Social embeddedness

To what extent do individuals choose their courses of action largely on the basis of a calculation of costs and benefits? And to what extent, on the contrary, are their actions importantly driven by the normative assumptions they share with other individuals with whom they interact? Mark Granovetter formulated this foundational question for the social sciences in his important 1985 contribution to the American Journal of Sociology, "Economic Action and Social Structure: The Problem of Embeddedness" (link). He used the concept of embeddedness as a way of capturing the idea that the actions individuals choose are importantly refracted by the social relations within which they function. This is a topic we've addressed frequently in prior posts under the topic of the social actor, and Granovetter's contribution is an important one to consider as we try to further clarify the issues involved.

The large distinction at issue here is the contrast between rational actor models of the social world, in which the actor makes choices within a thin set of context-independent decision rules, and social actor models, in which the actor is largely driven by a context-defined set of scripts as he/she makes choices. The contrast is sometimes illustrated by contrasting neoclassical economic models of the market with substantivist models along the lines of Karl Polanyi's The Great Transformation: The Political and Economic Origins of Our Time, and it links to the debate in economic anthropology between formalists and substantivists. Here is how Granovetter puts the fundamental question:

How behavior and institutions are affected by social relations is one of the classic questions of social theory. (481)

He argues that neither of the polar positions are tenable.  The formalist approach errs in taking too a-social view of the actor:

Classical and neoclassical economics operates, in contrast, with an atomized, undersocialized conception of human action, continuing in the utilitarian tradition. ... In classical and neoclassical economics, therefore, the fact that actors may have social relations with one another has been treated, if at all, as a frictional drag that impedes competitive markets. (483, 484)

But the extreme alternative isn't appealing either:

More recent comments by economists on "social influences" construe these as processes in which actors acquire customs, habits, or norms that are followed mechanically and automatically, irrespective of their bearing on rational choice. (485)

So action doesn't reduce to abstract optimizing rationality, and it doesn't reduce to inflexible cultural or normative scripts either. Instead, Granovetter proposes an approach to this topic that reframes the issue around a more fluid and relational conception of the actor. Like the pragmatist theories of the actor discussed in earlier posts (Abbott, Gross, Joas), he explores the idea that the actor's choices emerge from a flow of interactions and shifting relations with others. The actor is not an atomized agent, but rather a participant in a flow of actions and interactions.

At the same time, Granovetter insists that this approach does not deny purposiveness and agency to the actor. The actor reacts and responds to the social relations surrounding him or her; but actions are constructed and refracted through the consciousness, beliefs, and purposes of the individual.

The idea of embeddedness is crucial for Granovetter's argument; but it isn't explicitly defined in this piece.  The idea of an "embedded" individual is contrasted to the idea of an atomized actor; this implies that the individual's choices and actions are generated, in part anyway, by the actions and expected behavior of other actors.  It is a relational concept; the embedded actor exists in a set of relationships with other actors whose choices affect his or her own choices as well.  And this in turn implies that the choices actors make are not wholly determined by facts internal to their spheres of individual deliberation and beliefs; instead, actions are importantly influenced by the observed and expected behavior of others.

Their attempts at purposive action are instead embedded in concrete, ongoing systems of social relations. (487)

Some of Granovetter's discussion crystallizes around the social reality of trust within a system of economic actors. Trust is an inherently relational social category; it depends upon the past and present actions and interactions within a group of actors, on the basis of which the actors choose courses of action that depend on expectations about the future cooperative actions of the other actors. Trust for Granovetter is therefore a feature of social relations and social networks:

The embeddedness argument stresses instead the role of concrete personal relations and structures (or "networks") of such relations in generating trust and discouraging malfeasance. (490)

And trust is relevant to cooperation in all its variants -- benevolent and malicious as well. As Granovetter points out, a conspiracy to defraud a business requires a group of trusting confederates. So it is an important sociological question to investigate how those bonds of trust among thieves are created and sustained.

This line of thought, and the theory of the actor that it suggests, is an important contribution to how we can understand social behavior in a wide range of contexts. The key premise is that individuals choose their actions in consideration of the likely choices of others, and this means that their concrete social relations are critical to their actions. How frequently do a set of actors interact? Has there been a history of successful cooperation among these actors in the past? Are there rivalries among the actors that might work to reduce trust? These are all situational and historical facts about the location and social relations of the individual. And they imply that very similar individuals, confronting very similar circumstances of choice, may arrive at very different patterns of social action dependent on their histories of interaction with each other.

It seems that this theory of the actor would be amenable to empirical investigation.  The methodologies of experimental economics could be adapted to study of the relational intelligence that Granovetter describes here. Recent works by Ernst Fehr and Klaus Schmidt explore related empirical questions about decision making in the context of problems involving fairness and reciprocity (Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies and "The Economics of Fairness, Reciprocity and Altruism - Experimental Evidence and New Theories"; link).

(These topics have come up in earlier discussions here. Here is a post on Chuck Tilly's treatment of trust networks; link. Amartya Sen's discussion of "rational fools" is relevant as well, as is his account of the role that commitments play in action (link). It seems likely that Granovetter would argue that Sen's solution is still too formalist, in that it attempts to internalize he social relations component into the actor's calculations. This is true of the "identity economics" approach as well; (link).)

Ostrom's central idea

Elinor Ostrom was a very important contributor to the theory of public rationality and the institutions that underlie cooperation, and she was most deserving of the recognition that accompanied her receipt of the Nobel Prize in Economics in 2009.  Her passing today is a sad loss for the academic world.

Her key contributions were included in Governing the Commons: The Evolution of Institutions for Collective Action, a masterful book that presents a new theoretical framework and body of empirical evidence for conceiving of the ways in which human communities can handle common property resources -- forests, fishing grounds, grazing areas, water supplies. Anyone interested in the ways that collective action works in practice will want to read the book. (See also Baden and Noonan, Managing the Commons, Second Edition for an important set of perspectives on "managing the commons" and solving common property resource problems.)

Rational choice theory has been unfriendly to the idea that communities can self-regulate when it comes to public goods and public harms.  Garrett Hardin offered the theory of the "tragedy of the commons", in which he argues that rational egoists will inevitably overuse a common resource. And Mancur Olson offered similar arguments about the feasibility of collective action in an extended group in The Logic of Collective Action: Public Goods and the Theory of Groups. Against these views, Ostrom and her research collaborators demonstrated that human communities have actually created a number of informal institutional complexes for regulating access to common resources that succeed in creating a stable balance between use and resource renewal.

