Morality, Rationality and Efficiency

New Perspectives on Socio-economics

Richard M. Coughlin

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315488592
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The papers in this collection were selected from nearly 200 that were presented at the 50 sessions of the second annual International Conference on Socio-Economics held at The George Washington University in Washington, D.C. March 1990. They reflect the great interest that socio-economics has inspired in the few years since the Society for the Advancement of Socio-Economics was founded in 1989. The papers represent the stimulating dialogue among psychologists, sociologists, political scientists, philosophers, economists, and students of finance and business administration. The authors are communicating across the frontiers of established disciplines to address enduring questions on economic theory and policy, and they aim to liberate the study of economics from the straitjacket of the neoclassical approach.

1
Introduction

1
Introduction: Toward an Agenda for Socio-Economics

RICHARD M. COUGHLIN

Political Economy is inseparably intertwined with many other branches of social philosophy. Except on matters of mere detail, there are perhaps no practical questions, even among those which approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone.

—John Stuart Mill, Principles of Political Economy with Some of Their Applications to Social Philosophy (1848)

Socioeconomics assumes that economics is embedded in society, polity and culture, and is not a self-contained system. It assumes that individual choices are shaped by values, emotions, social bonds, and judgements—rather than by a precise calculation of self-interest.

—Society for the Advancement of Socio-Economics, "What is Socio-Economics?: A Brief Platform" (1990)

In name only, socio-economics is of recent ancestry. Amitai Etzioni's book, The Moral Dimension, published in 1988, launched the current socio-economics movement, but the intellectual roots of socio-economics reach back to the very beginnings of the social sciences.¹ Before disciplines had names, before they differentiated themselves by laying claim to distinctive theories and methodologies, the idea that behavior in the economic realm could or should be separated from the study of other aspects of human behavior would have been regarded as an anomaly, if not an abomination. Consider the terms used to describe the early stages in the development of the science of economics in the eighteenth and nineteenth centuries—moral philosophy and political economy—although these terms subsequently took on meanings quite different from their original denotations. The classic theorists of the social sciences, from Adam Smith through Max Weber, Emile Durkheim, Alfred Marshall, and of course Karl Marx and Friedrich Engels, each in his own way attempted to locate the study of economic phenomena within the context of society, politics, history, and philosophy. So, too, do the papers in this volume, each in its own way, attempt to improve the understanding of economic behavior, drawing upon the insights and methods of the contemporary disciplines of sociology, psychology, political science, philosophy, economics, and management.

Of Paradigms and Disciplines

To appreciate the contributions these perspectives offer, it is important to understand both what socio-economics is and what it is not. It is not, at this stage at least, either a radically new paradigm or an academic discipline, at least in the sense that these terms are now widely understood. Here I use "paradigm" in the sense Thomas Kuhn used the term in his classic study, The Study of Scientific Revolutions (1962). A paradigm suggests a relatively closed system of assumptions and propositions that delimit the range of scientific inquiry. A paradigm, in this sense, determines which questions are appropriate and useful to explore and which are not. Clearly, neoclassical economics has developed into a paradigm according to this definition. Paradigms impose constraints, as Kuhn demonstrates, but they also confer advantages. They help to guide and order inquiry; they lead to development of parsimonious models of explanation and prediction (albeit at the cost of reductionism); and they are conducive to the legitimation of particular approaches as intellectual disciplines in their own right.

If we apply these restrictive criteria to socio-economics in its current state, it is not a paradigm. Not everyone would agree with this contention. Lutz (1990), for example, argues that The Moral Dimension presents a "visionary hope of creating some new (and more encompassing)... Kuhnian paradigm, replete with positions on ethics, methodology, and epistemology" (pp. 4-5). It is certainly true that socio-economics presents a fundamental challenge to the dominant neoclassical paradigm, and may signal the start of a "paradigm shift" (Swedberg, 1990), and while there are paradigmatic elements in Etzioni's outline of socioeconomics (for example, the propositional inventory found on pp. 253-57 of The Moral Dimension), these elements do not even come close to the closed system of theoretical propositions or methodological assumptions that mark a full-blown paradigm. Etzioni's exposition of socio-economics contains some fundamental propositions (e.g., the rejection of a mono-utility conception of behavior; the recognition of the mediation of economic behavior by social and political processes and structures), but these are relatively few in number and, more important, are treated as working hypotheses rather than as axioms. Along the same lines, the platform of the Society for the Advancement of Socio-Economics (1990) emphasizes the open character of socio-economic inquiry:

Socioeconomics is an evolving discipline that seeks to draw on a variety of social sciences... . [S]ocio-economic propositions contain at least one independent variable of economics and one of another social science. Collections of new data and inductive studies are co-equal in methodological status to deduction and manipulation of existing data.

