**1. Introduction**

76 Sociological Landscape – Theories, Realities and Trends

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The spectacular revival of economic sociology in the US in the 1980s and in Europe at the beginning of the 21st century will be regarded as part of a paradigm shift in social sciences. Whereas classical sociology almost always dealt with normatively defined situations and value-based actions in which individual decisions, interests, and other situational aspects disappear from view, neo-classical economic theory focused on the rational autonomous individual trying to maximize private utility in market structures and therefore neglected social institutions as an important aspect of economic life.

Because of this, New Institutionalism as well as New Economic Sociology claimed to improve sociological explanations and analyses of *main economic structures* by using wider sociological concepts and by focusing on social aspects in economic actions, especially social expectations. New Economic Sociology in particular focuses on social economic action and claims to show why and how personal interactions, networks, social norms and so on frame economic actions and therefore help to create market transactions as well as successful organizational behavior or entrepreneurship. In the 1960s and 1970s, Neil Smelser asked for, in a nod to Max Weber, an economic sociology which analyzes the causal relations between economic and social facts (Smelser, 1963). More precisely, Neil Smelser and Richard Swedberg define in their influential *Handbook of Economic Sociology* that *economic sociology* should be "the application of the frames of reference, variables, and explanatory models of sociology to that complex of activities which is concerned with the production, distribution, exchange, and consumption of scarce goods and services" (Smelser & Swedberg, 2005: 3).

Moreover, New Sociological Institutionalism tries to overcome the implications and imperfections of the sociological tradition by generally explaining institutions as a result of more or less rational individual action in social situations (Dimaggio, 1998; Maurer & Schmid, 2002). Therefore, the notion of uncertainty is widely used; only a few, more recent works reflect more precisely on social constellations like conflict, common interests, or divergent cultural patterns (Coleman, 1985; Elster, 1989; Nee, 2005; Maurer & Schmid, 2010). When economic sociology returned, many sociological concepts were, because of tradition, badly prepared for improving and systemizing analyses of the economic sphere by taking into account different interdependencies in economic life. Furthermore, these sociological theories are challenged by New Economic Institutionalism that has successfully started to

Economic Sociology: Bringing Back Social Factors 79

especially social institutions. This responds in two ways to New Economic Sociology outlined in the US in the 1980s that claims in contrary to economic theory that social relations (social capital, trust, norms), hierarchy, and networks are important for economic action. Secondly, economic sociology needs to show why particular institutions come into being in modern economy, not only as a result of direct rational invention, but also as a matter of social action. Therefore, it is helpful to start with the general assumption of uncertainty; but in order to provide more precise explanations and analyses of main economic institutions, it is also important to develop and use more realistic and problemfocused models of social action in economy. Instead, economic institutions have to be explained by the individual's need for (one-sided as well as mutual) social expectations. This helps us to ask why and when individuals try to establish institutions and what problems arise in doing so. Furthermore, this provides a criterion for the extent to which particular institutions help to frame individual actions as well as social relations in the economic field by supporting exchange, defining prices or markets, legitimating organizational structures, etc. Summarizing, economic sociology on the one hand should explain why and how particular economic institutions or institutional settings like markets, large firms, money, etc. come into being and are maintained by individuals in economic fields (North, 1977; Trigilia, 2002). On the other hand, sociological (institution) theories need to show how economic actions reproduce general social institutions like rationality, time, common knowledge, patterns of legitimation, organizational forms, etc. (Carruthers & Espeland, 1991; Dimaggio, 1994; Fligstein, 2005; Nee, 2005). Analyses of social as well as economic institutions in the economic field are more relevant to economic-sociology. Whereas analyses of how economic action influences social institutions like cultural symbols and rituals are more important to New Sociological Institutionalism. But both come together within an approach that tries to link individual actions and social structures by explaining and analyzing social

institutions in the sense of social expectations that support social actions in economy.

relevant for economic action in general (Maurer & Schmid, 2010).

Last but not least, to prevent the failures of both neo-classical economics and classical sociology and for adopting the claim of economic sociology to focus on social factors in economic life, to me, the most important aspect is to firstly look upon social situations with regard to the individuals, so we can see why particular social factors become relevant; and then with regard to the social side-effects that are – intendedly and unintendedly – produced. Economic sociology needs a theoretical framework or foundation that gives good methodological arguments for connecting individual actions and structure. The notion of social institutions in the broader sense of shared social expectations provides such a linkage. Today, multi-level explanations that have improved and become more common since the 1980s provide an elaborate methodological framework for bridging individual actions, social institutions, and structure. The general aim is to provide a theoretical-oriented way of bridging micro and macro theories and therefore connect both levels of analyses in all social sciences (Coleman, 1986; Alexander et al., 1987). Hence, I will argue that multi-level explanations are a useful method for economic sociology as well because it needs to be founded on an action theory that provides a connection between individuals and social structure by showing why certain social aspects become relevant for individuals in their social, political, and economic actions. The common issue is that the linkage is founded on the assumption of intentional individuals that scan their social world as an action frame. That means that social institutions as well as cultural beliefs or scarce material resources are

integrate 'social institutions' like hierarchies, trust, social capital, etc. into the economic approach (see Williamson, 1985; North, 1990). Whereas the two 'new-comers' in sociology – New Institutionalism and New Economic Sociology – are still missing an integrating theoretical frame that would help to build up explanations that link individual actors and social structure in order to explain main economic phenomena or economically relevant phenomena like religious communities, trade unions, arts, etc. Today, there is great need for a linkage between assumptions on the micro level and on the macro level in order to explain social factors as a result of individual actions in social contexts. Hence, it is necessary to widen our models of economics and to show when and why social institutions matter in economic life and how this reproduces the social world.