Here is how Ostrom casts the problem in Governing the Commons:

The term “common-pool resource” refers to a natural or man-made resource system that is sufficiently large as to make it costly (but not impossible) to exclude potential beneficiaries from obtaining benefits from its use. (30)

Instead of presuming that the individuals sharing a commons are inevitably caught in a trap from which they cannot escape, I argue that the capacity of individuals to extricate themselves from various types of dilemma situations varies from situation to situation. The cases to be discussed in this book illustrate both successful and unsuccessful efforts to escape tragic outcomes. (14; kl 306)

Institutions are rarely either private or public -- "the market" or "the state." Many successful CPR intitutions are rich mixtures of "private-like" and "public-like" institutions defying classification in a sterile dichotomy. By "successful," I mean institutions that enable individuals to achieve productive outcomes in situations where temptations to free-ride and shirk are ever present. A competitive market -- the epitome of private institutions -- is itself a public good. (14; kl 311)

Ostrom demonstrated, both theoretically and empirically, that legal regulation is not the only possible solution to public goods problems. Instead she documents community-based solutions to common property resource problems that have proved successful over multiple generations. These are quasi-voluntary arrangements through which a community of users (fishers, grazers, irrigators) are able to manage the resource collectively and control violators, in such a way as to preserve the resource over time. And she points out that these institutions can be self-maintaining, in that participants have an incentive to watch out for cheaters and shirkers.  In describing the Alanya inshore fishing system in detail she writes, "The process of monitoring and enforcing the system is, however, accomplished by the fishers themselves as a by-product of the incentive created by the rotation system" (19-20; kl 378).

Given that common property resource problems are ubiquitous, her policy recommendation are sensible ones:

An important challenge facing policy scientists is to develop theories of human organization based on realistic assessment of human capabilities and limitations in dealing with a variety of situations that initially share some or all aspects of a tragedy of the commons. (23; kl 436)

What is missing from the policy analyst's tool kit -- and from the set of accepted, well-developed theories of human organization -- is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts. Examples of self-organized enterprises abound. (24; kl 449)

Essentially her research comes down to this point: There are multiple possible property systems through which access to natural resources can be mediated. A simple Lockean theory of private property holds that all goods have individual private owners. It is possible, however, to conceive of forms of “social property” or community property through which at least some assets are held in common, and for which there are fair and well-defined procedures for providing rights of access to the use and enjoyment of the social property.

As Ostrom demonstrated in depth, there are socially feasible arrangements in which a “common property resource” such as a fish stock is exploited by a number of independent producers within the context of a stable community.  In this instance we have a combination of private property (nets and boats) and social property (the waterway and fish stock), and Ostrom documents several different sets of social rules that establish the terms of access and use that individuals will have to the common property resource.

There is extensive debate over the economic efficiency or viability of social property arrangements such as these. Concerning fisheries and traditional practices of forestry, for example, there is the familiar argument that rationally induced free-riding will eventually undermine the community-based rules of use. The point here not that social property regimes are superior, but rather that they are possible. And Ostrom's research illustrates a great variety of common-property resource regimes that appear to be efficient and stable.  It is therefore a matter of public debate which particular rules and institutions ought to govern the use of property. And there may be something in this finding that provides new ways of thinking about economic arrangements in the twenty-first century as well.

(I had an interesting exchange with Ostrom on the occasion of her receiving an honorary degree from the University of Michigan in 2006. I raised the topic of agriculture and food within the world economy and referred to a continuing debate I'd been having with my daughter about traditional farming versus largescale industrial agriculture.  My argument was that traditional farming was not productive enough to feed the world's population, and my daughter's view was that industrial agriculture is unsustainable and destructive of existing rural communities.  I asked Ostrom about her opinion.  Her response was: "you are both right." In hindsight, after rereading Governing the Commons, I'm inclined to interpret her response as expressing the idea that solutions to our large global problems need to be mixed solutions. Her work on self-governing community-based systems for making use of resources suggests that she would have some sympathy for the continuing significance of traditional farming systems within the larger context of the world agriculture system. But at the same time, she was always insistent that we need to be realistic about the assumptions about behavior that underly the solutions we recommend.)

Akerlof and Kranton on identity economics

George Akerlof and Rachel Kranton have collaborated for over ten years on a simple idea: is it possible to introduce the concept of social identity into the formal mechanics of mainstream economics? Can "identity" complement "interest" in the calculation of rational individual behavior? Their ideas were developed in several important articles: "Economics and Identity" (link), "Identity and the Economics of Organizations" (link), and "Identity and Schooling" (link).  These earlier articles are all available on the Internet.  Much of their thinking is pulled together in a recent book, Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being.

So what is their theory of identity and rational behavior?  "Economics and Identity" (2000) is a good place to begin. Akerlof and Kranton argue that there are common social phenomena that are not well explained by the assumption of narrow economic rationality, but that are more amenable to treatment with a theory of individual choice that incorporates the factor of social identity. They include "ethnic and racial conflict, discrimination, intractable labor disputes, and separatist politics" as examples of social behavior that "invite an identity-based analysis" (716).

Here is how they incorporate the behavioral mechanism of identity into an actor model, using the example of gender identity:

Everyone in the population is assigned a gender category, as either a ‘‘man’’ or a ‘‘woman.’’ Following the behavioral prescriptions for one’s gender affirms one’s self image, or identity, as a ‘‘man’’ or as a ‘‘woman.’’ Violating the prescriptions evokes anxiety and discomfort in oneself and in others. Gender identity, then, changes the ‘‘payoffs’’ from different actions. (716-717)

In other words, they incorporate identity into the rational-actor model by hypothesizing that one's identity alters one's utility function or preferences:

In the next section we propose a general utility function that incorporates identity as a motivation for behavior. (717)

And here is the utility function they produce (719):

We propose the following utility function: 

(1) Uj = Uj(aj,a_j,Ij). 

Utility depends on j’s identity or self-image Ij, as well as on the usual vectors of j’s actions, aj, and others’ actions, a_j. Since aj and a_j determine j’s consumption of goods and services, these arguments andUj(·) are sufficient to capture the standard economics of own actions and externalities. 

Following our discussion above, we propose the following representation of Ij: 

(2) Ij = Ij(aj,a_j;cj,epsilonj,P). 

A person j’s identity Ij depends, first of all, on j’s assigned social categories cj. The social status of a category is given by the function Ij(·), and a person assigned a category with higher social status may enjoy an enhanced self-image. Identity further depends on the extent to which j’s own given characteristics j match the ideal of j’s assigned category, indicated by the prescriptions P. Finally, identity depends on the extent to which j’s own and others’ actions correspond to prescribed behavior indicated by P. We call increases or decreases in utility that derive from Ij, gains or losses in identity.

What this comes down to, in my reading, is the idea that one's "identity" creates a new set of payoffs for some actions, depending on whether the action confirms and enhances one's identity fulfillment or whether it decreases one's identity fulfillment. If I am a Welsh miner and strongly subscribe to the idealizations associated with miners -- then I will take utility in the actions that express solidarity and thereby buttress my status as a good miner, even when the self-regarding utilities of the action would dictate anti-solidarity.  Crudely, identity-consonance is a plus utility, while identity-dissonance is a minus utility, and actors balance first-order utilities and identity-consonance utilities in their ultimate choice of action. So this construction doesn't deviate from standard rational choice reasoning much, if at all. Rather, it extends the cost-benefit calculation to include a new category of effect that the agent is hypothesized to value or disvalue--consistency / inconsistency with self concept.

