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Open Access 2018 | OriginalPaper | Chapter

1. What Is This Book Good for?

Author : Stefan Mann

Published in: Socioeconomics of Agriculture

Publisher: Springer International Publishing

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Abstract

Socioeconomics may be under greater pressure to define itself than the “classical” sciences. The latter have largely been defined by the conceptualization of real-world phenomena: biology, for example, arose because of the willingness to better understand the phenomenon of life in its different specificities. Economics arose to study and resolve the issue of scarcity. And sociology was created to analyze the dynamics of societal groups.
Socioeconomics may be under greater pressure to define itself than the “classical” sciences. The latter have largely been defined by the conceptualization of real-world phenomena: biology, for example, arose because of the willingness to better understand the phenomenon of life in its different specificities. Economics arose to study and resolve the issue of scarcity. And sociology was created to analyze the dynamics of societal groups.
But socioeconomics? Its name pays tribute to the existence of sociology and economics, so one might either suspect that socioeconomics is merely is a combination of both sciences (S + E = SE), or that there is an intersection of sociology and economics which is best termed as socioeconomics (S ∩ E = SE). Most past attempts to define socioeconomics as a science in its own right may have been motivated to counter such a simplistic understanding of socioeconomics.
In this chapter, we review past attempts to define socioeconomics before the approach is chosen that we applied in this book.

1.1 Approaches Towards Socioeconomics

There is a strong lingual proximity between socioeconomics and social economics. Social economics, however, is a discipline with a considerable tradition. Since its early beginnings (Ward 1893), proponents of social economics argue that economics is not just the replication of a biological system in society, but that moral and social considerations always have to be considered. Social economic was called everything that attempted to improve the living standard of the working class (Say 1891; Gide 1905). This has hardly changed to date. The Association of Social Economics claims on its website that “social economics is the study of the ethical and social causes and consequences of economic behavior, institutions, organizations, theory, and policy”. It probably would not be necessary to mention that this association had been founded in 1941 as the “Catholic Economic Association” to convince readers that social economics follows a rather normative rationale. It goes beyond the utilitarian fundamentals of economic science and emphasizes moral values in societal and business decision-making.
Whatever can be said about socioeconomics, it is clear that it takes a much more descriptive approach than social economics, even though it is also considered as alternative to mainstream economics. Socioeconomics also is a lot younger than social economics. Since the 1970s, the word was occasionally used in the non-economic literature to describe developments touching both sociological and economic aspects. However, the leading communitarian scholar Etzioni (1985, 1986) was the first prominent voice to suggest that “a new discipline would be developing which would merge economics and other social sciences” (Etzioni 1986: 13). He suggested four fields in which such an approach would generate added value:
(1) opening up the preferences; (2) modifying the assumption of rationality (again!) (3) the societal nestling of the market (a matter of institutions and political power); and (4) increasing the empirical, inductive elements of the study of economic behavior. (Etzioni 1986: 13)
The impulse which Etzioni gave was strong enough that the Society for the Advancement of Socio-Economics (SASE) was founded in 1988 and that the Journal of behavioral economics, in 1990, was re-named into the Journal of Socio-Economics (23 years later, though, it was then re-renamed into the Journal of behavioral and experimental economics).
Since then, both the journals and the conference have flourished and attracted increasing number of submitters. Particular empiric contributions are apparently attractive to make, ranging from “Are High-Performance HR Practices Good for Employee Well-being” to “How Race and Human Resources Influence Consumer Expectations and Attitudes”. Theoretic contributions about the nature of socioeconomics are somewhat rarer. However, a few of the brave colleagues having made attempts to proceed on the theoretical side of the socioeconomic agenda are certainly worth mentioning:
  • Abell (2003) distinguishes two dimensions relevant for sociology, economics and (in his argument) socioeconomics. One are interactions on the micro level versus social (macro) conditions, the other dimension is whether to focus on the interactions and conditions themselves, or to look at the individual actions or the social outcome. Abler wants to “unite” sociologists and economists by suggestion to focus on the causalities of individual interactions and social conditions and to analyze how both impact on individual actions. He emphasizes the different starting points that economics and sociology have regarding models of the individual. In the economic view, “individuals are conceived as taking choices” (Abell 2003: 8), so they are considered as subjects, whereas for many sociologists “individuals are […] deriving their actions (or decision to act) from those with whom they interact” (Abell 2003: 9), so they are more considered as objects.
  • Karl H. Müller (Hollingsworth and Müller 2008; Müller 2015, 2016) has a historic approach, summarizing the classic, reductionist way of research as in classic physics as “science 1” and the modern, complex approach as found in life sciences as “science 2”. He sees the challenge for socioeconomists to enter the “science 2” mode by occupying themselves with complex networks, evolutionary theory and nanofoundations as a significant degree below the micro-level and by deliberately entering more meta studies to uncover the limitations of researchers themselves. Much more than anybody else, Müller tries to advance rather than define socioeconomics, i.e. his priority lies in the progress of the socioeconomic discourse rather than in the establishment of a clearly defined socioeconomics as an additional social science.
  • In a critique to the last approach, Boyer (2008: 744) suggests that “socio-economics is about the investigation of the origin, transformation and impact of governance structures in modern societies”. Socioeconomics should focus on the institutional arrangements people have given themselves to organize social, economic and political relations. Such analyses could result in formalizations of the models identified. It could also result in the identification of viable institutional settings on the macro level. His vision of socioeconomics also includes the added value from comparative historical institutional analysis.
This book certainly owes most of its epistemologic foundations to Boyer’s ideas. How the latter might be translated into practice and will be translated in this book, is to be outlined in the remainder of this chapter.

