Re-Thinking Economics

Asimina Christoforou, Michael Lainé, Asimina Christoforou, Michael Lainé

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781135119508
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Once again, unfettered capitalism has failed. Promises for global prosperity and peace have given way to a world of deep recession, social upheaval and political instability. Once again, mainstream economics has proved its inadequacy. Despite its technical rigour and mathematical virtuosity, it failed dramatically to respond to the current crisis. Why is this so? Mainstream economics turns a blind eye to society. By assumption, it maims its analyses by wiping away what makes us what we are. There is pressing need for a critical discussion and new ideas.

We therefore turn to the insightful and stimulating work of Pierre Bourdieu. Arguably one of the major sociologists ever, he was also a major 'economist'. Yet his works on the economy have received only scant attention, especially from economists, be they 'mainstream' or 'heterodox'. Bourdieu helps to take a broader view and enrich our scientific imagination. By including dimensions of power, intuitive behaviour and social structures within the scope of his analysis, he provides for an alternative foundation of economics, based on an integrated, interdisciplinary theory. For the first time, this volume fills this gap in economics by featuring state-of-the-art research and experts from different social science disciplines. This book constitutes a first step, and hopes to become a milestone.

The book offers an innovative outlook and a unique source for social scientists of all fields, particularly economists and sociologists, who wish to engage in the study of Bourdieu and his economics with a view to developing a more pertinent theory. It will also constitute a useful reference for university students and administrators who would like to explore the economy from a Bourdieusian perspective.

Part I

Introduction

1 Re-thinking economics – why Pierre Bourdieu?

Asimina Christoforou and Michael Lainé

Pierre Bourdieu (1930–2002), a philosopher turned sociologist bred by the very French tradition of Grandes Écoles, among the likes of Jacques Derrida, Michel Foucault, Jean Baudrillard and many other influential thinkers of the twentieth century, was a leading voice of social justice and path-breaking scientific analyses. In his research, his ambition was to devise a general theory which would demolish disciplinary borders across the social sciences and would be applicable to virtually all societies. In a scientific world marked by isolationism, with scholars locked in higher and higher ivory towers of tinier and tinier subject matters, Bourdieu’s work is, to our knowledge, the most recent attempt in the social sciences at offering a general, grand perspective on society, on the ways people think and behave. The breadth and scope of his knowledge enabled him to blend philosophy, sociology, anthropology, linguistics, history and economics into an integrated, consistent theory of human behaviour and social reality. For him, the study of the economy was not a secondary theme. And it was all the less so as he endorsed and generalised many key economic notions such as capital, interest and strategy, by changing their meaning, which raised some confusion and misunderstanding – the common lot of pioneering thinkers. The basic objective of this volume is to implement a cross-fertilisation between Bourdieu’s theories and that of economics so as to enrich our scientific imagination and our ability to think about globalisation and the erratic changes of modern society.

Bourdieu matters for the study of the economy. His research not only appeals to sociologists, but is of particular interest to economists. Indeed, Bourdieu was not only one of the major figures of sociology, with theories plunging deep into philosophical waters, his student training; he also devised a comprehensive set of novel analytical tools, the potency of which has virtually escaped notice outside sociology, especially that of the economist. This book is the first to try to remedy this loophole. His specific writings on the economy have been the subject of many articles. However, no book has been entirely devoted to the topic so far. This is a real puzzle since Bourdieu’s most stimulating and insightful analytical tools were marred by economics. Of course, disciplinary borders have been very resilient, as most economists seldom take time to look beyond their field. Few economic studies, be they heterodox or not, have ever engaged in a critical discussion of Bourdieu’s work. This book should be read as a plea for a unified theory of economic practice across the social sciences, without endorsing a hierarchy or dissolution of the specificity of economic analysis. Of course, the economy is subject to peculiar laws and motives, irreducible to those of other activities. Nonetheless, our main contention is that these laws are not fully apprehended by the current state of economics. It needs to be re-considered within the context of sociological analyses, chiefly that of Bourdieu’ s. Furthermore, the existence of specific laws does not preclude the existence of general ones. Put differently, the specificity of some economic laws can be subject to a systematic, general analysis.