This is a pretty limited conception of how identities work.  A more adequate treatment of identity as a substantive feature of social psychology ought to pay attention to a number of dimensions of practical rationality that are not included in this analysis.  (i) Cognitive frameworks.  Individuals with a specific identity may have distinctive ways of conceptualizing and experiencing the world.  These differences may affect behavior through mechanisms that are quite distinct from calculation of costs and benefits. (ii) Normative motivations. It is possible that people make decisions on the basis of their normative commitments, and that this process is to some degree independent from calculations of costs and benefits.  Moreover, it is possible that different groups have significantly different normative commitments. In this case individuals from different "identities" may behave significantly differently when confronted with apparently similar situations of choice. (iii) Group affinities / identifications.  It is possible that there is a social psychology of "solidarity" that has its own dynamic and behavioral consequences; and that this affective or motivational system has different characteristics in different groups. (iv) Emotional frameworks. It is possible that individuals absorb behaviorally important systems of emotions and feelings through their development within a specific cultural group; and it is possible that differences across groups lead to different patterns of behavior in common scenarios of action and choice.

So I think that Akerlof and Kranton are right to think that the theory of action associated with narrow economic rationality doesn't do justice to ordinary decision making in a range of important cases.  They are right as well in thinking that the social psychology of identities and normative commitments is relevant to behavior in ways that cannot be pushed aside as "extra-rational." But I don't find their solution based on incorporating identity "utilities" into a larger utility function to be an adequate way of incorporating these broader considerations for action into a theory of the rational actor.

(It is worth observing that the descriptions offered by Akerlof and Kranton of the prescriptions surrounding gender identity are quite jarring: for example, "the ideal woman is female, thin, and should always wear a dress". Here is another set of gender stereotypes that they weave into their exposition:

Female trial lawyer, male nurse, woman Marine—all conjure contradictions. Why? Because trial lawyers are viewed as masculine, nurses as feminine, and a Marine as the ultimate man. People in these occupations but of the opposite sex often have ambiguous feelings about their work. In terms of our utility function, an individual’s actions do not correspond to gender prescriptions of behavior. (721-22)

These assumptions aren't crucial to their argument, but they are difficult to overlook.  It is hard to read these expository paragraphs without thinking that Akerlof and Kranton have built some very basic negative stereotypes into their description of gender identities. So it's worth noting how a very good gender theorist might react to these descriptions.  Here is a very good, nuanced analysis by Elizabeth Cole and Alyssa Zucker on "Black and White Women's Perspectives on Femininity" that does a much more adequate job of describing gendered identities (link).)

A pragmatist action theory

A theory of action is one component of a meta-framework for sociology. It is an organized set of ideas about what individuals are doing when they engage in interactions in the world, and what we think at the highest level of generality about why they behave as they do. Individuals within social interactions constitute the social world; they do things; and they do things for reasons that we would like to understand. A theory of action ought to give us a basic vocabulary for describing behavior in the social world. And it ought to provide some framing hypotheses about the causes or motivations of behavior.

An important aspect of action theory is the idea of "intensionality" and mental representation. This is the conception of the individual as possessing consciousness, purposes, and a mental orientation to the world. He or she "understands" the events that surround him/her -- that is, the individual forms a mental representation of the swirling set of actions and events that surround him or her. And the individual places him/herself within this representation by conceptualizing wants, aversions, aspirations, and intentions concerning what might be achieved through intentional behavior.

This description may seem obvious. Or it may seem to reflect a set of assumptions about how to parse the social world that are substantive, consequential, and debatable. They are consequential because they push our sociological researches in a particular direction: who are the actors that make up a social ensemble? What are they doing? Why are they doing these things?

They are debatable because -- as we've seen in discussions of Abbott and Gross previously -- they privilege the actor over the action, the individual over the interaction. They push us in the direction of a social ontology that is individualistic and perhaps reductionist. Abbott proposes, in contrast, that we begin with the interaction, the flow of moves and responses. Tilly suggests that we start with the relationships and turn to the individual actors only later in the analysis. And Gross suggests starting with the creativity inherent in any complex flow of human activities and interactions.

Each of these thinkers point in the direction of a pragmatist theory of action. So what might a pragmatist theory involve?

One avenue for getting a handle on this question is to turn to the work of Hans Joas, who has contributed deeply to the question of how pragmatism intersects with sociology. His article with Jens Beckert in Jonathan Turner's Handbook of Sociological Theory is a good place to start, since he is specifically concerned there to give an exposition of a theory of action that acknowledges several important sources for such a theory while specifically developing a pragmatist account.  (The article covers a lot of the ground presented in Joas's 1997 book, The Creativity of Action. Also important is his Pragmatism and Social Theory.)

Joas begins his account by framing the standard assumptions of existing action theory in terms of two poles: action as rational choice (e.g. James Coleman) and action as conformance to a set of prescriptions and norms (e.g. Durkheim, Parsons). He argues for a view that is separate from both of these, under the heading of "creative action".

However, the alternative that reaches even further beyond the routinized exchanges between rationalist and normativist theories of action seems to us an action-theoretic conceptualization that focuses on the notion of the creativity of human action. Such a theory can be based primarily on the tradition of American pragmatism that originated in philosophy and psychology but also has a significant sociological tradition. (270)

Common to both traditional views, Joas argues, is the assumption of purposiveness: that action proceeds to bring about explicit pre-articulated goals subject to antecedently recognized constraints. The pragmatist view of action rejects this separation between goals, action, and outcome, and focuses on the fact that goals and actions themselves are formulated within a dynamic and extended process of thought and movement. (Dewey is the chief source of this view.) Tactics, movements, and responses are creative adaptations to fluidly changing circumstances. The basketball player driving to the basket is looking to score a goal or find an open teammate. But it is the rapid flow of movement, response by other players, and position on the floor that shapes the extended action of "driving for a layup." Likewise, a talented public speaker approaches the podium with a few goals and ideas for the speech. But the actual flow of ideas, words, gestures, and flourishes is the result of the thinking speaker interacting dynamically with the audience. Joas puts his view in these terms:

At the beginning of an action process goals are frequently unspecific and only vaguely understood. They become clearer once the actor has a better understanding of the possible means to achieve the ends; even new goals will arise on the basis of newly available means. (273)

For the theory of creativity of action the significance of the situation is far greater: Action is not only contingent on the structure of the situation but the situation is constitutive of action. (274)

So what are the features of the situation that intersect with the thinking actor to create the temporally extended action? Joas refers to corporality and sociality. The body is not simply the instrument of the agent. Rather, the physical features and limitations of the body themselves contribute to the unfolding of the action. (This aspect of the theory has much to do with phenomenology.) And the other persons involved in an action are not simply subjects of manipulation. Their own creativity in movement and action defines the changing parameters of the actor's course of action. (Again, think of the analogy of 10 players in a basketball game.)

Joas thinks that this interpretation of action as extended intelligent adaptation to shifting circumstances helps to account for complex social circumstances that rational-actor and normative-actor theories have difficulty with. He illustrates this claim with the extended examples of reciprocity and innovation.

This is a rich and nuanced theory of action, and one that has the potential for offering a basis of a much richer analysis of concrete social circumstances than we currently have. At the same time it should not be thought to be in contradiction to either rational-deliberation or normative-deliberation theories. These creative actors whom Joas describes are purposive in a more diffuse sense, and they are responsive to norms in action. It seems to me that the chief tension Joas offers is between stylized, mono-stranded models of action, and thick theories that incorporate the plain fact of intelligent adaptation and shaping of behavior that occurs in virtually all human activities.

