The Neo-Marxist Contribution to Economic Sociology

 

The Neo-Marxist Contribution to Economic Sociology

Gaurang R. Sahay

Neo-Marxism swept like a breath of fresh air into the rather stale economic sociology in the middle of twentieth century. After a few years later it was clear that Marxism had more or less regained the position that it had once had in the beginning of economic sociology, and it is today rightfully considered as one of its richest intellectual traditions. The taboo against citing the older generation of Marxists has been lifted, and a series of new, interesting works have been produced. A sign that the times have indeed changed is that when Arthur Stinchcombe published in 1983 the first book in field of neo-Marxism to have the title ‘Economic Sociology’, he stated that his primary purpose was to ‘complete and unify the neo-Marxist tradition’. Another sign that Marxism is taken seriously again can be found in a survey of economic sociologists that Harry Makler, Arnaud Sales, and Neil Smelser carried out in 1979. The authors found that ‘practically all or 90 percent of our respondents indicated that Marxist or neo-Marxist approaches are most often used in the study of economy and society’. Even if one grants that the survey was somewhat impressionistic in nature, it is clear that Marxism is back on the agenda of economic sociology. Some of the major themes in Marxist economic sociology include the ownership and control of the means of production, and the effect of this ownership and control on the workplace, on the economic system, and on society in general via the economic system.

Marxism and the Critique of the ‘Economy and Society’ Perspective

In the economic sociology that developed just after World War II in Europe as well as in the US, Marxism played an extremely minor role. Economic sociologists, especially the Americans, were either hostile to Marx or they felt that he had very little to contribute to the field of economic sociology. This becomes quite clear if one looks at the more programmatic attempts from that time: Parsons and Smelser’s Economy and Society, Wilbert E. Moore’s pamphlet on Economic and Society and Smelser’s article in the International Encyclopaedia of the Social Sciences with the same title, and Smelser’s The Sociology of Economic Life. In Parsons-Smelser’s Economy and Society, which is a work of more than 300 pages, there are three minor references to Marx. The ideas expressed here are not without interest. There is the observation, for example, that Marx’s idea of a capitalist system was a predecessor to the concept of ‘the economy as a social system’. It is also noted that Marx, as opposed to Marshall, failed to see that ‘organization’ can be regarded as a distinct force of production. This impression is confirmed when one looks at the annotated bibliography at the end of Economy and Society. Out of the nearly one hundred references to important works in ‘economics’ and ‘sociology’, there is only one reference to a work by Marx. This is to Capital, which has been described as ‘the classic text of socialistic economic theory’.

In Moore’s pamphlet Economy and Society, one can find a few scattered references to Marx. The gist of most of them is that Marx was wrong. In Moore’s vision, Marx was an economic determinist, and his type of analysis is simply ‘not very helpful’. In the list of ‘selected readings’ that Moore had compiled for the benefit of the student, there are references to Kuznets, Weber, Caplow, and so on — but none to Marx.

In Smelser’s famous textbook The Sociology of Economic Life and in his article on ‘economy and society’ in the International Encyclopaedia of the Social Sciences, there are a few rather nondescript references to Marx. The textbook describes Marx as an interesting thinker whose ideas are mainly of historical interest for the economic sociologist. This impression is confirmed when one reads the text on ‘economy and society’ in the International Encyclopaedia. According to the appended bibliography, economic sociologists can profit from studying the works of people such as James S. Duesenberry, George Katona and David M. Landes but Marx is not mentioned.

When Marxists started to criticize mainstream sociology, in the late 1960s and early 1970s, one of their major charges was that sociology ignored political economy. In A Brief Guide to Bourgeois Culture Robin Blackburn typically noted sociology’s ‘rejection of most political economy’ and claimed that sociology ‘assumes on principle a harmonious economic system’. Terms like ‘exploitation’, Blackburn added, are taboo in bourgeois economics as well as in sociology.

A particularly well executed critique along the lines of Blackburn can be found in Alvin W. Gouldner’s The Coming Crisis of Western Sociology (1970). In a section entitled ‘The Extrusion of the Economic from the Social’ he argues that sociology has become a ‘residual discipline’, studying only ‘what was left over by other disciplines’. Gouldner makes an interesting observation that since sociologists were unable to analyse economic facts, they simply rationalized them away. This, Gouldner says, is especially clear when it comes to analyses of the social order:

This means that Academic Sociology traditionally assumes that social order may be analysed and understood without making the concerns of economics focal and problematic. It implies that the problem of social order may be solved, practically and intellectually, without clarifying and focusing on the problem of scarcity, with which economics is so centrally concerned. Although aspects of sociological analysis make tacit assumptions about scarcity, sociology is an intellectual discipline that takes economics and economic assumptions as givens, and that wishes or expects to solve the problem of social order under any set of economic assumptions or conditions. Sociology focuses upon the noneconomic sources of social order. Academic Sociology polemically denies that economic change is a sufficient or necessary condition for maintaining or increasing social order.

