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The new economic sociology and its relevance to Australia.

Australian sociologists have a long-standing interest in the articulation between the economy and society. Their research mostly takes its bearings from political economy and critical theory. Two themes are especially prominent: first, the role of the state and political elites in relation to the economy and, second, social class and social control. An exemplar of the former theme is Michael Pusey's Economic Rationalism in Canberra: A Nation Building State Changes Its Mind (1991); an exemplar of the latter is R.W. Connell's Ruling Class, Ruling Culture: Studies of Conflict, Power and Hegemony in Australian Life (1977). When the Australian Sociological Association ran a poll of its members regarding the most influential books in Australian sociology on its fortieth anniversary in 2003, Connell's Ruling Class Ruling Culture came first and Pusey's Economic Rationalism in Canberra ran second. Presumably these results indicate that this line of inquiry is held in high regard by the Australian sociological community. So it should be.

Yet there is another sociological tradition that addresses the articulation between the economy and society. This approach, usually described as 'economic sociology', has undergone a resurgence in the past two decades, especially in the United States (Guillen et al., 2002: 5-6). In turn, there has been a wave of books that take stock of the field, both in terms of its classical lineage and its contemporary manifestation. Most but not all of these books are from the US. They include Carlo Trigilia's Economic Sociology: State, Market, and Society in Modern Capitalism (1998; English translation 2002); Neil Fligstein's The Architecture of Markets: An Economic Sociology of Twenty-first-century Societies (2001); Harrison White's Markets from Networks: Socioeconomic Models of Production (2001); Nicole Biggart's Readings in Economic Sociology (2002); and The New Economic Sociology: Developments in an Emerging Field (2002), edited by Mauro Guillen, Randall Collins, Paula England and Marshall Meyer.

The new economic sociology has barely registered in Australia. This is a pity. This review article explores how economic sociology might contribute towards a richer understanding of the articulation between economy and society in Australian sociology. It does so through a review of three books. First, it addresses Michael Pusey's latest book, The Experience of Middle Australia: The Dark Side of Economic Reform (2003). It then turns its attention to Carlo Trigilia's Economic Sociology, a landmark synthesis of the field from a European perspective, and Neil Fligstein's The Architecture of Markets, an ambitious attempt to build a more coherent theoretical foundation for the field. Finally, the article considers how economic sociology might enrich Australian sociology.

Pusey's The Experience of Middle Australia

Connell's Ruling Class Ruling Culture was written in the midst of the crisis of the Keynesian welfare state and the Fordist production model. The crisis was followed by two decades of neoliberal economic reform. The intellectual leadership of the case for neoliberal economic reform--or 'economic rationalism' as it became known in Australia--came from economists. The intellectual leadership against economic reform came from political scientists, with the support of sociologists and some renegade economists (Carroll and Manne, 1992; Stewart, 1994; Stilwell, 2000). The dominant framework in the case against neoliberalism was one of political economy, for sociologists as well as political scientists.

The most prominent sociologist in the debate around neoliberalism was Michael Pusey. Pusey's Economic Rationalism in Canberra, based on interviews with 215 senior government officials, catapulted Pusey to national prominence in the debate. Pusey described how 'economic rationalists', often trained in economics and sceptical about the role of government, had taken over the senior ranks of the federal public service. Their reforms were supported by the peak organizations of big business, notably the Business Council of Australia. This was a tale of rampant capitalism.

Pusey's most recent book, The Experience of Middle Australia (2003), turns the focus from government officials to 'middle Australia'. Pusey interviews a random sample of 400 Australians from five capital cities with average household incomes below the 90th percentile and above the 20th percentile. His object is to map their 'lived experience' of economic reform. Pusey's intellectual bearings come from European post-Marxist and critical theory: for example, Habermas, Offe, Touraine and Bauman.

In Chapter 2 Pusey addresses income. In the 1960s, he observes, Australia was a relatively affluent nation with a 'distribution of (wage) income that was generally judged to be one of the most equal, if not the most equal, in the world' (2003: 20). This was on account of the 'wage earners' welfare state', the 'bedrock institution' secured through class settlement at the time of Federation (2003: 41). Neoliberal reform had successfully undermined the wage earners' welfare state, making Australia one of the most unequal nations in the world. Middle Australians 'have a fairly accurate perception of what is happening to their incomes' (2003: 30). They are also realistic in their view of who have been the winners ('people on high incomes, rich people with assets, big business, and big companies') and losers ('people in the middle' and 'ordinary people generally') (2003: 32-4). Most middle Australians think that there is too much dispersion of incomes.

