Economic Sociology: Emile Durkheim and Georg Simmel

 

Economic Sociology: Emile Durkheim and Georg Simmel

Émile Durkheim

As compared to Max Weber, Émile Durkheim (1858–1917) knew less economics, wrote less about economic topics, and in general made less of a contribution to economic sociology. While none of his major studies can be termed a work in economic sociology, all of them nonetheless touch on economic topics. Durkheim also strongly supported the project of developing economic sociology by encouraging some of his students to specialize in this area and by routinely including a section on economic sociology in his journal L’année sociologique. At one point he gave the following definition of economic sociology:

'Finally there are the economic institutions: institutions relating to the production of wealth (serfdom, tenant farming, corporate organization, production in factories, in mills, at home, and so on), institutions relating to exchange (commercial organization, markets, stock exchanges, and so on), institutions relating to distribution (rent, interest, salaries, and so on). They form the subject matter of economic sociology.' (Durkheim [1909] 1978b, 80) 

Durkheim’s first major work, The Division of Labor in Society (1893), has most direct relevance for economic sociology. Its core consists of the argument that social structure changes as society develops from its undifferentiated state, in primordial times, to a stage characterized by a complex division of labor, in modern times. For Durkheim, division of labour is an economic phenomenon because it refers to the process of dividing up of labour into separate and special operations with the express purpose of increasing the rate of production but such a process brings about social cohesion in the form of organic solidarity which develops in societies whose social bonds result from the way individuals relate when their occupational functions are separate and specialized. 

Durkheim believed that the division of labour develops when the social, economic and political boundaries dividing segment societies begin to break down and segments come together. As the segments become more and more “permeable”, they become less resistant to change and this creates movement between the parts of the social mass. Durkheim identified three primary sociological reasons of division of labour. Firstly, division of labour develops when there is geographical proximity of individuals or when populations begin to concentrate themselves in more confined areas instead of being spread over larger territories. Secondly, formation of cities lead to division of labour. Formation of cities happens when social density in populations increases. This creates an intensification of interaction between individuals leading to an increase in the overall social mass. As social mass is increased, it tends to accelerate mixing of segments into consolidated social organs. Thirdly, when the growing social mass produces more frequent communication and the need for transportation, there is an increase in social volume in society. Social volume is positively related with division of labour because it acts to increase in moral density, intra social relations, and frequency of contacts between individuals. 

Durkheim establishes the sociological character of division of labour by arguing that, first, the division of labour grows as the intensification of the struggle for existence increases due to the additional density of population. Second, individuals living in close proximity find that they must live cooperatively and this social cooperation takes the form of the division of labour. Third, a system of mutual social relations arises from the form of interdependence produced by the division of labour and this is expressed in rights, duties and laws. Fourth, a system of social links ensues from the material links and these links make up the new system of social cohesion based on the division of labour. Finally, moral links emerge from the material links, giving rise to the principle of social cohesion based on division of labour. 

Durkheim argues that individuals are functionally interconnected through the division of labour since they are reliant upon others for what they cannot produce on their own. This is key to the new system of social cohesion, since individuals are more dependent upon society while at the same time being more autonomous. These developments not only bring about social differentiation of society into component parts, but connection between each parts arises anew. The new social links are no longer determined by custom. Individuals begin to pick and choose only those values and beliefs which are relative to their occupational experiences and this reduces their direct link to society leading to an increase in individual autonomy, a process which Durkheim referred to as ‘ individualism’. 

Durkheim also talks about the sociological character of abnormal division of labour in society. He argues that it happens when anomic situations develops in society or whenever divison of labour is forced on a the various segments constituting a society. 

The next step Durkheim took was to look at division of labour from the perspective of law. He contended that the way a society punishes its members is a clue to find the level of division of labour and the associated system of solidarity. For Durkheim, there are fundamentally two distinct systems of law: Penal and Contractual. Penal law can be distinguished from other forms of law by its repressive sanctions and its straightforward intention of imposing harm on the offender. It does this either by reducing the social honour of the offender or by depriving offenders of their freedom or their life. In a system of penal law, punishment is severe and sanctions against offenders are ‘repressive’. The acts which the penal law prohibits and labels crime are of two kinds: First, acts which are particularly violent in nature, and second, acts against the accepted norms and values or collective conscience of society. It maintains social cohesion by setting examples which act to maintain the vitality of the collective conscience. Penal law and repressive sanctions are found in societies with no or very minimal level of division of labour. In such societies solidarity is mechanical. 

