The Architecture of Markets

Market societies have created more wealth, and more opportunities for more people, than any other system of social organization in history. Yet we still have a rudimentary understanding of how markets themselves are social constructions that require extensive institutional support. This groundbreaking work seeks to fill this gap, to make sense of modern capitalism by developing a sociological theory of market institutions. Addressing the unruly dynamism that capitalism brings with it, leading sociologist Neil Fligstein argues that the basic drift of any one market and its actors, even allowing for competition, is toward stabilization. The Architecture of Marketsrepresents a major and timely step beyond recent, largely empirical studies that oppose the neoclassical model of perfect competition but provide sparse theory toward a coherent economic sociology. Fligstein offers this theory. With it he interprets not just globalization and the information economy, but developments more specific to American capitalism in the past two decades--among them, the 1980s merger movement. He makes new inroads into the ''theory of fields,'' which links the formation of markets and firms to the problems of stability. His political-cultural approach explains why governments remain crucial to markets and why so many national variations of capitalism endure. States help make stable markets possible by, for example, establishing the rule of law and adjudicating the class struggle. State-building and market-building go hand in hand. Fligstein shows that market actors depend mightily upon governments and the members of society for the social conditions that produce wealth. He demonstrates that systems favoring more social justice and redistribution can yield stable markets and economic growth as readily as less egalitarian systems. This book will surely join the classics on capitalism. Economists, sociologists, policymakers, and all those interested in what makes markets function as they do will read it for many years to come.

Neil Fligstein is Professor of Sociology and Class of 1939 Chancellor's Professor at the University of California, Berkeley

List of Tables	p. xi
Preface	p. xiii
Bringing Sociology Back In	p. 3
A Critique of the Existing Literature in the Sociology of Markets	p. 6
Theoretical Questions for a Sociology of Markets	p. 10
A Political-Cultural Approach	p. 15
Structure of the Book	p. 20
Normative Implications of the Political-Cultural Approach to the Sociology of Markets	p. 21
	p. 25
Markets as Institutions	p. 27
Market Institutions: Basic Definitions	p. 28
State Building and Market Building	p. 36
Power in Policy Domains and Market Institutions	p. 42
The Politics of the Creation of Market Institutions	p. 45
Political Structuring of Labor Market Institutions	p. 53
Policy Domains and Market Regulation in Real Societies	p. 56
Stability and Complexity	p. 59
Implications for Research	p. 62
Conclusion	p. 64
The Theory of Fields and the Problem of Market Formation	p. 67
Markets as Fields	p. 67
The Goal of Action in Stable Markets	p. 70
The Problem of Change and Stability in Markets	p. 75
Links between Market Formation and States	p. 86
Some Macro Implications of the Theory of Fields	p. 89
Globalization and Market Processes	p. 94
Conclusion	p. 97
	p. 99
The Logic of Employment Systems	p. 101
Employment Systems as Institutional Projects	p. 103
Variations and Transformations in Employment Systems	p. 107
The Dynamics of Systems of Employment Relations	p. 108
Insights into Comparative Employment Systems	p. 111
Research Agendas	p. 117
Conclusion	p. 120
The Dynamics of U.S. Firms and the Issue of Ownership and Control in the 1970s	p. 123
Review of the Literature	p. 124
Management versus Owner Control	p. 125
Bank Control	p. 126
Market Dynamics and Management Control	p. 128
Hypotheses	p. 130
Data and Methods	p. 132
Results	p. 136
Discussion and Conclusions	p. 144
Appendix A	p. 146
The Rise of the Shareholder Value Conception of the Firm and the Merger Movement in the 1980s	p. 147
What Is to Be Explained?	p. 150
Finance Economics	p. 151
Manager, Owner, and Bank Control	p. 153
The Crisis of the Finance Conception of Control and the Rise of the Shareholder Value Conception of Control	p. 155
Hypotheses	p. 157
Data and Methods	p. 158
Results	p. 162
Conclusion	p. 166
Corporate Control in Capitalist Societies	p. 170
Economic Theories and Mechanisms	p. 172
Sociological Theories of Control	p. 176
Comparative Cases	p. 181
Conclusion	p. 189
Globalization	p. 191
Definitions of Globalization	p. 193
Critique of Globalization Arguments	p. 195
The Slow Expansion and Unevenness of Global Trade	p. 196
Change or Continuity in the Organization of Production?	p. 203
Does Globalization Cause Deindustrialization and Inequality?	p. 206
Politics, Governments, and Financial Markets	p. 209
Trade, Competition, Industrial Policy, and the Welfare State	p. 213
Globalization and Neoliberalism as an American Project	p. 220
Conclusion	p. 221
Conclusions	p. 223
Two Tales of One Industry	p. 223
Stability and Efficiency	p. 228
Efficiency, Stability, and Equity	p. 231
Conclusion	p. 236
Notes	p. 239
Bibliography	p. 247
Index	p. 269
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The Architecture of Markets

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