Customer Reviews

Networks and Markets

5 star:		(1)
4 star:		(0)
3 star:		(1)
2 star:		(0)
1 star:		(0)

 

 

In Networks And Markets, James Rauch and Alessandra Casella effectively collaborate to assemble contributions by both sociologists and economists to provide a coherent view of the role of economic incentives and established channels of personal relationships in the economic marketplace. The focus is on how social networks are an essential precondition for successful markets, and whether networks arise naturally out of markets as traders build reputations and gain confidence in one another through the history of their mutual dealings. Networks And Markets is strongly recommended and informative reading for economists and sociologists, as well as non-specialist general readers with an interest in how personal and professional relationships affect economic transactions on a corporate and governmental level.

Rauch and Casella conducted a provocative experiment at a conference in 1997: they invited sociologists and economists to discuss and critique each others' views of markets and networks. Of the 6 substantive chapters in the book, 3 were written by sociologists and "discussed" by economists, 2 were written by economists and "discussed" by sociologists, and the sixth involved economists playing both roles. (I suspect that's because of the fairly technical nature of the analysis in the sixth.)

The result makes for fascinating reading. Rauch and Hamilton, in their introductory chapter, do a nice job of capturing the dimensions along which the two groups agreed and (mostly) disagreed. They argue that both groups could benefit by paying more attention to the others' work, but then they also point out that the methods of inquiry used by the two groups differ in many important respects. Rauch and Hamilton conclude that the current division of labor between sociology and economics is likely to persist.

For me, several of the comments made by discussants from one group on a chapter by the other group revealed how wide the gulf is between the disciplines. In commenting on John Padgett's chapter on Florentine bankers, for example, Gregory Besharov and Avner Grieif followed a scorched earth policy in which they emphasized the barriers to interdisciplinary exchange. In another exchange, Joel Sobel was a little more gentle on Ron Burt, but still offered a fundamentally different theoretical model in place of Burt's analysis of trust, information, and gossip in social networks.

This book would be very appropriate for a course on economic sociology, or a seminar on social networks. It would show students what they're up against! However, reading between the lines of the economists' comments in the book, I find it hard to imagine it being used in an economics course.