The second system of law Durkheim talked about is called contract law and its sanctions are restitutive in nature. It refers to a system of judicial rules and legal sanctions which arises in large scale societies with organic solidarity as a result of the development of the division of labour. Contract law has two central characteristics: first, it prescribes obligations and expectations by binding contracting parties, and second, it defines sanctions as they relate to offenses and breaches against contracts. The contract law functions through various specialized institutions such as the courts, arbitration councils and other administrative bodies. In contrast to the penal law, the function of contract law is to regulate relations between particular individuals rather than acting in the name of the collective norms of the group. The purpose of contract law is to develop rules which bind individuals to each other by regulating contractual obligations, and thus contributing to the maintenance of solidarity in society that Durkheim termed organic. In contrast to penal law and its repressive sanctions, the aim of contract law and its restitutive sanctions is to restore things to the way they were before the offence occurred. Its intention is not to inflict suffering upon the offender but to undertake to restore and compensate for damages. 

Durkheim believed that the transition from the penal law to contract law has happened due to growing division of labour in society because only through the division of labour specific changes in the sanctioning mechanism leading to the development of restitutive sanctions has taken place. He also believed that contract law and division of labour are positively correlated because it is though contract law individuals performing specialised functions are related with each other. 

For Durkheim, the development of division of labour is also associated with legal system in society. As part of society’s evolution to a more advanced division of labor, the legal system changes. From being predominantly repressive in nature, and having its center in penal law, it now becomes restitutive and has its center in contractual law. In discussing the contract, Durkheim also described as an illusion the belief that a society can function if all individuals simply follow their private interests and contract accordingly (Durkheim [1893] 1984, 152). A contract does not work in situations where self-interest rules supreme, but only where there is a moral or regulative element. “The contract is not sufficient by itself, but is only possible because of the regulation of contracts, which is social in origin” (Durkheim [1893] 1984, 162). 

A major concern in The Division of Labor in Society is that the recent economic advances in France may destroy society by letting loose individual greed to erode its moral fiber. This problematic is often cast in terms of the private versus the general interest, as when Durkheim notes that “subordination of the particular to the general interest is the very well-spring of all moral activity” ([1893] 1984, xliii). Unless the state or some other agency that articulates the general interest steps in to regulate economic life, the result will be “economic anomie,” a topic that Durkheim discusses in Suicide ([1897] 1951, 246ff., 259). People need rules and norms in their economic life, and they react negatively to anarchic situations. 

In many of Durkheim’s works, one finds a sharp critique of economists; and it was Durkheim’s conviction in general that if economics was ever to become scientific, it would have to become a branch of sociology. He attacked the idea of homo economicus on the ground that it is impossible to separate out the economic element and disregard the rest of social life ([1888] 1978a, 49–50). The point is not that economists used an analytical or abstract approach, Durkheim emphasized, but that they had selected the wrong abstractions (1887, 39). Durkheim also attacked the non-empirical tendency of economics and the idea that one can figure out how the economy works through “a simple logical analysis” ([1895] 1964, 24). Durkheim referred to this as “the ideological tendency of economics” ([1895] 1964, 25). 

Durkheim’s recipe for a harmonious industrial society is as follows: each industry should be organized into a number of corporations, in which the individuals will thrive because of the solidarity and warmth that comes from being a member of a group ([1893] 1984, lii). He was well aware of the rule that interest plays in economic life, and in The Elementary Forms of Religious Life he stresses that “the principal incentive to economic activity has always been the private interest” ([1912] 1965, 390). This does not mean that economic life is purely self-interested and devoid of morality: “We remain [in our economic affairs] in relation with others; the habits, ideas and tendencies which education has impressed upon us and which ordinarily preside over our relations can never be totally absent” (390). But even if this is the case, the social element has another source other than the economy and will eventually be worn down if not renewed.

Georg Simmel

Georg Simmel, (born March 1, 1858, Berlin, Germany—died Sept. 26, 1918, Strassburg), was a German Neo-Kantian sociologist. He like Emile Durkheim, usually viewed economic phenomena within some larger, non-economic setting. Nonetheless, his work has relevance for economic sociology. Simmel focuses on the analysis of interests. He suggested what a sociological analysis of interest should look like and why it is indispensable to sociology. Two of his general propositions are that interests drive people to form social relations, and that it is only through these social relations that interests can be expressed. To quote him, 'Sociation is the form (realized in innumerable different ways) in which individuals grow together into a unity and within which their interests are realized. And it is on the basis of their interests—sensuous or ideal, momentary or lasting, conscious or unconscious, causal or teleological—that individuals form such units' (Simmel [1908] 1971, 24). Another key proposition is that economic interests, like other interests, can take a number of different social expressions (26).

