Research

• Dialogue between Disciplines
• Understanding Economic Behavior
• Institutions and Markets
• Institutional Embeddedness of Economic Oranizations
• Institutional Structure of Political Systems
• Fields of Production and the Social Structure of Demand

Research at the International Max Planck Research School on the Social and Political Constitution of the Economy (IMPRS-SPCE) investigates the complex linkages between economic and social action. Just as politics and social life are affected by pressures for economic efficiency and economic power, economic action is embedded in and indeed presupposes an infrastructure of social institutions and political decisions. In this sense, the economy as a system of action is both politically and socially constituted.
 

Dialogue Between Disciplines

The mutual interdependence between the economy and society has long been a core topic in both sociology and political science, or political economy. The School undertakes to relate these two traditions systematically in an effort to exploit and enhance their synergies. In sociology, the study of the social embeddedness of economic action is at the center of a fast-growing subdiscipline, often referred to as the "New Economic Sociology".
 
Sociology is thus reclaiming territory it had long abandoned to economics. The focus of the new economic sociology is on the investigation of the functioning of markets. While economic sociology tends to emphasize the contribution of informal social structures to the facilitation and direction of economic action, political scientists have studied the contribution of formal political institutions and collective decision-making to economic governance. The latest offshoot of this literature, which goes back to the institutional economics of the early twentieth century and includes the study of organized capitalism in the 1960s and neo-corporatism in the subsequent decades, is the current work on the convergence and divergence of different "varieties of capitalism".

 

Understanding Economic Behavior

Bringing into dialogue economic sociology and institutionalist political science, work at the School pursues an empirical-analytical approach rather than an efficiency-theoretical, prescriptive approach. Understanding and explaining how economic behavior is influenced by its social context and vice versa takes precedence over prescriptive theorizing aimed at finding optimally efficient solutions to economic problems. Unlike the various efficiency-theoretical approaches in political economy, the program's research tries to understand how economic institutions evolve in the real world, rather than determining how they should, or would, evolve in an ideal world.
 
Technically speaking, while efficiency theory and prescriptive modeling exogenize both the meaning of efficiency and the preferences of actors, economic sociology and institutionalist political economy see these as themselves socially and politically constituted, and they therefore undertake to treat them as endogenous. Endogenizing economic preferences in social theory and exploring the social and political constitution of economic efficiency is at the core of the theoretical program of the Research School.
 

Institutions and Markets

Two types of social formations receiving particular attention in the research program, are institutions and markets. Both on their own and in their interaction institutions are normative constructs that generate social order by constraining specific actions while supporting others. Recently increased attention has been paid to institutional change as a principal subject of research and theorizing. Debates have moved from path dependency and punctuated equilibrium models to the exploration of various types of gradual but nonetheless significant change, and especially of the social mechanisms that drive them. As economic, social and political interactions have internationalized, the conditions, mechanisms and effects of international institution building have become another vibrant field of research.
 
Among the most promising analyses seem to be those that take historical sequences into account consider potential complementarities between institutions belonging to a common context, such as a national economy, and make allowance for the effects of multi-level institutional arrangements. Historical-institutionalist analyses of this sort stand to benefit from a proper microfoundation in a realistic theory of social action which goes beyond conventional assumptions of strategic rationality and takes the impact of bounded cognitive capacities and environmental uncertainty seriously.
 
No less than institutions, markets are social constructions. Modern economic sociology has begun to explore the social-structural, institutional and cultural preconditions for the development and proper functioning of market relations. Much more research on this is needed, however, especially in a period of liberalization and internationalization in which a growing range of social transactions are defined as economic and are released from normative, political and bureaucratic control, to be relegated to voluntary and competitive contractual exchange under free price formation. Researchers in this IMPRS-SPCE area study market formation in a wide variety of areas from both a social and a political perspective, exploring how trust, good will and cultural norms of behavior interact with political and regulatory intervention to make markets possible or, for that matter, impossible.
 

Institutional Embeddedness of Economic Organizations

Another prominent subject at the School is the institutional embeddedness of economic organizations, their relationship to political regulation, and their role in the constitution and reproduction of markets. Over the last twenty years, organization studies has moved much closer to institutional analysis in sociology and political science, focusing particularly on the institutional context of business firms. Changes caused in the organizational structures and strategies of firms by processes of liberalization have become a major research theme in political economy. Institutional constructions of "rationality" in business strategies and structures have been investigated by organization theorists operating in an institutionalist tradition. Research on regional economies shows the importance of the embeddedness of firms in social relations of trust that are in turn partly dependent on political conditions. The institutional embeddedness approach also contributes to a better understanding of the organizational structure and strategies of economic organizations other than the business firm, such as unions and employers associations and international organizations.
 

Institutional Structure of Political Systems

Research at the School investigates the economic effects of the institutional structure of political systems. For example, different election systems, power sharing between the legislative and the executive, the degree of centralization of political decision making, and multi-level governance all affect the possibility of adapting existing political regulations of the economy to changing economic needs. Understanding the ways in which political institutions condition the range of possible collective decisions, for example on economic reforms, represents an indispensable contribution to the analysis of the social and political constitution of the modern economy.

 
Fields of Production and the Social Structure of Demand

The final major topic at the School is the analysis of the embedding of markets in larger institutional complexes. In Pierre Bourdieu's terminology these configurations of institutions are called fields of (cultural) production. In such fields not only economic goods, but also their esthetic and normative evaluations, are produced. From this perspective, the interplay between actors and institutions in the creation of goods and their meaning becomes a central topic of economic sociology and economics. The increasing shift in consumer demand from commodities that have mainly instrumental value towards goods that are normatively and esthetically evaluated makes the understanding of evaluation increasingly important. Research in this area also studies the relevance of this development for core explanatory categories in the investigation of social inequality, such as class, economic stratification, and lifestyles.