Market System Dynamics Flashcards
What is the market system approach?
The market system dynamic approach focuses on more than economic factors, it looks at the sociological and cultural factors which have an affect on markets.
MARKET: one of many different economic arrangements.
SYSTEM: interaction between actors, includes the sociology and cultural theories.
DYNAMICS: looking at the emergence and change
What is the difference in the actor in economic vs economic sociology/ Market System dynamics theories?
In economics the actor is INDIVIDUAL.
In Market System Dynamics the actor is SOCIAL. decisions aren’t made individually.
Everything individuals are doing is a reflection of the current time, culture.
What is the difference in economic action in the economic vs market system dynamic theories?
In economics, economic action is always RATIONAL.
In Market System Dynamics, economic action is sometimes rational, something other. It may be rational, but it also may be a value oriented action, aim not to maximize utility but to follow a custom.
Rational is economics is based on cost and utility. Always a cost-benefit analysis.
What is the difference in economic actors in economic vs market system dynamic theories?
In economics, the economic actors are only the producers and the consumers.
In Market System Dynamics, the economic actors are the producers, consumers, the state, NGOs, opinion leaders, the church, etc.
What are the main takeaways from the the question “What is a market”
Market exchange is one of the many types of economic exchanges.
Social relations and institutions shape economic exchanges; in turn economic exchanges reproduce particular social relations.
Markets’ moral evaluation as beneficial vs detrimental has change over time.
What is the substantive definition of the economy?
How societies provision themselves: how people organize the pursuit of things needed for sustaining human life. How they allocate goods and services.
Resdistribution
Reciprocity
Householding
Exchange (Market)
Polyani (1957) saw that the formal definition of the economy doesn’t describe many economies throughout history.
What is the formal definition of the economy?
Economy is a rational economic calculation (cost-benefit analysis).
This definition doesn’t describe many economies throughout history, and in 1957 Polyani expanded this to the substantive definition.
What are the 4 parts of the economy from the substantive definition of the market?
Substantive definition: how societies provision themselves
Also called modes of exchange, modes of provisioning or modes of allocation
- Redistribution - example is public nursery (state redistribution)
- Reciprocity - example is friends with kids
- Householding - example is parents themselves
- Exchange/ Market - example is babysitter (market)
(using example of childcare)
What is redistribution?
Produced goods and/or earned money accumulated at a central point. Think of anything state run, paid for with taxes. State decides who gets what.
Examples - socialism, Clans/Mafia, public healthcare and public schools
What is reciprocity?
Reciprocity is a mutual, symmetrical exchange.
(Balanced Reciprocity): Expectation of a return gift of equal value later.
(Generalized reciprocity): True gift, no return is expected.
Examples - gift giving, alliances with in states (think of larger gift giving across society norms, like for a wedding).
What is householding?
Householding is providing for one’s own (and household members) needs.
Examples - own chickens/eggs, cooking own food, garden, knit your own sweater, watching your own kids.
What is Exchange/Market?
The exchange or market is when goods are exchanged for money through a price mechanism.
Examples - going to a restaurant for dinner, hiring a babysitter.
What is important to keep in mind about the different types of economies/diverse economies?
All forms (market, householding, reciprocity and redistribution) are simultaneously present in an economy. There is always a dominant form.
Even in market economies, we rely on a lot of unpaid work, which would be a mix of redisribution, householding and reciprocity.
Economic exchanges reflect social relationships, for example: family relationships typically expect reciprocity. When there are hierarchical relations between central power and households, this is redistribution.
Explain a brief historical overview of the moral evaluation of markets.
Pre 18th Century: Socrates economy imaged as limited set of resources = war
18th century: markets brought peace and freedom. Idea from David Hume/Adam Smith - you can have growth w/o war, peaceful economic growth. Market exchange is a “civilising force.” Consumer choice is freedom.
19th century: Devastating markets. Industrial revolution and huge economic growth. Dark side of markets emerged; uneven allocation of “fruits” of the industrial revolution labor. Two classes of society: those who own the means of production and those who don’t (the workers).
Marxist writing appears - solution to move to redistribution
20th century: Cold war - competing system of markets. Capitalism (also political freedom) vs Communist. Followed by rise of neoliberalism: extension of competitive markets into all areas of life, including the economy, politics and society. Roll back of welfare state, privatization.
Contemporary: more criticism of markets inequality. human values and community and environmental criticism.
Growing systems of householding and reciprocity (service in exchange for data, like google/facebook, free apps - many of most valuable brands use this).
What is the difference between micro and meso level thinking?
Micro is the individual interpretation (family, relationship, individuals).
Meso level thinking explains behaviors based on the structures of organizations/communities - not personality traits, but your position within the organization. Meso level thinking is the foundation through which we discussed all theories in class.
Example - at a University (org), what people do depends on what is expected from them in this setting, from teacher to student positions.
What is organizational institutionalism?
Organizational Institutionalism is a meso level theory that focuses on why organizations behave the way they do?
An institution is:
1- reoccuring pattern of behavior, way of thinking, valued aims: like family, religions, marriage, art, markets
2- formal organizations (groups together with similar valued aims): education sector, healthcare sector, religious institutions, financial institutions.
For example - in the army, classical ballet, university: what are the patterns of behavior, the ways of thinking and things taken for granted?
It is different than past approaches because it stresses the role of culture and interpretation.
