Beyond the New Economic Sociology: The Role of Embedded Networks in Post-Neoliberal Culture
42 Pages Posted: 27 Sep 2011
Date Written: September 26, 2011
The power of Credit Rating Agencies (CRAs) over the fortunes of economic actors was brought into sharp question by the recent financial crisis. The natural response of governments firstly to apportion blame and secondly to regulate brought the role of CRAs in the financial sector into focus.
As “gatekeepers” of the markets, the reputational capital of CRAs is built on trust, notions of which have suffered setbacks in the wake of the crisis. In a classical economic view of the world, homo economicus maximizes his utility without recourse to deceit, fraud or malfeasance. In referring more closely to reality and acknowledging the existence of such practices, economic sociology not only sees financial markets as tangential representations of social interaction, but would seek to offer two explanations as to why greater levels of malfeasance are not seen. The undersocialized account would refer to institutional barriers to such while the oversocialized account would point to the internalization of social norms such as trust. Embedded economic networks, by contrast, stresses the role of concrete personal relations or networks that regulate action. Yet in an increasingly globalized, anonymized, atomized market, how useful is the embedded network analysis in providing an answer to the regulatory reforms that governments around the world have declared aphoristically necessary?
Using regulatory reform of the CRA market as an example, the paper argues that a new form of ‘depersonalized’ network that combines both under- and over-socialized accounts of economic interaction and which embraces government intervention as a necessary corollary to the effect of free market policies on community cohesion, and consequently on embedded networks, must be recognized.
Keywords: New Economic Sociology, Credit Rating Agencies, Trust, Granovetter, Reputational Capital, Economic, Sociology, Embedded Networks, Economic Networks, Trust Networks
Suggested Citation: Suggested Citation