Chapters 3 to 6 address work, families, communities and politics in turn. The details change, but the basic story is the same: neoliberal reform has wreaked havoc in the everyday lives of middle Australians. For example, economic reform has 'blasted away institutional constraints on markets', leaving people with 'depleted connections that were once concretely available from stronger, "thicker" communities, local neighbourhoods, church congregations, and extended families--all typically, only a generation ago, more often than not within walking distance of their homes' (2003: 135). Middle Australians are still overwhelmingly unreconciled to reform. They are most likely to blame big business and multinational corporations, and they still want active government. These views have been evident in sporadic political breakouts, such as the movement around Pauline Hanson. Such breakouts still threaten 'the end-game of economic reform, which is the political disempowerment of the broad middle class' (2003: 167).

In his final chapter, Pusey observes that the criterion of success for reformers 'has always been the degree to which the people can be made to accept "the dull compulsions of the market" like wind and rain and hence as inevitable and quasi-natural forces' (2003: 173). Yet the 'promises of economic reform have now gone sour' (2003: 170). Pusey describes how his respondents--as they reflect on their experience of economic reform--show 'two emotions that are perhaps one: anger and moral anxiety' (2003: 174). They are angry about the new capitalism, with 'egoistic and predatory corporate moguls ... at the top and themselves at the bottom' (2003: 177). They are anxious about how 'the market is attacking the social proteins' that hold us together as families, communities and a nation (2003: 175). In turn, middle Australians no longer trust governments, corporate elites and economic institutions. Pusey hopes that it will not be too long before 'the avenging return of constructive politics' (2003: 185).

The Experience of Middle Australia is not just social research. It is a rallying call. Pusey identifies unapologetically with middle Australia: for example, speaking of how 'economic reform came upon us from the top down' (2003: 1, my italics). Middle Australia is the hero of this story; economic rationalists and corporate elites are the villains. For example: 'these corporate leaders, the faceless men, are now as before in our history generally egoistical and amoral people with little feeling for, or attachment to, the nation' (2003: 163). Pusey dearly hopes that a middle-class revolution is on the way, the sooner the better.

Yet Pusey is partisan to a fault. The problem is not that he has strong views against neoliberalism. The problem is that he is selective in his presentation of evidence. For example, there is a good case for growing income inequality in Australia, but it is not as good as Pusey makes out. Several prominent specialists in the field have presented evidence that the trend towards greater income inequality was not especially pronounced in Australia between the 1970s and 1990s, especially in comparison with other OECD countries (Smeeding, 2002: 211; Travers and Richardson, 1995: 78; Whiteford, 2001: 211;). Pusey simply ignores this evidence. Similarly, there is a good case that middle Australia is angry and resentful, but again it is not as good as Pusey asserts. His own data is telling here. After two decades of economic reform, he reports that 'just over one-quarter (29 per cent) of our respondents rate themselves "warm" towards reform; slightly less (26 per cent) give a "cold" rating; and 45 per cent are neutral' (2003: 139). These numbers suggest uncertainty more than resentment. Indeed, slightly more respondents are positive towards reform than negative. Pusey's selective presentation of evidence reduces confidence in his broader analysis.

In close connection, Pusey's account presents middle Australians as a storehouse of personal and civic morality at the expense of making them into victims. There is little acknowledgement of how middle Australians are complicit in economic reform. After all, the main electoral backlash against economic reform (Pauline Hanson's One Nation Party and Kennett's electoral defeat) has come from regional Australia, outside the ambit of this study. There has been no substantial electoral backlash from the suburbs, Pusey's stomping ground. Indeed, the suburbs have kept John Howard in office. Pusey's data is again telling in this respect. He identifies those groups of middle Australians who are 'warm' or 'neutral' in relation to economic reform (he calls them 'North Shore People' and 'Survivors'); and he also identifies differences among those who are angry about reform (he calls these people 'Battlers' and 'Hansonites', and 'Achievers'). His account of these groups is the highlight of the book, providing leverage in understanding the complicity of middle Australians. Yet the overall narrative plays down these differences and divisions. To put it another way: Pusey identifies with middle Australia, but it does not appear that most middle Australians identify with Pusey.

