ABSTRACT
We have so far described economic life in China as relational and contextual and also dwelled on the differences between such a view of economic life as opposed to economic theories of economic action – theories which to no small degree have been instrumental in the reforms and changes of market economies in the West. But an extensive body of work within economic sociology and the scholarly field loosely dubbed socio-economics has with considerable success demonstrated that Western markets are not quite as detached from social life or as based on rationality as an apriority in the way economic theory posits. We believe it worthwhile to draw on some of these concepts for our analysis both because they shed light on economic life in its embedded and contextual sense and also because several of these theories have already been applied to China and the Chinese economy. The following three characteristics are major features of these theories, stand in marked contrast to mainstream economic theory and should also make it clear why we find socio-economics applicable to the study of Chinese capitalism.
Social embeddedness. While standard economic theory posits economic activity as largely disembedded from the social sphere and structured by formal institutions based on ex ante and codified ‘rules of the game’, socio-economics and economic sociology instead posit markets as embedded in social networks.
Informal, not (only) formal, institutions. Rather than focusing on the ex ante rules of formal institutions, these theoretical traditions have developed theoretical notions of institutions that place much more emphasis on informal institutions based on cultural and cognitive schemata. Such institutions are therefore not based on ex ante rules, but rather on cultural frames. That is to say that such theories still see institutions as based on ‘rules of the game’ but the definition of such rules has been dramatically changed. They are here conceptualised as among other things cognitive schemata (i.e. thought) and seen to emerge through, if not ‘forms of life’ (see previous chapter) then at least through (routinised) social action in a reflexive sense á la Garfinkel. We are dealing with reflexively reproduced meaning rather than ex ante formal codes.
Varieties of capitalism. The socio-economic approach has also rendered it visible that capitalism can take different forms and that market efficiency hinges on more than just enforcement of formal legal rules.
