Economic sociology is the sociological analysis of economic phenomena. As the earliest economists recognized, economic institutions are of profound importance to both local communities and the larger society. However, the formal models developed by economists for understanding the economy are inadequate for explaining the processes, day-to-day practices, and social mechanisms underlying economic markets. The classical economic approach must be supplemented by a variety of more sociological and institutional approaches. This endeavor has largely been pursued by sociologists and political scientists under a variety of rubrics: economic sociology, comparative political economy, and studies of economic regulation.

Sociological analysis of economic phenomena focuses on the ways in which various kinds of institutions and social processes--the state and political power, social networks, social norms, unions and secondary associations--play an essential role in explaining the actual functioning of real economies. From the inception, the founders of the discipline--Simmel, Marx, Weber, and Durkheim--focused on understanding how markets and the practices of individuals in those markets are influenced by society, culture, and politics. For example, classical sociology gave insight into how behavior in economic markets is affected by  class position (interests), religious practices (institutions), relations to authority (power), legal consciousness (ideas), and social relations  (networks).

As the discipline has evolved, the sub-discipline of economic sociology has become increasingly aware of the need for systematic analyses of the social dimensions of economic institutions and practices. Contemporary scholars such as Granovetter, White, Bourdieu, Fligstein, Smelser, Swedberg, Nee, Zelizer, and Dobbin have all advanced the insights of classical sociology and contributed to the overall project to show how economic life and markets are dependent on, and embedded within, social and cultural foundations.

Classical Scholarship

Karl Marx argued that economic forces were absolutely central to society and deeply influenced its social structures. The founding figures of sociology, such as Max Weber, similarly regarded economic processes as fundamental to the structure of society. George Simmel, particularly in his book Philosophy of Money, was important in the early development of economic sociology, as was Emile Durkheim through Division of Labor. Other important early contributions to economic sociology were made by people who are more usually thought of as economists, e.g. Thorstein Veblen and Joseph Schumpeter.

Karl Polanyi, in his book The Great Transformation, was the first theorist to come up with the idea of the "embeddedness", meaning that the economy is embedded in social institutions, which is vital so that the market does not destroy other aspects of human life. Marxist and other left-wing economic thought has focused on the social implications of consumerism and economic development within the system of economic relations that produce them.

Contemporary Scholarship

Current economic sociology focuses particularly on the social consequences of economic exchanges, the social meanings they involve and the social interactions they facilitate or obstruct. Influential figures in modern economic sociology include Mark Granovetter, Harrison White, Paul DiMaggio, Joel M. Podolny, Richard Swedberg, or Viviana Zelizer in the United States and Luc Boltanski, Laurent Thévenot, or Jens Beckert in Europe. To this may be added Amitai Etzioni, who has popularized the idea of socioeconomics, and Chuck Sabel and Wolfgang Streeck, who work in the tradition of political economy/sociology.

The focus on mathematical analysis and utility maximization during the 20th century has led some to see economics as a discipline moving away from its roots in the social sciences. Many critiques of economics or economic policy begin from the accusation that abstract modeling is missing some key social phenomenon that needs to be addressed. In reply, many mainstream economists point out that such cultural and social arguments often seem to favor the interests of local monopolists and the already powerful.

Economic sociology is an attempt by sociologists to redefine in sociological terms questions traditionally addressed by economists. It is also an answer to attempts by economists--such as Gary Becker--to bring economic approaches to the analysis of social situations that are not obviously related to production or trade.

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