Pusey's middle Australians are victims of neoliberal reform in the first place, and ultimately of 'the market'. Pusey tells us that economic rationalists' ultimate objective is to make people accept 'the dull compulsions of the market' as inevitable, like wind and rain. Ironically, Pusey's own account does little to challenge this view of the market. The market is a juggernaut, once restrained by government and now unleashed by economic reform. It corrodes character, colonizes the family and depletes civil society. There is no sense in this account of the market as a social institution, governed by social rules. It is at precisely this level that the new economic sociology has something to offer.

Carlo Trigilia's Economic Sociology

In the 1980s seminal works by White (1981), Burt (1982) and Granovetter (1985) presented the case for a sociology of economic life, stimulating a growing body of research framed in such terms. In turn, during the 1990s several edited volumes emanating from the US (Granovetter and Swedberg, 1992; Smelser and Swedberg, 1994) drew together the classical and contemporary literature, consolidating the field. Carlo Trigilia's Economic Sociology follows in the path of these edited volumes. The difference is that he is a single author writing from a European perspective. The fact that he is Italian is not a coincidence: since Piore and Sabel's classic study The Second Industrial Divide (1984), the industrial districts of the 'Third Italy' have been a consistent point of reference in the new economic sociology.

As a first approximation, Trigilia defines economic sociology as 'a body of study and research aimed at establishing the links between economic and social phenomena' (2002: 1). He then proceeds to reject the narrow definition of the economy in terms of 'activities which involve the rational allocation of scarce resources in order to obtain the most from the means available' (2002: 2). This definition is favoured by economists, allowing them to apply mathematics to economic behaviour, develop theories at a high level of abstraction, and formulate economic predictions and normative principles. As Trigilia observes, it does not travel well 'when one needs to understand contexts in which the self-regulating market has a limited role, or simply does not exist' (2002: 3). Not surprisingly, Trigilia favours a broader definition of the economy, in terms of 'a body of activities which is usually carried out by members of a society in order to produce, distribute, and exchange goods and services' (2002: 2). This definition is grounded in the principle that 'economic activity is an institutional process', and allows for the study of 'the different ways, over space and time, in which institutions orient and regulate economic activities' (2002: 4). Trigilia adds that economic sociology is not just about the social construction of the economy, but also about 'the social, political, and cultural consequences of economic development' (2002: 5). Pusey's The Experience of Middle Australia falls within this broader definition.

Trigilia's book is divided into two parts. The first part is entitled 'The Classics and the Sociology of Capitalism'. It begins with the birth of economics as a discipline (Adam Smith, David Ricardo and Thomas Malthus); Marx's critique of economics; the 'marginalist revolution' in late 19th-century Britain and France, which dispatched institutions from economics comprehensively; and the emergence of economic sociology in Germany, on account of the influence of idealistic philosophy. Chapters 2 and 3 address Simmel, Sombart and Weber, all trained in the German school of historicism and striving for a stronger theoretical base in the study of economic institutions. Chapter 4 discusses Durkheim and Veblen in terms of 'the social consequences of capitalism'. Chapter 5 considers Polanyi and Schumpeter, both of whom addressed the crisis of liberal capitalism.

Part 2 of Trigilia's book addresses 'Themes and Routes of Contemporary Economic Sociology'. In Chapter 6 Trigilia discusses how the legacy of the classics became fragmented in the wake of the Second World War, and there was increasing disciplinary specialization, such as industrial sociology, sociology of organizations and sociology of work. The one area where economic sociology continued to exercise substantial influence was in the new sociology of development, covered in Chapter 7. From the 1970s the crisis of the Keynesian welfare state promoted renewed attention to the political and social institutions of the developed countries. This is the focus of Chapter 8, drawing upon comparative political economy. In Chapter 9 Trigilia shifts his attention to the crisis of Fordism, the production model based on large and mass production firms; its transformation, resulting in 'neo-Fordist' or 'flexible production' models; and the emergence of a 'new economic sociology'. The final chapter draws together comparative political economy and the new economic sociology. It does so through consideration of whether the diversity of capitalisms is enduring, or whether globalization is resulting in the convergence of market institutions. Trigilia argues that the diversity is enduring. This is partly because institutional choices in different countries are 'path dependent', grounded in different institutional legacies. It is also because different national responses and institutional strategies may be 'functionally equivalent' in terms of their competitive capacity, especially in the long haul.

