Mark Granovetter

This is a dense-in-a-good-way look at some of the ways that the economy interacts with society. It's more of an outline of key issues than a presentation of answers. Granovetter makes that explicit in the closing of the book: "And so what I hope to have done here is to present informed researchers with an assemblage of crucial concepts that must be combined in ways that particular cases dictate with the larger goal of creating generalizations that will inform future theory."

So what does that mean for the more casual reader of this book? First, note that the book is dense academic prose. I happen to like that, but if that is not your thing, then you probably won't enjoy this book. However, for those who are happy (or at least willing) to get through that, there are a lot of valuable observations.

Granovetter's core position is that the assumptions that underlie neoclassical economic theory are flat out wrong. Humans are not selfish, rational individualists. He rejects the other extreme as well. Humans are not irrational bundles of instinct and internalized norms. Nor is our behavior fully defined by culture. Rather, he presents a more complex view of humanity where individual interests interact with relationships to form broader group and cultural norms. These norms are highly influential but they are also plural, meaning that individuals in practice have a lot of flexibility about which norms they follow, how they combine norms, and how norms evolve.

The key insight, perhaps not surprising given that Granovetter's contribution to the popular vocabulary is weak ties, is that it's relationships, on a 1-to-1 and group level, which are key to explaining the connection between individual desires and group norms. Without understanding this connection, those trying to understand the other tend to fall into either/or distinctions: either group identity matters or individual personality and situation matter; either selfish rationality drives economic decisions or culturally influenced irrationality. Granovetter turns this around and makes it a both/and situation. Relationships are critical to individuals so individual rationality entails taking larger relational and group norms into account. Economic decisions are rational, but more than purely economic factors play into the rationality of those choices. Humans are relationally embedded creatures.

Granovetter doesn't just state this. He invokes a variety of academic arguments and case studies from across many domains to demonstrate that a pragmatic hybrid approach much better explains observations than more simplistic models. At the same time, Granovetter cautions us to beware of cherry picking. We should not consider his examples evidence of his theories but merely as evidence that there is something intriguing to research here.

The book goes into depth on the topics of trust and power as well as how institutions and individuals interact with each other. These explorations are interesting, especially because they sometimes defy standard economic reasoning. For example, it's a truism in neoclassical economic theory that trust reduces economic efficiency. If trust is necessary than less economic activity is going on than should be and if trust is privileged then it leads to corruption. But when perfect information, that sneaky assumption of economics, is neither possible nor comprehensible at scale, trust can play a vital role in increasing economic efficiency by allowing people to engage in transactions that they would otherwise avoid.

The book contains many more interesting discussions with more examples. It was a good read and one I expect to revisit. (Also, there's a promised companion volume of case studies which hasn't come out yet. The constant allusions to it were vaguely annoying, but I'm excited anyway!)… (plus d'informations)