20 Years of Enzioni

Socio-Economic Review (2008) 6, 135173 Advance Access publication December 4, 2007

doi:10.1093/ser/mwm021

DISCUSSION FORUM Amitai EtzioniTwenty years of The Moral Dimension: Toward a New EconomicsThis year, 2008, is the twentieth anniversary of the rst appearance of Amitai Etzionis The Moral Dimension: Towards a New Economics (New York: The Free Press, 1988). The book was a major foundational text behind the inauguration of SASE, the Society for the Advancement of Socio-Economics, from which Socio-Economic Review originated. The editors have asked four scholars working on the relationship between economy and society to assess the books continuing importance. The Review Symposium concludes with a response from Amitai Etzioni. Keywords: socio-economics, economics, economic sociology, sociology, political economy, moral norms JEL classication: A12 relation of economics to other disciplines, A13 relation of economics to social values, A14 sociology of economics

The road not taken: The Moral Dimension and the new economic sociologyJens BeckertMax Planck Institute for the Study of Societies, Cologne, Germany Correspondence: [email protected]

The rst time I read Amitai Etzionis The Moral Dimension (Etzioni, 1988) was as a graduate student in New York. This must have been about two years after the book was published. At this time I started to get interested in the relationship between society and economy, and The Moral Dimension was a captivating read for me. I had studied sociology and economics and was deeply interested in the question of a sociologically informed alternative to the depiction of the economy that I had been taught based on the neoclassical paradigm. I was primarily familiar with the connections between the two elds that came from

# The Author 2007. Published by Oxford University Press and the Society for the Advancement of Socio-Economics. All rights reserved. For Permissions, please email: [email protected]

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classical sociology, especially the works of Durkheim and Weber, and to some extent from contemporary sociological theory. What I wasnt aware of before reading The Moral Dimension were the many dissenting voices within contemporary economics upon which Amitai Etzioni based many of his arguments. I was rst introduced to the works of Amartya Sen, Harvey Leibenstein and Lester Thurow when I read The Moral Dimension. By organizing these works around core questions like the relationship between the individual and the community, the concept of rationality, and a decision theory going beyond the economic concept of individual utility maximization, the book not only gave me many fresh insights but also helped me see the connection between these insights and ways to apply them in the context of social theory. Retrospectively it is evident that the late 1980s were a time when several roads were being built that could potentially lead the way for a new sociological approach to the economy. It was the time when crucial new developments in the economy and in economics began to take shape. A period of profound change in economic policies ensued. During the Reagan era, deregulation, the privatization of large public industries, discussions about the retrenchment of the welfare state, and the rise of the coordinated market economies in Japan and Germany provided puzzles in social and economic development that were calling for sociological investigation. Marxist approaches had exhausted themselves by then. In economics, approaches that attempted to bring some realism back into the assumptions underlying model building gained inuence, such as information economics and the new institutionalism with their introduction of information asymmetries and transaction costs. No one was talking about behavioural economics yet, but the rst experimental studies showing the role of altruism and fairness in economic decision making had been published and were cited in The Moral Dimension. From the perspective of sociology, the development that later proved to be the most inuential was the emergence of the new economic sociology. In the 1980s, works we now consider to be the classics of the new economic sociology, such as Viviana Zelizer (1979), Mark Granovetter (1985), Harrison White (1981), Wayne Baker (1984) and Richard Swedberg (1987), had already been published, but they did not yet constitute a eld of their own. The anthologies that became so important for the constitution of the new economic sociology were not published until the early 1990s (Zukin and DiMaggio, 1990; Granovetter and Swedberg, 1992; Swedberg, 1990; Smelser and Swedberg, 1994). Though the seeds for the rapid expansion of economic sociology were planted at this time, it was not possible to foresee the powerful development that would take place in the 1990s. Amitai Etzionis The Moral Dimension offered a platform that could have formed the intellectual basis for the engagement of sociology with economics and the economy. Yet it did not become that platform. Why it became the

Twenty years of The Moral Dimension: Toward a New Economics

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road not taken one can only speculate. One guess is that the book closely intermingles two realms that todays professionalized sociology tries to separate as much as possible: the analytical and the normative. The Moral Dimension is as much about how people act in the economy as it is about how we should organize the economy to create the conditions for what Etzioni calls the I&We paradigm. A second guess is that the book, though undoubtedly deeply sociological, relies heavily on dissenting voices within economics to develop its arguments. To learn that so many insights for a sociological understanding of the economy have been developed by heterodox economists is not an especially motivating experience for sociologists. Even today discourse between heterodox economics and economic sociology is thin despite many obvious overlaps.1 A third possible reason that applies especially to American sociology is that The Moral Dimension has a distinct Parsonian air. The concern with the normative foundations of society, arguably the core of the sociological enterprise, has been received critically in American sociology since the late 1960s. It is noteworthy that many of the key contributors to the new economic sociologyamong them Harrison White, Mark Granovetter, Michael Useem and Paul DiMaggiohave been teachers or students at the Harvard sociology department (Convert and Heilbron, 2007, p. 36), sometimes dening their approach in opposition to Talcott Parsons (Beckert, 2006). The Moral Dimension might have been too close to the tradition these sociologists tried to free themselves from. The Moral Dimension was the road not taken by the new economic sociology. However, 20 years after its publication, with economic sociology being a consolidated eld of American and, increasingly, of European sociology, one can ask whether it has missed something by sidelining the concerns addressed in the book. I would say it has, and I will use the remainder of this commentary to spell out three aspects the new economic sociology could have learnedand still canfrom The Moral Dimension. (1) The rst point I want to mention is Etzionis deep engagement with questions of action theory. The main theme of The Moral Dimension is a critique of the action theory of utility maximizing homini oeconomici that has dened economic modelling for over 100 years. This theory of action has even been radicalized from its eighteenth century sources through the notions of opportunism and interest seeking with guile introduced by the new institutional economics. This action theory is intellectually simplistic. Nevertheless it is attractive to students precisely because of its simplicity and to mathematically oriented researchers as a basis for modelling. But is the theory empirically relevant? Possibly the most important contribution of The Moral Dimension is to show from a1

See for instance the works by Geoffrey Hodgson (1988, 2004) or the topics discussed in post-Keynesian economics (Dequech, 2003, 2005).

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variety of different perspectives that decision making even in contemporary economic contexts cannot be understood on the basis of selsh utility maximization. While this has been common knowledge in sociology at least since the writings of Emile Durkheim, it nevertheless remains a powerful argument in the sociological understanding of the economy. Etzioni develops this argument based on a discussion of economic approaches, mostly from the 1980s, that assume that individuals have more than one utility and that these multiple utilities comprise conicting forces (Etzioni, 1988, pp. 36ff). I am not sure whether distinctions between preferences and meta-preferences are indeed very helpful conceptually, but the main point is a compelling one: Actors act not just based on their selsh interests, but take the norms and interests of the community to which they belong into consideration when making decisions. With the development of behavioural economics, this basic insight now also seems to be trickling down to economics, though it does so as an impoverished version, concentrating on the hard-wired mechanisms of neuroscience. In the new economic sociology, there has never really been much discussion about which action theory is actually appropriate for the analysis of the economy, with some rare exceptions (Hirsch et al., 1990; Beckert, 2003). In his inuential programmatic statement on embeddedness, Mark Granovetter (1985) does not embark on a discussion of action theory. The embeddedness in social networks is to provide a structural explanation of economic outcomes, but the relationship between social morphology and the enactment of structures through agents is not seen as a problem. When Granovetter comes to discuss rational choice theory, he takes an accommodating position: [W]hile the assumption of rational action must always be problematic, it is a good working hypothesis that should not easily be abandoned (Granovetter, 1985, p. 506). And indeed several network analysts combine the structural approach with a rational choice theory of action (Burt, 1992). I do not necessarily subscribe to the I&We paradigm suggested by Amitai Etzioni, since it might indeed focus too strongly on social norms to be able to explain the integration of economic exchange in contemporary societies. But it is clear that a sociological conceptualization of the economy must be based on an action theory that is itself sociological. By this I mean a theory that explains social action based not on individual predispositions but on culturally anchored meanings, the intersubjective constitution of the actor and social macrostructures such as norms, institutions and social networks. (2) The second challenge entailed in The Moral Dimension that is not taken up in the new economic sociology is seeing the economy as part of the larger social system. Etzioni discusses the economy from the perspective of social theory. In normative terms he calls for the type of social organization of the economy necessary to produce social outcomes that conform to the values of what he