This is a very good book. It is wide-ranging, well organized and well written. In covering so much ground, Trigilia highlights the limited points of reference in the Australian literature on economy and society. There is a vigorous political economy tradition in Australia, heavily grounded in the Marxist tradition and exemplified by the Journal of Australian Political Economy. There is also a sociological literature, exemplified by Connell and Pusey. Again, the classical points of reference in this literature are mostly Marxist. There is little reference to Trigilia's classical theorists, with their emphasis upon culture and institutions. The contemporary points of reference are overwhelmingly those of political economy and critical theory. Some sociologists have engaged with the new economic sociology (for example, Alexander, 1998; Marceau, 1999; Singh, 1997), but their work has been relatively marginal.

Consider, for example, the themes of innovation and entrepreneurship. Trigilia describes how the classical sociologists devoted much attention to these themes. More specifically, they observed that the legitimacy of the market was not a sufficient condition for innovation. Innovative capacity was 'fundamentally dependent on entrepreneurship, that is--as Schumpeter would say--on the capacity to realize new things--new products, new processes and methods of organization of production, and new markets' (2002: 130). In this context, the classical sociologists argued that entrepreneurs had 'a particular set of features, whose aims are different from those of other economic actors, and which cannot be identified as a generic rational pursuit of interest' (2002: 130). The explanation for the characteristic features of entrepreneurs was not just psychological and individual, but social. That is, it involved 'the presence of institutions that facilitate or hinder entrepreneurship' (2002: 130). Weber and Sombart emphasized the role of religion; Simmel and Sombart emphasized exclusion from citizenship rights; Veblen and Schumpeter emphasized access to technological knowledge. This line of inquiry is largely overlooked in the Australian literature on economy and society (Gilding, 2004: 128). The sheer mass of empirical data has compelled a few sociologists (including myself) to address entrepreneurship and small business from time to time, but they have struggled to locate themselves within the Australian literature (Collins et al., 1995; Gilding, 1999, 2004; Marceau, 1983).

In their account of entrepreneurship, Trigilia observes, the classical sociologists described institutions as constitutive of markets, and not just regulatory. The most important constitutive rules were generally 'the normative ones, which define the ultimate values that guide behaviour, a typical example of which are the religious beliefs affecting the origins of market capitalism' (2002: 131). Some scholars, including Veblen, Sombart and Schumpeter, also drew attention to 'the growing role that cognitive resources--the actors' knowledge, routines and know-how--play in the formation of entrepreneurship and in development in advanced capitalist economies' (2002: 131). It is this constitutive role of social institutions that is missing from Pusey's account of the market in The Experience of Middle Australia, and more generally from the Australian literature.

The strength of the new economic sociology is precisely that it addresses the ways in which social institutions constitute the market, as well as regulate it. For example, Trigilia discusses the substantial literature on the influence of industrial districts, social networks and trust. The theoretical point of departure in this literature was 'institutional economics', in particular Williamson's work on transaction costs. The empirical point of departure was the emergence of flexible production systems and new industrial districts such as the 'Third Italy' and Silicon Valley. The key idea was that social networks grounded in trust facilitated entrepreneurship and innovation at the local level. More specifically, networks operated as 'learning systems':
   It is no longer the firm as a hierarchy that decides on its
   productive objectives and imposes them on the market; instead, it is
   the market, in a new fragmented and unstable form, which requires
   more rapid and costly adjustments. Networks allow the speed of
   adjustment and capacity for learning to be reinforced, as well
   as the costs of the new products to be reduced, by distributing them
   over a wider range of subjects and thus lowering the risks. Networks
   are able to carry out these tasks better because collaboration is
   based on a series of formal and informal links and does not require
   a detailed definition of contractual clauses between the involved
   parties (which would in fact be very complex and inevitably
   incomplete). But at the same time, networks avoid the bureaucratic
   rigidity and slowness of the hierarchy. (2002: 211-12)


