To what extent do individuals choose their courses of action largely on the basis of a calculation of costs and benefits? And to what extent, on the contrary, are their actions importantly driven by the normative assumptions they share with other individuals with whom they interact? Mark Granovetter formulated this foundational question for the social sciences in his important 1985 contribution to the American Journal of Sociology, “Economic Action and Social Structure: The Problem of Embeddedness” (link). He used the concept of embeddedness as a way of capturing the idea that the actions individuals choose are importantly refracted by the social relations within which they function. This is a topic we’ve addressed frequently in prior posts under the topic of the social actor, and Granovetter’s contribution is an important one to consider as we try to further clarify the issues involved.
The large distinction at issue here is the contrast between rational actor models of the social world, in which the actor makes choices within a thin set of context-independent decision rules, and social actor models, in which the actor is largely driven by a context-defined set of scripts as he/she makes choices. The contrast is sometimes illustrated by contrasting neoclassical economic models of the market with substantivist models along the lines of Karl Polanyi’s The Great Transformation: The Political and Economic Origins of Our Time, and it links to the debate in economic anthropology between formalists and substantivists. Here is how Granovetter puts the fundamental question:
How behavior and institutions are affected by social relations is one of the classic questions of social theory. (481)
He argues that neither of the polar positions are tenable. The formalist approach errs in taking too a-social view of the actor:
Classical and neoclassical economics operates, in contrast, with an atomized, undersocialized conception of human action, continuing in the utilitarian tradition. … In classical and neoclassical economics, therefore, the fact that actors may have social relations with one another has been treated, if at all, as a frictional drag that impedes competitive markets. (483, 484)
But the extreme alternative isn’t appealing either:
More recent comments by economists on “social influences” construe these as processes in which actors acquire customs, habits, or norms that are followed mechanically and automatically, irrespective of their bearing on rational choice. (485)
So action doesn’t reduce to abstract optimizing rationality, and it doesn’t reduce to inflexible cultural or normative scripts either. Instead, Granovetter proposes an approach to this topic that reframes the issue around a more fluid and relational conception of the actor. Like the pragmatist theories of the actor discussed in earlier posts (Abbott, Gross, Joas), he explores the idea that the actor’s choices emerge from a flow of interactions and shifting relations with others. The actor is not an atomized agent, but rather a participant in a flow of actions and interactions.
At the same time, Granovetter insists that this approach does not deny purposiveness and agency to the actor. The actor reacts and responds to the social relations surrounding him or her; but actions are constructed and refracted through the consciousness, beliefs, and purposes of the individual.
The idea of embeddedness is crucial for Granovetter’s argument; but it isn’t explicitly defined in this piece. The idea of an “embedded” individual is contrasted to the idea of an atomized actor; this implies that the individual’s choices and actions are generated, in part anyway, by the actions and expected behavior of other actors. It is a relational concept; the embedded actor exists in a set of relationships with other actors whose choices affect his or her own choices as well. And this in turn implies that the choices actors make are not wholly determined by facts internal to their spheres of individual deliberation and beliefs; instead, actions are importantly influenced by the observed and expected behavior of others.
Their attempts at purposive action are instead embedded in concrete, ongoing systems of social relations. (487)
Some of Granovetter’s discussion crystallizes around the social reality of trust within a system of economic actors. Trust is an inherently relational social category; it depends upon the past and present actions and interactions within a group of actors, on the basis of which the actors choose courses of action that depend on expectations about the future cooperative actions of the other actors. Trust for Granovetter is therefore a feature of social relations and social networks:
The embeddedness argument stresses instead the role of concrete personal relations and structures (or “networks”) of such relations in generating trust and discouraging malfeasance. (490)
And trust is relevant to cooperation in all its variants — benevolent and malicious as well. As Granovetter points out, a conspiracy to defraud a business requires a group of trusting confederates. So it is an important sociological question to investigate how those bonds of trust among thieves are created and sustained.
This line of thought, and the theory of the actor that it suggests, is an important contribution to how we can understand social behavior in a wide range of contexts. The key premise is that individuals choose their actions in consideration of the likely choices of others, and this means that their concrete social relations are critical to their actions. How frequently do a set of actors interact? Has there been a history of successful cooperation among these actors in the past? Are there rivalries among the actors that might work to reduce trust? These are all situational and historical facts about the location and social relations of the individual. And they imply that very similar individuals, confronting very similar circumstances of choice, may arrive at very different patterns of social action dependent on their histories of interaction with each other.
It seems that this theory of the actor would be amenable to empirical investigation. The methodologies of experimental economics could be adapted to study of the relational intelligence that Granovetter describes here. Recent works by Ernst Fehr and Klaus Schmidt explore related empirical questions about decision making in the context of problems involving fairness and reciprocity (Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies and “The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories”; link).
(These topics have come up in earlier discussions here. Here is a post on Chuck Tilly’s treatment of trust networks; link. Amartya Sen’s discussion of “rational fools” is relevant as well, as is his account of the role that commitments play in action (link). It seems likely that Granovetter would argue that Sen’s solution is still too formalist, in that it attempts to internalize he social relations component into the actor’s calculations. This is true of the “identity economics” approach as well; (link).)