[p. 1]

Contrasting this new approach to the "economic imperialism" of the current dominant paradigm, Swedberg (1990) succinctly sums up the situation as follows: "Socioeconomics ... tries to keep the door open" (p. 151).

At its present state of development, socio-economics is a locus of convergence, from multiple and often quite diverse perspectives, on a set of central and relatively enduring questions about the nature of human behavior in the economic realm. Even in its core questions and concerns, much of the intellectual terrain of socio-economics remains to be explored and charted. The elements of a paradigm are still developing, growing, and adapting themselves to new theoretical propositions and empirical findings.

Nonetheless, although the boundaries of socio-economic inquiry are not yet firmly etched out, certain general features of the field can be discerned, particularly with regard to such core concerns as the moral underpinnings of economic behavior; the complex nature of rationality, self-interest, motivation, and preference formation; the importance of organizational culture, political institutions, and other elements of social structure as mediators of economic activity of both individuals and business firms. Although there are numerous interconnections among these concerns, as the papers in this volume amply demonstrate, there is as yet no overarching socio-economic framework that specifies a priori how intellectual inquiry should proceed. This kind of openness of inquiry is probably possible only in the absence of an entrenched, dominant paradigm.

Carried to an extreme, of course, a lack of a tight paradigmatic structure runs the risk of intellectual chaos: each analysis begins anew with no antecedents or descendants; theory disintegrates into countless fragments; hypotheses remain unconfirmed; knowledge fails to accumulate. This is a real danger, one that socio-economics cannot ignore, but on balance I do not regard it as a serious problem at the present time because the very questions that are at the center of socio-economic inquiry are also central to the established scholarly disciplines from which the ranks of current "socio-economists" are drawn.

This observation leads to a second point about the organization and production of knowledge: namely, the state of socio-economics as an academic discipline. Let me introduce this point with an anecdote. At the First Annual International Conference on Socio-Economics, held at the Harvard Business School in 1989, the distinguished economist Amartya Sen was one of three individuals honored as a "founding father" of socio-economics. (Lest this nomenclature be interpreted as evidence of a sexist bias in socio-economics, it should be noted that anthropologist Mary Douglas was similarly honored at the 1990 conference.)² In accepting the award, Sen commented humorously that being named a founding father of the discipline was a little like being unexpectedly served with a paternity suit—the "father" is unaware of the child's existence, and even unsure of his part in the conception. To anyone familiar with Sen's central contributions to the study of rationality and social welfare economics, the appropriateness of the award was self-evident. But Sen's academic appointments are in economics and philosophy, and it was in these fields doing the work identified with these disciplines, that he made his important contributions to socio-economics. The emphases in the preceding sentence are critical to understanding how socio-economics has related thus far, and at least for the time being should continue to relate, to existing academic disciplines in the social and behavioral sciences.

Academic disciplines serve primarily as vehicles of social organization. First, disciplines are the main means for organizing the production and dissemination of knowledge among scholars of kindred interests. Considered in this broad sense, socio-economics is no less a discipline than its older, more established counterparts in the social and behavioral sciences. Second, in the bureaucratic setting of the contemporary university disciplines are the principal institutional mechanism for organizing and supporting the activities of individual scholars. With few exceptions, scholarly disciplines qua academic departments offer opportunities for employment, make collective claims on institutional resources, and enable the training of new graduates. These mundane aspects of disciplines take on critical importance mainly when they are absent, a hard fact of life that many well-intentioned "interdisciplinary" efforts have discovered on the road to oblivion. New intellectual disciplines are in a meaningful sense analogous to small business enterprises—the risks are high, the chances of long-term success are slim, and experience teaches that most fail in a relatively short time. Certainly there are few incentives for individual scholars to renounce their current disciplinary identities to join up with a new intellectual movement—at least not if the latter requires foregoing all the practical advantages offered by an existing disciplinary niche. The good news, however, is that such choices do not have to be of an either/or type. For socio-economics, the best chances for success appear to lie in a dual strategy: building on the foundation of scholarship in existing disciplines, while at the same time reaching out to forge new and stronger links across disciplinary boundaries. In time socio-economics may evolve into a "discipline" in the sense of establishing academic departments, offering degrees, and the like—but it need not do so to survive, even flourish, as an intellectual enterprise. At the moment, what is essential to the continued growth of socioeconomics is the definition of research agenda that makes sense for scholars to pursue within their current disciplines. If successful, this approach will likely lead to development of a research agenda that is more distinctively socio-economic. In the next section I attempt to sketch out, in a preliminary way, what such an agenda might look like.