There is a small Australian literature that explores these themes. Like the entrepreneurship literature, it operates on the margins of sociological inquiry. The findings of this literature suggest weak development of industrial districts in the Australian context. In the late 1990s Jane Marceau observed a 'hollowing out of many older industry clusters' and the failure of new regional networks and clusters to take their place (1999: 159). Her study of Sydney biomedical firms confirmed her point: location was influenced by 'proximity to the residences of the founders of the businesses or their successors more than anything else' (1999: 163). Lyndal Thorburn's survey of biotechnology firms found evidence of geographical clustering grounded in proximity to universities and hospitals, but 'little evidence of significant agglomeration economies arising from these clusters' (1999: 253). A 2001 review of the fledgling literature reached the conclusion that 'most Australian industry clusters are very weak compared to those in other OECD countries' (Enright and Roberts, 2001: 81). In this context, perhaps the weakness of the new economic sociology in Australia reflects no more than our old-style economy. There is something in this. After all, it is no accident that many of the most prominent writers in the new economic sociology--for example, Mark Granovetter, Anna-Lee Saxenian, Walter Powell, Neil Fligstein--are based in California, the heartland of the 'new economy'.

Yet this is not the full story. The analysis of industrial districts, social networks and trust could be readily applied to mainstream Australian industries, such as mining, tourism and property development. It is not obvious what such an analysis would yield. There is also scope for interesting analysis of new industries in the Australian context. Thorburn's analysis of biotechnology firms suggests a unique configuration of international business partnerships (and networks), arising from Australia's distance from the world centres of biotechnology (1999: 255). For their part, Australian governments--federal and state--have identified the 'development of clusters, incubators and networks' in biotechnology as one of their objectives (Commonwealth Government, 2000; Victorian Government, 2001). This is not just rhetoric. Lofgren and Benner's comparative study of biotechnology and governance in Australia and Sweden found that Australian governments have implemented 'a set of comparatively coordinated regulatory and other measures to foster the growth of biotechnology', whereas the Swedish industry has 'a pattern of fragmentation and relatively weak state steering' (2003: 25). Their findings confound expectations, based on the characterization of Sweden as a 'strong state' economy and that of Australia as a neoliberal society 'lacking in state steering capacity' (2003: 25). More generally, Lofgren and Benner observe: 'The relative open-endedness of the search in these countries for a mode of regulation of biotechnology suggests that the role of the state in economic restructuring today is fundamentally distinct from that of earlier periods' (2003: 25).

As it stands, there is not a single mention of Australia--or Australian researchers--in Trigilia's Economic Sociology. Fair enough. Yet pioneering research on biotechnology firms--their networks and government support--suggest that not only might Australian sociology have something to gain by closer attention to the new economic sociology; economic sociology might have something to gain from research in the Australian context.

Neil Fligstein's The Architecture of Markets

Unlike Trigilia, Fligstein is writing from the heartland of contemporary economic sociology, namely California. In The Architecture of Markets, the classics barely get a mention. Fligstein is specifically concerned with the resurgence of economic sociology over the past 20 years. Like Trigilia, he identifies two key literatures: a 'political economy' approach focused on macro-processes, and a 'firm- or industry-level' approach (described by Trigilia as the 'new economic sociology') focused on micro-processes. Unlike Trigilia, he is less than impressed by the common ground in these literatures, observing that they are united by little more than their critique of neoliberalism. The upshot is that economic sociology 'lacks a coherent intellectual structure' (2001:1). Fligstein believes that this is one of the main reasons for the limited impact of economic sociology upon economics and social policy. It is also the impulse behind the book, which aims to bring theoretical clarification to the subject.

Part One of The Architecture of Markets is theoretical, putting the case for what Fligstein describes as a 'political-cultural approach' to economic sociology. In Chapter 1 he introduces the main elements of this approach. Its 'key insight' is 'to consider that social action takes place in arenas, what may be called fields, domains, sectors, or organized social spaces' (2001: 14, original italics). Fligstein applies the theory of fields to markets. In this framework, markets are understood as stable collections of firms characterized by both a social structure and a meaning system. The social structure consists of large dominant firms (described as 'incumbents') and smaller subordinate firms ('challengers'). For all actors within fields, stability and survival are the main goals, not profit maximization.

