Question

Difference between Granovetter’s view of economic and Adam smith economic behavior theory?

Answer 1

Studies show that no one had explained economic behavior as a field of study before Adam Smith. Once he published Wealth of Nations in 1776, some advanced thinkers began to apply the developing field of mathematics to the study of economic principles. And, given the propensities of economists, by 1798 with Malthus, other natural philosophers began questioning his theories, with his even more extreme interpretation of the natural outcome of the competition. On the other hand, other economists started to research and seek the possible potential of government intervention in economic behavior for the improvement of humankind, and the spectrum of competing for economic theories – competition vs cooperation, libertarianism vs. managed economies – was established that persists today. The bottom line, do not let anyone ever tell you that there is one set of proven economic principles; there are only different ways of measuring and describing basic human nature.

The theory of embeddedness explained by Granovetter has common relevance in the study of economics and can make changes in the theoretical and practical ways to study economic behavior. It is classified amongst the most effective and significant theories on economic sociology in the past years. The idea is that a lot of sociology thought of explanations of behavior based on an isolated individual: You can think of rational actions or valued-based explanations but in each case, the individual decides action without taking into account social context. But, so says the argument, the behavior is context-dependent. So, the ties the persons have -number, type- are relevant. Specifically, economic behavior depends on how economic relations are 'embedded' on other ties. To understand that, you need to think in terms of concrete and actual relations, not in a general context (you behave that way because that tie you have with that actor have such form, and that tie you have with another actor is another form).