The Changing Relationship Between Economic Sociology and Institutional Economics

Abstract

Abstract In his early work. Talcott Parsons severely criticized Old Institutional Economists like Thorstein Veblen and Clarence Ayres. Parsons’main objection was that institutional economics had a misconceived view on the scope of economics: institutions, being the embodiment of values, were the proper subject of sociology rather than economics. By arguing for a clear‐cut division of labor between economics and sociology. Parsons legitimated the divide between the two disciplines that came into being in the years to follow. Recently however, the relationship between economic‐sociology and institutional economics has changed dramatically. New Economic Sociology (advocated by scholars like Mark Granovetter and Richard Swedberig) rejects the division of labor proposed by Parsons. By‐providing substitutes rather than just complements to economics, it tries to counter economic imperialism. This creates significant similarities between New Economic Sociology, Old Institutional Economics and the recent return of institutionalism in economic theory. However, the quest for a division of labor between economics and sociology remains unfinished.