In Chapter 2 Fligstein discusses markets as institutions, governed by social rules. These rules 'can appear as laws, understandings, or practices'. They define those issues 'about which actors who want to generate markets must create general understandings in order for stable markets to emerge' (2001: 33). Chapter 3 addresses the political construction of markets, drawing upon comparative political economy. Fligstein emphasizes variations in national capitalisms, reflecting different balances of power between government officials, capitalists and workers. In Chapter 4 Fligstein narrows his focus to particular markets. Here he elaborates on the strategies whereby 'actors try to differentiate their products to form niches to protect themselves from price competition' (2001: 71). In his own words:
   My claim is not that actors in firms are always successful at
   creating stable shelters from price competition, but that the price
   mechanisms in markets push them to do so. In markets, the goal of
   action is to ensure the survival of the firm. It is very difficult
   for actors to know a priori if a given set of actions will stabilize
   a firm's market position vis-a-vis its competitors. Put
   rhetorically, no actor can determine which behaviours will maximize
   profits (either a priori or post hoc), and action is therefore
   directed toward the creation of stable worlds. (2001: 71)


Part 2 of The Architecture of Markets uses literature reviews and case studies in order to demonstrate the usefulness of the political-cultural approach. Earlier versions of most of these chapters have already been published elsewhere. Chapter 5 compares employment systems in diverse national capitalisms. Chapters 6 and 7 use data from the top 100 corporations in the US to explore the dynamics of ownership and control during the 1970s and 1980s, in particular the 'rise of the shareholder value conception of the firm and the merger movement' (2001: 147). Chapter 8 compares corporate control in diverse national capitalisms. Chapter 9 addresses globalization and its impact upon governments and diverse economic systems.

The Architecture of Markets is a stimulating book with a rich storehouse of hypotheses and insights. In particular, Fligstein explores how institutions are constitutive of markets, and not just regulatory. In this framework he identifies four types of rules that are necessary for markets to work. First, property rights are 'rules that define who has claims on the profits of firms' (2001: 33): they include patents and credentials. Second, governance structures are 'general rules in a society that define relations of competition and cooperation and define how firms should be organized' (2001: 34): they include laws such as antitrust and fair competition laws. Third, rules of exchange define 'who can transact with whom and the conditions under which transactions are carried out': they include rules about weights, common standards and the enforcement of contracts. Fourth, conceptions of control are 'market-specific agreements between actors in firms on principles of internal organization (i.e., forms of hierarchy), tactics for competition or cooperation (i.e., strategies), and the hierarchy or status ordering of firms in a given market'. A conception of control is a form of 'local knowledge', 'historically specific to a certain industry in a certain society' (2001: 35).

Fligstein dedicates particular attention to his own concept, 'conceptions of control'. There are many possible conceptions of control because 'the unique history of markets means that clever entrepreneurs and managers can produce myriad cultural solutions to their collective problems of price competition' (2001: 71). When markets are emerging, the situation is fluid. Many firms are forming, all with their own conceptions of how the market will develop. The politics at this stage resembles social movements. New markets often borrow conceptions of control from nearby markets. A stable market is one where the roles of incumbents and challengers are defined and there is a shared conception of control, including the implied status hierarchies and strategies. Yet 'stable markets are like sand castles': they are 'built up, last a while, but in the end are transformed' (2001: 90). Crisis arises because of exogenous forces: 'shifts in demand, invasion by other firms, or actions of the state' (2001: 84). As crisis occurs, power struggles within firms and markets become more intense, until eventually a new conception of control prevails.