1.2 The Interaction Approach

Most institutional economists subscribe to the notion that three different modes of interaction should be distinguished: Since Adam Smith’s “The Wealth of Nations” had established the science of economics in 1776, the discipline’s focus has increasingly been put on trade and on markets. The economic historian Mikl-Horke (2015) nicely illustrates this reduction of economic science, particularly in the decades around 1900. While early economists would integrate social, political and ethic aspects in their “economic” thinking, economics was increasingly reduced in the late 19th century to restrict itself to the exchange of goods, leading to a (mostly implicit) world-view in which everything was subject to trade. It then was Coase (1937) who related the discourse on interaction to the existence of companies and their hierarchies. He posed the question why such (sometimes huge) hierarchies would be created if everything would be most efficiently traded on markets, thus demonstrating some institutional diversity. Table 1.1 demonstrates the size of the hierarchies by comparing the turnover of the largest private companies to the GDP of countries.
Table 1.1
Turnover of private companies and GDP of comparable countries (2016)
Private company
Turnover (billion US-$)
Country
GDP (billion US-$)
Wal-Mart
482
Belgium
470
Royal Dutch Shell
272
Pakistan
271
Volkswagen
237
Finland
239
Coase remarked that defining prices would cause transaction costs, as do hierarchies in their daily routine. Coase suggested that there would be a social optimum somewhere in between a centrally planned world hierarchy and atomized trading partners. While enterprises, in classical economics, largely had been defined as a production function, they now became a structural element in a society’s organization.
Institutional economists have devoted a lot of energy towards the question of why persons would choose either hierarchies or markets as coordinating mechanism of their interactions. Three important factors—asset specificity, frequency and uncertainties—have been identified in the wake of this research which had a strong predictive power on the level of transaction costs in this context and therefore would also influence organizational choices:
  • If the specificity of assets is high, this creates a strong mutual dependency which suggests a long-term hierarchical organization rather than short-term trade on markets. Courses in milking technology will rather be organized in an intra-firm setting than courses in presentations.
  • The more often a transaction takes place, the more transaction costs can be distributed. Frequent transactions may rather be organized within one unit and in a hierarchical framework, so that repeated negotiations may be avoided.
  • Uncertainty increases transaction costs, so that long-term hierarchies may be chosen to avoid such uncertainties.
The advantages of hierarchies are that human resources can rather flexibly be reallocated, mental work can be distributed and shared more flexibly than in a pure market setting and a well-established communication system is also more easily established within a hierarchy.
More than half a century later than Ronald Coase, Ostrom (1990) introduced coordination as another important mode of interaction, showing that often people chose to jointly work for a common goal by neither trading nor submitting to each other. Everyday examples for cooperation are traffic, sports or associations.
If we think about the most beautiful incident of our life, it is likely that we find it in the realm of cooperation, be it a romantic encounter, an occasion with our friends or joint work. While economists love to talk about utility maximization, they tend to neglect the fact that it is unlikely that individual utility maximizations, added up, will lead to a societal optimum by itself. It is true that, as economists often emphasize, cooperation suffers from possible opportunistic behavior like the free-rider phenomenon. It is often possible to exploit a team to which I become a member by contributing less than benefitting, sometimes to the point of the collapse of the system. The spirit that joint and mutual actions produce, however, is nevertheless driving many people to, again and again, enter attempts of successful cooperation Fig. 1.1.