Central Questions, Enduring Concerns, and Points of Convergence

To reiterate, my general argument is that socio-economics comprises a set of shared substantive and theoretical concerns through which scholars from a variety of backgrounds are fruitfully exploring a set of interconnected questions about economic behavior. These concerns are, for the most part, not in themselves new, having been identified in one form or another within existing scholarly disciplines as important to the development of sound social theory. What sets socio-economics apart, and gives it a distinctive character, is the convergence on these questions from multiple directions, but with an identifiable communality of purpose. Taken separately and together, these questions form the framework for socio-economic research.

Rationality

One of the most enduring problems in the social sciences concerns rationality as the basis of human behavior. As incorporated into neoclassical economics, cognitive theory in psychology, exchange theory in sociology, and public choice theory in political science, rational choice has become the dominant paradigm (Etzioni, 1988; Coleman, 1989), Within the rational choice paradigm, however, rationality is typically taken for granted—at least in the narrow terms in which it is defined—and being taken for granted, it has ceased to be studied as a problematic concept. It is only outside of the dominant paradigm of rational choice that interest in rationality as a phenomenon to be studied in its own right has remained active.

In rational choice models, rationality is commonly treated as a simple expression of self-interest. Indeed, the term "rational behavior" has taken the connotation "narrowly self-interested" in many contemporary contexts—not only with respect to economic activity but across a broad range of behavior. Alternatively, "rational behavior" is conceptualized as the manifestation of individual preferences, allowing "altruistic" impulses some latitude. The latter usage is problematic, however, since it easily slides into the tautology that "people do what they do because they want to do it." Commenting on the tautological nature of rational choice models, two sociologists write, "Shiite martyrs who die charging machine guns are no less rational than Wall Street stockbrokers; they just have different utilities" (Evans and Stephens, 1988, p. 733). Only by specifying where preferences come from, they add, can the revealed preferences conception of rational choice be saved. Such a specification is precisely what rational choice theorists are reluctant to do.

The possible approaches to developing a more complete understanding of rationality are numerous. For a start, we can recognize that behavior can be understood as rational only by reference to a particular set of contextual conditions—historical, political, or sociocultural. Only by placing actors in the context of such variables can we begin to make sense out of what is otherwise strange or incomprehensible behaviors: for example, the odd wagering patterns of the Balinese cockfight, which Geertz (1973) describes, or the apparently irrational purchasing decisions of Japanese consumers (The Economist, 1987). Sen (1977) has provided us with the reductio ad absurdum of rational choice in his famous depiction of the "rational fool." Operating in a mode of relentlessly rational self-interest, no individual could function for very long in the real world; a society organized along these lines is equally unthinkable, as Thomas Hobbes correctly recognized long ago.

Another objection to rational choice is that it does not accurately describe how people process information, rank alternatives, and make decisions. Nearly forty years ago Milton Friedman attempted to answer this objection by offering a clever counterargume...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• List of Figures
• List of Tables
• Preface
• PART ONE: INTRODUCTION
• PART TWO: RATIONALITY, MOTIVATION, AND PREFERENCES
• PART THREE: MARKETS, COMPETITION, AND EFFICIENCY
• PART FOUR: THE MORAL DIMENSION OF THE FIRM
• PART FIVE: SOCIOPOLITICAL CONTEXT OF ECONOMIC ACTIVITY
• PART SIX: SOCIO-ECONOMICS OF WORK AND THE WORKPLACE
• PART SEVEN: POLICY ANALYSIS
• About the Contributors
• Index