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called in the subtitle of a much later book the good society. The economy is seen as a crucial part of contemporary society, but the normative standards by which its performance is to be judged cannot beat least not exclusivelythe criteria of efciency. Instead the organization of the economy is judged by its contribution to making the world a livable place by arranging the production of wealth in a way that does not jeopardize the realization of the values of justice, freedom and fairness in society. Etzionis discussion of encapsulated competition (Etzioni, 1988, pp. 199ff) addresses exactly this point: to be viable, the market mechanism of competition must be encapsulated by social bonds and government regulation. The new economic sociology, by contrast, focuses on the economy in isolation from other social realms and is much closer to the efciency perspective of economics. Research projects typically focus on the explanation of the operation of a market or an industry, without seeing its embeddedness in society writ large. This holds true when network analysis is used to investigate the social preconditions of the operation of any given market or organization. Cultural and institutional approaches in economic sociology do a much better job of dening the non-economic preconditions necessary for the functioning of markets. A prime example is Viviana Zelizers (1979) study on the emergence of the life insurance industry in nineteenth century America, which shows the cultural transformations necessary for this market to come into existence. However, the new economic sociology hardly pays any attention to the social effects produced by the organization of the economy. Traditional sociological concerns of social inequality, alienation or exclusion have yet to nd a prominent place in the research program. In its disregard for criteria other than efciency (or survival) it even shares a joint perspective with economics, only in a more limited way. The normative perspective of economic theory emerges from the claim of an indissoluble connection between individual wealth maximization on the one hand and a harmonious social order on the other. Economic sociologists for the most part would not share this claim, but they do not offer an alternative normative perspective either. I maintain that they can afford to do so only by shielding themselves from questions about the social effects of the observed organization of the economy. Once the effects of markets come into focus, the economy is analysed within its societal contexts and a profoundly different perspective emerges because the centre of attention is no longer only the functioning of the economy as such, but also its role within society. It might not be hopelessly outdated to suggest that the task of sociology as a discipline is to understand societies at large and not just the operation of their functionally differentiated partsthough the careful analysis of the parts is the precondition for any enlightening social theory. It is only recently that these concerns have been expressed more directly in the new economic sociology (Fourcade and Healy, 2007; Zelizer, 2007). While The Moral Dimension might intermingle analytical

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and normative concerns too closely, one can learn from it that the two dimensions cannot be completely separated either. (3) A third learning opportunity for the new economic sociology provided by The Moral Dimension relates to the concept of performativity, which has received signicant attention in recent scholarship (Callon, 1998; MacKenzie et al., 2007). The assertion is, in a nutshell, that the function of economic theory is not so much to describe economic reality but rather to inform economic actors how they should act. The more actors in the economy make use of the templates provided by economic theory, the more likely it is that subsequent economic processes will indeed conform to the descriptions in economic theory. Empirical studies from commodities markets (Garcia-Parpet, 2007) and from nancial markets (MacKenzie and Millo, 2003) provide detailed analyses of such processes. On a more abstract level the argument is that it is economic theory that makes the coordination of economic processes possible. This claim presupposes that an economy can indeed operate the way neoclassical theory tells us it can. Amitai Etzioni (and many others before him) warns us about this by claiming that economic action in the form propagated by economic theory potentially undermines the social preconditions necessary for the functioning of the economy. As Etzioni writes: [C]ompetition is not self-sustaining; its very existence, as well as the scope of transactions organized by it, is dependent to a signicant extent upon contextual factors [. . .] within which it takes place (Etzioni, 1988, p. 199). In his congenial tableau of intellectual positions regarding the social effects of capitalism, Albert Hirschman (1986, p. 109) has called this position the self-destruction thesis. Capitalism would undermine its own basis if it did not reproduce the social and moral preconditions on which it rests. One chief reason for this process, according to observers of capitalism, is the destruction of religious values leading to increasingly hedonistic and selsh action orientations. These two perspectivesthe performativity thesis and the self-destruction thesisdo not necessarily contradict each other in an empirical sense, but they do constitute a paradox worth exploring: While economic theory provides a focal point in economic practice for coordination games, this focal point is at the same time inherently unstable because it does not consider the non-economic preconditions of economic exchange. Amitai Etzionis The Moral Dimension is the road not taken by the new economic sociology. Twenty years after the books publication, with the new economic sociology having developed into a consolidated approach, it is worthwhile contemplating whether to set out on this journey again. Opening up interesting, unexpected vistas, a new road can take us beyond the insights gained by economic sociology thus far. As Robert Frost wrote: To take the road less traveled by [. . .] has made all the difference.


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ReferencesBaker, W. (1984) The Social Structure of a National Securities Market, American Journal of Sociology, 89, 775 811. Beckert, J. (2003) Economic Sociology and Embeddedness. How Shall We Conceptualize Economic Action?, Journal of Economic Issues, 37, 769787. Beckert, J. (2006) Interpenetration versus Embeddedness. The Premature Dismissal of Talcott Parsons in the New Economic Sociology. In Parsons, T., Moss, L. and Savchenko, A. (eds) Economic Sociologist of the 20th Century. American Journal of Economics and Sociology, 65, 161 188. Burt, R. (1992) Structural Holes: The Social Structure of Competition, Cambridge, MA, Harvard University Press. Callon, M. (ed) (1998) The Laws of the Markets, Oxford, UK, Blackwell Publishing. Convert, B. and Heilbron, J. (2007) Where did the New Economic Sociology Come from?, Theory and Society, 36, 31 54. Dequech, D. (2003): Conventional and Unconventional Behavior Under Uncertainty, Journal of Post Keynesian Economics, 26, 145 168. Dequech, D. (2005) Cognition and Valuation: Some Similarities and Contrasts between Institutional Economics and the Economics of Conventions, Journal of Economic Issues, 39, 465 473. Etzioni, A. (1988) The Moral Dimension: Towards a New Economics, New York, NY, The Free Press. Fourcade, M. and Healy, K. (2007) Moral Views of Market Society, Annual Review of Sociology, 33, 1 37. Garcia-Parpet, M.-F. (2007) The Social Construction of a Perfect Market. In MacKenzie, D., Muniesa, F. and Siu, L. (eds) Do Economists Make Markets? On the Performativity of Economics, Princeton, NJ, Princeton University Press, pp. 21 53. Granovetter, M. (1985) Economic Action and Social Structure: The Problem of Embeddedness, American Journal of Sociology, 91, 481 510. Granovetter, M. and Swedberg, R. (eds) (1992) The Sociology of Economic Life, Boulder, CO, Westview Press. Hirsch, P., Michaels, S. and Friedman, R. (1990) Clean Models vs. Dirty Hands: Why Economics is Different from Sociology. In Zukin, S. and DiMaggio, P. (eds) Structures of Capital, Cambridge, UK, Cambridge University Press, pp. 39 56. Hirschman, A. O. (1986) Rival Views of Market Society, New York, NY, Viking Press. Hodgson, G. M. (1988) Economics and Institutions: A Manifesto for a Modern Institutional Economics, Cambridge, UK, Polity Press. Hodgson, G. M. (2004) The Evolution of Institutional Economics: Agency, Structure and Darwinism in American Institutionalism, London, Routledge.

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MacKenzie, D. and Millo, Y. (2003) Constructing a Market, Performing Theory: The Historical Sociology of a Financial Derivatives Exchange, American Journal of Sociology, 109, 107 145. MacKenzie, D., Muniesa, F. and Siu, L. (eds) (2007) Do Economists Make Markets? On the Performativity of Economics, Princeton, NJ, Princeton University Press. Smelser, N. and Swedberg, R. (eds) (1994) Handbook of Economic Sociology, New York, NY, Russell Sage Foundation and Princeton, NJ, Princeton University Press. Swedberg, R. (1987) Economic Sociology: Past and Present, Current Sociology, 35, 1 221. Swedberg, R. (1990) Economics and Sociology: Redening their Boundaries: Conversations with Economists and Sociologists, Princeton, NJ, Princeton University Press. White, H. (1981) Where do Markets Come from?, American Journal of Sociology, 87, 517547. Zelizer, V. (1979) Human Values and the Market: The Case of Life Insurance and Death in 19th Century America, American Journal of Sociology, 84, 591610. Zelizer, V. (2007) Ethics in the Economy, Zeitschrift fur Wirtschafts- und Unternehmensethik, 8, 8 23. Zukin, S. and DiMaggio, P. (1990) Introduction. In Zukin, S. and DiMaggio, P. (eds) Structures of Capital. The Social Organization of the Economy, Cambridge, UK, Cambridge University Press, pp. 1 36.