The concept of 'conceptions of control' is intriguing, but ambiguous. Fligstein's most sustained analysis of conceptions of control addresses what he calls the 'shareholder conception of control', which prevailed in the largest US corporations in the 1980s. The 'key idea in the shareholder conception of the firm is that the only legitimate purpose of firms is to maximize shareholder value' (2001: 148); its main indicator is the share price of the firm on the share market. The same conception of the firm also prevailed in Australia, reflected in the rise of the corporate raiders. This conception of control is not market-specific or 'local knowledge'--criteria employed by Fligstein in distinguishing the concept from other types of rules about markets. Indeed, the concept overlaps substantially with those of property rights, governance structures and exchange. After all, the shareholder conception of control makes claims about property rights (shareholder rights trump the rights of other stakeholders), governance structures (more power to shareholders) and rules of exchange (marketization of all possible transactions). It should also be noted that property rights, governance structures and exchange rules invariably address the search for stability; for example, through patents (in the case of property rights), fair competition laws (governance structures) and industry standards (exchange rules). In other words, conceptions of control are not defined by the search for stability, any more than they are defined by their specificity to a particular market or being grounded in local knowledge. Ultimately the concept is a very broad one, although it can be applied at the level of specific markets. Its strength lies in its insistence upon the social construction of markets across the board, including belief systems, structures and strategies.

In fact, Fligstein's 'shareholder conception of control' is closely linked with neoliberalism. Thus, Fligstein argues: 'While the American industrial structure is firmly in the grasp of the shareholder conception of control, the rest of the world has steadily resisted importing it' (2001: 189). This is because property rights, governance structures and exchange rules are still controlled by 'nation states and local elites' (2001: 189), notwithstanding globalization. After all, the countries that trade most successfully on the global market often have interventionist governments (notably Japan) and big-spending welfare states (say, Germany). Moreover, most trade is between developed countries, where technological innovation is critical and wage competition is unimportant. Nation-states and local elites have much to gain from current arrangements and much to lose from undermining them. Fligstein's case concerning the resilience of different national capitalisms begs the question as to why Australian elites capitulated so completely to neoliberalism and the 'shareholder conception of control'.

Pusey's Economic Rationalism in Canberra provides one answer to this question, focusing upon government officials and their tertiary training in neoclassical economics. Other sociologists have placed more emphasis upon capitalists themselves (Connell, 2004; Sklair, 1996), but in general terms only. Detailed studies of capitalists, industries and markets are missing. There is no sociological research, for example, on the corporate raiders and entrepreneurs in the 1980s. Yet the corporate raiders and entrepreneurs were classic 'outsiders' in the sense of Trigilia's classical sociologists, mostly immigrants, many of them Jewish (Gilding, 1999: 177-8). There is also little research on specific industry groups or markets. We do know that some industry groups strongly favoured neoliberalism (mining and finance), and others opposed it (manufacturing). Yet we do not know much about the 'architecture' of these markets, and how it articulated with neoliberalism. Fligstein's book suggests interesting lines of inquiry in these directions.

Even so, The Architecture of Markets has a basic problem. Fligstein wrote his book partly because he was frustrated that economic sociology was mainly united around the critique of neoliberalism. Yet Fligstein himself finds it difficult to move beyond this theme. Neoliberalism is the main point of reference in the book, not the different approaches taken within economic sociology. Moreover, Fligstein seems unsure about how far the critique actually extends. At an early stage of the book, Fligstein emphasizes the search for market stabilization above and beyond price competition; he also describes economic sociology and economics as 'adversarial, particularly in their implications for policy' (2001: 10). In the last chapter, though, Fligstein states that 'the economic and political-cultural approaches are not necessarily antithetical': rather, 'they observe somewhat different sets of facts and draw conclusions consistent with their perspectives'. He elaborates: 'As the defender of the political-cultural perspective, I argue that the efficiency viewpoint is not so much wrong as incomplete' (2001: 229).

In a sense Fligstein is correct both times round. Economic sociology and economics are adversarial. Their respective approaches are also incomplete. The debate reminds me of other long-standing debates in which sociologists have a stake, such as nature versus nurture, and positivism versus interpretivism. It is not so much a question of one being right and the other wrong, or even one being partly right and the other being partly right. Human beings are both social and opportunistic. Price competition is important for markets, and so is the search for stability. The interesting question is how these things interact with each other. It is the interaction that makes all economic behaviour social, and the insights of economic sociology pivotal to the study of markets.