Neil Gross's pragmatist sociology

An earlier post discussed Neil Gross's attempt to understand social mechanisms from the point of view of a pragmatist sociology. Gross's attempt to flesh out a pragmatist theory of action is intriguing and worthy of further exploration.  So here I'll look at a subsequent article, "Charles Tilly and American Pragmatism" (2010), in which Gross extends this analysis to an interpretation of Charles Tilly.  He makes an interesting case that Tilly's theories share a great deal in common with pragmatist theory.  I'm not going to evaluate that claim here, though he makes a strong case, but instead want to pull out the essentials of what Gross seems to believe to be the fundamental assumptions of a pragmatist theory of acdtion.

So what are some of the insights from pragmatism that Gross thinks can help us to formulate a more adequate framework of sociological thinking?  Here is a suggestive statement:

I aimed for a way of proceeding that would also accord with the turn toward “practice” in contemporary theory—that is, toward the reconceptualization of action as “forms of doing or ways of acting and interacting that appear within particular communities or groups; depend on shared presuppositions or assumptions...; and unfold in individuals’ lives as a result of active, creative, and less than conscious puttings into play of those presuppositions and assumptions in the context of various and intersecting sociobiographical experiences and exigencies.” (342)

This part of the story falls clearly in the zone of attempting to improve upon the theory of action that much social theory has presupposed for more than a century -- the idea of the rational, purposive agent considering options and choosing outcomes (link).  Against that hyper-deliberative conception, Gross (and pragmatism) advocates for a more fluid, interactional, and only partially conscious flow of actions.  There is a suggestion here of stylized modes of behavior (scripts) within which persons locate their actions, and a suggestion of the importance of specific cognitive fields embodied in social groups that contextualize and rationalize the person's activities (assumptions, for example, of how a doctor should treat a patient in a hospital).

Another important part of Gross's conception of pragmatist action theory is the way we conceive of the individual. According to the pragmatist theory, the individual needs to be considered within the context of a social group, influenced by norms, emotions, and actions of the others in the group.  So action should not be "atomized" into a group of individual actors choosing independently.  Gross puts this part of the theory in the form of a comment about Tilly:

The motivating claim of Durable Inequality is that analysts should dispense with “individualistic” models that seek to explain differences in the life chances of members of social groups in terms of their experiences, properties, and characteristics, whether these are assumed to be a product of genetic endowments, as in Herrnstein and Murray’s (1994) controversial “bell curve” thesis, or social circumstance, as in some versions of human capital theory. (349)

The point emerges in Tilly through his insistence on "relationality" -- his deep objection to attempting to understand actions by individuals without regard to the networks of other individuals whose behavior and thoughts set the context to the actions.

Third, there is the question of how the agent decides what to do in a particular circumstance. The pragmatist view that Gross describes holds that the actor chooses in line with habit and script. Essentially, this is the insight that there are fairly well defined rules of thumb or scripts for how to respond to certain kinds of problems. And the theory holds that the actor generally acts accordingly. When an experienced politician is confronted by a heckler, the play book pretty well specifies how he/she should respond. This contrasts sharply from the deliberativist view of action.

What makes this set of assumptions a "pragmatist" approach?  Fundamentally, because it understands the actor as situated within a field of assumptions, modes of behavior, ways of perceiving; and as being stimulated to action by "problem situations".  So action is understood as the actor's creative use of scripts, habits, and cognitive frameworks to solve particular problems.  (Gross refers to this as an A-P-H-R chain: actor, problem situation, habit, and response; 343.)

How does this compare to the foil of pure deliberative rationality?  According to rational choice theory an actor makes a choice in a problem situation by (i) arranging a preference ordering of possible outcomes, including utilities for each outcome; (ii) consulting rational procedures to gain beliefs about the probabilities of various strategies leading to various outcomes; and (iii) choosing that strategy that results in the greatest expected utility (utility x probability).  This account makes choice rational in both aspects: rational acquisition of beliefs about interventions and outcomes, and rational comparison of the relative goodness/badness of the outcomes associated with possible interventions.  There is no place in this story for culturally variable cognitive frameworks for perceiving the situation, or for group-specific rules of thumb governing the choice of interventions.

This formulation of the two theories permits fairly direct comparison between them.  Consider this table comparing the two theories of action:

So how would we pursue a concrete sociological question differently if we chose one or the other of these theories of action?  Let's consider rebellion -- the coordinated activities of resistance of a large population against a powerful ruler.  What would a deliberative rationality sociology of rebellion look like?  And what would a pragmatist theory look like?

Oddly enough, it seems to me that we have clear illustrations of both approaches in the existing literature on peasant rebellion.  In fact, the moral economy debate of the 1970s illustrates both approaches. The protagonists here are Samuel Popkin's The Rational Peasant: The Political Economy of Rural Society in Vietnam and James Scott's The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia.  Popkin's analysis of rebellion and revolution in Vietnam is thoroughly grounded in the assumptions of rational choice theory.  Popkin tries to understand the actions of each of the players according to their rational behavior in the face of risk and uncertainty and the strategic behavior of others.  Peasants rebel when the likelihood of success is great enough to make the discounted rewards of rebellion greater than the discounted costs of failure.

Scott understands rebellion in Southeast Asia in very different terms.  He finds that the "moral economy of the peasant" is a powerful source of behavior for villagers as they consider the options of resistance and subordination.  He is sympathetic to the idea that peasant perceptions of society, of the power structure, and of the future are powerfully shaped by shared social assumptions and frameworks, here and in other works like Weapons of the Weak: Everyday Forms of Peasant Resistance and Domination and the Arts of Resistance: Hidden Transcripts.  So Popkin's assumptions are an almost pure example of rational-choice social research; whereas Scott's assumptions have a very close match with the premises of pragmatist theory of action, as I've reconstructed it here.

So perhaps James Scott too -- like Tilly, in Gross's interpretation -- has a deeply pragmatist side lurking within his sociological imagination.

Marx an analytical sociologist?

In an earlier post I gave a brief sketch of the emerging field of analytical sociology, and summarized its foundations around three premises: microfoundations, rational social actors, and causal mechanisms.

Marx is often thought to be a "structuralist" thinker, highlighting large social processes and entities such as the mode of production, the economic structure, and social class (for example, by Althusser and
Balibar in Reading Capital). However, I argued in The Scientific Marx (1986) that a careful examination of Marx's economic writings reveals something quite different. I argued, first, that Marx embraced the idea that social explanations require microfoundations.