The Moral Dimension and its meaning for economic ethicsBettina HollsteinMax Weber Center for Advanced Cultural and Social Studies, University of Erfurt, Erfurt, Germany Correspondence: [email protected]

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Preliminary remarks

When Etzioni published his book The Moral Dimension: Towards a New Economics (Etzioni, 1988) 20 years ago, he was already consideredmostly because of his book The Active Society: A Theory of Societal and Political Processes (Etzioni, 1968)one of the most important sociologists in the USA. In this book from 1968, he had developed a very ambitious alternative to the dominant approach in social theory, that of Talcott Parsons. Etzioni took up some elements from Talcott Parsons and connected them with elements from systems theory and cybernetics as well as phenomenological and interactionist ideas and ideas


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developed in conict theory (Joas and Knobl, 2004, p. 681). In addition to these theoretical works, Etzioni published a great number of empirical studies, mostly in the eld of organizational sociology, and was the leading scientic policy advisor in the White House under President Carter. He is one of the most frequently cited authors in sociology (Coughlin, 1996, p. 15), and founder of a research centre (Center for Polity Research at Columbia University), a scientic organization (Society for the Advancement of Socio-EconomicsSASE) and a new social movement (the Communitarian Network; Sciulli, 1996, p. 3). In light of his many activities and the broadness of debate concerning Etzionis work, it could seem questionable that20 years laterthere is anything new to be said about this book, which was widely received, although primarily in the social sciences. One way to discover new aspects of this book or to see old ndings in a new light is to take a decisively interdisciplinary perspective and to consider it from a deliberately differentnot sociologicalpoint of view. My perspective here is shaped by economic ethics1 and the attempt to combine sociological, economic and ethical insights. In this article, I attempt to highlight the meaning of The Moral Dimension for economic and business ethics on the one hand and to develop new perspectives on Etzionis contribution on the other. 2. Points of contact for economic ethics

The English title of Etzionis work already insinuates a possible afnity with the economic ethics debates. Actually, however, no traces of Etzionis work can be found in the most inuential writings in this area. The reason for this might have been that in the USA, this debate is more or less concentrated on business ethics. The US business ethics movement is primarily concentrated on practical question of everyday business life (Grabner-Krauter, 2005, p. 166). Relevance according to the orientation on concrete business problems and applicability were essential elements of US business ethics (Galtung, 1985); in this regard, it is not surprising that an integration into higher ranking economic or sociological macro theories is generally lacking in these business ethics approaches. In the European context, however, where beyond business ethics economic ethics also existsinternally differentiated in various more or less institutionalized approachesdifferent philosophical traditions were used to fertilize these debates. Generally, these approaches have afnities to political philosophies in the realm of liberalism, i.e. to authors such as Rawls or Habermas. Etzionis theory, however, has afnities with the critique of Rawlsian liberalism, which had its starting point with Sandels book Liberalism and the Limits of Justice1

This point of view is particularly inuenced by the European debates on economic ethics, which have a more theoretical character.

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(Sandel, 1982). This critique stresses the aspect of community for political, social and economic action and differentiates several dimensions of the concept of community. It led to communitarianism, a philosophical tradition that was discussed in a controversial manner during the debate on liberalism versus communitarianism but was not taken up in economic and business ethics.2 On the level of political theory, mutual learning processes of liberals and communitarians have taken place. Liberal philosophers have reacted to critiques by communitarians and Etzioni, who is clearly not an anti-liberal thinker, labels himself a communitarian liberal (Reese-Schafer, 2001). It is not necessary to reiterate this philosophical and sociological debate here; but the differences of Etzionis position against liberal theories have consequences for the economic and business ethics approaches grounded on these theories. So, the possibilities for connecting economic and business ethics to the socio-economics of Etzioni on a solid theoretical ground are to be demonstrated, as well as the fruitfulness of such an enterprise. 2.1 The relation of interests and morality

With The Moral Dimension, Etzioni laid down the theoretical bases for socioeconomics, which can be characterized as a heterodox economic3 theory with an afnity to the philosophy of communitarianism (Biesecker and Kesting, 2003). Etzioni constructs socio-economics on the bases of what he calls the I&We paradigmthus his concise formulation (Etzioni, 1988)that is grounded in a moderately deontological ethic.4 The I of the I&We paradigm has not so much to do with an isolated individual, but rather is related to the I and thou of Buber (Buber, 1937), who was one of Etzionis teachers. Instead of assuming the maximization of individual utility as the only goal of human beings, as is done by neoclassical economists in their main presumptions, Etzioni makes the assumption that people make moral judgements and use these to evaluate their goals and interests. So, besides the desire to realize their goals and interests, people have the need to live in accordance with their moral values. The moral dimension is thus not only a dimension that affects action in a moral system which is completely separated from the economic one, but2 3

For a summary, see Joas and Knobl (2004).

Characteristics of heterodox economic theories are the openness to cultural and normative aspects of economy and the contestation of models of homo oeconomicus as the only possible approach to explaining human behaviour and action. For a more precise characterization and some examples, see Hollstein (2007). The moderately deontological approach nds its expression in the assumption that the subjects of action feel obliged by values and principles, but while responding to these obligations, they consider the outcomes of their actions as well. They are no pure adepts of an ethic of conviction.

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directly affects economic action. To that extent, the systems theory and its proper separation of differentiated systems is contested. Even the I, according to this paradigm, is no pure homo oeconomicus, but rather it is affected by society. A society that considers itself to be only the sum of isolated individuals following their own interests, undermines in this [socio-economic] view its own bases (Biesecker and Kesting, 2003, p. 152). In contrast to neoclassical theory, the socioeconomic paradigm sees value-based commitments not as mere restrictions of individual freedom of action, but as legitimate and integral parts of everyones existence. Individuals and community are both completely essential, and hence have the same fundamental standing (Etzioni, 1988, p. 9). To underpin his paradigm, Etzioni rst deconstructs various existing utilitybased economic theories. As other authors5 before him, but in an outstandingly clear manner and with the incentive to counter new developments attempting to install economic utility concepts as a general paradigm of rational choice in the social sciences,6 he points out (1988, p. 31): All concepts of utility are defective because they do not offer an explanation of the sources of preferences and the factors that cause them to change, nor do they explain how consumers allocate their income among alternative goods to begin with. For economic ethics, Etzionis paradigm offers the advantage that the rational interest-related elements are explicitly presented as equal to moral and emotional aspects, which avoids the fruitless debate as to whether economic aspects have to be subordinated to moral ones or the other way round. 2.2 The role of community

By taking into consideration the values of the acting individuals, the communities in which individuals live become visible. In fact, the genesis of values is related to experiences in social communities and to a social and cultural context, in which the economic sphere is embedded (Polanyi, 1978 [1944]). Stressing the embeddedness7the integration of the economy in social and cultural contexts8is an aspect Etzioni shares with a lot of other social scientists and other heterodox traditions in economic theory. Critiques of the economic paradigm by the5 6 7

For a general view, see Sen (1977). This position is prominently represented by Becker (1993).

Etzioni does not refer to embeddedness, but to encapsulation and relates this term especially to the social framing of economic competition, which can be realized by social bonds or laws (Etzioni, 1988, pp. 199ff). We should not forget that especially Western culture is itself strongly affected by economic thinking.

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social sciences often claim to analyse economics in the context of society and to conceptualize the economy as an embedded one. In this context, a new theoretical discussion in the area of economic sociology has evolved, mainly initiated by Swedberg and Granovetter (1992, p. 7). In the context of economic ethics, the concept of an embedded economy has been interpreted in two different ways. On the one hand, it has been conceptualized as the necessity of setting an external juridical and institutional framework of action, within which the economy can evolve according to its own logic. For example, Homann9 represents this conception. Consequently, the systematic place for economic ethics in this view is the framework of action. Economic ethics is the discipline which deals with the question which norms and ideals can/should be valuated under conditions of modern economy and society (Homann, 1992, pp. 7f). On the other hand, embeddedness can be understood as the fact that each economic action is interwoven in its context and that a separation of action and framework of action is only possible on an analytical level, so that even on a theoretical level, embeddedness or interwovenness of action has to be taken into account.10 Etzionis view is closer to the second version. To analyse the economy as embedded in this last interpretation also includes the reection in an economic ethical and political philosophical way of the theoretical assumptions which are the foundations of economy, as well as the analysis of the institutional framing conditions. This approach is also shared by Ulrich, the main representative of integrative economic ethics, which is another very important school of economic ethics (Ulrich, 2004, p. 56). The assumption that in addition to rationality, social contexts and normative values are pertinent even for economic contexts is widespread in sociology and in some economic traditions. But the ways to conceptualize this embeddedness and the concrete relations between both elements are quite different. This can even include attempts of synthesis of economics and social sciences. Weber, for example, stressed the importance of values (Wertideen) which are necessarily connected to the perception of reality and explained that this point of reference is necessary if economic science intends to be a cultural science (Weber, 1973 [1922], pp. 161ff, 176). The endeavour to consider aspects of economics and social sciences and to give to both factors an important and necessary function is not a singularity of Etzioni, but rather a step in a long range of very different attempts in this respect in sociologic theory, as, for example, Webers approach.9

Karl Homann is one of the most important representatives of an economic theory of ethics, which can be considered as one of the predominant schools in economic ethics. For a short overview on Homanns approach with more references, see Hollstein (1995).