What does legitimacy have to do with organizational institutionalism?
Companies gain legitimacy by conforming to institutional norms. They are more likely to be accepted and less likely to be criticised.
Think of the example - why would a restaurant keep expensive wines on their wine list that they are never able to sell?
What is institutionalization?
Institutionalization is the process through which certain ways of acting and thinking become taken for granted, rule like, in a particular area of social life.
What is institutional isomorphism?
Institutional isomorphism refers to the similarity of organizations in a given industry; it is achieved by:
Coercive (rules/regulations)
Mimetic
Normative
What is decoupling? (Institutionalism)
Decoupling is when organizations conform to the norms on the surface, but aren’t actually doing it. It is a conflict with what is legitimate and what is technically efficient.
What are institutional logics? How does change happen?
Institutional logics capture the phenomenon of 2 or more norms/ways of thinking in a market. It is the differences within the same market. Important to note that these two co-exist within one institution.
Ex - cuisine in France: nouvelle vs traditional
Change happens:
- In stable markets, gradually, without explicit questioning of rules, rather re-interpretations
- In forming/radically transforming markets, rules don’t exist or they’ve come under attack. Change is radical, explicit and often called a “social movement”
Change can happen based on centrality from existing powerful actors, peripheral actors or brokers, who are companies and individuals who are at the intersection of different logics, can bring one into another field and innovate.
How does change happen in institutional logics?
Problem of OI (Organizational Institution) - if individuals are constrained by organizations, and organizations are constrained by the institutions in its field; how can markets change? How can new logics emerge?
Change happens:
- In stable markets, the rules are institutionalized, there is conflict - but the established main rules are not challenged. Change happens gradually, without explicit questioning of rules, rather re-interpretations.
- In forming/radically transforming markets, rules don’t exist or they’ve come under attack. Change is radical, explicit and often called a “social movement”
Who is likely to promote change? Institutional entrepreneurs, based on centrality (existing powerful actors, peripheral actors).
Brokers - companies at the intersection of different logics; can bring one logic into another field and innovation. Those with competing ideas, ready to change.
What are the differences between Institutional Logics and Field Theory?
Who are the key authors in Field Theory?
Pierre Bourdieu
Neil Fligstein: “Institutional logics theory underestimates power, conflict and the degree to which there exists hierarchy within the fields.”
What is Field Theory?
Field Theory is thought of as opposite of Institutional logics - it is more interest based and less idea based, but also as a complementary additional step that explains who and why we would promote these different logics.
Field Theory says all firms struggle for domination in the field, and that the position that they occupy defines the range of strategies that they can adopt in the struggle. The position they have depends on capitals (i.e. economic, cultural, social, symbolic, etc).
What is a field?
A field is same as institutional logics, but analyzed differently. It is an area of life where participants compete for the same stakes/ to achieve the same thing.
There is a shared understanding of power. Meso level social order in which actors (individual or collective) have a shared understanding of the purposes, who has power and why, and the rules governing legitimate action.
What is capital?
Any resource that makes you a high position actor in a specific field. Resources are different in every field.
Some examples:
Economic Capital (money, income, wealth, other financial resources and assets).
Cultural Capital (education, knowledge, know how, skills, expertise, possession of valued cultural objects)
Social Capital (network, any connection that can be mobilized)
Symbolic Capital (authority: what is valuable, being respected, capacity to define what is not in a given field)
Other: scientific, beauty, gender, religious, etc.
What are subversion strategies?
Subversion strategies are done by challengers in a field, who would like to change the field by changing its rules.
- Subversion strategy: Redefining capitals: changing a field so that its own qualities yield a higher position. (Beauty example)
- Subversion Strategy: Redefining Borders of a Field, so that challengers have created their own subfield and gain advantage. They reclaim the field according to their own strategies. (Industrial beer vs craft beer, boutique hotels). Incumbents protect the status quo, by maintaining its boarders and excluding new entrants. (This is not music, not champagne).
What is performativity theory?
Performativity Theory explores how ideas shape markets.
It originated with John Langshaw Austin with the Speech act theory: certain utterances create what they name.
Michel Callon: Economics is performative. The descriptions contribute to the production of markets. If we think markets work in a certain way, we act accordingly, this is partly the reason why markets actually work in that way.
What is performativity in marketing?
Market research predicts trends and social changes with their implications for new needs.
Marketing supplies goods and services for the new needs.
They supply the goods not just in response, but they contribute to creating the need. It performs on the original prediction.
Example: prediction: young ppl want to see the world, they will travel more and more.
marketing response: let’s give them youth hostels and cheap student tickets.
would young ppl have travelled without the youth hostels and cheap tickets?
Ex: think of fashion trends. Would these trends be born, if marketing hadn’t catered to it?
How does social position shape taste?
Two main social positions:
Dominant: high economic and high cultural capital
Dominated: low economic and low cultural capital
Dominant position leads to a taste shaped by material abundance = distance from necessity. A taste appreciating form. This is the legitimized taste.
Dominated position leads to a taste shaped by necessity = a taste appreciating content and function. This is the non-legitimized (‘vulgar’) taste.
There are also in-between positions.
What people of different social position like can vary across time and space and across cultures (i.e. polenta in Ticino)
What are the elements of practices?
The key point is that practices are social. It is beyond the individual, if it is something only you do, then its not a practice.