Marxist social science commonly has advanced macro explanations of social phenomena in which the object of investigation is a large-scale feature of society and the explanans is a description of some other set of macro phenomena. Some Marxist social scientists have recently argued, however, that macro explanations stand in need of microfoundations: detailed accounts of the pathways by which macrolevel social patterns come about. These theorists have held that it is necessary to describe the circumstances of individual choice and action that give rise to aggregate patterns if macroexplanations are to be adequate. Thus to explain the policies of the capitalist state it is not sufficient to observe that this state tends to serve capitalist interests; we need an account of the processes through which state policies are shaped and controlled so as to produce the outcome. (127-28)

Consider now a second issue underlying the call for "microfoundations" for Marxian explanations: the gap between the interests of a group as a collective and the interests of the individuals who comprise the group. (John Roemer refers to this as the "aggregation gap.") "Rational-action" explanations depend on identifying an individual's interests and then explaining the person's behavior as the rational attempt to best serve those interests. The model is often extended to account for collective behavior of groups as well.... However, Mancur Olson and others have made it plain ... that it is not sufficient to refer to collective interests in order to explain individual behavior. (129-30)

In both cases the objection being advanced to macro-Marxism is grounded in a recognition that there are no supraindividual actors in a society. (131)

After examining several examples of Marx's most important explanations, I conclude that his arguments conform to the requirements of the microfoundations principle. His most characteristic explanations proceed from reasoning about the actions of typical individuals within capitalist institutions to an effort to aggregate these individual choices up to the level of larger collective patterns.

Second, I argued that Marx's explanations were almost always grounded in an analysis that highlighted rational individual decision-making. But Marx differed from the perspective we would now call "public choice theory" in that he gave much greater attention to the historically specific motives and values of the actor.  Marx highlighted what we might now call "political psychology" of the actor -- the socially specific ideas, motivations, and ideologies that the actor acquired through ordinary experience of capitalism. So there is a developed "action theory" present in Marx's writings.  It is a theory that gives prominence to means-end rationality.  And it gives attention to the social specificity of the actor as well.  

Here is how I described Marx's assumptions about the actors within capitalism in TSM:

Marx's accounts depend on an examination of the circumstances of choice of rational individuals. Marx identifies a set of motivational factors and constraints on action for a hypothetical capitalist and then tries to determine the most rational strategies available to the capitalist in these circumstances of choice.... A second part of this model of explanation involves an attempt to determine the consequences for the system as a whole of the forms of activity attributed to the typical capitalist at the preceding stage of analysis. (141-42)

But Marx has a nuanced and socially specific conception of the actor:

Against both these positions -- the nonsocial individualism of political economy and the uncritical holism of speculative philosophy -- Marx puts forward an alternative position. On this account the socialized individual is the ultimate unit of analysis in social explanation. "Individuals producing in society -- hence socially determined production -- is of course the point of departure" (Grundrisse 83).... On this account society is not a freestanding entity, and social relations exist only through the individuals who stand within them. At the same time, however, individuals exist only within particular sets of historically given social relations. Consequently, social explanations must begin with a concrete conception of the individual within specific social relations." (150)

These assumptions about social actors conform fairly well to the assumptions incorporated into analytical sociology.  

And third, I argued that Marx offered causal mechanism explanations based on an analysis of what I termed the "institutional logic" of a particular social setting. So various features of capitalism are explained as resulting from rational actors situated within a particular set of institutions. These accounts serve as descriptions of the social mechanisms through which capitalist dynamics take place.

Marx attempts to work out the institutional logic of these capitalist institutions. What distinctive features of organization and development are imposed on the capitalist economy by its defining structural and functional characteristics? What are the "laws of motion" of the mode of production defined by these conditions? We may call this an institutional-logic analysis of social regularities, and it is significantly different from the construction of theoretical explanations in natural science. Such an analysis is concerned with determining the results for social organization and development of an entrenched set of incentives and constraints on individual action. (34)

Marx's interest in discovering and elaborating the social mechanisms that drive social processes is found within his theory of historical materialism as well.  In TSM I argue that Marx's claims about causation between levels of the social and economic structures of various modes of production are best understood as "mechanisms" explanations.

In order to understand fully this view of the relation between the economic structure and noneconomic phenomena, it is necessary to describe the mechanisms through which the lower-level structures constrain or filter superstructural elements. The filtering may occur through a variety of mechanisms, both intended and unintended. (56)

This account of Marx's implicit theory of social explanation -- microfoundations, rationality, and mechanisms -- reproduces Coleman's boat (Foundations of Social Theory).  The institutions and structures of capitalism create a local environment of choice for individual capitalists and workers, and their behavior aggregates to a macro-outcome of interest (for example, the falling tendency in the rate of profit). This is a "logic of institutions" argument in a specific sense. The institutions (property relations) create an environment of choice in which actors pursue specific strategies, and these strategies aggregate to a certain kind of macro-level outcome. These are the "laws of motion" of the capitalist mode of production, in Marx's terms. And it is a mechanisms-based explanation in a specific sense as well. Marx is deliberately seeking out the social mechanisms through which the institutional setting produces a set of macro-outcomes, through their influence on the behaviors of the actors. The Scientific Marx offers a handful examples of these aggregative explanations. The point here is that this logic conforms very well to the framework of thought associated with analytical sociology.

There is one additional point of convergence between the methods I identified in Marx's writings in 1986 and the current doctrines of analytical sociology. I argued that the covering law model of explanation and the deductive-nomological model of justification did not work at all well in application to Marx's reasoning. The reason? Because the covering law model assumes that explanatory warrant proceeds from laws and regularities, whereas the heart of Marx's explanations rests upon the discovery of particular social processes and mechanisms.

Do Marx's explanations conform to the subsumption theory? ... There are statements of lawlike regularities in Marx's explanations, but these statements are somewhat trivial.... The real weight of the argument lies elsewhere: in the particular details of the circumstances of choice in which capitalists find themselves, and in Marx's reasoning from these circumstances to patterns of collective behavior. (152) [Or in other words, he seeks to uncover the social mechanisms of capitalism and their aggregative dynamics.]

The process of discovering an institutional logic is not merely one of working out the deductive consequences of the theory; it is rather discovering new aspects of the social process. These aspects are perhaps "implicit" in the original theory, but their discovery is a substantive one, not a mere deductive exercise. (153)

Here too there is a strong affinity between Marx's theory of science (as I interpreted it in 1986, anyway) and the philosophy of social explanation developed within analytical sociology.

So it looks as though Marx's analysis of capitalist society -- at least as it is reconstructed in The Scientific Marx -- falls squarely within what we would now call "analytical sociology" with a commitment to microfoundations, mechanisms, and socially constituted purposive actors. What a surprise!

Rawls and decision theory

John Rawls's A Theory of Justice was a strikingly original contribution to political philosophy upon its appearance in 1971.  Against the prevailing preference for "meta-ethics" in the field of philosophical ethics, Rawls made an effort to arrive at substantive, non-tautological principles that could be justified as a sort of "moral constitution" for a just society.  The theory involves two fundamental principles of justice: the liberty principle, guaranteeing maximal equal liberties for all citizens, and the difference principle, requiring that social and economic inequalities should be the least possible, subject to the constraint of maximizing the position of the least-well-off.  (The principle also requires equality of opportunity for all positions.)

Two elements of Rawls's philosophical argument were particularly striking.  The first was his adoption of the anti-foundationalist coherence epistemology associated with Quine and Goodman (SEP article by Jonathan Kvanvig); so Rawls conceded that it is not possible to provide logically decisive arguments for moral positions.  Though his theory of justice has much in common with the ideas of Kant and Rousseau, Rawls rejected the Kantian idea that moral theories could be given secure philosophical foundation.  It is rather a question of the overall fit between a set of principles and our "considered judgments" about cases and mid-level moral judgments.  He refers to the situation of "reflective equilibrium" as the state of affairs that results when a moral reasoner has fully deliberated about his/her considered moral judgments and tentative moral principles, adjusting both until no further changes are required by the requirement of consistency.