Having mentioned cooperation and hierarchies as important occasions of interaction, they have never made it into the core domain of economic analysis. It is no coincidence that Ronald Coase has always been a fierce critic of mainstream economics (Coase 1946, 1988; Schwab 1989), and that Eleanor Ostrom was not even an economist by education (but was rather a political scientist). Neither is it coincidence that the concepts of hierarchy and cooperation can rarely be found in the mainstream textbooks and concepts of economists. The assumptions of markets are an ideal playing field for the reductionist and quantitative way of working that most economists feel comfortable with.
This is not to say that cooperation and hierarchy would not be apt for scientific analysis. A great part of political science, for example, deals explicitly with the mechanics of hierarchy (Lieshout 1995; Wight 2002), both its creation (Pabst 2012) and its impact (Ikeda and Richey 2005). The same can be said about management science (Magee and Galinsky 2008; Friesl et al. 2011), albeit for private rather than for public environments. Grey (2004) explores the relations between both realms of research and their strong link via the analysis of hierarchies.
Anthropology is the science most concerned with cooperation. A good case in point is a collection by Blundo and Le Meur (2009) in which different organizational ways of collaboration are compared and evaluated.
If there is any science currently covering all three angles, it is sociology. There is a “sociology of markets” (Lie 1997; Fligstein and Dauter 2007), a “sociology of hierarchy” (Dumont 1966) and a “sociology of cooperation” (Infield 1971). However, the sociology’s preoccupation is with groups, their dynamics, their interaction, their development. Therefore, a sociology of markets will never lead to a holistic understanding of all aspects in markets. It will not, for example, fully reveal the price effect of a monopolistic constellation. This also applies to the fields of hierarchies and cooperation. Sociology will only cover the (albeit interesting and relevant) aspects of group dynamics in the single realms of interaction. Another example of a social science which is not fixed in one corner of the triangle would be psychology. Psychology, like sociology, does not have a real focus on interactions as such. It focuses much more on individuals.
The archetypes being described rarely ever appear in their pure form. Cooperation, of course, play an important role both in companies and in markets. And there is hierarchy in markets as there are trades between employees in companies. No single social science discipline as we know it, however, is prepared to understand these combinations. This starts with different toolboxes: The assumptions that psychologists make about individual behavior (driven by culture, parents etc.), for example, are totally inconsistent with what economists would assume (utility maximization). Nor would the single social sciences with their rather fixed assumptions regarding individual objectives, decision making processes or individual abilities be prepared to explain the dynamics in between the three presented modes of interaction. Such movements from one mode to another are to be described in the next section.
The following aims to show that many societal developments involve a shift from one form of interaction towards another. Using the arrows in Fig. 1.2, examples are provided for each of them.
A.
Commercialization
 
Of all the arrows below, this is probably the one which receives the most attention from social scientists. Many scholars have argued that a number of realms in life are increasingly transferred from the cooperative sphere to the market, in both developed and developing countries. For the latter, the land market (Chabwela and Haller 2010) and the exchange of food (Lewis 1989) are examples being described by anthropologists. For developed countries, Wilkinson (2016) and Misra and Ghadai (2016), for example, focus on schools where an increasing part of content involves the purchase of certain items on the marketplace. Mann’s (2008) examples of the societal shift from cooperation towards market-based exchanges include the area of problem-solving which has shifted markedly from family and friends towards psychologists. The most prominent example of a normative approach to this development comes from Sandel (2012). He suggests that public action should be taken to avoid further shifts from the sphere of cooperation towards economic exchange.
B.
Community building
 
