economic life, sociology of The fundamental problem in economics is to explain how the limited productive resources and effort of a society are allocated among the wide range of alternative uses to which they might be put. Conventional economic theory seeks to address this issue by adopting a position of methodological individualism. It also makes a number of abstract assumptions for purposes of analysis. First, relationships of competition exist between the producers of a commodity, between its consumers, and between producers and consumers collectively, the whole constituting a set of market relationships. Second, both competition and economic co-operation are outcomes of the rational pursuit of economic advantage by individuals and groups. This is the paradigmatic example of a rational choice exchange theory. Third, the propositions of the theory do not simply describe the institutions and motivations of so-called market societies alone; they formalize what is an inevitable and natural set of determining influences in any society, as soon as the issue of scarce resources (means) and competing possible uses (ends) arises.

The sociology of economic life can also be said to be concerned with resource allocation; and, like economics, it can trace its origins to classical political economy. However, early sociology was very often a critique of the tendencies towards individualism and abstraction within political economy, on which economics subsequently built. For example, Karl Marx was among the first to claim that resource allocation through unregulated market competition is fundamentally anarchic rather than orderly, and reproduces already existing inequalities of class power and privilege. In modern times, a similar view has been taken of market discrimination in relation to race and gender. Such arguments mean that the investigator is obliged to approach society with a degree of methodological holism which is unacceptable to many economists.

Another influential controversy is the link between economics and various versions of liberal political theory in which state regulation of economic and social policy is rejected as an infringement of individual liberty. It is claimed that welfare is more likely to be maximized by encouraging free enterprise and unrestricted market competition. This view is associated with neo-classical economics which argues that the fundamental momentum of a competitive economy is towards optimum distribution of resources and equalization of the incomes of factors of production. It is a serious mistake, however, to assume that intellectual criticism of this orthodoxy in economic theory amounts in itself either to an attack on liberal political values or (a criticism often levelled at sociological thought) inevitably implies an underlying socialistic bias. On the contrary, many of the sociological critics of competitive market theories have themselves subscribed to the broader values of liberalism and individualism, yet at the same time have argued either that neoclassical theory is intellectually inadequate or that political reliance on supposed laws of the marketplace will have unintended consequences which place liberal values in jeopardy. Examples include Max Weber on bureaucracy and Émile Durkheim on anomie. Moreover, a similar controversy has existed within modern economics itself, especially since the revolution in economic theory initiated by John Maynard Keynes and his followers. Keynesian economics claimed that the equilibrium of a whole economy may occur at a point where aggregate resources are less than optimally utilized—even though individual markets are in equilibrium.

Sociology has shared with economic history (and with the so-called institutional heresy within economics itself) an interest in the origin and variability of actual markets and other economic institutions. Markets and banking, for example, both presuppose a relatively stable currency, codified and effective law, and normative standards of conduct. A degree of moral order, together with interpersonal trust, is a necessary pre-condition for sound money, dependable contracts, and economic transactions in general. The need to account for the non-contractual preconditions of contractual exchanges was acknowledged by early political economists, but with the increasing formalization and abstraction of market theory was overlooked, and only taken up later by sociologists from Durkheim onwards. Market institutions also presuppose the presence in individuals and groups of the appropriate economic motivations. But, far from being a universal human motive, the calculative and sustained pursuit of economic advantage and profit, so essential to the idea of the competitive economy, may have flourished only under the rather unusual, possibly unique, religious and moral conditions found at the onset of the modern age. Sociologists tend therefore to be highly critical of the suggestion that the supposed laws of the market are universally valid, rather than (at best) merely descriptive of a particular historical situation and type of society, namely modern capitalism and industrialization.

Because the causal factors advanced by conventional economics may themselves stand in need of causal explanation, some sociologists have gone so far as to claim that economic theory cannot stand alone, or even that a separate discipline of economics is unnecessary. Such sociological imperialism risks self-contradiction. On one hand, sociologists commonly compare societies in terms of their economic institutions; on the other, the meaning and nature of economic activities is held to be wholly relative to individual cases. The (mainly Marxist) attempt to solve this problem by equating economic activity with productive activity overlooks the fact that, in all societies, many undoubtedly productive activities, notably domestic and reproductive tasks performed by women, are considered to be of little economic value. Economists can thus argue that their treatment of scarcity and resource allocation as a universal and self-contained societal problem is indeed valid.

Sociologists are arguably better placed to address the interconnections between the economy, the political system, social structures, ideological systems, and culture. Examples might include the linkages between the international division of labour, inter-state relations, and multinational firms; the relationship between patriarchy, as a set of social institutions, and the economy; or the classic example of the thesis about a direct link between the protestant ethic and the rise of capitalism in Western Europe. Sociologists have contributed a substantial body of theoretical and empirical work on particular features of the economy and labour-market, particularly at the micro-level, including the study of power relations in the labour-market as a whole and in the workplace; industrial conflict and its resolution; explaining the development and impact of pressure groups, trade unions, and other associations, and analysis of their role in industrial relations; studies of social movements such as demands for desegregation and equality of opportunity in education, training, and the workforce; studies of management, entrepreneurs, firms, and corporate behaviour; analysis of social and technical innovation processes and the diffusion of knowledge and technical innovations; studies of work organization and social processes in the workplace, and their effects on productivity or job satisfaction, including theses about de-skilling and socio-technical systems; research on social and economic relationships within households, and the implications of household work strategies and family financial management systems on workforce participation and attitudes to pay; issues of preferences and tastes, work orientations, and value systems which affect labour-market behaviour and consumer behaviour; the wider objectives of management that make satisficing strategies more common than profit-maximizing ones; and the nature of work outside the market economy, including domestic work and work in the informal economy. Finally, sociologists' strengths in empirical research mean they are usually better placed than economists to collect data and conduct studies to test theories and arguments about economic activity developed by economists, particularly in relation to decision-making processes, both implicit and explicit.

An early, but still useful, attempt to map the contours of this major area of sociology is Neil Smelser's The Sociology of Economic Life (2nd edn., 1976). For a more recent selection of representative articles see Mark Granovetter and and Richard Swedberg ( eds.) , The Sociology of Economic Life (1992)
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