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Embeddedness Free market Social Sciences

How abstract ideas are “embedded” into everyday interactions…

There seems to be a general consensus at the moment that our ways of doing, talking and thinking are the constructs of “good ideas” in the social sciences over the past few centuries. We are living “the dreams of dead people”, to quote Yuval Noah Hariri. Once these are taken up on a broader level by society, these “good ideas” become taken for granted. We don’t spend our days pondering the rule of law, separation of powers, agency, productivity, and so on. We know these are important and work, as concepts, because… well, they just do. Look around you.

But the seeming invisibility of these “ideas” is a problem. Ignoring the fact that we prioritise concepts agency hides their historical and cultural contingency, and then leaves these unavailable to analysis. How can we challenge neoclassical economic theory that has become “common knowledge” or “just the way things are” when we no longer even notice it?

There have been a few books, blog posts and tweets recently that have spoken to this which are worth mentioning here.

Firstly, James Suzman’s new book. He’s just done an interview about this with GQ magazine, and it’s well worth a read. To oversimplify his argument hugely, he challenges our current notions of productivity in western liberal culture, and specifically puts this in the context of property ownership, heritage, lineage, time and space. In other words, our focus on productvity – often at the expense of other factors in life – is a cultural, social, legal and economic construct. Why do we internalise norms of productivity? Because a few economists 100 years ago thought that the abstract notion might be a good thing for growing the economy (and profits). However, in the process of moving from neoclassical economic theory to mainstream cultural doctrine, it has changed the way we see ourselves as citizens and as consumers.

There’s also a biography of Torsten Veblen by Charles Camic out at the moment, which is a really interesting take on the “outsider” economist. Geoffrey Mead has written a review on the LSE Review of Books Blog here, which offers “an excellent account of how Veblen arrived at his influential contributions to economic theory and paying close attention to how abstract ideas get embedded in institutions and practices”.

Well, yes. They do. And my book (out later this year) is a deep dive into the impact the way we talk about law and economy on how we do and think. Specifically, I look at embeddedness. In the drive to “Build Back Better”, there’s been a lot of talk of “re-embedding” the economy in society. Since responses to the 2008 financial crash started to appear, there have been a lot of statements either that “the economy is embedded in society” or that “society is embedded in the economy”. Start looking out for them – they’ll crop up more than you’d expect. And yet nowhere is there an explanation of what we’re talking about (what is embedded in what) and what we really mean by this.

Image of one large blue sphere with a smaller red sphere attempting to "embed" itself into the blue sphere. This is ultimately impossible because they are separate phenomena
“Nowhere is there a definition: what is embedded in what”. What are we actually talking about? My work shows that talking about law and economy as “embedded in” society is superficially helpful, but actually restricts innovative responses. We are just repeating the mainstream vocabularies and grammars that got us in to this mess in the first place.

But it really is important. My work is about just one example. But if we do want to Build Back Better, we need ways of talking about law, economy and society that recognise, acknowledge and then challenge “common sense” or accepted ways of doing and thinking about the economy. And this starts with those “good ideas” or abstract notions that eventually work their way into the mainstream and become “received wisdom”, invisible, or “just the way things are”.

Matthew Syed wrote a comments piece in the Sunday Times this week about a new drug for obesity, but placing it firmly in the wider context of personal responsibility, agency (as a Weberian ideal), and the atrophying of this that happens when the state gets too involved in individuals’ lives. I think he misses a trick by not recognising that while the agency-structure duality is open for debate, the “structural elements” (the food industry, the farming industry, and the advertising industry) have evolved under the guise of free marketeering far faster than our capabilities as agents to confront these, both on a social level and a biochemical level. Nevertheless, this is a prime example of one of those “common sense”, “received wisdom” ideas (personal responsibility) that is derived from “good ideas” of theorists (agency and the notions of the individual agent of neoclassical economics) that is held up (usually by free market advocates) that we tend to ignore. Yet we ignore it at our peril. The agency-structure debate is as relevant as it ever was, however our grammars and vocabularies to respond to current crises, crashes and catastrophes are those of the mainstream… in other words, the mainstream mental models that got us into this mess in the first place.

So, we need new ways of doing, talking and thinking about the legal and the economic. We need new grammars and vocabularies that challenge these accepted notions. The fact that we are turning more to the social sciences, to our social and institutional heritage to seek answers for how we can respond to the current crashes, crises and catastrophes is something to be celebrated. The social sciences have a huge role to play in our response. We cannot Build Back Better without them, and the founding fathers of sociology still have a lot to teach us, if we’re willing to listen.