In fact, it is time we abandon the sterile demarcation of disciplinary borders. Economics has already begun to open up to other sciences, namely psychology (the so-called strands of ‘behavioural’ and ‘experimental economies’), biology (‘evolutionary economies’) and neuroscience. These borders are bound to fade away, since all these disciplines share the same subject matter, that is, decision-making writ large, as every economic phenomenon implies a human decision. Sociology on the other hand is not entirely absent, as in the works of institutional economics and Marxism, for instance. But so far it has been discarded from the mainstream. Why should economists shy away from considering what others have to say about the economy? Deep-rooted misconceptions have prevented a real dialogue from being implemented. Since Vilfredo Pareto, most economists believe that economics has to deal with rational behaviour, whereas sociology ought to be concerned with rule-based behaviour. We believe this interpretation to be biased and misleading. First, it can be rational to follow rules. Furthermore, the canonical subjective expected utility models, the most popular in economics, never define – and this is their raison d’être – what is concealed behind the smokescreen of ‘utility’. It can be virtually anything, including social rules.

Thus the Paretian boundaries end up very much blurred. Actually, we observe that economics has influenced sociology via rational action theory. To take an example, the analyses of the economist Gary Becker and the sociologist James Coleman are broadly aligned. Yet sociological theory has rarely influenced economics and never really inspired Becker. We argue that there is no point in restricting ourselves to the principle of rational choice, since many economic phenomena obviously are not rational in the strict sense of a means-ends and cost-benefit analysis, yet they have a rationale, a reason or cause, which requires systematic analysis. Alternative interpretations of economic behaviour can be sought in the social sciences: so long as they share the same subject matter, the economy, they should unite. Moreover, they can provide for a more encompassing and stimulating explanation of individual action. But why are we so reluctant to go outside economics? As John Kenneth Galbraith noticed decades ago, such reluctance stems from a ‘theological’ viewpoint, derived from a normative belief, located beyond doubt, like faith, in the best of all worlds, one that consists of more or less rational people in more or less free, self-regulated markets. Since mainstream economics provides a theoretical framework that describes such a world, there is no need for alternative explanations. In our view, what is more interesting is to have a more complete and realistic account of the reasons and causes of economic behaviour, and mainstream economics usually fails to do so.

Of course, one might argue that our plea for re-thinking economics toward a unified theory must take account of the epistemological and methodological differences with sociology, and the possible inconsistencies that could emerge. Bourdieu was very much aware of these issues and his theoretical framework proves to be most appropriate in resolving them. He tried to overcome the traditional dichotomies that separate these areas of research, such as individual and structure, by developing an ‘applied rationalism’, a mid-way between rationalism and realism. In this manner, according to Bourdieu, we manage to avoid the pitfalls of adhering to either one of the two extremes. Rather than seeing them as opposing positions, we see them as complementary and unravel their ‘hidden solidarity’ to draw together theory and experiment. More importantly, as we discuss in detail below (see points 1 and 2 below), by overcoming the traditional opposition between rationalism and realism, Bourdieu devised a theoretical framework that is compatible with these philosophical tenets and the ways they are applied in economics, across its diverse strands: falsifiability à la Popper and positivism à la Friedman, which pertain to rationalism, and realism. By using this framework, economists are able to build stronger theories, which lead to testable predictions, can be falsified and are grounded on empirical studies. Hence they can produce theories that accommodate the progress made in economics and take it further by incorporating the social dimensions of economic behaviour, such as the interplay between agency and structure or the evolution of power relations (see points 3 and 6).

This book gathers the contributions of sociologists and economists alike, who try to use novel analytical tools in order to better account for economic phenomena. But why appeal to Bourdieu? How useful are his theories? Can his analytical tools be applied to economic analysis? It is up to the reader to judge, but we give at least seven reasons why Bourdieu should matter, to be expounded hereafter.