For a differentiated analysis of several forms of being embedded in contexts and meanings, see FUGO (2004).

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In economics, however, these attempts were not noticed, in spite of the fact that Etzionis approach is particularly promising for economic theory. The assumption of embeddedness is of crucial importance for economic ethics, which tends to argue in a macro-theoretical way and is stressedin different waysby most of the economic ethics approaches. On this basis, concrete claims can be formulated concerning the responsibility of corporations for the contexts affected by their activity. These themes are articulated in the Corporate Social Responsibility (CSR) debate and in the stakeholder approach,11 which are important elds of discussion in business ethics. One problematic question, when stressing the genesis of values in real communities, is how universalistic value consensus can be generated from particular values and norms of communities. How can universalism rise, or how can a generally accepted and valued morality be generated? Consideration of articulation and narrativity seem to be of crucial importance in this eld (Taylor, 1994, pp. 94ff), along with the implicit consequences for (economic) ethical discourse. I cannot discuss this topic in detail here. 2.3 Moral acts

From an economic ethics perspective, the socio-economic approach is very interesting because it contests the assumption of given preferences of neo-economic theory and investigates the formation of preferences. The main source of evaluations, that is, the source of the formation of preferences, according to Etzioni besides pleasureis morality. Crucial in this context are moral acts. Etzioni distinguishes four criteria that dene moral acts (Etzioni, 1988, pp. 41ff): moral acts reect an imperative, a generalization, and symmetry when applied to others, and are motivated intrinsically. (Each criterion is necessary by itself but not sufcient; in conjunction that may serve to dene a moral act.) Imperative (a) means that people feel obliged to act in a specic way, but not due to external coercion. Generalization (b) is related to a sort of universalism in the sense of Kant. The claim for symmetry (c) could be interpreted as a special case of criterion (b). Etzioni tends to exclude by this criterion racist ideologies or moral systems. On the other hand, we could interpret it as a hint concerning reciprocity approaches, which are possible to integrate in Etzionis world, but are never discussed in a consistent manner by him. This point, which could lead to fruitful new insights, will be discussed later (see Section 3.1). Also, the question concerning intrinsic motivation (d) which is grounded in personality and based on personal experiences provides an occasion for further inquiry which will be discussed in what follows (see Section 3.2).Etzioni himself discussed the Stakeholder Theory in a communitarian perspective (Etzioni, 1999, pp. 2742).11

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The four criteria of moral acts are well suited to relate to them some new ideas for economic ethics in light of socio-economics. The rst criterion (imperative quality) of moral acts concerns two main aspects: (a) The autonomy of the liberal subject is challenged when values that bind people cannot be entirely referred to a deliberative act. Community-building processes and experiences of self-transcendence have an impact on the genesis of values (Joas, 1999). A commitment to values is not comparable with free choice. Here, we can nd parallels with Nussbaums (2003) critique concerning the autonomous subject and ndings in economic ethics by Sen (1987). Etzioni himself has a more sophisticated view which has been too often simplied in the literature. An orientation along the idea of the good and the capabilities of subjects is a perspective that might initiate interesting research in economic ethics, which is mainly dominated by discourses on justiceas can be seen with regard to Sens works. (b) Beyond this, the imperative quality challenges the assumption that the acting individual is mainly determined by external constraints or incentives. It is crucial for economic ethics to challenge this assumption as demonstrated by the example of moral consumption as developed by Priddat (2000, pp. 128 151). One example for moral consumption is I prefer carpets from Nepal to those from Persia, but only if they are produced without child labor. Moral consumption is dened as the renunciation to what somebody prefers, because he does not want to be guilty in a moral sense regarding circumstances during the production of the preferred good that are not compatible with human rights, ecological issues or other moral aspects (Priddat, 2000, p. 129). It is not the good carpet that is immoral, but the justication of the other actions of the producer. Moral consumption has two economic effects (beside the satisfaction of living according ones own values): rst, it can lead to a signicant reduction of demand, as was the case for Shell during the Brent Spar Affair; second, it demonstratesindependent of its effect on demandto ones fellow man that someone is a moral human being. A gaining of reputation through moral gesture is achieved (Priddat, 2000, p. 131). Because moral consumption is dependent on mediality, it is reasonable in economic terms to do moral consumption only when it is socially communicated, because other moral consumption lacks the boycott competence12 which can only be

12 Boycott competence means that moral consumption leads to a perceivable reduction of demand and generates consequences for the corporations policy. Without a reduction of demand, moral consumption remains unknown and without effect.


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achieved by attaining certain thresholds (Priddat, 2000, pp. 132f). In these cases, individual values are not decisive, but rather values which are common to a greater group relevant for the market and which are communicated in this group. The preferences for moral consumption are, in this perspective, already challenged on the economic level and dependent on social communication processes. And these communication processes cannot be referred to as external constraints on individuals. Beyond that, we hold for certain that these communication processes are in a close reciprocal relationship to value convictions on a deeper level because moral consumption is an act of articulation of strong valuations and helps to make them evident. The second criteria concerning universalism is crucial for a lot of our everyday actions and is integrated into everyday ethics for most of us. The golden rule13 is a prominent example for this. It addresses an individual person who is confronted with another person who can try to understand him by desisting from his own subjective experiences. Human behaviour is then analysed and evaluated through the eyes of both concerned partners of interaction. The golden rule is hence a maxim that is useful for seeing human behaviour between actors in a more objective way, for those cases when individuals are confronted with other identiable individuals. But the golden rule nds its limitations in the economic context. The social subsystem called the economy is regulated by the code money. In the economy, signals given by prices govern actions like buying or selling. In this frame of logic, ethics cannot be effective. Fundamental problems in communication occur and lead to the practical fact that corporations that act in a moral way within the economic system are punished by the market. Finally, acting as a moral individual along the premises of the golden rule would probably lead to the elimination of all ethically acting corporations in the market. Individual ethics, for example as articulated in the golden rule encounter limitations when the individual is not facing another identiable partner, but a complex, interdependent and global system. Problems in the sector of environmental politics illustrate this aspect very well.14 For this reason, social ethics approaches are necessary, and in this respect, a macrotheoretical approach is required in addition to the micro-theoretical one that is predominant in business ethics. In this perspective, this second criterion highlights the necessity for a more complex and macro-theoretical founding of economic and business ethics.All those things, then, which you would have men do to you, even so do you to them (Matthew 7:12).14 13

For more details, see Hollstein (2001).

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3.

Possibilities for further development of the socio-economic approach

By looking at the two further criteria for moral acts mentioned below, I see possibilities for developing Etzionis work in a perspective of economic ethics and for resolving in a fruitful way some of the existing ambiguities in his approach. 3.1 Symmetry and reciprocity

I want to interpret Etzionis claim for symmetry as a dimension of reciprocity in a theory of action.15 Etzioni offers advice in several places to expand his paradigm to a dimension of reciprocity but does not actually take this step. Referring to Henaff (2002), not only can we differentiate between actions oriented towards utility or actions oriented towards values, but we have to, in addition to these two dimensions, take into account actions oriented towards reciprocity, and this dimension cannot be reduced to one of the other ones. Out of Henaff s description of the phenomenon of the gift, I want to retain the following systematic elements for a theory of reciprocity 16: (1) The phenomenon of the gift is neither an economic act, as an exchange of goods or a preliminary stage to it, nor is it a moral act as the self-forgetful caritas present, but can only be understood within a theory of reciprocity substantiating relationships of recognition. (2) Phenomena which are generated by relationships of recognition in a reciprocal way are very diverse concerning their historical specicity and depend on the cultural context in which they occur. In modern societies, reciprocal relationships of recognition are mostly generated in the private sphere and in local small unitsan aspect that is emphasized by communitarians. (3) These relationships of recognition also lead to ethical requests, namely the request for reciprocity including freedom. The gift illustrates challenge and appeal for the encounter of autonomous beings that show by the exchange of gifts that they are willing to recognize each other and to commit to one another without abandoning their individual freedom. I think that this aspect can be related to the claim for symmetry that Etzioni postulates.15 Etzioni offers some links in this direction, for example, concerning the role of the gift for social relations (contextual gift-giving/gifts often serve to reafrm relationships; Etzioni, 1988, p. 75) or regarding illegitimate material for exchange (Etzioni, 1988, p. 81). 16

For more details, see Hollstein (2006).