The move from markets towards cooperation can be understood in the spirit of communitarianism (Etzioni 1995) and is often driven by the desire to create strong and lasting human bonds and trust. That was the case in the movement to found Kibbutzim in the early 20th century (Russel et al. 2011), as it is in today’s attempts at community-supported agriculture (CSA; Henderson and Van En 1999; Cone and Myhre 2000; Schnell 2007). Both are examples where participants attempted to link agricultural production with the creation of social capital, with bridging and bonding—in the case of the Kibbutzim among Jewish settlers, in the case of CSA between producers and consumers. The dynamics of this arrow is often driven by vision, impressively described by Conway (2016): “People, when they come together, can share understandings and manage their resources by enforcing norms and rules of their own design! The unconventional idea in many quarters was that people could cooperate beyond markets and states.”
C.
Mergers, Acquisitions and Integration
 
If there was one clear line in historic development of economic structures, it would be the enlargement of companies through mergers, acquisitions and other ways of integration, described as a “consistent and growing part of the business landscape” (Schweiger and Goulet 2000: 61). That this enlargement of companies is an implicit step from interaction through markets to the strengthening of hierarchies, is often an overlooked aspect. The most visible case of this aspect is probably vertical integration. Prominent examples in the literature are the auto industry and the agri-food chain. Particularly in the United States, car manufacturers have chosen to skip market relations to part-makers, instead integration the companies into the car-producing firm (Blois 2014; Langlois and Robertson 1989). In the realm of agribusiness, poultry production is a case in point for similar decisions. Vukina (2001) explains the tendency for meat processors to use contract farmers by factors like risk-sharing, innovation dissemination, demand for uniform quality and access to capital.
D.
Outsourcing and “You Inc.”
 
Management scholars have advocated that companies should focus on their core competencies and purchase all others on the marketplace (Quinn and Hilmer 1994), leading to the outsourcing of company parts to a self-reliant entity. Quinn (1999) describes that this process has begun in the realm of physical support like parts, componentry and hardware subsystems, and is increasingly shifting to intellectually-based resources which may be purchased more efficiently outside the company. In the extreme case, such processes lead to a situation where hierarchies are entirely replaced by market relations. Self-employment has become a societal trend and has spurred scientific discourses in two directions: in the Anglo-American world, advice has been given on how to turn this self-employment into economic success (Beckwith and Beckwith 2007). Under German conditions, the concept of the “Ich AG” has rather attracted concerns about precarious social conditions under which unprotected individuals may work (Sattelberger 2006; Keller and Seifert 2007).
E.
Emancipation
 
If any long-term macro trend can be identified in the history of humankind, it may be summarized in this arrow. Emancipation has materialized in many different realms: the gender-based process of emancipation may the most visible and well-documented one (Markovic 1973), but the emancipation of the black race from slavery (Berlin 1985) and of homosexuals from discrimination (Steakley 1975) are other prominent examples. The tendency to substitute hierarchical structures by the spirit of even collaboration has also entered the business world. In particular, the Japanese concept of Kaizen (Singh and Singh 2009), while focusing on the steady improvement of process and product, has emphasized the “spirit of cooperation” (Brunet 2000: 3) which is necessary to unleash the full power of collective creativity. Styhre (2001) emphasizes the emancipation potential of Kaizen. Unfettering from external restraints is, in this case as in the other cases of emancipation, a crucial success factor.
F.
New authoritarianism
 
In the realm of politics, many social scientists face a new breed of authoritarianism in a democratic setting, be it in Erdogan’s Turkey (Taspinar 2014), Putin’s Russia (Horvath 2011) or Orban’s Hungary (Krasztev and van Til 2015). In an increasing number of states, voters are apparently willing to trade democratic gains as “necessary sacrifices on the altar of stability and growth”, as McFaul and Stoner-Weiss (2008: 68) put it. Perceived or real, there may be shortcomings of strongly cooperative governance, and clear hierarchical structures may decrease a system’s transaction costs. The view that “benevolent autocrats operating within a competitive institutional framework seem to provide the most effective combination of economic achievement and political restraints” (Gomberg 1966: 35) is also an accepted position among management scholars, so that the move from cooperative structures towards hierarchies is not restricted to the public sector, but also extends to companies.
Taken together, there seems to be a lot of “traffic” on the arrows in Fig. 1.2, and it can be argued that this traffic goes along all three sides of the triangle. This strongly dialectic situation offers many questions to be studied for socioeconomists. Apparently, the flows do not neutralize each other. Instead, they shape the look of a development which needs socioeconomists to be properly understood.