Gouldner also felt that when the structural-functionalists did look at economic phenomena, their analyses were strangely inept and marred by a tendency to treat economic phenomena as if they were subcategories of sociological concepts. Gouldner illustrates this idea by a careful examination of the way property has been analysed in mainstream sociology. Gouldner’s critique of Parsons and Smelser’s thesis on property can be found in a section entitled ‘Towards a Sociology of Property’ where the author also advances his own version of how property should be analysed from a sociological perspective. Gouldner says that Parsons and Smelser view property in a very naive way, and he points out that they basically do not see any difference between property and other forms of social relationships. Property, Gouldner concludes, is a social relationship of a very special type; it can bypass the roles and values that make up Parsons’ social system.

A ‘social system’ is therefore a residual organization of social relationships, in that it may deal with only those things that are ‘left over' after property rights have been established ... Property constitutes the ‘givens’ or the limiting conditions for the construction and development of social systems in the Parsonian sense Property is thus the infrastructure of social systems. (261, p. 309)

The Renewal in Marxist Economic Sociology

A more noteworthy Marxist critique of sociological understanding of advanced industrial society is found in Maurice Zeitlin’s Corporate Ownership and Control: The Large Corporation and the Capitalist Class. The book contains a sharp critique of the previously widespread idea that the separation of ownership and control had fundamentally changed the nature of large corporations and, with them, of capitalism.

Zeitlin starts by pointing out that there exists an ‘astonishing consensus’ among social scientists, including sociologists, that a separation has taken place between ownership and control of the large corporation and that this has led to the demise of the capitalist class. It is the managers and not the old capitalist families who rule the big companies today, and they do it in a novel manner. The managers do not maximize profits but rather their own power. Ideas of this type, Zeitlin says, can be found in a variety of well-known sociological works such as Dahrendorf’s Class and Class Conflicts in Industrial Society, Bell’s The Breakup of Family Capitalism, and Parsons- Smelser’s Economy and Society.

There is a problem with this type of analysis, Zeitlin says, and that is its lack of solid empirical backing. Zeitlin points out that the figures in Berle and Means’ classic work The Modern Corporation and Private Property show at most that only one out of five large corporations was controlled by the managers. Later works in the same genre are no more convincing. There is also the crucial fact, according to Zeitlin, that no-one has shown why the policies of managers should differ in any significant way from those of the owners; the fact that the owners do not personally lead their corporations does not mean that they have given up the power to make the key decisions. Zeitlin concludes that ‘news of the demise of the capitalist classes ... is ... somewhat premature’. What is needed to settle the issues involved, he says, is new and more sophisticated research:

The methods and procedures, and the basic concepts and units of analysis, in such research will have to be quite different than those which have been commonly employed in the past. Most important, such research must focus at the outset on the complex relationships in which the single corporation is itself involved: the particular pattern of holdings and their evolution within the corporation; and the relationships between it and other corporations; the forms of personal union or interlocking between the officers and directors and principal shareholding families; the connections with banks both as ‘financial institutions’ and the agents of specified propertied interests, including those who control the banks themselves; the network of intercorporate and principal common shareholdings. In a word, it will be necessary to explore in detail the institutional and class structure in which the individual large corporations are situated.

Zeitlin’s call for new concepts and methods in the study of the capitalist class has been heeded by quite a few researchers. Three of the more recent and interesting among them are Michael Useem who has done work on ‘the inner circle’ of the capitalist class, and Beth Mintz and Michael Schwartz who have launched the theory of ‘financial hegemony’. Mintz and Schwartz’ theory of financlal hegemony is most fully elaborated in The Power Structure of American Business (1985), and the basic idea is that it is the financial institutions — mainly banks but also insurance companies — which control the capital flow and thereby set structural constraints for all other corporations. ‘The biography of American capitalism can, in a sense, be written as a chronicle of the flow of capital into certain sectors and away from others’.