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(4) Although money is a universal substitute and an inevitable means allowing for processes of individualization and autonomization of free subjects through fair exchanges, the exchanging of gifts provides relations of recognition that are necessary for the genesis of social bonds. To enlarge the socio-economic paradigm with a theory of reciprocity would also lead to the possible objection of a too pronounced dichotomy of utility versus morality and emotions17 and clarify how the all-important community is held together by social bonds. 3.2 Personality and intrinsic motivation

The personality of the subjects expresses itself in N/A factors18 [including strong valuations (Taylor, 1994) that determine characters and intrinsic motivations]. Etzioni always analyses in these factors values and emotions as crucial elements for individual action. But the relation between values and emotions is not very clear. Here, the concepts of Joas could be helpful. Joas isas a neo-pragmatistclose to communitarian thinking and has analysed the role of emotions for the genesis of values in reference to the work of George Herbert Mead (Joas, 1999). Emotions interfere with not only rational actiona fact that Etzioni shows with a large amount of empirical evidencebut also moral action. At this point, the danger of a dualistic picture is imminent, showing the individualistic impulses and desires on the one hand and the moral values on the otherin contradiction to Etzionis programmatic aim to overcome such dualisms. Finally, the last criterion of moral acts, the intrinsic motivation of the person, also refers to the dimension of meaning in human life. Barkhaus and I have developed some ideas concerning this issue, concentrating on the role of meaningful activities which are personally fullling and socially recognized (but not necessarily paid; Barkhaus and Hollstein, 2003, pp. 287 306). From these, we have found arguments for an activating and sustainable welfare state. Other applications in economic ethics as well as in economic politics could be developed by following this path. As a result of these reections, we maintain that Etzionis book offers, even 20 years after its rst edition, a wide range of impulses for the economic ethics debate which are far from being exhausted. They could serve to overcome some xed debates in economic ethics and provide a helpful macro-economic framework for business ethics. At the same time, it seems worthwhile

17 18

See also Section 3.2. Normative affective factors (Etzioni, 1988, pp. 93ff).

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to extend (Etzionis) socio-economic paradigm with an economic ethics perspectiveespecially with regard to reciprocity, recognition, emotions and motivationand in this way to enhance this approach in its theoretical and practical respects.

References Barkhaus, A. and Hollstein, B. (2003) Ein Sozialstaat, der Sinn macht? Begrundung der Leitidee eines nachhaltigen aktivierenden Sozialstaates, Zeitschrift fur Wirtschafts- und Unternehmensethik, 4, 287 306. Becker, G. S. (1993) Der Okonomische Ansatz zur Erklarung menschlichen Verhaltens, 2nd edn, Tubingen, Mohr. Biesecker, A. and Kesting, S. (2003) Mikrookonomik. Eine Einfuhrung aus sozial okologischer Perspektive, Munich, Oldenbourg. Buber, M. (1937) I and Thou, New York, NY, Charles Scribners Sons. Coughlin, R. M. (1996) Frameworks and Findings: Assessing Etzionis Contributions to Sociology. In Sciulli, D. (ed) Macro Socio-Economics, London, Sharpe, pp. 13 34. Etzioni, A. (1968) The Active Society. A Theory of Societal and Political Processes, London, Collier-Macmillan Limited. Etzioni, A. (1988) The Moral Dimension. Towards a New Economics, New York, NY, The Free Press. Etzioni, A. (1999) Essays in Socio-Economics, Berlin, Springer. FUGO (2004) Perspektiven einer kulturwissenschaftlichen Theorie der unternehmung, Marburg, Metropolis. Galtung, J. (1985) Struktur, Kultur und intellektueller Stil. Ein vergleichender Essay uber sachsonische, teutonische, gallische und nipponische Wissenschaft. In Wierlacher, A. (ed) Das Fremde und das Eigene, Munchen, Iudicium, pp. 151197. Grabner-Krauter, S. (2005) US-Amerikanische Business Ethics-Forschung the Story So Far. In Beschorner, T., Hollstein, B., Konig, M., Lee-Peuker, M.-Y. and Schumann, O.J. (eds) Wirtschafts- und Unternehmensethik: RuckblickAusblickPerspektiven, Munich, Rainer Hampp, pp. 141 180. Henaff, M. (2002) Le Prix de la VeriteLe Don, largent, la Philosophie, Paris, Editions du Seuil. Hollstein, B. (1995) Wirtschaftsethik und Umwelt, Wiesbaden, Gabler Verlag. Hollstein, B. (2001) Wie kommt Moral in die Okonomie? Wirtschaftsethik Aus Weiblicher Perspektive, Evangelische Aspekte, 11, 36 40.


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Hollstein, B. (2006) Der Preis der WahrheitRezension zu Marcel Henaff (2002): Le Prix de la Vevite: Le Don, largent, la Philosophie, Zeitschrift fur Wirtschafts- und Unternehmensethik, 7, 384 387. Hollstein, B. (2007) Pragmatistische Inspirationen fur eine kulturbewusste Okonomik. In konomikEthik, LeePeuker, M.-Y., Scholtes, F. and Schumann, O. J. (eds) KulturO Bern, Rainer Hampp. Homann, K. (1992) Einleitung. Ethik und Okonomie. In Bockle, F. and Homann, K. (eds) Aktuelle Probleme der Wirtschaftsethik, Berlin, Duncker & Humblot, pp. 7 12. Joas, H. (1999) Die Entstehung der Werte, Frankfurt am Main, Suhrkamp. Joas, H. and Knobl, W. (2004) Sozialtheorie. Zwanzig einfuhrende Vorlesungen, Frankfurt am Main, Suhrkamp. Nussbaum, M. C. (2003) Langfristige Fursorge und soziale Gerechtigkeit. Eine Herausfor derung der konventionellen Ideen des Gesellschaftsvertrages, Deutsche Zeitschrift fur Philosophie, 51, pp. 179 198. Polanyi, K. (1978 [1944]) The Great Transformation. Politische und Okonomische Ursprunge Von Gesellschaften und Wirtschaftssystemen, Frankfurt am Main, Suhrkamp. Priddat, B. (2000) Moral Hybrids, Skizze zu einer Theorie Moralischen Konsums, Zeitschrift fur Wirtschafts- und Unternehmensethik, 1, 128151. Reese-Schafer, W. (2001) Kommunitarismus, Frankfurt am Main, Campus. Sandel, M. (1982) Liberalism and the Limits of Justice, Cambridge, Cambridge University Press. Sciulli, D. (ed) (1996) Macro Socio-Economics: From Theory to Activism, London, Sharpe. Sen, A. (1977) Rational Fools: A Critique of the Behavioral Foundations of Economic Theory, Philosophy and Public Affairs, 6, 317 344. Sen, A. (1987) On Ethics & Economics, Berkeley, CA, Oxford and Cambridge, MA, Blackwell Publishers Inc. Swedberg, R. and Granovetter, M. S. (1992) Introduction. In Granovetter, M. S. and Swedberg, R. (eds) The Sociology of Economic Life, Boulder, CO, Westview Press, pp. 1 26. Taylor, C. (1994) Quellen des Selbst: Die Entstehung der Neuzeitlichen Identitat, Frankfurt am Main, Suhrkamp. Ulrich, P. (2004) Der ethisch-politisch eingebettete Markt. Programmatische Uberlegun gen zu einer praktischen Sozialokonomie. In Jochimsen, M. A., Kesting, S. and Knobloch, U. (eds) Lebensweltokonomie, Bielefeld, Kleine Verlag, pp. 55 81. Weber, M. (1973 [1922]) Die Objektivitat Sozialwissenschaftlicher Und Sozialpoli tischer Erkenntnis. In Weber, M. (ed) Gesammelte Aufsatze zur Wissenschaftslehre, revised 4th edn, Tubingen, Mohr, pp. 146 214.

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The Moral Dimension and The Action Frame of Reference: lessons for sociologistsEdward W. LehmanDepartment of Sociology, New York University, New York, NY, USA Correspondence: [email protected]

Comparison of The Moral Dimension with the action frame of reference displays how Parsons approach to social action and social order have inuenced Etzionis work. Nevertheless Etzioni signicantly advances the sociological understanding of both issues. His approach to action provides a more sombre view of the rational capacity of humans but also adds a deontological aspect to actions normative component, thus opening the way for observers and participants to transcend moral relativism. Etzionis approach to order claries how a social capsule regulates self-interested competition and conict, introduces the key role of macro-actors and highlights the inevitable and complex interplay of normative and coercive factors in fostering order.

1.

