ABSTRACT
The collapse of world financial markets between 2008 and 2012 and the economic crisis that has accompanied this collapse has had many looking back over historical precedents for clues about the likely longevity and severity of the crisis. The guiding insight for this chapter is that, historically, sociologists have had much to offer for the understanding of financial and economic crises, pointing to their complex and highly social causes. The origins of sociology are bound up with this problem, setting up a yet-to-be fully resolved conflict between the ways sociologists and economists understand the behaviour of markets. We take our direction from the key observation that the “states of disorder” that sometimes rule markets and lead to breakdowns cannot neatly be dismissed as irrational deviations from otherwise rationally behaving markets. The view is now strongly advocated by major figures within the economics profession (see Akerlof and Shiller 2009; Krugman 2012; and Stiglitz 2010). But here, we are guided by strong hints and clues left by much earlier generations of sociologists who lived through major economic crises – Émile Durkheim and Robert Merton in particular. Our investigation starts with a closer look at how Durkheim’s concept of anomie sheds light on the origins and consequences of economic instability and the way anomic states impact on economic activity. What becomes clear in Durkheim’s account is the crucial role of ‘external constraints’ in regulating markets, and this leads us to reflect upon the contemporary meaning of external constraints in the context of the recent market meltdown.