Simmel’s Soziologie also contains a number of suggestive analyses of economic phenomena, among them competition. In a chapter on the role of the number of actors in social life, Simmel suggests that competition can take the form of tertius gaudens (“the third who benefits”). In this situation, which involves three actors, actor A turns to advantage the fact that actors B and C are competing for A’s favor—to buy something, to sell something, or the like. Competition is consequently not seen as something that only concerns the competitors (actors B and C); it is in addition related to actor A, the target of the competition. Simmel also distinguishes competition from conflict. While a conflict typically means a confrontation between two actors, competition rather implies parallel efforts, a circumstance in which society can benefit from the actions of both the actors. Instead of destroying your opponent, as in a conflict, in competition you try to do what your competitor does—but better. The interaction between two people, a dyad, will be very different from that which is possible in a three-party relationship, or triad. 

Simmel's major work, The Philosophy of Money, is concerned with money as a symbol, and what some of the effects of this are for people and society. In modern society, money becomes an impersonal or objectified measure of value. This implies impersonal, rational ties among people that are institutionalized in the money form. For example, relations of domination and subordination become quantitative relationships of more and less money -- impersonal and measurable in a rational manner. The use of money distances individuals from objects and also provides the means of overcoming this distance. The use of money allows much greater flexibility for individuals in society -- to travel greater distances and to overcome person-to-person limitations. 

Philosophy of Money (1900), contains an innumerable insightful sociological reflections on the connections of money with authority, emotions, trust, and other phenomena. The value of money, Simmel observed, typically extends only as far as the authority that guarantees it (“the economic circle”; [1907] 1978, 179ff.). Money is also surrounded by various “ important sentiments,” such as “hope and fear, desire and anxiety” ([1907] 1978, 171). And without trust, Simmel argues, society could simply not exist; and “in the same way, money transactions would collapse without trust” (179). In relation to money, trust consists of two elements. First, because something has happened before—for example, that people accept a certain type of money—it is likely to be repeated. Another part of trust, which has no basis in experience and which can be seen as a non rational belief, Simmel calls “quasi-religious faith,” noting that it is present not only in money but also in credit. 

Simmel thus suggests that the spread of the money form gives individuals a freedom of sorts by permitting them to exercise the kind of individualized control over "impression management" that was not possible in traditional societies with ascribed identities. Even strangers become familiar and knowable identities insofar as they are willing to use as a common but impersonal means of exchange. Development of the money form has both positive and negative consequences. That is, individual freedom is potentially increased greatly, but there are problems of alienation, fragmentation, and identity fragmentation and construction. 

For Simmel, fashion, a market oriented economic phenomenon which develops mainly in the city, has a sociological character. It intensifies a multiplicity of social relations, increases the rate of social mobility and permits individuals from lower strata to become conscious of the styles of upper classes. In the traditional setting, fashion would have no meaning or be unnecessary. Since modern individuals tend to be detached from traditional anchors of social support, fashion allows the individual to signal or express their own personality or personal values. It expresses individuality, because an individual through fashion may choose to express some difference from norms. Fashion is dynamic and has an historical dimension to it, with acceptance of a fashion being followed by some deviation from this fashion, change in the fashion, and perhaps ultimate abandonment of the original norm, and a new norm becoming established. Leadership in a fashion means that the leader actually follows the fashion better than others, as well as there being followers of the fashion. Mavericks are those who reject the fashion, and this may become an inverse form of imitation. 

According to Simmel, fashion derives from a basic tension specific to the social condition of the human being. On one hand, each of us has tendency to imitate others. On the other, we also have a tendency to distinguish ourselves from others. Undoubtedly, some of us tend more towards imitation (and thus to conformism) while others tend more towards distinction (and thus to eccentricity and dissidence), but fashion needs both of these contradictory tendencies in order to flourish. For Simmel, fashion represents nothing more than one of the many forms of life by the aid of which we seek to combine in uniform the tendency towards social equalization with the desire for individual differentiation and change. In each social relation there are two forces at work: one pushing us to bind ourselves to others through imitation, and another pushing us to unbind ourselves from others, to undo the social network, through distinction. But social life changes in so far as the balance between the socialising force and the de-socialising force is always unstable and provisional. Fashion is an example of the way in which actual social life always includes in some way its own opposite, an asocial life. As Kant said, society is based on ungesellige geselligkeit, "unsociable sociality". We can order the two sets of opposites whose dynamic relationship produces fashion. But fashion exists only in so far as one of the two poles does not ultimately prevail in the end. Fashion is the effect of an always unstable balance between two poles from which the self-destructive parabola of fashion derives. To quote Simmel, 'As fashion spreads, it gradually goes to its doom. The distinctiveness which in the early stages of a set fashion assures for it a certain distribution is destroyed as the fashion spreads, and as this element wanes, the fashion also is bound to die. (...) The attractions of both poles of the phenomena meet in fashion, and show also here that they belong together unconditionally, although, or rather because, they are contradictory in their very nature.' (F, pp. 138-139.) 

