Economics Essay ⋆ Sociology Essay Examples ⋆ EssayEmpire

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Economics as a modern discipline focuses primarily on money-coordinated exchange and wage-based production. It is dominated by a US-centered tradition that uses mathematical models and quantitative data to explore markets, i.e. the aggregate outcomes of individual actors’ decisions to buy and sell various commodities. It is probably the most influential of the social sciences because of its connection to the policies of nation states, and its role has become increasingly international during the era of neoliberalism and globalization at the end of the twentieth century. Its market-based explanations have been applied in a number of sociological subfields, but sociologists typically find its approach too narrow and unrealistic in the way it brackets the institutional contexts of actors’ decisions.

Modern Mathematical Economics

Economics mainly analyzes the material production of goods in societies with industrial technology, an extensive division of labor, and monetary means of exchange. From the early twentieth century onwards it has increasingly focused on mathematical models of rational decisions and market coordination. It is often presented as consisting of micro and macro branches, the former focusing on business, employee, and consumer-level decisions, the latter analyzing national and international systems of production, finance, and employment. Theories in both branches generally consist of precise stylized models involving graphs, equations summed over multiple dimensions, calculus-based solutions to maximization problems, and topological proofs of the possibility of complex equilibria. These models are typically tested using quantitative data and a wide variety of regression-based statistical techniques (”econometrics”).

Economics does not typically attempt to explain cultural or other institutional contexts, nor does it examine the detailed structures of organizations or other social groups. With the exception of some experimental and psychology-based subfields it simply treats individual and collective actors ”as if” they routinely make complex maximizing calculations in the appropriate markets. When it explains major macroeconomic shifts it does so in terms of exogenous developments in politics, technology, and attitudes, or changes in amounts of human capital. It does not focus on explaining the political, cultural, and environmental origins or consequences of such developments.

History and Social Role

Western economics has always been closely tied to the policies of nation states. Early modern approaches focused on active governmental support of commerce and agriculture, while eighteenth-century ”classical” ideas of markets and labor-based values implied that the material wealth of nations was best promoted by liberal, hands-off policies. Laissez-faire policies were also supported by late nineteenth-century ”neoclassical” microeconomics, which began to use graphs and calculus-based models to explore how prices responded to demand as well as labor input, and how decisions were made in terms of marginal rather than average costs. During the Great Depression the macroeconomic models of John Maynard Keynes were much more in line with interventionist policies, and after World War II these flourished alongside new developments in constrained optimization modeling and econometrics. As neoliberal policy regimes began to increase in influence from the 1970s onwards, economics continued to combine a wide range of ideas and promote the further adoption of mathematical techniques, most notably in financial pricing models and game theory.

The post-war period was also when the discipline’s center of gravity moved decisively towards the USA, where it was increasingly institutionalized as a profession with multiple representatives in business, government, and transnational organizations. The long-term significance of this – and of its subsequent spread to other countries – is hard to gauge. On the one hand it is clear that the scientific authority of mathematical market models is a potentially powerful discursive resource for justifying neoliberal policy regimes. It is also clear that economic theories have in many ways become embedded in modern institutions, for example in basic measures such as ”gross national product,” in complex financial trading algorithms, and even in the very notion of ”the economy” as a distinct entity. On the other hand many orthodox economists are critical of extreme neoliberalism, and their influence in practical settings seems to depend greatly on the pre-existing interests and authority of decision-makers. Furthermore it must be remembered that most neoliberal ideology came from outside the professional mainstream, and that the math-based authority of economic knowledge was largely the same during the previous era of Keynesian interventionism.

Economics Relationship to Sociology

Economics and sociology tend to be institutionally and intellectually separate despite the clear overlap in subject matter. Comprehensive syntheses have not proved popular, and most interactions have involved economists attempting to bring scientific rigor to a supposedly inferior discipline, or sociologists arguing that market-based explanations of economic and other phenomena are hopelessly narrow, if not ideologically biased.

Major attempts by economists to explain ostensibly non-economic phenomena include public choice theory (analyzing voting patterns and the self-interested behavior of lobbyists, politicians, and bureaucrats), new institutional economics (modeling the effects of different institutionalized incentives on various levels of organizational structure), and Gary S. Becker’s rational choice program (presenting utility maximization and human capital as the key to understanding all social interaction). While ideas from these lines of research have been selectively adopted in related sociological subfields, sociologists have generally remained unconvinced that choice or market models can ever adequately take account of broader social, cultural, and political factors.

Applications of sociology to economics have generally centered on this same issue of narrowness of focus. Examples of this are Marxist critiques of capitalism (including world systems and dependency theories) and other approaches to stratification which look at how apparently fair market allocations of wealth are in fact biased by historical, political, and cultural factors outside the scope of economic analysis. Analyses of work, consumer behavior, and the meanings of particular commodities similarly suggest that apparently simple market decisions actually depend on complex cultural and social factors. Finally, the field of economic sociology has developed very consciously as a counterpoint to economics, arguing that market processes can only be understood by examining their embeddedness in broader social contexts.

Bibliography:

Backhouse, R. E. (1985) A History ofModern Economic Analysis. Blackwell, Cambridge, MA.
Becker, G. S. (1978) The Economic Approach to Human Behavior. University of Chicago Press, Chicago, IL.
Bernstein, M. A. (2001) A Perilous Progress: Economists and Public Purpose in Twentieth-Century America. Princeton University Press, Princeton, NJ.
Fourcade-Gourinchas, M. (2006) The construction of a global profession: the transnationalization of economics. American Journal of Sociology 112: 145-94.
MacKenzie, D., Muniesa, F., & Siu, L. (eds.) (2007) Do Economists Make Markets? On the Performativity of Economics. Princeton University Press, Princeton, NJ.