The theory of financial hegemony differs from traditional ‘bank control theory’, according to which banks control the industrial corporations in a direct manner by appointing their leadership, acquiring controlling stock, establishing capital dependency, and so on. Mintz and Schwartz do not deny that show-downs occur between banks and corporations; they do, and it is usually the banks that win. The emphasis in their analysis is, however, on ‘hegemony’ as a form of rather loose and indirect control by the banks over the environment in which the corporations operate. As a rule, industrial corporations cannot make major decisions without approval from the financial community. The banks themselves usually present a united front since they are connected to one another through interbank borrowings and through loan consortia.

The Power Structure of American Business uses empirical evidence of various types. The book uses a list of bank interventions in major US corporations during a five-year period has been compiled with the help of the business press. The authors also use the huge and increasingly sophisticated literature on interlocking directorates to support their theory of ‘financial hegemony’. Mintz and Schwartz show that commercial banks send out and receive interlocks more often than other types of corporations. The authors interpret this as meaning that interlocks are needed by the banks both to determine the direction of capital flows and to get information about what is going on in the economy.

While Mintz and Schwartz have followed up on Zeitlin’s suggestion that one should look into the link between the corporations and the banks, Useem has focused on the idea that there exists an ‘inner group’ in capitalist society which is responsible for ‘the cohesiveness of the capitalist class and its capacity for common action and unified policies’. In The Inner Circle Useem presents evidence that businessmen are not necessarily disorganized and differentiated by heterogeneous interests, as Berg and Zald have suggested, some of them do constitute a class conscious elite (for the considerably broader claim that there exists a socially cohesive upper class in the US.) Useem’s main thesis is that businessmen who are simultaneously represented on several boards of directors will develop a sense of the general interest of the business class and not only perceive what is good for their own firms. He also postulates that these businessmen will be more active in government, in non-profit organizations and in trade organizations than are businessmen in general. These hypotheses are confirmed through interviews with a large number of US and British businessmen and through an analysis of interlocks. Useem concludes: ‘the members of the inner circle constitute a distinct, semi-autonomous network, one that transcends company, regional, sectoral, and other politically divisive fault lines within the corporate community’.

Of special interest is Useem’s finding that businessmen from large corporations basically sit on many boards in order to get information about what is going on in the economy and to find out what other large corporations are up to (‘the business scan’). The ‘inner circle’ has consequently, according to Useem, not come into being through some conspiratorial design but as an unintended consequence of ‘the unpredictability of circumstances facing all large corporations in industrial democracies’. The author’s speculations that the rise of an ‘inner circle’ of businessmen heralds a new stage of capitalism — ‘institutional capitalism’.

According to Marxist theory, the fact that a minority is in control over the means of production leads to a society which is divided into antagonistic classes. There is thus a direct and clear link in Marxism between ownership and the constitution of the major groups in society, which is absent in stratification theory concerning advanced industrial society. Neo-Marxists thus attacked mainstream stratification studies in the 1970s for ignoring the role of ‘class’ or social divisions based on control over property.

By the early 1980s a series of attempts by neo-Marxists to map out the class structure of various countries had also been made. The analysis which has attracted the most attention, is probably that of Erik Olin Wright. There are two general strengths to Wright’s work: his theoretical classification of certain middle class groups (‘contradictory locations within class relations’) and his vigorous attempt to operationalize Marxist categories. It should also be mentioned that Wright has been directing a huge empirical project since 1978 involving comparisons of the class structure in at least eight countries.

From the viewpoint of economic sociology it is clear that class analysis represents an advance over the kind of stratification studies which were popular in the 1950s. The reason for this is that it pays more attention to fundamental economic facts. In this context it should also be mentioned that Erik Olin Wright’s most recent studies seem to be heading in a direction directly relevant to economic sociology. Inspired by the work of John Roemer (497), Wright has decided to reconceptualize his class analysis in terms of ‘exploitation’. This latter concept, which replaces ‘domination’ in Wright’s conceptual scheme, is directly connected to the notion of ‘material interests":

...the exploitation-centered concept is more systematically materialist than domination concepts. Classes are derived from the patterns of effective ownership over aspects of the forces of production. The different kinds of exploitation that define different kinds of classes are all linked to the qualitative properties of these different aspects of forces of production.

It is to be hoped that Wright, as part of his new research on classes, will examine different forms of property to see how they have evolved historically, and then determine the effect they may have on the social structure. These kinds of questions are definitely central to economic sociology and have not been extensively studied.

The neo-Marxists’ idea that control over the means of production is of decisive importance for what is happening in the economy brought them into a head-on clash with the mainstream version of industrial sociology. The result was a series of interesting Marxist analyses of what is sometimes referred to today as the ‘sociology of the labour process’.

