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Markets. Essay

1059 words - 4 pages

Most insights of sociological markets have been framed as reactions to the neoclassical economic views of functioning markets. Many sociologists prefer the idea that all forms of economic interaction were centered in social relations, many sociologists have stated that embedded markets produce effects of economics. Network theory argues that an embedded market shifts firms' motivations away from the narrow pursuit of immediate economic gains toward the enrichment of relationships through trust and reciprocity. These Social networks consist with strong ties and weak ties which could be used for enrichment of relationships, information exchanges, and business cooperation. However, there are issues embedded in the networks in markets that I will compare and contrast.White's theory of markets, which self-reproduce social structure among different firms and other actors whose roles evolve from observations of each other's behavior. According to White, "the key fact is that markets are social structures in which producers reproduce their own set of actions; the set confirms as correct each firm's expectations of what it hoped." One aspect of White's theory states that markets are not primarily viewed as price determining mechanisms, or places of exchange, but as devices that link firms through social relations and direct communication. These dense networks of social ties exist for a reason. Firms watch each other within a market through social networks and economic interactions. According to White, "pressure from the buyer side creates a mirror in which producers see themselves, not consumers." Therefore, a successful firm best manages production by examining the prior performance of their collaborators and competitors rather than market data of buyers. And Markets are regulated and developed through interactions between firms and networks.In contrast, Neil Fligstein created a political-cultural approach to markets. Neil uses the metaphor of "Markets as politics" as the unifying construct which focuses on how social structures are produced to control competition and organize the firm. This potential of price competition is often used to undermine market structures. Therefore, actors try to differentiate their products to form their own specialties to protect themselves from price competition. For this reason, firms often try to cooperate with competitors to share markets, price control, licensing agreements and joint ownership of production facilities, in which the market would be stabilized. Because of this, social institutions are necessary preconditions to the existence of a stable market. States also play an important role in the construction of market institutions, which institutions refer to as shard rules. According to Neil Fligstein, "Capitalist firms could not operate without collective sets of rules governing interaction." Therefore, states in modern capitalist society require the creation and enforcement of rules that govern economic...

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