1. Any kind of social science faces a fundamental dilemma, owing to the fact that individuals bestow meaning on their actions and yet they do not necessarily realise the true reasons underlying their choices. Roughly speaking, two sorts of answers have been given to this dilemma. Scientists either tend to take at face value what people think and say of themselves, and thus society is comprised of the numerous interactions between them. Pragmatic sociology and ethnomethodology can be said to fall into this category. Or they tend to elaborate mathematical models and see whether they can predict behaviour: if anything, it would mean that people decided as if they used such models, without consciously endorsing them, as is the case in mainstream economics. What both answers have in common is that they do not delve into the determinants of decisions: the former adheres to what individuals consciously know and master, the latter does not want to probe (and indeed, this contributes to its appeal, since it can apparently accommodate the heterogeneity of human motives through the catch-all notion of ‘utility’). In both cases, the human mind remains a black box.

Exploring the work of Bourdieu enables us to open such a box, and that’s why his theories are so valuable. In fact, his whole theoretical enterprise stemmed from the will to avoid the illusions produced by these two approaches: the first reflects a kind of ‘illusion of immediate knowledge’, and the second is dubbed ‘scholastic illusion’. A genuinely sound science should be built on an ‘epistemological break’ with what people spontaneously think of themselves, what seems ‘natural’, ‘evident’, or what is taken for granted. At the same time, it cannot turn a blind eye to their reflections and claims, as if they did not matter. This is the seminal tension that runs through Bourdieu’s work. One cannot help but take heed of what people think, for it exerts some influence on their final decision, but one should also go beyond that in order to grasp the source of their motives and expectations. Each practice has a ‘double truth’ that is located both ‘inside’ and ‘outside’ of what individuals consciously expect. As we shall see, this ‘double truth’ provides a more accurate answer to the ongoing agency-structure debate.

2. First of all, Bourdieu purports that the ‘laws’ by which society works are to be concurrently uncovered and elaborated by the sociological discourse. He makes clear though that these sociological laws are of a statistical nature. People have more or less chances than others to think or behave in a certain way for a specific matter. But they are not irremediably compelled to do so. In a given social group or class, not every individual acts like others or thinks s/he should do so. Rather, a proportion of this group decides significantly differently from the average of the group as well as from the general population. That’s all, but that is more than nothing. Incidentally, it implies that individuals can be said to be all alike and all different at the same time, for this is what statistics is about.

Second, there exists what Bourdieu called, following Popper, indeterminism. Causality is not a question of succession of events, that is, each event, the cause, being inevitably followed by another one, the effect. Causality is seen as success of events: sometimes the cause succeeds in being followed by the effect, sometimes it fails. Such a causality principle is of a probabilistic nature. Sociological laws make the effects more or less probable for certain groups of individuals than for the average population. Furthermore, even if some people decided to act in a specific way, there is no assurance that they will continue, since the cause can ‘fail’ (so to speak). This proposition has tremendous consequences. It means, for instance, that people are able to hold opposing views without being inconsistent, for this is what probability is about (a belief p that an event will occur implies a belief 1-p that it will not happen). We should also bear in mind a vital distinction: probability is so to speak mathematical as to society or social groups and metaphorical as to individuals.

Third, as a scientist very well versed in philosophy, Bourdieu endorsed Wittgenstein’s criticism of the very notion of rule. According to the latter, a rule cannot be as precise as to provide an answer to each and every circumstance one can face. For all imaginable situations are virtually infinite: if a rule were to prescribe very precisely what to do, it would be tantamount to a network of infinite railways upon which our expectations would roll. But no one, of course, can ever install such railways since our time is finite and our abilities limited. Hence, a rule necessarily comprises vague and incomplete components. So, even when they obey sociological laws, individuals have a more or less significant margin of freedom. They improvise. Each time Bourdieu speaks of strategies, a key element of his theory, he accounts for the fact that there is an adjustment to specific laws, unnoticed by consciousness, as well as an improvisation, rendering the decision-maker’s action non-mechanical, thus predictable and unpredictable at the same time.