Another and perhaps even more distinctive part of Rawls's approach is his use of the apparatus of decision theory to support his arguments in favor of the two principles of justice against plausible alternatives (including especially utilitarianism).  Essentially the argument goes along these lines.  Suppose that representative individuals are brought together in a situation in which they are expected to make a unanimous and irreversible decision about the fundamental principles of justice that will regulate their society; and suppose they are profoundly ignorant about their own particular characteristics.  Participants do not know whether they are talented, strong, intelligent, or eloquent; and they do not know what their fundamental goals are (their theories of the good).  Rawls refers to this situation of choice as the original position; and he refers to the participants as deliberating behind the veil of ignorance.  Rawls argues that rational individuals in these circumstances would unanimously choose the two principles of justice over utilitarianism.  And this conclusion is taken to be a strong basis of support for the two principles as correct.  This is what qualifies Rawls's theory as falling within the social contract tradition; the foundation of justice is the fact of unanimous rational consent (albeit hypothetical).

Once we connect the question, "what is the best theory of justice?", with the question, "what principles of justice would rationally self-interested persons choose?", there are various ways we might proceed.  Rawls's description of the original position is just one possible starting point out of several.  But if we begin with Rawls's assumptions, then it is natural to turn to formal decision theory as a basis for answering the question.  How should rational agents reason in these circumstances?  How should they decide which of several options will best serve their future interests?  And one point becomes clear immediately: the choice of a decision rule makes a critical difference for the ultimate choice.  If we were to imagine that decision-making under conditions of uncertainty mandates the "maximize expected utility" rule, then one choice follows (utilitarianism).  But Rawls argues that the expected utility rule is not rational in the circumstances of the original position.  The stakes are too high for each participant.  And therefore he argues that the "maximin" rule would be chosen by rational participants in the circumstances of the original position.  The maximin rule requires that we rank options by their worst possible outcome; and we choose that option that comes with the least bad outcome.  In other words, we "maximize the minimum." (The maximin rule was described by von Neumann and Morgenstern in 1944 in their Theory of Games and Economic Behavior.)

Notice that this analysis involves a question of second-order rationality: not "what outcome would the rational agent choose?", but rather "what decision rule would the rational agent follow?".  So it is the rationality of the decision rule rather than the rationality of the choice that is at issue.

Another important qualification has to do with defining more carefully what part of the theory of rationality Rawls is using in this argument.  It is sometimes said that Rawls applies game theory to the situation of the original position; and there is a certain logic to this interpretation.  Game theory is the theory of strategic rationality; it pertains to that set of situations in which the payoff for one participant depends on the rational choices of other participants. And the original position seems to embody this condition.  However, the requirement of unanimity and the complete absence of a context of bargaining makes the situation non-strategic.  So Rawls's use of rational choice theory does not involve game theory per se, and he is not interested in demonstrating a Nash equilibrium in the OP.  Instead, he believes that there is a single best strategy that will be chosen by each individual--the two principles of justice.  (Here is a good brief description of the main assumptions of game theory.)

One might ask whether the two features singled out here -- anti-foundationalism and decision theory -- are consistent.  If Rawls's theory of justice depends on an argument within formal decision theory, then why is it not a foundationalist argument?  (And in fact, Rawls on occasion refers to his argument as reflecting a "kind of moral geometry".)  What makes Rawls's use of decision theory "anti-foundationalist" is the fact that this argument itself is philosophically contestable.  Reasonable decision theorists may differ about the rationality of the maximin rule (as John Harsanyi argued against Rawls).  So the appeal to decision theory does not obviate the need for a balance of reasons in favor of the approach and the particular way in which it is specified in this situation; and this in turn sounds a lot like the role of physical theory and methodology within Quine's notion of "The Web of Belief."

(A mountain of words have been written about Rawls's moral epistemology.  Here is Samuel Freeman's excellent article on the original position in the Stanford Encyclopedia of Philosophy; here is a useful compendium of the history of rational choice theory; and here is an old article of mine on the epistemology of reflective equilibrium.)

Norms and deliberative rationality

Why do people cooperate? That is, what motivates individuals to come together to share labor and resources in pursuit of a common good from which they cannot be excluded -- fighting fires, hunting marauding tigers, cleaning up a public beach? Standard rational choice theory, and its application to problems of individual rationality in group settings, implies that cooperation should be unstable in the face of free-riding. This was Mancur Olson's central conclusion in his classic book The Logic of Collective Action: Public Goods and the Theory of Groups. Roughly, his conclusion was that cooperation would be possible only if there were excludable side benefits for participants, selective coercion to enforce cooperation, or privatization of the gains of collective action. Otherwise, it is prisoners' dilemmas all the way down. However, we know from many social contexts that individuals do in fact succeed in establishing cooperative relationships without any of these supporting conditions. So what are we missing when we consider social action from the narrow perspective of rational choice theory?

A part of the answer to this puzzle involves the role of norms in action. Here the criticism is that the rational-choice approach, by attending solely to calculations of self-interest, is blind to the workings of normative frameworks; but in fact norms are powerful factors underlying behavior in most traditional contexts. This perspective finds expression in the moral economy literature within peasant studies -- e.g. James Scott's The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia. (This debate is sometimes referred to as one between formalists and substantivists. Karl Polanyi is another good example of the substantivist perspective (The Great Transformation), while Sam Popkin (The Rational Peasant: The Political Economy of Rural Society in Vietnam) and Theodore Schultz (Transforming Traditional Agriculture) fall on the side of the formalists.)

According to the substantivist perspective, traditional societies are communities: tightly cohesive groups of persons sharing a distinctive set of values in stable, continuing relations to one another (Michael Taylor Community, Anarchy and Liberty). The central threats to security and welfare are well-known to such groups--excessive or deficient rainfall, attacks by bandits, predatory tax policies by the central government, etc. And village societies have evolved schemes of shared values and cooperative practices and institutions which are well-adapted to handling these problems of risk and welfare in ways which protect the subsistence needs of all villagers adequately in all but the most extreme circumstances. The substantivists thus maintain that traditions and norms are fundamental social factors, and that individual behavior is almost always modulated through powerful traditional motivational constraints. One consequence of this modulation is that many societies do not display a sharp distinction between group interest and individual interest that is predicted by collective action theory. (An important theoretical defense of this conclusion can be found in the work of Elinor Ostrom and her fellow researchers in their treatment of "common property resource regimes"; see Governing the Commons: The Evolution of Institutions for Collective Action.)