1.3 The Diversity Approach

Mainstream economists have developed a strong tradition of explaining the differences in growth rates between countries (e.g. Barro 2000). Increasingly, the focus of this analysis shifts towards the analysis of institutions: Particularly economists around Acemoglu and Robinson (2012) have emphasized the great importance of institutions for the development of nations. It has become obvious that institutions like low entry barriers in the financial sector, transparent standards in the educational system or flexible labor policies are able to contribute to economic prosperity.
One could term this worldview hegemonic or one-dimensional in the way that it implicitly assumes that there is one single optimal way of development for any nation you could imagine. Fukuyama (1992) has taken this idea to the extreme, suggesting that market capitalism in junction with liberal democracies are the ultimate and best form of governance, so that the end of history has ultimately be reached.
While the powerful movement in social sciences describing and explaining different varieties and eventually the resulting diversity of capitalism can be understood as a stand-alone approach, it is probably more fruitful to depict it as a countermovement to this impression. By taking this perspective, Peck and Theodore (2007: 732) describe how “the varieties approach represents a fecund interdisciplinary zone of engagement within the wider field of heterodox economic studies.” After socialism had almost ceased to exist, it was neither useful nor necessary to depict capitalism as a homogeneous ideological block against collectivization and nationalization. Instead, an increasing number of social scientists started to describe the diversity of market-based systems. There was less normativity in this concept than in traditional growth models: Yes, some countries generated slightly less value added per capita than others, but maybe they fared better in other respect. Thus, the new, explicitly socioeconomic approach focused on describing different blossoms instead of measuring the most beautiful one.
Albert (1991) took a first step in that respect by describing the difference between a ‘Rhinish’ model typical of continental Europe and the classically neoliberalized path of Anglo-American countries, but a more thorough and formalized proposition was introduced by Amable (2003). He used cluster analysis to identify groups of countries with similar patterns concerning key socioeconomic variables such as labor organization, social policy and education. He found that countries with similar patterns were also often geographically adjacent, suggesting a strong cultural or at least geographical force behind the emergence of those systems.
The basic concept can also be traced back to the importance of institutions, observing their complementarity. A simple example would be the independence of central banks and inflation. The Central Bank’s main concern usually is to keep inflation down, while governments are more interested in lush spending opportunities. That implies that the independence of the Central Bank will negatively correlate with a country’s inflation rate.
It is easy to see that institutions play a key role in shaping the specific characteristics of capitalism in the country concerned, but less easy to understand why such different institutions would emerge. Hall and Thelen (2009: 7) emphasize the role of political equilibria: “Persistence of institutions depends not only on their aggregate welfare effects but also on other distributive benefits that they provide to the underlying sociopolitical coalitions.” At least as important, however, is the role of culture in shaping such national systems. Bruff (2008) has explored this relationship in detail and, due to the many facets that the term culture can have, suggests referring explicitly to Gramsci’s (1985) concept of common sense in society. Empirically, Schwartz (2007) is able to show that the observed differences in cultures can partly be traced back to people’s value orientation. In attempting to explain the persistence of “varieties of capitalism”, particularly in small countries, Elsner and Heinrich (2009) develop a game theory model indicating that homogeneous groups are formed within society in order to make cooperative behavior predictable.
It has been criticized that the “varieties of capitalism” approach is not very dynamic. There have been changes within capitalism, particularly of liberalizing economic restrictions around labor laws. If societies had created stable equilibria, this would have been very unlikely. Instead, it has proven useful to consider the possibility of shifts in a country: partly by linking the results from Public Choice Theory with the observations of systemic changes. Societal changes can often be explained by new coalitions between societal groups who press for such changes. Another explanatory approach are objective societal changes, such as the rising dominance of the service sector in the economy, or decreasing barriers of trade and communication.

