The Architecture of Markets: An Economic Sociology of Twenty-First Century Capitalist Societies (review)

Neil Fligstein identifies as well as anyone the central problem facing economic sociology over the past two decades or so. Economic sociologists have developed sophisticated theoretical frameworks and conceptual schemes that, unfortunately, largely impress fellow sociologists (and political scientists). Their approaches have not informed current (or past) debates between economists or corporate law scholars. How exactly can economists, legal scholars, policymakers, and judges use the new institutionalism or population ecology? More telling: What difference would it make if they did?

Five of the book's 10 chapters are impressive both in surveying where economic sociology has been and in presenting where Fligstein would like to see the field go in the future. In chapters 2 and 4 he elaborates on why he treats markets as institutions, as sites of "structured exchange." He proposes that economic sociologists focus on four sets of structuring rules: property rights, governance structures, rules of exchange, and what Fligstein calls "conceptions of control." The latter is essentially what institutionalists earlier called institutionalized norms or institutionalized environments. With economists, Fligstein notes that managers and owners cannot really identify, either prospectively or retrospectively, which corporate policies maximize profits. Unlike economists, he suggests that they likely gauge their own success by whether they establish and maintain "stable worlds" of economic competition. In Fligstein's world of economic institutions, stability and survival ultimately trump competitiveness and profitability, rather than vice versa.

More impressive, in chapter 5 Fligstein places employment patterns in a larger sociological context that spans changes in education policy and in intracorporate playoffs between managerial and professional orientations. His use of four ideal types of employment patterns, illustrated by Germany, the U.S., France, and Japan, is suggestive for future cross-national research. In chapter 6 Fligstein methodically explores the economic and sociological literature regarding who controls the corporation. He finds little empirical support for those who point to interlocking directorates revolving around banks and instead finds that CEOs' backgrounds are the best predictor of corporate performance. This is hardly a startling finding, but it does advance a specialized debate. Chapter 9 contains one of the most reasoned discussions of globalization that I have seen in the past two decades. Fligstein masterfully explores contemporary positions and sets the whole discussion into a historical perspective that strongly supports his own approach to this issue.

Three other chapters are impressive in describing the current state of economic sociology. But here Fligstein's proposals for future work are hardly likely to impress economists and legal scholars. Thus, they are not compelling candidates to remedy the central problem noted at the opening.

In chapter 1, Fligstein provides an overview of his "political-cultural approach" to markets, noting that neoclassical economists' narrower focus on wealth creation driven by technology and market competition is only "part" of the story. He is extraordinarily candid in acknowledging that economic sociologists borrow from economic theory "unsystematically" and that the "only" element that holds economic sociology together even broadly is opposition to neoclassical concepts.

Fligstein suggests that economic sociology can revolve more positively in the future around five "core questions." This is a promising proposal, but all of the questions need to be recast in order to overcome longstanding limitations of institutionalism that Fligstein has inherited. This is not the place to review all four limitations, but one of the most important is that institutionalists, including Fligstein, fail to identify the qualitative effects of norms institutionalized in markets, as opposed to the quantitative effects stemming from strictly economic forces. Aside from related limitations of his core questions, Fligstein's initial line of criticism — economics tells only part of the story — is hardly impressive. It can be directed casually to any discipline, including sociology and Fligstein's own work. Worse, Fligstein concludes his book conceding nearly everything to the very same "partial" story he had earlier belittled.

Chapters 7 and...