There are, of course, well-known social and behavioral processes that may tend to undermine the working of a given set of norms. Normative systems are inherently ambiguous and subject to revision over time. Consequently we should expect that opportunistic agents will find ways of adapting given social norms more comfortably to the pursuit of self-interest. Consider the requirement that elites should provide for the subsistence needs of the poor in times of dearth. There are some grounds for supposing that such a requirement is in the longterm interest of elites--for example, by promoting social stability and establishing bonds of reciprocity with other members of an interdependent society. But it seems reasonable to expect that elites--already by their superior economic position able to exercise political and social power as well--will find ways of limiting the effect of such norms on their behavior. So it is insufficient to simply postulate a set of governing norms; we need to identify the mechanisms at the group and individual levels that make them behaviorally relevant and stable. But, significantly, some theorists have tried to show that rational self-interest may actually reinforce certain kinds of norms of fairness and reciprocity; thus Robert Axelrod's analysis of the dynamics of reciprocity demonstrates that cooperation is rational in relation to a variety of circumstances of face-to-face cooperation in The Evolution of Cooperation: Revised Edition.

These points notwithstanding, there remains a credible line of criticism of the rational-choice paradigm based on the role of norms in behavior. For it is clear that individuals pay some attention to normative constraints within the process of rational deliberation. The model of simple maximizing decision-making is overly abstract; instead, we need to have a conception of rational action that permits us to incorporate some consideration of normative requirements as well as purposes and goals. We need a broader conception of practical rationality that incorporates both means-end rationality and normative deliberation; we need a theory that embraces both Mill and Aristotle.

A number of social scientists have taken this point seriously. Particularly profound is the critique of pure rational choice theory offered by Amartya Sen in an essay called "Rational Fools" (jstor link; and here is the introduction to a recent symposium on the article in Economics and Philosophy). Sen criticizes the assumption of pure self-interest which is contained in the standard conception. Against the assumption of self-interested maximizing decision-making, Sen argues for a proposal for a more structured concept of practical reason: one which permits the decision-maker to take account of commitments. This concept covers a variety of non-welfare features of reasoning, but moral principle (fairness and reciprocity) and altruistic concern for the welfare of others are central among these. Sen believes that the role of commitment is centrally important in the analysis of individuals' behavior with regard to public goods, and he draws connections between the role of commitment and work motivation. He argues, therefore, that in order to understand different areas of rational behavior it is necessary to consider both utility-maximizing decision-making and rational conduct influenced by commitment; and it is an empirical question whether one factor or the other is predominant in a particular range of behavior. Thus Sen holds that an adequate theory of rationality requires more structure than a simple utility-maximizing model would allow; in particular, it needs to take account of moral norms and commitments.

These arguments are telling; the model of narrow economic rationality makes overly restrictive assumptions about the role of norms in rational behavior. Human behavior is the resultant of several different forms of motive--self-interest, fairness, and altruism; and several different types of decision-making processes--maximizing and deliberation. A more adequate model of broadened practical rationality therefore needs to incorporate a decision rule that represents the workings of moral constraints and commitments as well as goal-directed calculation. This rule should reduce to the familiar utility maximizing rule in circumstances in which moral constraints are not prominent -- e.g., in decision-making within a market. But in situations where important norms of behavior are in play, we need to try to reproduce the more complex deliberation processes that real human decision-makers undergo in order to combine their normative commitments and their goals and preferences.

This is not a small problem, however; for one of the chief merits of the paradigm of narrow economic rationality is its parsimony--the fact that it reduces rational choice to a single dimension of deliberation. Once we require that rational choice theory needs to take normative constraints and commitments into account as well as interests, it is much more difficult to provide formal models of rational choice. However, some progress has been made on this problem. For example, Howard Margolis (Selfishness, Altruism, and Rationality) attempts to formalize represent rational deliberation in the presence of public goods as the result of two utility functions, one representing the individual's private interests and the other the individual's appraisal of the public good; the two functions are then aggregated by a higher order decision rule. (John Harsanyi makes similar arguments.)

This broadening of the conception of individual rationality has important implications. For example, consider public goods problems. Once we consider a more complex theory of practical deliberation, formal arguments concerning freeriding problems in real social groups will be indeterminate. On a more complex, and more empirically adequate, account of practical reason, conditional altruism, cooperation, and reciprocity may be deliberatively rational choices; therefore we would expect a social group consisting of rational individuals to show signs of cooperation and conditional altruism. And the challenge for sociology is to identify the mechanisms of individual deliberation and social reinforcement that serve to stabilize the system of norms and the behaviors that conform to them. This is one of the tasks that the field of new institutionalism has taken on (Mary Brinton and Victor Nee, eds., The New Institutionalism in Sociology).

What to do?

Decision makers at every level are perplexed by the turbulence created by the current financial crisis. Everyone is acting under great uncertainty -- business owners, state governors, the Department of the Treasury, the presidential candidates, and university officials. And yet today's actions may have enormous effects on the business, the non-profit organization, the family, or the state tomorrow. Liquidity drought, variations in cash flow, the availability of credit for major capital projects, the possibility of bankruptcy of major and essential business partners such as contractors, the possibility of further major job losses in various regions, abrupt decline in demand for houses and cars, and a plummeting stock market make for an environment of choice in which every action can have seriously bad consequences.

I'm thinking here particularly of decision makers who are responsible for large, complex organizations -- organizations that deliver services or products, that depend on staff and facilities to fulfill their mission, that need to make medium-term plans about investments of resources for future use, and that depend on assumptions about revenues in the future to satisfy the cash-flow needs of the enterprise to stay financially viable. What is noteworthy about this situation of choice is that it necessarily involves plans and projections about the future. And it involves the temporally extended coordination of activities of people and expenditures of resources over a prolonged period of time. This means that it isn't possible to achieve success through a purely opportunistic and moment-by-moment response to events. You can't fly a complex organization by the seat of your pants.

So how do we plan for the best outcomes in the current circumstances of turbulence and uncertainty? The normal assumption of continuity -- assume that most circumstances won't change much between today and tomorrow -- is distinctly inappropriate. Today's economic and financial environment has many moving parts -- and they interact in surprising ways. And unfortunately, it appears that there is no reliable science to guide us here. Experts disagree about the mechanisms and the potential remedies of the current crisis. Navigating this environment is akin to trying to catch a pingpong ball in a crowded wind tunnel.

So what is to be done? I mean to pose this question in the most pragmatic way possible. Given deep uncertainty about the changes that may occur tomorrow, and given a fairly deep ignorance of the fundamental mechanisms that are affecting this storm, how can prudent stewards of institutions and businesses do the best job possible to preserve the fundamental interests of their stakeholders and carry out the missions of their organizations?

There are a couple of rational-choice answers to this question, falling generally under the topic of "decision making under risk and uncertainty." One prescription is the expected utility rule: identify the possible actions and their various outcomes; assign a probability and utility to each outcome; and choose the action with the greatest expected utility (sum of the products of probability and utility for the outcomes). Or we might consider the more risk-averse rule, the minimax principle: choose that action with the least bad worst possible outcome.

Unfortunately, neither of these decision procedures is of much help in current circumstances. We don't know what the range of possible outcomes is for a given action or policy (because we don't understand the mechanisms); we can't assign likelihoods to outcomes; and it's not feasible to measure the utility of a given outcome, all things considered. So expected utility decision-making doesn't seem very helpful in current circumstances.

