What is the difference between economic sociology and mainstream economics in their explanation of social phenomena PDF

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Evgenia Bondarenko Group 8 What is the difference between economic sociology and mainstream economics in their explanation of social phenomena? Both Economics and Economic Sociology study economic markets. Economic sociology studies the social implication of different economic phenomena, economics is the study of how scarce resources are allocated. Economics is considered a branch of sociology. The pioneers of sociology distinguished themselves from the economic theory of their time by putting the economy within the broader context. Therefore, the question arises: what is the difference between Economics and Economic Sociology. Economists employ the Homo Economicus approach, assuming that all agents are rational in their decision making. Meanwhile, sociologists explore economics via the social embeddedness of economic behavior, the extent to which the actors are connected in social networks, as a part of their subject matter – society. The concept of social embeddedness of the economy was initially introduced by Karl Polanyi. The term implies that the economy is an inherent part of the social relations, the two being interdependent. Polanyi stresses that the formalist approach to understanding what economics is, which is based on the neoclassical economic theory, is only applicable to modern day capitalist markets, where efficiency is stressed. However, he also allows for the substantivist view, which deals with a more institutional function of the economy – the satisfaction of human needs, thus focusing on sufficiency, rather than efficient.

When it comes to relationship between economy and the society, it is necessary to consider the founding fathers’ stance on the issue. Marx, being a materialist, believed that capitalism is a product of social relations are production, where in a polarized society, one group exploits the other. Durkheim also explored the changes in social relations, which occurred with industrialization; however, he focused on how specialization was increasing with the increased division of labor, giving a rise to organic solidarity, where all groups are interdependent on one another; thus, the rise of capitalism and economic markets has brought individuals together. Weber has also explored the causes for the rise of the modern day economics markets, but his writing also specifically focused on what counts as an economic action, as an economic

Evgenia Bondarenko Group 8 organization and how different forms of rationality were involved in social actions. He typified economically rational actions as instrumentally rational. Economic sociology differs from economics as a discipline in some other ways as well. To begin with, they use different fundamental starting point of their analysis. Economics begin from a given individual, his preferences and decisions, and works outwards. Economic sociology begins with observing society as an aggregation and works inwards to groups and institutions. Also, economics relies on the assumption that individuals’ all desire to maximize their utility, while economic sociology works from the belief that people are embedded in a social context and each individual’s interests are shaped by the society and social interactions. Sociologists also consider multiple types of economic actions; this is specifically reiterated by Weber’s concept of ideal types, each of which observes individuals in a broader social context. Therefore, even though economic and economic sociology are similar in their essence, they differ in their assumptions and their perception of the phenomenon. Furthermore, as economics includes the analysis based on people’s behavior, while behavior is the subject matter of microsociology and is determined by society....