Introduction

Why do we need The Moral Dimension, a skeptical sociologist colleague remarked right after its publication. After all, he continued, isnt Etzioni just repeating in different terminology what Parsons said back in 1937 in The Structure of Social Action?. Although I quickly led these words away as an expression of theoretical navete, they puzzled me over the next two decades. Why? It is incontestable that The Moral Dimension offers economists a starkly alternative vision of their disciplines key issues. But, I repeatedly asked myself, does it contain any new, core lessons for sociologists? (I am thinking here of sociologists generally and not just those who call themselves economic sociologists, political economists or socio-economists.) This paper is my opportunity to put this puzzle to rest. To answer the question, one must compare Amitai Etzionis 1988 book with Talcott Parsonss The Structure of Social Action ([1937] 1968)and, to a lesser degree, contrast the trajectories of each scholar. I rst examine their similarities since I know (from conversations over the years) that Etzioni has great respect for Parsonss contributions and hence no one should be surprised that The Moral Dimension displays Parsonsian inuences. Acknowledging the similarities, however, is essential for isolating the differences. It is only by nding these


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divergences that The Moral Dimensions pivotal contributions to the resolution of fundamental sociological issues become manifest. 2. Similarities

The two books central similarity is a common agenda: to preserve what is best in the Utilitarian tradition. This claim may appear counter-intuitive to readers who view Parsons and Etzioni as notorious critics of the excesses of instrumental rationality and individualism. Yet the aim of The Structure, as Jeffrey C. Alexander (1983, pp. 8 45, 1987, pp. 22 35) reminds us, was to buttress Utilitarianisms defense of reason and freedom in the face of totalitarian assaults on democracy in the 1930s and not just to jettison the traditions unsatisfactory rationalistic and individualistic presuppositions. Etzionis agenda was more concrete than Parsonss metatheoretical exercise but was basically the same. He is advancing an empirically sound economic theory. The Moral Dimension attempts to save (not eliminate) what is valuable in neoclassical economics (Utilitarianisms most viable social-scientic progeny) by synthesizing it with a deontological paradigm to forge a more theoretically multidimensional and empirically open socio-economics. Both authors augment Utilitarianisms contributions to the Western cultural legacyalthough Parsonss focus was on the metatheoretical grounding for all the social sciences while The Moral Dimension concentrates on building a more robust social science of economic life. Etzionis socio-economics implicitly embraces The Structures most essential metatheoretical contribution: the action frame of reference (see Parsons [1937] 1968, especially pp. 727 775). This formula posits that social action is the fundamental building block of all social-science analysis. It consists of an individual capable of making choices (the actor) embedded in a material social situation (made up of enabling means and constraining conditions) pursuing goals (or utilities in economic terminology, i.e., desired future states of affairs) with all of the former marinated by a set of norms (subjective denitions of appropriate conduct). Parsons wanted to synthesize two competing views: the largely Anglo-American rationalistic tradition of Utilitarianism which valorizes a protoscientic actor struggling to carve means out of conditions but which left goals unaccounted for; and the mainly Continental idealistic approach (whose exemplars remain Max Weber and Emile Durkheim) which focuses on symbolic actors pursuing normatively inspired goals, an approach that coped unsatisfactorily with the world of means and conditions. The action frame of reference asserts that social action is simultaneously rational and material, on the one hand, and non-rational and ideal (normative) on the other. And it tells us that since norms permeate all social situations they shape not just actors selection of goals but also how these will be pursued,

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i.e., which conditions actors will attempt to convert into means. Moreover, Parsons classic suggested that this formula grapples with the two fundamental questions of social-science analysis: not only social action but also the problem of social order. Alexander (1987, pp. 1 21) calls the two presuppositional in the sense that they refer to the general assumptions that analysts inevitably must make (either consciously or not) as they encounter social reality (1987, p. 10). He credits Parsons with helping to clarify why each is basic to social-science inquiry (although contending that Parsons often conated the two). The problem of social action asks about the interplay between rationality and non-rational factors in framing the building block for social science analysis. The problem of social order asks how best to conceive of the multiple acts by multiple actors to leave open a potential for coordination, cooperation and predictability. That the action frame of reference was Parsonss solution to the problem of action seems obvious since it posits that both rational and normative components are constitutive elements of this basic unit. But why is social order equally decisive? Parsonss answer focused on the failure of Utilitarianisms rational individualistic bent to include a collectivistic feature. In the spirit of Durkheim, Parsons contended that seemingly self-interested negotiations among apparently free-standing individuals are actually encased in a preexisting social context whose core feature is moral. Order is made possible, he believed, only to the degree that a collectivity (e.g., society) is also a moral community. This normative character of collective social order, he concluded, was synonymous with the norms within the action frame of reference. Etzionis socio-economics builds on the problems of action and order as the decisive assumptions of social science. In broad outline he accepts Parsonss presuppositional solutions to each. Starting in his earliest works, and most clearly in The Moral Dimension, he assumes that (1) rational social action is always intertwined with non-rational elements (composed of normative and affective factors) and (2) social order cannot arise from only individual self-interest but that a pre-existing social capsule (of which the normative is one key element) is essential. The two presuppositional questions shape The Moral Dimensions organization. Parts I (Beyond Pleasure: the Case for Deontological Social Actions) and II (Beyond Rationalism: the Role of Values and Emotions) detail Etzionis theory of action, with a focus on economic actions. Part III (Beyond Radical Individualism: the Role of Community and Power) elaborates his perspective on the collective aspects of social order. In these specications of action and order Etzionis departures from Parsons are spotlighted, and one is able to recognize his unique contributions towards an understanding of the presuppositional groundings of contemporary sociology.


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3.

Differences

Since the two questions are decisive for both authors, they provide a handy way for organizing my discussion of how Etzioni has separated himself from Parsons. Let me emphasize at the outset, however, that one advancement Etzioni has made is avoiding the trap of conating the two presuppositional subjects. Alexander (1982, p. 119) notes (as I mentioned above) that Parsons did that insofar as he often argues that to describe collective order is, at the same time, to describe normative action. Etzionis ability to keep the two fundamentals distinct was discernible 47 years ago in A Comparative Analysis of Complex Organizations (Etzioni [1961] 1975). There he unequivocally separates organizational participants actions from the compliance structuresnormative, utilitarian, and coercivein which the actions occur. Moreover, in his isolation of these three pivotal forms of compliance Etzioni signals that he is moving beyond Parsons approach to social order.

3.1

Etzionis theory of social action

Although the two theorists share the goal of salvaging Utilitarianisms key contributions, they differ in how they accomplish this. Parsons, from The Structure through The System of Modern Societies (1971) never doubted the centrality of rational action in the trajectory of history. The principal addition of the action frame of reference was insisting, as had Weber, that rationality is always marinated by normative forces and that some among the latter (e. g., the Protestant Ethic) have been more conducive for the expansion of reason than others. Neither Parsons nor Weber was unaware of the costs of this process of rationalization but they did not doubt its inexorability. Etzioni, on the other hand, has become increasingly skeptical about the predetermined primacy of rationality in social action and society generally, even in the economic realm. In The Active Society (Etzioni, 1968) he had focused on knowledge and values as the two key cultural dimensions of societal agency but extensively analysed only the positive endowments of the former (see Lehman, 2006). Twenty years later, in The Moral Dimension, the situation had changed. Rational (L/E or logical empirical) factors in action now are seen as typically swamped by N/A (normative affective) ingredients. Economic action (and social action generally) is at best normally sub-rational and is more likely to be non-rational (1988, pp. 89 180) because processed knowledge plays a limited role in choices and many decisions. Of course, Etzioni has not collapsed into a postmodernist funk, but the shift in mood between the two books is discernible. (Perhaps it partly reects a reaction to the dashed expectations of the 1960s.) He still emphasizes the vital importance

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of societal knowledge and explores toolsparticularly macrosociological ones for sharpening it. But he argues that we must move beyond rationalism, to take into account the positive roles of values and emotions in decision-making (1988, p. 89). Although emotional factors are hardly left unanalysed in The Moral Dimension, values are of greater concern (and hence provide the books title). The existence of values demonstrates that humans are more than pleasureseeking animals; we create and apply moral meanings as well. Values thus shape the two irreducible goals or utilities of human economic and social life: the pursuit of self-interested pleasure and trying to abide by ones moral commitments. And values shape the means by which humans pursue pleasure and afrm meanings. If some values play a more positive role in making actions rational (whether for pleasure or the afrmation of meaning) how can social scientists recognize them? Since values are subjective, isnt moral relativism inevitable? Parsons settled, as had Weber, on the solution that goals were non-rational since they were shaped by moral forces not susceptible to scientic assessment. He saw an unbreachable barrier between the world of facts (however socially constructed they are) and observers value judgments as well as between empirical and normative theories. Etzioni has never been comfortable with this separation and as early as in The Active Society he offered analysts a logical empirical basis for judging the authenticity of values and goals. There he gave special attention to a theory of basic human needs as a vehicle for bridging the facts value judgement chasm (1968, pp. 618 666). By 1988 Etzioni recognizes that any reconciliation of observed facts about human conduct and an observers value judgements must spring from a theory of social action that moves beyond Parsons. This is why the analysis of action (and not just economic action) constitutes two-thirds of The Moral Dimension. Yet a study of how values (and emotions) contour the limits of rational behaviour (Part II, pp. 88 180) will not sufce (as they did for Parsons). A satisfactory theory of action must also include a deontological component (Part I, pp. 21 87) which offers both actors and social scientists criteria to judge the moral authenticity of competing values. Etzionis presentations of his moderate deontological position over the past 20 years require a separate essay. The following succinctly captures his views over that time: Its [deontologys] core claim is that certain moral causes speak to us in compelling terms. It does not ask where these values come from but takes as a starting point the assumption that these values address us without lters. This does not mean they are exempted from examination but that they rst present themselves and only later do we