According to the early industrial sociologists, what goes on in the workplace depends mainly on the interaction within and between local groups. From a Marxist viewpoint, this is an excessively narrow perspective and a sign that ‘bourgeois social science including sociology’ are unable to deal with the objective dimension of the labour process. Harry Braverman has thus argued that most industrial sociologists feel that ‘their task is not the study of objective conditions of work but only of the subjective phenomena to which these give rise: the degrees of “satisfaction” and “dissatisfaction”. Michael Burawoy says basically the same thing when he points out that industrial sociology looked at what happens inside the factory but then ‘stopped at the factory gate’. Burawoy is more appreciative than Braverman, however, of industrial sociology; it is thus possible, he says, to integrate sociology’s ‘partial truths within a Marxist framework’.

In the concrete studies that have been produced in industrial sociology by the neo-Marxists, the idea that control over the means of production shapes work inside factories and offices is worked out in different ways. The general thesis of Harry Braverman’s Labor and Monopoly Capital (1974) is that the capitalists are increasingly eliminating the element of thought in work and thereby degrading it. Human work, which Marx had characterized as a mixture of action and conceptualization, is ‘deskilled’ and reduced to the level of animal activity. Under capitalism thinking is monopolized by management, and Braverman writes: ‘The verb to manage, from manus, the Latin for hand, originally meant to train a horse in his paces, to cause him to do exercises of the maflége... Like a rider who uses reins, bridle, spurs, carrot, whip, and training from birth to impose his will, the capitalist strives, through management, to control’. The claim that the element of thought in ordinary work is increasingly transferred to the sphere of management is elevated by Braverman to ‘the general law of the capitalist division of labour’.

The argument in Richard Edwards’ Contested Terrain (1979) is somewhat different from Braverman’s even though the basic idea is similar, namely, that capitalist control over the means of production determines the way in which the labour process is organized. Edward’s main thesis is that workplaces are organized in a hierarchical way ‘because it is profitable’. The historical development of US capitalism has produced three different types of hierarchical control: ‘simple control’ (petty tyranny in the small workplace), ‘technical control’ (the labour process is directed by the machine), and ‘bureaucratic control’ (control via the social structure of the company). Edwards then connects his three forms of control to different labour markets. ‘The working poor’ thus tend to work in ‘the secondary market’, where ‘simple control’ is common. ‘The traditional proletariat’ can mainly be found in ‘the subordinate primary market’ with ‘technical control’. And ‘the middle layers’ operate in the ‘independent primary market’, where ‘bureaucratic control’ is predominant.

Michael Burawoy’s Manufacturing Consent is also constructed around the importance of capitalist ownership of the means of production for the way in which the labour process is structured. Work inside the factory is thus analysed from the perspective that it is absolutely necessary in capitalism to ‘simultaneously obscure and secure surplus value’. What reconciles the worker to the task of producing a profit for someone else, the author says, is that his or her work is organized as a game (‘making out’). The goal of ‘making out’ is ostensibly to earn incentive pay, but what really makes the worker play the game is that it breaks the monotony and makes it easier to become absorbed in one’s work. ‘Making out’ also existed at the stage of ‘competetive capitalism’ according to Burawoy, who on this point of his study refers to Donald Roy’s famous research in the very same factory thirty years earlier. At this earlier stage of capitalism, however, coercion was more common than consent (‘the despotic organization of work’). In today’s monopoly capitalism the situation is the reverse (‘the hegemonic organization of work’). In his later research Burawoy has continued to focus on the notion that what happens at the point of production is crucial to the maintenance of the whole capitalist system.

One of the most popular topics among neo-Marxist writers in the 1970s was the capitalist state. The key question-here was the way in which control over the means of production by the capitalist class influenced the actions of the state. The answers that the neo-Marxists gave to this question are usually labelled ‘instrumentalist’ and ‘structuralist’. A third possibility — that of ‘class- struggle’ — is sometimes added. According to the instrumentalists, the state is basically used as a tool by the capitalist class. The structuralists strongly disagreed with this formulation, and they argued that the state has a certain autonomy from direct control by the ruling class (‘relative autonomy’). According to the class struggle perspective, power over the capitalist state is determined by ongoing confrontations between the classes in society.