Now, the impulse to imitate - and thus to endure, to unify, to equalise - is not directed towards our neighbours: we imitate instead people who are, in one way or another, superior to us. From which follows the Simmelian principle, "... fashion ... is a product of class distinction ..." (F, p. 133). For fashion to exist, society must be stratified, some members must be perceived as inferior or superior - or simply as worthy or unworthy of being imitated. And as far as the "inferior one" imitates their direct "superior" and never vice versa, the conclusion is: "... fashion - i.e., the latest fashion [in social forms, apparel, aesthetic judgement, the whole style of human expression] - affects only the upper classes." (F, p. 135.) For example, suppose some upper class girls begin to wear a new skirt designed by a prestigious couturier. Soon, the desire for lower class girls to imitate them will force the market to supply low-priced copies. Thus, moving down from one level to another, in a short space of time this skirt no longer distinguishes the upper class girls, since everyone is wearing cheap imitations. So the girls from the upper classes will once again have to look for something else to distinguish themselves, which will once again be imitated, and so the cycle will goes on. 

Even economists - who have tried to understand fashion phenomena - consider a phenomenon called "snob demand". From an economist point of view, fashion symbolises a market constituted only of snobs - essentially, a snob is a consumer who stops buying a product when the price drops too much. Economists also talk about a "bandwagon effect" (The bandwagon effect is a phenomenon whereby the rate of uptake of beliefs, ideas, fads and trends increases with respect to the proportion of others who have already done so. As more people come to believe in something, others also hop on the bandwagon regardless of thr underlying evidence.) when a product is sold more because of simple imitation. But there is also a "reverse bandwagon effect", when a "snobbish" consumer stops buying a product because too many others are buying it. Simmel argues that every economic choice is bound not only to the pure computational rationality of individuals, but is influenced by "irrational" factors, i.e. by social imitation and by what Simmel calls the "need for distinction", which is the contrary of imitation. Except that while in economics the "reverse bandwagon effect" is limited to a specific series of commodities, in fashion this effect is generalised and constitutive of the fashion itself. We can say that what we call fashion - a fast change of cultural features - is basically anything which fundamentally depends on the game of bandwagon and reverse bandwagon, on imitation and distinction. A game which does not concern just a small portion of consumers - the snobs - but all or nearly all members of a culture. 

Do we thus imitate persons who we admire and/or envy because we perceive them to be superior? Moreover, does every fashion, in its distinctiveness, display contempt towards our fellow citizens from whom we are distinguishing ourselves? In other words, does fashion imply a relationship between social envy and contempt? Simmel says: "... this quiet personal usurpation of the envied property contains a kind of antidote (a remedy to counter anything unpleasant), which occasionally counter-acts the evil effects of this feeling of envy." (F, p. 140.) In short, envy creates a social link - not in spite of its negative aspect, but precisely because of it. I can envy somebody only if I admire them, to the degree that I make them my ideal of behaviour or social achievement. Envy marks the distance between myself and my ideal of being or having. But fashion is also a remedy for envy, because, in imitating the person I admire, I become or appear like them, and thus I identify myself as one who appears admirable. Fashion dilutes envy among individuals by watering it down with social inclusiveness. 

Division of labour happens in the metropolis or city leading to expansion of individuality and individual freedom. At the same time Simmel notes that for the individual this creates the "difficulty of asserting his own personality within the dimensions of metropolitan life." (Farganis, p. 142). The growth of the city, the increasing number of people in the city, and the "brevity and scarcity of the inter-human contacts granted to the metropolitan man, as compared to the social intercourse of the small town" (Farganis, p. 143) makes the objective culture dominate over the subjective culture. Subjective culture is the capacity of the actor to produce, absorb, and control the elements of objective culture. Modern culture or objective culture in terms of language, production, art, science, etc. is at an ever increasing distance. This is the result of the growth of the division of labour and the specialization in individual pursuits that is a necessary part of this. In an ideal sense, individual culture is shaped by objective culture. The problem is that objective culture comes to have a life of its own. The individual has become a mere cog in an enormous organization of things and powers which tear from his hands all progress, spirituality, and value in order to transform them from their subjective form into the form of objective life. This sounds much like Marx's alienation, Durkheim's anomie, or Weber's rationalization, although Simmel associates this with the division of labour based city or metropolis, rather than with the society as a whole, as do the other classical writers.