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study them. We do not reach them through some kind of utilitarian or consequentialist analysis. (Etzioni, 2000, p. 230)1 The addition of a deontological component to Parsonss synthesis of rational and idealistic approaches provides the key for reconciling empirical and normative theories. It is not sufcient to argue that human actions are saturated by subjective meanings. Etzioni offers the possibility that observers and participants will be able to judge the authenticity of values, the courses of action they inspire and how both contribute to rationality. His synthesis of a deontological paradigm with Parsonss (and not just with neoclassical economics, as The Moral Dimension asserts) permits the assessment of values in a manner congenial with logical empirical analysis and helps avoid culture wars. Although N/A factors blur our L/E capacities, Etzioni argues, we can identify compelling values capable of guiding our actions towards a more decent society even when the relative rationality of our acts is held constant. 3.2 Etzionis theory of social order

Beginning in the late 1950s Parsonsian theory was under assault, especially by new forms of rational-choice (or exchange) and conict theories. Both these schools belittled morality as a sound basis for order. The former, inuenced by neoclassical economics, pointed to self-interest as a more reliable footing. The latter, inuenced by neo-Marxism, stressed the coercive power of larger structures controlled by economic and political elites. Since Parsons had conated the questions of action and order, however, he had no convincing reply to these attacks. For him, acceptance of social order based on anything other than morality unraveled his synthesis of rational and idealistic theories of action. Etzionis A Comparative Analysis of Complex Organizations ([1961] 1975) stepped into this void by acknowledging that all actions have a normative dimension (thus preserving the action frame of reference) and translating the question of order into one of compliance. In searching for a satisfactory typology of organizations he zeroed in on why norms were complied with in diverse administrative bodies and came up with his well-known classication of normative, utilitarian and coercive compliance structures. Yes, Etzioni said, all action has a moral dimension but social order in some settings depends on people complying with norms because it pays to (utilitarian) or because they are afraid not to1

Etzioni has a second standard for judging the moral worth of values, functionalist analysis which makes a brief appearance in The Moral Dimension but only receives equal time in his communitarian writings (see e.g. 1996, pp. 6, 4546, 89 and 243). I do not include functionalism in the current discussion because it is not integral to the action frame of reference.

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(coercive); they do not always comply because they love either the rules or the rule givers (normative). Nonetheless, Etzioni has continually advocated the superior efcacy of normative compliance while not making it orders exclusive cornerstone. He suggests that all social units (not just organizations) which strive to treat members as the ends of action and not merely as cogs in a social machine should adopt normative compliance. Normative compliances advantages over utilitarian and coercive forms provide a bridge to Etzionis socio-economic and communitarian theories. Part III of The Moral Dimension elaborates what the collective features of social order look like. The similarities and departures from Parsons are there for all to see. Like Parsons, Etzioni says: Individuals do play a role, but within the context of their collectivities (1988, p. 181). Moreover, he focuses on the social capsule for ordering economic and all social conduct. Going beyond Parsons, he stresses that when a collectivity operates as a macro-actor (a concept alien to Parsonsian theory) it helps make choices and decisions more rational than those made by individuals alone by increasing its L/E content and reducing the knowledge costs. . . (1988, p. 182). Macro-actors play a critical role in coordinating selfinterested market competition and in enhancing overall social order. They shape the social capsule in which self-interested (i.e., market-like) actions are made more orderly by either normative or coercive meansor by a combination of the two. Etzionis rejection of Parsonss conation of order and normative compliance is his most signicant addition to the understanding of social order. The complex interplay of moral bonds and coercion on the community, political, societal and international levels for encapsulating self-interested competition, conict and warfare has become his major focus from The Moral Dimension onward. In this book, the management of economic competitions dysfunctions by moral communities and political authorities is the cardinal social-order topic. In his communitarian writings (see, for example, 1996) he suggests that a societys judicious balance of self-interest and collective responsibility is best achieved by giving priority to voluntarily building new shared values (or revitalizing old ones) and also by assigning a secondary place to the hierarchical imposition of virtue. Etzioni (e.g., 2004, 2007) has recently applied this principle to the international realm. His theme remains the same, however: the formation of supranational communities and institutions is vital for containing global terrorism and ruinous inter-societal competition. In sum, the liabilities of unadulterated selfinterest on all social levels are best managed within a social capsule which, despite normative compliances unique advantages, must always be ready to be coercive if the moral order falters.


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4.

Summary

One cannot fully appreciate Amitai Etzionis contributions to the fundamental issues in contemporary sociology without coming to grips with how he has been inuenced by Parsonian theory. This is most evident in The Moral Dimension, which broadly embraces Parsons multidimensional approach to both social action and social order. Etzioni, however, makes signicant strides beyond Parsons in both areas. Etzioni enriches action theory by adding a deontological component to its normative elements. Rational action, for him, is not just saturatedand often overwhelmedby subjective denitions. Actors and observers are also aided by an ability to weigh the moral authenticity of these denitions. This potential helps to dissolve (or at least thin out) the barrier between empirical and normative theories. And it assists us in ascertaining which values support the expansion of rational action and the building of a decent society. Etzionis separation of the problems of action and order allows him to avoid Parsonss conation of social order with normative compliance. His emphasis on social capsules in which macro-actors play major roles claries how normative and coercive compliance must interweave to contain the costs of self-interested competition and conict. The wide applicability of this approach to order is demonstrated not just in Etzionis socio-economics but in his writings on communitarianism and international relations.

Acknowledgments I am grateful for Mildred Schwartzs many helpful comments. Ethna Lehmans intellectual, moral and emotional support was indispensable.

ReferencesAlexander, J. C. (1982) Theoretical Logic in Sociology. Volume I: Positivism, Presuppositions, and Current Controversies, Berkeley, CA, University of California Press. Alexander, J. C. (1983) Theoretical Logic in Sociology. Volume IV: The Modern Reconstruction of Classical Sociological Theory: Talcott Parsons, Berkeley, CA, University of California Press. Alexander, J. C. (1987) Twenty Lectures: Sociological Theory Since World War II, New York, NY, Columbia University Press. Etzioni, A. ([1961] 1975) A Comparative Analysis of Complex Organization, New York, NY, Free Press. Etzioni, A. (1968) The Active Society: A Theory of Societal and Political Processes, New York, NY, Free Press.

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Etzioni, A. (1988) The Moral Dimension: Toward A New Economics, New York, NY, Free Press. Etzioni, A. (1996) The New Golden Rule: Community and Morality in a Democratic Society, New York, NY, Basic Books. Etzioni, A. (2000) Epilogue. In Lehman, E. W. (ed) Autonomy and Order: A Communitarian Anthology, Latham, MD, Rowman & Littleeld. Etzioni, A. (2004) From Empire to Community: A New Approach to International Relations, New York, NY, Palgrave Macmillan. Etzioni, A. (2007) Security First: For A Muscular, Moral Foreign Policy, New Haven, CT, Yale University Press. Lehman, E. W. (2006) The Cultural Dimensions of The Active Society. In McWilliams, W. C. (ed) The Active Society Revisited, Latham, MD, Rowman & Littleeld. Parsons, T. ([1937] 1968) The Structure of Social Action, New York, NY, Free Press. Parsons, T. (1971) The System of Modern Societies, Englewood Cliffs, NJ, Prentice-Hall.