3. This is a major departure from mainstream economics as well as rational action theories that are rife in other social sciences. Paradoxically enough, the proponents of such theories extol the virtues of individual freedom, as if they managed to account for every decision by reasons, thus viewed as uncaused causes. Bourdieu kept on scoffing at the actual determinism of these theoretical attempts: when individuals are said to maximise utility, they have no choice but to retain the option offering the highest payoff in terms of utility multiplied by probability! Even in behavioural economics, there is no room for genuine ‘choice’, since individuals are still modelled as maximising a mathematical function that distorts money or utility (called ‘decision-values’) and probability (called ‘decision-weights’). Agency also seems to be desperately absent. In Bourdieu’s theory, there is no maximisation; there is indeterminism and improvisation. Therefore, human agency has some role to play and, in spite of stringent sociological laws, there is leeway. Accordingly, Bourdieu also took distance from ‘Marxism’, which deterministically accounted for every phenomenon by the underlying economic infrastructure, expectations and thoughts thus being the mere reflection of class interests. Albeit Marx was indisputably one of his main sources of influence, he did not adhere to a Marxist theory.

4. Bourdieu was all the less a Marxist as he focused on the symbolic dimensions of economic activities. Such dimensions were never reduced to economic laws. They have a rationale of their own, even though they could be partly influenced by the economy. By extending the notion of capital to other non-economic domains such as culture, symbols and networks, he provided tools for grasping a more comprehensive picture of the heterogeneous motives and reasoning behind individual behaviour. Even in the economy, people do not always try to maximise economic capital (i.e. money). Their goals could be broader and include the accumulation of other types of capital, namely symbolic, cultural and social. Furthermore, their reasoning also depends on their social position guaranteed by the possession of all sorts of capital. It opens many avenues for further research. Forms of cultural and social capital are easier to assess by appealing to the educational qualifications and the nexus of social networks inherited by the family and the school and obtained through the individual’s social trajectory. As to symbolic capital, or the capital that offers recognition and legitimacy to other types of capital and takes on the form of honour and status, it appears more elusive, in that it seems less susceptible to numerical measure, but nonetheless it is of paramount importance.

5. Possession (of capital) makes (social) position. And position entails (specific) reflection. By explaining expectations and decisions in relation to social positions adequately defined, Bourdieu provides an alternative theory that departs from mainstream and rational action theories in three fundamental ways: it makes us look behind the smokescreen of ‘utility’ (the basis of preferences); it goes beyond probability in beliefs; and finally, it drops mathematical understandings of ‘maximisation’ in decision-making. It helps us look inside the black box of ‘utility’, which has been used by rational theorists to keep individual motives far from scientific scrutiny. Noblesse oblige: a specific social position implied by the possession of capital entices one to behave in a certain way or have certain expectations, even though probability calculus cannot be implemented by individuals. Instead, they rely on an analogical ‘practical sense’, aka ‘habitus’. Moreover, Bourdieu’s notion of habitus is predominantly qualitative, making it difficult to apply usual conceptions of maximisation. Yet at the same time we can say that generally it adapts rather well to the circumstances, or to the ‘field’, that is, to the objective social relations determined by the distribution of all kinds of capital and the social struggles between individuals.

6. There is a major blind spot in mainstream economics: power relations. Decisions and expectations are said to be the sole fruit of a pure reason, unsoiled by any social hierarchy. Or power is said to be encapsulated in the catch-all notion of ‘utility’. Thus, we do not explain anything. We cover our ignorance with a word. No analysis of power is provided, and yet power prevails in everyday life. According to Bourdieu, power is a matter of inequality of capital. Behind each economic decision, technical and power issues can be very hard to disentangle. Power can give rise to symbolic violence, a vital concept that explains why people comply with hierarchy even though this might be against their interest, and why they do not dissent even though their objective situation of subordination and exploitation would seem to spur them to do so.

7. Notwithstanding the talk of bargaining ‘power’, in game theory the scientist focuses only on interactions. S/he assumes that players make a choice after carefully considering the choices of those with whom they interact while envisioning the problem from the same angle. There is no imagining the reactions of other people. T...