Another approach depends on what we might call "locally rational decision-making" or heuristic decision-making. We don't know what the consequences of an extended liquidity crisis are, but we may reason that more reserves are always useful; so we may choose to curtail spending today to increase reserves. Or we may observe that an additional debt burden for the business is likely to be a handicap in the future, so we may postpone important capital projects. Or we may defer hiring additional staff in order to preserve more budget flexibility in the future. But notice that there are rules of thumb that point in the opposite direction: "A business should take bold moves in times of crisis, to leave it in a stronger position when recovery begins." This advice would encourage investment rather than curtailing it. So the problem with rules of thumb is that they often come into conflict with each other -- leaving the decision maker in a quandary.

In fact, if the range of uncertainty is great enough, it is impossible to be prudent. Prudence involves taking steps today that are most likely to leave you in a satisfactory position tomorrow. But if we are uncertain about even the most basic truisms -- if we are in a position where the most basic assumptions of continuity are defeated -- then we can't begin to weigh possible outcomes or design prudent strategies. It's hard to see how a pilot could fly "prudently" in the dark and without instruments.

It would seem that today's financial crisis doesn't create quite this degree of radical uncertainty, however. It is a fair bet that the world economy and financial system will survive and will recover within a few years. It is likely enough that cash reserves will be very useful for organizations and businesses in the next few years. It is likely that risky decisions have a greater potential for enterprise ruin than in normal times -- "high risk, high reward" is probably a bad rule to follow in current circumstances. And these assumptions add up to a counsel of conservation of resources, flexibility of activities, cost discipline, and preservation of accessible reserves.

Methodological individualism

Methodological individualism (MI) is a doctrine in the philosophy of the social sciences about the relationship between "society" and individuals. The idea can be formulated in several related but somewhat different ways: social facts are constituted by facts about individuals; social entities are composed of individuals and their properties and relations; social structures and entities are "nothing but" ensembles of individuals and their behaviors; social explanations must be derivable from facts about individuals; scientific statements about "society" must be reducible to statements about individuals and their properties and relations; social laws or generalizations must be derivable from general facts about individuals. And there are probably other possible formulations as well.

So the doctrine of methodological individualism often represents a form of reductionism from one area of scientific theory to another: theories about social entities and properties must be reducible to theories and statements about individuals and their properties. This line of thought is parallel to materialism in the philosophy of mind or anti-vitalism in the philosophy of biology. Mental states must be reducible to a set of facts about neurophysiology; statements about living organisms must be reducible to a set of facts about the molecular chemistry and physiology of cells. (See Ingo Brigandt and Alan Love's article in the Stanford Encyclopedia of Philosophy on reduction in biology.)

A somewhat less restrictive view than reductionism is the theory of "supervenience" between levels of scientific description. According to the theory of supervenience, facts at one level of description are fixed or determined by facts at a lower level of description. To say that X supervenes upon Y is to say that there is no difference between states of affairs concerning X for which there is not also a difference in states of affairs concerning Y. This is a less restrictive doctrine because it doesn't require that we provide derivations of the facts of X from facts of Y. (Jaegwon Kim is the primary innovator here; see Physicalism, or Something Near Enough for a recent formulation of the theory.)

Methodological individualism is the limit version of a family of perspectives on social explanation that we might refer to as "agent-centered" approaches to social explanation. Here the general idea is that we explain social outcomes as an aggregate result of the actions, choices, and mentalities of individuals. Individuals' behavior and choice constitute the causal dynamics of social outcomes. The idea of "microfoundations" has played an important role in recent thinking about the relationship between social facts and individual facts. (See Microfoundations, Methods, and Causation for more on the idea of microfoundations for social explanations.)

But agent-centered approaches can give more "social-ness" to the individual than the founding statements of MI would permit. For example, the position of "methodological localism" identifies socially constituted and socially situated individuals as the foundation of social explanation; but this position explicitly denies the idea that all social facts are reducible to bare psychological facts about individuals. Rather, individuals are themselves constituted and constrained by previously established social conditions. (See "Levels of the Social" for more about methodological localism.)

The idea of methodological individualism is one that has appealed to philosophers and social thinkers for almost as long as there has been systematic thinking about social science. Modern philosophy of social science began in the nineteenth century, and John Stuart Mill's theories of social knowledge contained the assumption of methodological individualism (The Logic of the Moral Sciences). Max Weber also put forward the doctrine in The Methodology Of The Social Sciences. A classic statement was presented by J. W. N. Watkins (1968), "Methodological Individualism and Social Tendencies" in May Brodbeck, Readings in the Philosophy of the Social Sciences.

The logical contrary of MI is the idea of social holism, most explicitly advocated by Emile Durkheim in Rules of Sociological Method. Holism is a form of anti-reductionism; it maintains that there are facts about the social world that do not reduce to facts about individuals. Society is autonomous with respect to the individuals who "make it up". There are social forces (e.g. systems of norms) that exercise causal power over individuals, instead of norms being constituted by the psychological states of individuals. Other varieties of social holism are possible as well. Structuralism is the view that social structures exercise autonomous causal properties, as expressed in such authors as Levi Strauss, Althusser, and Foucault.

Arguments in favor of methodological individualism derive from several insights. First, there is the point that social facts are evidently constituted by the thoughts and behaviors of groups of individuals. Social movements are composed of individuals with specific psychologies and beliefs; organizations are composed of individuals; and, arguably, moralities and cultures are made up of individuals with specific beliefs and values. Second, there is the point that social "laws" are rare, exception-laden, and conditional; so there is a methodological reason to look for the more basic laws that may regulate social behavior -- at the level of individuals and their psychology. Third, there is a preference for ontological sparsity: if we can explain social facts in terms of facts about individuals, then we don't need to attribute ontological status to social facts and entities. Fourth, there is a "materialist" or anti-occultist preference that is appealing to many philosophers; the idea that social facts might be autonomous with respect to individuals gives an impression of occult causal powers or action at a distance. So there is a range of reasons to think that social outcomes are made up of or determined by the aggregate results of individuals and their interactions.

MI has been particularly appealing in certain disciplines of the social sciences -- especially economics and political science. In each case the perspective of "rational actor theory" has appeared to be a very promising line of explanation: explain the behavior of groups (consumers, voters) as the aggregate outcome of individuals making choices with a specific set of beliefs and preferences, within a specific set of constraints.

Other areas of the social sciences are less amenable to the theory of methodological individualism. Anthropology and sociology are disciplines that set the focus on the higher-level social conditions or causes that influence behavior -- a perspective that seems to be more comfortable with some form of holism. However, there is a range of opinion among practitioners of these disciplines as well, and there are anthropologists and sociologists who are more sympathetic to the impulses of methodological individualism.

It is important to highlight some points that MI does not entail. MI does not entail that individuals are egoists or purely self-regarding. It does not entail that individuals are not social. It does not entail that social facts do not have causal consequences -- for other social facts and for individual behavior. It is indeed possible to reframe almost all substantive sociological theory in terms that are consistent with the reasonable conditions implied by MI. Even Durkheim's central theories can be formulated in a way that is innocent with respect to the charge of "action at a distance". And, from the other direction, even a theorist with as clear a commitment to MI as Max Weber, is still able to make "macro" or "holistic" claims about the causal importance of factors such as religion or morality.