Political-Cultural Approach to Market Institutions Essay

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Markets as Politics: A Political-Cultural Approach to Market Institutions
Author: Neil Fligstein in: American Sociological Review, 1996, Vol. 61 (August:656-673) personal summary Markets are social constructions that reflect the unique political-cultural construction of their firms and nations. The creation of markets implies societal solutions to the problems of property rights, governance structures, conceptions of control, and rules of exchange. These solutions are then linked to current perspectives in economic sociology: networks, population ecology, institutional theory, and the problem of constructing action. The term "markets as politics" is used in two dimensions: a) the formation of markets is a part of state-building and b)
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Actors use two internal principles of organisation to indirectly control competition: integration and diversification. State-building as market-building States play an important role in the construction of market institutions as they have the power to make laws. Laws are never neutral but favour a specific group of firms. Propositions about the interactions between states and other organized societal groups under different social conditions: 1. The entry of countries into capitalism pushes states to develop rules about property rights, governance structures, and rules of exchange in order to stabilize markets for the largest firms. 2. Initial regulatory institutions shape the development of new markets because they produce cultural templates that affect how to organize. 3. State actors are constantly attending to some form of market crisis or another. This is because markets are always being organized or destabilized, and firms are lobbying for state intervention. 4. Laws and accepted practices often reflect the interests of the most organized forces in society. These groups support wholesale transformation of institutions only under crisis circumstances like war, depression, or state collapse. States remain players in the creation of the global economy because their elites depend on them to preserve their power and guarantee entry to

global markets. 5.
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