Sociology and Economy
Sociology
Sociology is concerned with the organization and dynamics of social relationships. It studies how social relations are formed, maintained, and transformed within society. Broadly, sociology seeks to answer three fundamental questions:
- How and why do societies emerge?
- How and why do societies persist?
- How and why do societies change?
Most sociologists agree that:
- The central focus of sociology is the analysis of human social behaviour and relationships.
- It studies key social institutions such as the family and explores mechanisms that maintain social order.
- Sociology examines the evolution, transformation, and functioning of social life.
- It investigates social processes like cooperation and competition, accommodation and assimilation, conflict, communication, differentiation, and stratification.
The discipline follows its own methodology, grounded in empirical data collection and inductive reasoning, while also applying deductive logic for broader generalizations.
Economics
Economics, another branch of social science, studies human wants and their satisfaction. It assumes that human wants are unlimited, while the resources available to fulfill them are limited. Consequently, individuals engage in various forms of work to secure the goods and services they require.
From farmers and factory workers to clerks and teachers — all are engaged in economic activities aimed at earning income to satisfy their needs and desires. These needs range from basic necessities like food, clothing, and shelter to higher aspirations such as quality education and healthcare.
Human wants are considered insatiable — the fulfillment of one desire gives rise to another in a continuous cycle. Thus, complete satisfaction of all human wants is impossible.
Economics studies how people earn and spend money, and how raw materials are transformed into usable goods (production), utilized by consumers (consumption), and distributed across society (distribution).
In short, economic activity involves two key aspects:
- The effort to meet one’s needs.
- The varying requirements for different goods and services.
According to Seligman, every economic activity begins with human wants — these wants create efforts, efforts lead to satisfaction, and the goods that fulfill these wants are called consumption goods.
Some goods, such as air and sunlight, are freely available and not considered economic goods. However, most goods are scarce and come at a price, which makes them economic goods.
Thinkers’ Views
- Lionel Robbins: “Economics is a social science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.”
Focuses on human activities like production, consumption, distribution, and exchange, and studies institutions such as banks and markets. - A.C. Pigou: “Economics studies that part of social welfare which can be brought directly or indirectly into relation with the measuring rod of money.”
- John Stuart Mill: “Economics is the science that traces the laws of those phenomena of society which arise from the combined operations of mankind for the production of wealth.”
- Alfred Marshall: “Economics is the study of mankind in the ordinary business of life; it examines that part of individual and social action most closely connected with the attainment and use of material requisites of well-being.”
- Max Weber: “Sociology is the science which attempts the interpretative understanding of social action in order thereby to arrive at a causal explanation of its cause and effects.”
- Morris Ginsberg: “Sociology, in its broadest sense, is the study of human interactions and interrelations, their conditions and consequences.”
Differences between Sociology and Economics
| Sociology | Economics |
|---|---|
|
Studies society and social relationships. |
Studies wealth, choice, and resource allocation.
|
|
A relatively newer science. |
An older branch of social science. |
|
Abstract in nature. |
More concrete in nature. |
|
Deals with all aspects of social life. |
Focuses on specific economic aspects. |
|
Has a broader scope. |
Narrower in scope. |
Similarities between Sociology and Economics
Sociology and Economics are both branches of social science concerned with understanding human behaviour and development.
Both disciplines apply scientific methods to investigate and analyse their respective subject matters.
Economics studies the economic aspects of human life, but these are closely connected to social interactions and structures.
Sociology examines social groups and institutions, which are significantly shaped by economic forces.
Economics is considered a social science, and historically, it originated as a sub-discipline within Sociology.
Economic Sociology
According to the Britannica Encyclopaedia, economic sociology applies sociological methods to study how goods and services are produced, distributed, exchanged, and consumed.
It pays special attention to the relationship between economic processes, the wider social structure, and the institutional changes that shape economic activity.
Although its roots lie in classical philosophy and early social science, economic sociology emerged as a formal academic subfield less than a century ago.
After becoming a recognized subdiscipline of sociology, it has significantly contributed to understanding society through an economic lens.
The origins of economic sociology can be traced back to the writings of Karl Marx.
Smelser and Swedberg note that the term economic sociology first appeared in 1879 in a publication by British economist W. Stanley Jevons.
Sociologists later adopted the term, and it appeared prominently in the works of Durkheim and Weber between 1890 and 1920.
This period marked the rise of classical economic sociology, illustrated by influential works such as:
Durkheim’s The Division of Labor in Society (1893),
Simmel’s The Philosophy of Money (1900),
Weber’s Economy and Society (written between 1908–1920).
These foundational works exhibit important characteristics:
Scholars like Weber viewed themselves as pioneers developing a new analytical approach.
They explored essential questions such as:
What is the role of the economy within society?
How does sociological analysis of the economy differ from that of economists?
What constitutes economic action?
They were deeply concerned with analysing capitalism and its transformative impact on society — often referred to as “the great transformation.”
Contemporary Economic Sociology
In recent decades—particularly after the 1980s—economic sociology witnessed a significant revival. A group of sociologists conducting rigorous studies on the relationship between markets and society produced influential work on market–society networks, reinvigorating economic sociology as a major subfield.
The most prominent contributor during the 1980s was Mark Granovetter, who highlighted the embeddedness of economic actions within concrete social relationships.
In his article Economic Institutions as Social Constructions, Granovetter contends that institutions are essentially solidified social networks. Since most economic activities occur within these networks, he argues that social scientists must account for interpersonal relationships when analysing the economy.
He further suggests that contemporary economic sociology views markets as networks of producers who monitor one another and attempt to establish their distinct positions. Thus, network structures form the central focus of modern economic sociology.
Another influential figure, Karl Polanyi, argued that the emergence of the free market was the result of an institutional transformation actively facilitated by the state. This perspective gained broad acceptance within the field of economic sociology.
Origin of New Economic Sociology
In their article “Where Did the New Economic Sociology Come From?”, B. and Heilbron provide a detailed account of the emergence of the new economic sociology.
They argue that this subfield gained scientific legitimacy by combining two major theoretical currents: network analysis and neo-institutionalism.
A smaller yet important cultural analytical approach also contributed to its development.
The integration of these perspectives helped transform the new economic sociology into one of the most active and vibrant subfields of modern sociology.
Important Keywords
Sociology, Economics, Social Process, Classical economics, Production, A.C. Pigou, John Stuart Mill, Alfred Marshall, Morris Ginsberg, Economic sociology, Division of Labor in Society, The Philosophy of Money, Economy and Society, Contemporary Economic Sociology, Mark Granovetter, Karl Polanyi and New Economic Sociology.
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