gathering and analyzing information takes resources, as well as clear goals. Simon was intensely interested in rationality “as process”, not as an assumption. And so on.
Rather than exhaustively pointing out similarities (and in turn, pointing out my own limited knowledge of Simon!*), I just want to note the similarities and say, here there be dragons! Er, or something like that. One clear place to see this sort of connection would be in Beunza and Stark’s work on “reflexive modeling,” the process they identified traders using to determine how others traders see the market and thus to test their own assumptions and look for errors. Here we see both the costs of rationality, and its process – and potential pitfalls. I wonder if making the connections between this sort of research and older inquiries in organizational theory more explicit would help ease the tensions between the science studies approaches and more traditional work.
* Note to self: read more Herbert Simon!
A (Budding) Sociologist's Commonplace Book 
Andrew
/ May 23, 2012and yet economists hate it when sociologists claim herbert simon as one of their own!
Andrew
/ May 23, 2012whoops, incomplete comment above – but bounded rationality shares a lot with past ideas from, say, Weber imho. Durkheim didn’t really seem to care about rational vs. non-rational action, though. Marx was kinduva rat choicer – or more like Marxism is kind of rat choice while Marx was more nuanced (or so some “Marxians” claim)
Taylor Spears
/ May 23, 2012Given Simon’s prominence throughout the social sciences, I think SSF folks need to do a better job of incorporating him into our theoretical canon. It’s tricky though, because Callon essentially wants to build a truce with neoclassical economics, whereas most of Simon’s work is directed towards critiquing that. I think there are also some pretty big philosophical differences between Simon’s work and Callon’s that would need to be thought through – namely that Callon wants to maintain a flexible ontology with regard to the demarcation of economic actors, while Simon seems to have a fairly clear idea of where the boundary between the individual and the organization lies.
You might want to check out “Reason in Human Affairs”. This small book isn’t as well-known as “Administrative Behavior”, but potentially provides better material for thinking through these issues. Simon makes an extremely well-informed critique of the neoclassical actor (specifically the Von Neumann / Morgenstern actor who maximizes subjective expected utility) and lays out some alternative frameworks for understanding rational behaviour.
Dan Hirschman
/ May 23, 2012Thanks for the suggestion!
I wonder if Simon isn’t a way to help read Callon as still being a bit more subversive of neoclassical economics than some of his writing suggests. Sure, Callon cedes neoclassical economics a lot of importance, and that’s flattering, but it’s an argument that econ is important because of its capacity to reshape the world, not its purity at representation. I think Simon makes a similar point in “Theories of Decision-Making in Economics and Behavioral Science” by relabeling most of microeconomics at that time as “normative microeconomics” – that is, microeconomics that assumes perfect rationality, derives optimal behavior, and then yells at folks to do that instead. Callon seems to agree, with the added argument that it often works – at least, for some contingent, science studies-inflected value of “works.”
I agree that the instability of the category “economic” is an issue that would need some working through. But maybe we don’t need a complete synthesis as much as a recognition of a shared lineage and problem space.