Neo-Marxist writings on the state in the 1970s made some interesting contributions to economic sociology. Many of the works in the instrumentalist tradition thus contain excellent analyses of the interaction between businessmen and the state. In the ‘power structure research’ by scholars like William Domhoff one can also find very fine and detailed studies of the power elite. A good example is his book on the Bohemian Grove in California, which is a social club for the upper class. Even if the instrumentalists failed to develop a sophisticated Marxist theory of the capitalist state, they have still contributed to that underdeveloped part of sociology which can be called ‘the sociology of the capitalist class’.

Other neo-Marxist studies of the state" are also of relevance to today’s economic sociology. This is especially the case with Fred Block’s brilliant article ‘The Ruling Class Does Not Rule: Notes on the Marxist Theory of the State’. The main argument here is that ‘state managers’ are likely to try to maintain ‘business confidence’ and, inadvertently, the capitalist system as well. Another study of interest in this context is Ulf Himmelstrand et al.’s Beyond Welfare Capitalism, where the authors, with the help of survey research, show how Swedish entrepreneurs basically ignore the negative side-effects of their businesses in the expectation that the state will handle them.

James O’Connor must be credited with having rediscovered and further developed the ‘fiscal sociology’ of Rudolf Goldscheid and Joseph Schumpeter. His The Fiscal Crisis of the State draws attention to the cross pressures to which the contemporary capitalist state is exposed; on the one hand, there is a demand for lower taxes and, on the other, a demand for more state services. Since O’Connor’s work was published, a few sociological works — Marxist as well as non-Marxist — have appeared which deal with the growing public sector and the problems that this entails. Surveying the literature on the fiscal crisis in 1981 Fred Block concluded that ‘much research remains to be done in developing a fiscal sociology and in providing additional evidence for the existence of fiscal crisis as a widespread tendency in advanced capitalism’. As neglected areas of research Block singles out state expenditures across nations and sociological investigations of tax resistance and of the sources of inflation. Some studies of thèse topics have appeared since Block’s overview was published in 1981. State expenditures in various OECD countries, it should also be mentioned, are presently being investigated in a research project directed by Walter Korpi and Gösta Esping-Andersen. According to a report from this project, it is clear that those economists who automatically view the existence of a huge public sector as a threat to good economic performance are mistaken.

A New Attitude to Economics?

The recent development of Marxist thought, which is of special interest to economic sociology, has been called ‘the new Marxism of collective action’ by Scott Lash and John Urry. These authors mainly discuss Jon Elster’s ‘game-theoretic Marxism’ and Claus Offe and Helmut Wiesenthal’s article ‘Two Logics of Collective Action’, but they also touch on the works of John Roemer and Adam Przeworski. Why Scott and Lash decided to highlight the Offe-Wiesenthal article in this context is somewhat mysterious; it contains a fine analysis of the differences between trade unions and employers’ organizations but it is very different in tone from Elster-Roemer-Przeworski, who all represent a very novel rapprochement between economics and sociology on a theoretical as well as on a methodological level.

John Roemer’s work emphasises the form of an analysis of exploitation through a ‘property relations approach’. By a very sophisticated use of mathematical models, Roemer concludes that ‘it is the ownership relations that are primary’ in explaining exploitation; what happens in the labour process at the point of production is ‘secondary’. The notion of surplus-value is of no help in the theory of exploitations, according to Roemer.

Roemer constructs his own ‘general theory of exploitation and class’ by combining the property relations approach with game theory. The basic idea is that members of a class are exploited in a mode of production if they would be better off by withdrawing with their share of the resources. This idea of withdrawal is a fascinating notion, which is so artificial and ahistorical, however, that it is unlikely to be of much value in sociology. Roemer’s focus on property relations, on the other hand, seems very promising since it raises some very difficult questions.

Adam Przeworski is a political socilogist who has tried to analyse the social democratic labour movement in terms of class compromise and hegemony. His work is especially interesting to economic sociology because of its emphasis on the importance of investment decisions, and Przeworski should be credited with having made a substantial contribution to ‘the sociology of investments’. Przeworski’s point of departure is Kelvin Lancaster’s famous article on the dynamic inefficiency of capitalism, in which Keynes’ analysis of investments and Marx’s idea of two opposed classes in capitalism are combined in a game theoretical analysis. The main idea in Lancaster, as well as in Przeworski, is that a choice must be made by the capitalists and the workers alike whether to consume now or in the future. Przeworski, however, is much more specific than Lancaster, and he skilfully analyses what consequences different investment decisions will have under different conditions; how the threat of disinvestment works; and so on. Unlike Roemer, Przeworski is also involved in empirical research on the issues that he models, and this makes it easier for sociologists to acknowledge the importance of his models.