Categories
economics Embeddedness Free market PhD Research Thesis Uncategorized

“Embeddedness” (and why we need to stop saying it)

Is the economy embedded in society? Is society embedded in the economy? Is the law embedded in society? Or is society embedded in a set of rules and regulations?

Have the law and economy become “disembedded” from society, and is this why the financial crisis in 2008 came as such a surprise? Would it help to “re-embed” the economy?

This post explores the use, misuse and abuse of the concept of embeddedness in the context of econo-socio-legal interactions.

Coinage of the term in the context of economic sociology and ESL is attributed to Karl Polanyi in his 1948 book The Great Transformation. Polanyi had reportedly been reading about the coal mining industry in the UK, and had taken the term “embeddedness” from descriptions of coal embedded in the walls of a mine. Thus, to Polanyi, the term was likely a relational descriptor and metaphor. Interestingly, despite earlier documented usage, Richard Thurnwald’s use of “embeddedness” has gone largely unremarked, enabling him to dodge the bullet of origination foisted on Polanyi. The term only appears twice on page 60 of Great Transformation, and then on pages 68, 73 and 135. There is no great overarching theme of embeddedness. Nor is there a definition offered. It is probably safe to assume that the word was a throw-away term of description that came to hand, and was then never given much more thought.

Little did Polanyi realise that 70+ years later, scholars would be puzzling over his meaning and even writing doctoral theses on the matter! One catalyst for the development of embeddedness into the core concept of sociological lenses was Mark Granovetter’s accidental revival of the term. Granovetter’s theory of networks, published in 1985, described the actor as embedded in networks. He has since admitted that at the time of writing, he had forgotten Polanyi’s usage of the term. Nevertheless, the success of Granovetter’s paper revived the career of embeddedness, but at the same time created confusion. Polanyi had been referring to the macro-level embeddedness of economy in society, although his “always-embedded economy” is more a theoretical proposition than empirically-proven reality. Conversely, Granovetter had used the term at the micro-level to describe the embeddedness of the individual in networks of interaction. Thus, development of the concept of embeddedness already straddled the micro and macro, giving rise of the question; “what are we talking about”?

Here’s the rub. When discussing the extraction of coal from a mine, for want of a better example, “embeddedness” is a perfectly adequate relational descriptor. It implies the co-existence of two conceptually separate phenomena in time and space; the coal, and the rock from which it is hewn. There is no problem with saying that one is embedded in the other.

Where difficulty arises though is where we also want to investigate the possibility that the two phenomena described not only share characteristics but might even be two aspects of the same phenomena. For example, we can say that the economy must be re-embedded in society if we accept that the economy and society are two distinct entities. This is clearly nonsense. An economy cannot exist outside of a society. An economy necessarily implies human interaction of a specific nature (economic). The same is true of law. We cannot imagine a legal system without a society behind, underpinning, and performing it. A legal system implies human interaction of a specific nature (legal). Therefore, stating that one is embedded within the other – whichever way round you phrase it – clearly does not make sense.

My research puts this in the context of ESL, which aim to reintegrate social science dialogue and which ultimately takes a constructivist approach. In other words, economic and legal phenomena (the econolegal) are performed through social interactions. All social interactions have econolegal aspects or flavours. There’s no escaping this, just as there is no way to have an economic exchange without it being between people (I’m excluding high frequency trading between computers here for argument’s sake, but will return to this in a future post).

Why is this important? Well, the response to the 2008 financial crisis is something we, in the UK, are still living with. Austerity, as the main policy response, was based on a particular understanding and framing of the economics that led to the crash. This is an economics that sees the discipline as somewhat ‘apart’ from society. Neoclassical economics sets out a version of ‘economic man’ on which complex economic theories are modelled. There has been recognition of the limitations of this approach. But in turn, those who criticise mainstream neoclassical economics frames tend to (with or without the help of Polanyi) argue that we need to “re-embed” the economy in society.

If we take this approach, we deny the possibility of ever seeing the economy as an aspect of society, the same as the law. We cannot hope to reorient the economy and its regulation (the law) towards real people if we talk about society, economy and law as separate entities. Speaking of one being embedded in the other simply reinforces their difference, their separation, and their disunity. It reinforces existing ways of doing, talking and thinking, which are predominantly shaped by neoclassical economics. It prevents us moving forwards.

So, what to do? We need to move beyond embeddedness, and how to go about that is the subject of a future post.

Copyright note: animation by me using ProCreate 5 on iPad Air 3. Please ask before you take!