1.4 Why Agriculture?

To the author’s knowledge, this is the first book in which the emerging concept of socioeconomics is applied to an economic sector. Even for supporters of the idea of a bridging social science like socioeconomics, this requires two steps of justification: Why is it applied to one sector, and why to the smallest of the three (if looked from a worldwide perspective)?
Starting with the question on sectors in general, most economists and sociologists alike consider the distinction between the micro and macro level as sufficient. Indeed, what has been sketched so far in this chapter also either takes place on a micro level (interactions) and on a macro level (varieties). However, Elsner and Heinrich (2011) emphasize the importance of the ‘meso’ level which leads directly to the discourse on mesoeconomics, the analysis of economic sectors. It is probably fair to claim that, due to large-scale negligence in socioeconomic research, neither intrasectoral nor intersectoral dynamics are yet well understood, despite a few individual contributions on this issue (Ng 1986; Mann 2011; Dopfer 2012). The potential connection between the ‘meso’ and the ‘varieties’ approach becomes clearer when focusing on the important role that cultural specifications play in both theoretical frameworks. Few scholars would reject the widespread notion that there exists an industrial culture (Sadler and Thompson 2001; Mole 2007), a peasant culture (Viola 1999; Henningsen 2001) and perhaps even a service culture (Edvardsson and Enquist 2002; Skinner Beitelspacher et al. 2011) in all countries and, to some extent, also in regions.
It is therefore worthwhile to take into account the possibility that different cultures may lead to different interaction patterns and, ultimately, to different systems. This simple mechanism does not only apply when comparing geographic cultures (Chinese vs. American, for example), but also, when looking on single sectors with their specific cultural characteristics.
One of the arguments that could be made to support this claim is to dwell on the peculiarities of agriculture. The least that can be said is that it is the oldest of the three economic sectors and that the decrease of its relative importance is usually a good indicator for a nation’s prosperous development. The sector’s tradition also translates into organizational peculiarities: 80% of the world’s food, in value terms, are produced by family farms (FAO 2014). 500 million of the world’s 570 million farms are run by families. While similar things cannot be said about other sectors, this constellation has, of course, significant effects for the social setting in which production takes place. All production decisions have immediate effects on households, and all changes in the household like divorces or new children affect the production system with which a family farm operates.
Such interdependencies may also exist for the industry and the service sector, but they certainly are less obvious and more indirect than for crop and animal production. And that is where socioeconomic research can play its greatest strength: All families need a great degree of cooperation to function, and many of them also need some hierarchical structures. If these two interaction levels synthesize with the market on which most family farms sell their products, this provides a playing field where only holistic approaches such as socioeconomic research are able to see the whole picture.
One additional argument for using the primary sector as a case in point should be mentioned: In the farming sector, what is produced is not only the most basic of human needs, our food preferences also are extremely dependent on our social environment. “Food is culturally defined and acquires immense significance in all societies because it involves the human body.” (Hamilakis 1999: 48). Again, there are cultural peculiarities (the domain of sociology) interfering with the sphere of markets (the domain of economists), so that another case for the application of socioeconomics could be made.

1.5 And Why Socioeconomics?

High quality textbooks on agricultural economics are available. So are very good textbooks on rural sociology. To justify the book at hand, we would need to show that a gap between these two breeds is to be bridged, and that nobody has done so yet.
In social sciences, many researchers look at causal linkages. Agricultural economists, for example, analyze how the wheat price in the EU is influenced by the wheat price on the world market. Rural sociologists check whether the self-understanding of second-home owners is dependent on the type of village they live in. But what if social factors are influenced by economic factors or vice versa? What if agricultural productivity is influenced by a growing number of female farmers? Or if the willingness to take over a farm shows to be dependent on income relations between sectors? Are such issues already addressed by the existing readings?
Agricultural marketeers could claim that this was the case. Arguably, they have been the first socioeconomists in the realm of agriculture, so as marketeers in general have been the first socioeconomists in social sciences. Because companies found out very early that social and economic factors were strongly interlinked. That men would buy more meat than women, but Muslim men wouldn’t buy pork. Because gender and religion, among others, are important predictors of economic behavior.
Thus, marketing became, in a way, the first application of socioeconomic thinking. The whole concept of target groups rests on the fact that our economic preferences are strongly culturally shaped.
While this is an important point, this is certainly not all which can be said about the socioeconomics of agriculture. The primary sector entails many more choices which are culturally shaped. The way farmers produce, the support they get from the public, the way in which this support is organized—all these factors are results of social and economic factors in strong interdependencies. It is the objective of this book to show this.
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Metadata
Title
What Is This Book Good for?
Author
Stefan Mann
Copyright Year
2018
DOI
https://doi.org/10.1007/978-3-319-74141-3_1