The relevance of the new economic sociology to Australia

There is a long-standing political economy tradition in Australia. There is also an important body of sociological research that addresses the articulation between economy and society. This research focuses heavily on the role of the state as a countervailing force to the market, and on the legitimacy of the market. These themes are important ones. By the same token, a narrow emphasis upon the regulatory role of institutions results in an impoverished image of the market as a juggernaut, sweeping aside everything in its path. This is exemplified in Pusey's The Experience of Middle Australia, where the market is both a constant point of reference and a 'black box' beyond social inquiry. Ironically, this image of the market is no more than a grotesque reflection of the neoliberal image of markets, overlooking the ways in which markets are constituted through social institutions.

The new economic sociology goes inside the black box. It addresses how social institutions are constitutive of markets, and not just regulatory. Trigilia's Economic Sociology provides examples of how institutions constitute economic behaviour and markets in his account of entrepreneurs, social networks, industrial precincts and trust. Similarly, Fligstein's The Architecture of Markets provides such examples in his discussion of the social rules that make markets possible, conceptions of control and the search for stability in markets, above and beyond price competition.

There is an Australian literature that addresses the themes of the new economic sociology, but it is small and fragmented. One reason for this is the Australian economy. 'New economy' industries have provided an inspiration for the new economic sociology (Powell, 2001; Saxenian, 1994), but such industries are weak in Australia (Marsh, 2001). It is no accident that what little has been written on industrial precincts and networks in Australia is mostly about biotechnology and biomedicine, where Australian prospects are most encouraging (Marceau, 1998, 1999; Thorburn, 1999).

Another reason is the influence of the Marxist tradition through political economy and critical theory. Marxists have regarded the classical economic sociologists--as identified by Trigilia--as taking too much for granted in terms of culture and consent, at the expense of power and coercion. In turn, influential Australian sociologists such as Connell and Pusey have little time for the market as a cultural creation. In The Experience of Middle Australia, Pusey employs the analogy of a cancer, describing how 'the market is attacking the social proteins' that hold us together as families, communities and a nation (2003: 175). Similarly, in a recent article Connell observes how a 'huge expansion of the logic of greed'--or the 'growth of the market'--has been 'sold as a moral triumph' for 'individual freedom', whereas it is no more than the 'freedom to do one thing: make money' (2004: 10).

The problem with this approach is that it lets economists--and neoliberalism--off lightly. It nourishes an alienated sense of outrage, but at the cost of presenting a caricature of markets. It also ultimately fails to problematize markets, or understand their resilience. The new economic sociology, exemplified in the work of Trigilia and Fligstein, suggests promising new lines of inquiry. In the Australian context, such lines of inquiry include the social origins and activities of entrepreneurs, the formation of industrial precincts and business networks, and conceptions of control in specific markets and industries. More generally, such lines of inquiry might clarify--in Fligstein's terms--why Australian elites supported neoliberal reform, notwithstanding popular opposition, whereas other national elites have resisted the neo-liberal agenda. As it happens, Australian governments (Commonwealth Government, 2000; Victorian Government, 2001) and business commentators (Gittins, 2005) are now engaging with some of the lines of inquiry suggested by the new economic sociology. It would be an irony if Australian sociologists did not.

Acknowledgements

This article has been heavily informed by work on two ARC grants: DP0343238 'New Economy Entrepreneurs: Making the Decision to Stay in Australia or Relocate Overseas', and DP0450010 'Genetic Identity Testing and the Family: The Articulation between Biotechnology and Family Relationships, Politics and Policy'. Thanks to Vikki Bunton for her research support, and Meg Carter for her helpful comments on an earlier draft. Also thanks to the anonymous JOS reviewers, whose comments were constructive and insightful.

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Biographical note

Michael Gilding is Professor of Sociology at Swinburne University of Technology. His publications include The Making and Breaking of the Australian Family (Allen and Unwin), Australian Families: A Comparative Perspective (Addison Wesley Longman) and Secrets of the Super Rich (HarperCollins). He is currently working on two ARC Discovery Projects; one concerning biotechnology clusters and the other on the creation of a market for genetic paternity testing. Address: Faculty of Life and Social Sciences, Swinburne University of Technology, PO Box 218, Hawthorn, Victoria 3122, Australia. [email: mgilding@swin.edu.au]
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