The Institutional Foundations of Capitalism

The Institutional Foundations of Capitalism

Northwestern University & the University of Chicago
Chicago - USA
July 10-12, 2014

About SASE

Founded in 1989, the Society for the Advancement of Socio-Economics (SASE) is an international, inter-disciplinary organization with members in over 50 countries on five continents. The academic disciplines represented in SASE include economics, sociology, political science, management, psychology, law, history, and philosophy. The membership of SASE also includes business people and policy makers in government and international organizations.

What is Socio-Economics?

As an emerging meta-discipline, socio-economics begins with the assumption that economics is not a self-contained system, but is embedded in society, polity, and culture. Socio-economics regards competition as a subsystem encapsulated within a societal context that contains values, power relations, and social networks. The societal context both enables and constrains competition. Socio-economics assumes that interests are not necessarily or automatically complementary and harmonious, and that societal sources of order are necessary for markets to function efficiently.

 

Socio-economics further assumes that individual choices are shaped by values, emotions, social bonds, and moral judgments rather than by narrow self-interest. There is no a priori assumption that people act rationally or that they only pursue self-interest or pleasure.

 

Methodologically, socio-economics regards inductive studies as co-equal in standing with deductive ones. For example, a study of how firms actually behave has the same basic merit as treating the firm as an analytic concept in a mathematical model. Inductive inputs and deductive derivations are assumed to correct and thus balance each other. Socio-economics is both a positive and a normative science. That is, it openly recognizes its policy relevance and seeks to be self-aware of its normative implications rather than maintain the mantle of an exclusively positive science.

 

SASE has little interest in criticizing neoclassical economics per se, and seeks to develop alternative approaches that are predictive, exemplary, and morally sound. Socio-economics does not entail a commitment to any one ideological position, but is open to a range of positions that share a view of treating economic behavior as involving the whole person and all facets of society.

Purpose of SASE

    The purpose of SASE is

    • to advance the understanding of economic behavior across a broad range of academic disciplines;
    • to support the intellectual exploration of economic behavior and its policy implications within the context of societal, institutional, historical, philosophical, psychological, and ethical factors; and
    • to balance inductive and deductive approaches to the study of economic behavior at both micro and macro levels of analysis.
    Meet SASE's New President Bruce Carruthers

    Q: What brought you to the field of Economic Sociology, or, to what do you attribute your becoming an economic sociologist?

    Bruce Carruthers: I started in graduate school before the resurgence of Economic Sociology, that is, before Granovetter’s famous 1985 article, and at that point considered myself a historical sociologist. But unlike many other historical sociologists, I wasn’t interested in doing my dissertation research on social revolutions, or the rise of the welfare state, or similar topics. I was particularly interested in economic processes, viewed historically. Maybe this is because I read a fair amount of economic history as an undergraduate. But once the economic sociology movement was underway, I was happy to join it because my interests sat so squarely at the intersection between comparative-historical sociology and economic sociology.

     

    Q: What is the common thread in your work?

    B.C.: One important theme also happens to be the theme for the 2014 conference: the institutional foundations of modern capitalism. I have studied a variety of institutions, including stock markets, money, bankruptcy laws, financial regulations, derivatives markets, accounting and credit information, which all contribute to the functioning of modern market economies. This is not an exhaustive list, of course, because my research is not encyclopedic (to say the least).

     

    Q: Perhaps one of the most intriguing parts in your recent article on credit agency ratings in SER is the examples you give of their failings.  Do you think that they should be done away with?

    B.C.: Credit ratings are now so thoroughly embedded within the regulatory and contractual machinery of global finance that I do not think it is politically feasible simply to abolish them. But that doesn’t mean they can’t be reformed in useful ways.

     

    Q: In what ways has your involvement with SASE influenced your work?

    B.C.: I was heavily influenced by the fact that as an undergraduate student in Canada, I was in a self-consciously interdisciplinary program and worked closely with people who had PhDs in anthropology, economics, sociology, comparative literature, philosophy, and communications. Thus, I particularly value SASE as a place where interdisciplinary conversations are the norm. So involvement in SASE has allowed me to continue to talk to people who are not sociologists. I’ve nothing against sociologists, of course. Some of my best friends are sociologists. But I do like to learn from people outside my own discipline.

     

    Q: The topic you chose for SASE 2014, The Institutional Foundations of Capitalism… Do you think the foundations of capitalism are crumbling?

    B.C.: “Crumbling” is too strong and simple a word, however tempting it is to use after the dramatic experience of 2008. These foundations are being transformed. Dynamism is one of the hallmarks of capitalism: its transformational capacities are impressive. This dynamism operates at several levels: we know that market conditions change, prices vary, firms enter and exit the market, and so on. But at a deeper level, the institutions that uphold markets also change. New forms of property are invented. New ways to create enforceable agreements emerge, both in and out of formal legal systems. The rules of the game evolve, as Douglass North might put it.

     

    Q: What are your plans for the SASE/Chicago meeting?

    B.C.: Our plans are still being formulated, but I am working with the other members of the local organizing committee (Gary Herrigel, Jeannette Colyvas, and Klaus Weber) to put together a program that encompasses the extraordinary intellectual diversity of SASE, but which also reflects Chicago as an intellectual and urban location. There are two “Chicago Schools” in social science: one in sociology (active in the 1920s and 1930s and associated with people like Burgess, Park, Thomas and Znanieki), and another in economics (dating from the 1960s, and involving Stigler, Friedman, Becker and Coase). The city itself has evolved from its famous industrial past (see Carl Sandburg’s 1914 poem “Chicago”) to its current dependence on a service-based economy. Stay tuned, as they used to say. There was also a Chicago School of architecture, and one of the pleasures of visiting the city is to see, as you walk around, the history of the skyscraper.

     

    Q: What is/are the best book(s) you have read so far this year?

    B.C.: On the fiction side, I particularly enjoyed The Silent Wife, by A.S.A. Harrison. Read what you want into that title, it is a smart, tightly-written, psychologically-acute novel set in Chicago. On the non-fiction side, Mark Blythe’s Austerity: The History of a Dangerous Idea, Michael Huberman’s Odd Couple: International Trade and Labor Standards in History, Lawrence Busch’s Standards: Recipes for Reality, and Martin Scheffer’s Critical Transitions in Nature and Society, were particularly rewarding to read. And I have just started David Graeber’s Debt: The First 5000 Years, and in the first 70 pages have been stimulated, annoyed, impressed, exasperated and irritated, all at the same time.