The Moral Dimension twenty years onDavid MarsdenDepartment of Management and Centre for Economic Performance, London School of Economics, London, UK Correspondence: [email protected]

To many economists, it may seem strange to hear that Economics lacks a moral dimension. At the LSE, I am surrounded by economist colleagues who work on poverty, minimum wages, social and educational deprivation and even happiness. They do so because they believe these are burning social issues. Other colleagues work on nancial markets, trying to understand how they work and why they are often prone to bouts of ungrounded optimism which prove so costly to us when they decimate our savings. Yet others work on the transition between economic systems and the construction of market economies. One thing most share in common is a basic training in the analytical methods of neoclassical economics. However, it is hard to detect a uniform political or moral agenda, or a single vision of the good society that derives from their training. Indeed, two LSE colleagues, one current and one former, Richard Layard and Alan Walters, collaborated on an introductory text to microeconomics, very much in the neoclassical tradition; Alan Walters was Chief Economic Adviser to Margaret Thatcher, and Richard Layard has been a staunch social democrat of the centre-left. One can see from recent issues, for example, of the Economic Journal and the Journal of


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Economic Perspectives that many within this branch of the social sciences share similar concerns to those of my LSE colleagues. Nevertheless, Etzionis book continues to raise a fundamental challenge to our basic approach within what is now mainstream economics, and this remains one of the strongest justications for his championing of Socio-Economics. It is best captured by his argument that moral motivation and behaviour differ from their pleasure-seeking counterparts. This is an empirical observation of human behaviour, and one that our theories should therefore recognize. He raises two other major challenges: that of bounded rationality as a constraint on rational calculation and a source of our dependence on rules of action; and that many of the most important decisions that affect our lives are taken by organizations rather than individuals. Thus, individual calculative choice has an important but limited place in Etzionis scheme. Over the past 20 years, bounded rationality and organizations have been the subject of a great deal of work by economists, sometimes working with other social scientists. Bounded rationality and how to solve problems of cooperation among self-interested agents are the foundations of the new institutional economics; and they, with elements of game theory, and from experimental economics, have helped to build the new analysis of organizational governance and strategy. Their primary building blocks remain individual self-interested actors so that his rst argument is the most controversial, and arguably the most challenging for cross-border research in the social sciences. The proposal for a dual utility function predates the Moral Dimension by some years and leads Etzioni away from the primary focus on individual selfinterested actors (Etzioni, 1986). It attracted a good deal of controversy when it was rst proposed (de Jonge, 2005), and it has never really been accepted into the mainstream, but despite criticism (e.g. Broome 1992; Khalil, 1997) it remains a challenging idea. Its core is very simple. The standard utility function purports to measure the contribution to our personal satisfaction of a range of different goods and services. In our choices, we seek the bundle of these which will give us the greatest level of satisfaction or utility. As Etzioni argues, moral choices t uncomfortably into this framework: they have an imperative quality unlike those between different goods in the market place; they relate to specic realms of social life, such as the sacred; violation may bring retribution and feelings of guilt; they are symmetrical in the sense that they apply to all similar cases and they afrm or express a commitment. Thus, choices on moral grounds take on very different characteristics from those motivated by their effect on ones personal well-being. Etzioni recognizes the extensive debate concerning interdependent utility and whether altruistic and other-directed acts can be logically reduced to a concern with individual satisfaction. In a formal sense, they probably can. However, in

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doing so, utility becomes empty of contentif we are all self-interested knaves, does the term retain any useful function? We seem to ignore the distinctions we make in ordinary language which reect and evolve with the everyday social practices of millions of our fellow beings. We also sacrice empirical reference: how do we explain the widely observed feelings of guilt and the equally evident sanctions that are applied when we fail to respect moral obligations? How too do we explain the existence and nature of moral argument in our societies? Surely, we are debating about the types of choices we believe that we and others should make, and not simply about what promotes our own personal satisfaction. As the Moral Dimension shows, it is an empirical fact that, in our societies, we have areas of decisionmaking in which we may consider predominantly our own personal goals, and there are others where we are constrained by obligations which are imposed on us, or into which we enter freely. The demarcation lines between these are drawn differently across societies and periods of history, but this is no reason to deny their reality. One trap into which analysis of the relationship between moral and other social norms and utility often falls is treating them as opposing. It is natural to consider cases in which moral and social norms override individual utility maximizing because they appear to highlight the logical differences between them. A good illustration is given by Beckers (1971) pioneering application of choice theory to racial and other kinds of discrimination in economic life. His strategy was to treat it from the outset as a form of behaviour that incurred a cost to those discriminating. Firms and workers manifest their taste for discrimination by its opportunity cost: how much income they will forego in order to work with people of their own race. Firms which choose to hire only White workers narrow their pool of recruitment and place an upward pressure on the wages of this group. As a result, non-discriminating rms can earn higher prots. Thus, economic decisions based on moral, or immoral, rather than efciency criteria incur a loss of effectiveness. If discrimination is considered a strong case of a social norm impinging on market choices, then a good dose of competition will sufce to hold it, and lesser cases, in their place. However, is it right to assume, as in this example, that moral considerations always or even mostly conict with those of efciency and individual satisfaction? A common way in which moral rules and established social norms contribute to economic life is to express a commitment and so make cooperative production of goods and services easier to achieve. Sometimes, these commitments, such as honesty and fair dealing, are societal in scope. Sometimes, they are fostered by the economic actors themselves. Akerlof (1982) argued that by paying above the market wage, employers could engage in a partial gift exchange with their employees: committing yourself to certain favourable employment practices can encourage your employees to show greater loyalty and commitment, and


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thus reduce the need to monitor their work closely. Fehr et al. (1998) arrive at a similar conclusion using the methods of experimental economics. The psychological contract literature within management has similarly placed a strong emphasis on the value of implicit mutual commitments by employers and their employees to support more exible and more productive forms of work organization (Rousseau, 1995). In trying to understand why employers did not cut the wages of their employees at the onset of the last major recession in the USA, Bewley (1999) found that they would often stress such reasons as avoiding loss of morale in the workplace. In addition to whatever contractual and legal obligations might be in place, the workplace comprised a set of unwritten mutual commitments and social bonds, and these were essential to good economic performance. Recessions could be used to weed out hiring mistakes, but their employees would consider it unfair to use them as a reason to cut their pay, and this would undermine workplace cooperation. On re-reading the Moral Dimension after 20 years, what is striking is the sheer variety of rules of action, ranging from practical rules of thumb to strong moral imperatives, but there is no hard and fast line of demarcation between the different types. Human beings more commonly follow habits and decision rules than calculate the utility gains to be achieved by their choices. At the right time and in the appropriate context, many rules may be practical and enhance efciency, but the population of rules evolves slowly and there is much inertia. This should warn against any kind of nave functionalism about their origins and purposes. The consequences of not following rules also vary, ranging from a simple opportunity cost to strong moral sanctions. The possibility that the same rule may take on a different force in different societies and at different times also militates against any hard and fast demarcation between moral and other types of decision rules based on their content. For example, the moral taboo attached to both abortion and capital punishment has varied greatly between societies and over time. One clue as to the special nature of moral rules to emerge from the book is that, apart from the range and variety of behavioural and moral rules, rules of thumb, routines and so on, certain rules span many different contexts. Herein lies an argument as to why we treat some rules as practical and others as moral. Simons theory of bounded rationality underpins much of our understanding of why we depend on decision rules rather than trying to work out every choice on its individual merits. Rules of thumb tend to be specic to certain contexts and are simply a means to an end, such as Favereaus (1989) example of the methode des deux biscottesto spread butter on a piece of French toast without it crumbling, one should always place the one being spread on top of the next one from the packet. Other rules are used across a wide variety of contexts and may serve as means in one and as ends in another. For example, honesty may reduce transaction costs in economic

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transactions and be useful on calculative grounds, whereas in other relationships, it may be part of the architecture, such as in marital, educational and religious relationships where too much economic calculation would undermine the spirit. Despite the economic rationale for writing pre-marital contracts about how to divide property in the event of divorce, to do so, for most of us, would undermine the spirit of a mutual commitment that should run for richer for poorer, in sickness and in health. One reason why many public gures nd marital indelities so hard to manage is because it is difcult to convince electors that one can be dishonest in a personal relationship while maintaining a high standard of probity in ones public duties. Thus, many of our simple moral rules have a special status beyond their economic rationale because they must span several different walks of life and because we treat them as requiring the same standard of behaviour in each domain. The issue is more than one of consistency, as one can see from Aokis (2001) reections on the linkages between the different social and economic contexts in which we make our choices. Often, how people choose in one domain gives us information about how they might behave in anotheras in the example of marital indelity among public gures: we are in the presence of linked games. Reputation damage in one spills over into the other and may lead to exclusion from both. The exchange between Etzioni and de Jonge in the Socio-Economic Review suggests that there is not a lot of mileage for socio-economics in seeking to differentiate kinds of utility or hierarchies of preferences and meta-preferences. They are hard to observe, and stated preferences detached from their opportunity costs are usually more like wish lists than predictors of potential choices. Surely, Etzioni is right to stress the need for parsimony. On the other hand, we have a rich agenda in studying choices where there is both scope for self-interest and social constraints on the range of options. The minimum wages and measures to combat educational disadvantage that some of my economist colleagues work on fall into this second category. Indeed, in many of the examples Etzioni gives, the moral imperative trumps other possible choices, such as in the case when the mother rushes into the ames to save her child. A second line of attack on individual rational choice in The Moral Dimension, one that is less closely related to specically moral norms, is that many key decisions in our lives are not taken by individuals but by organizations. Our bounded rationality forces us down this path because individually we cannot cope with all the information required fo

20 Years of Enzioni

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