markets.In essence,they discovered that the ological convergence of institutions toward atomized,price-taking actors,with perfect Western models implied by the economic un- and symmetrical information assumed by neo- derpinnings in much of modernization theory classical theory,did not seem to exist empiri- led scholars to look into how the evolving in- cally.Social relations seemed to be crucial to stitutions of capitalism (laws,regulations,and the functioning of markets and market actors institutionalized practices)came to regulate in a myriad of ways.Although all these sub- the relationships between firms,owners,gov- fields began to criticize economics,they did ernments,and workers in ways that produced so from different perspectives and for differ- fundamental differences in the market struc- ent reasons,and the critiques internal to the tures of these societies. logics of these fields were the first moves to- As development projects took off,first in ward the creation ofa contemporary sociology Japan and then later in Taiwan and Korea, of markets.It is useful to understand these de- scholars delved into how local arrangements bates in order to make sense of the different between governments,economic elites,and theoretical voices in the sociology of markets. workers provided the conditions of economic Political economy in the 1960s was domi-growth in both developed and less developed nated by modernization theory.This perspec-societies (Amsden 1991;Aoki 1990;Dore tive sought to explain how economically un-1973,1987,1997;Evans 1995;Johnson 1982; derdeveloped countries might develop along Wade 1990).Meanwhile,the study of com- the lines of industrialized nations.Generally, parative capitalisms revealed that the rela- studies in this vein focused on how similar tionships between these groups showed re- cultural and structural features in develop-markable diversity and reflected very much ing nations,characterized as traditional,could a historical,cultural,and national trajectory be overcome with the emulation of institu- (Campbell et al.1991,Campbell Lindberg tional models extant in developed countries to 1990,Fligstein Choo 2005).This perspec- promote economic growth(Eisenstadt 1973,tive suggested that governments,workers,and Kerr 1960,Lerner Riesman 1963,Rostow capitalists produced market structures that 1961).Critiques of modernization theory in were different across countries(Albert 1993, political economy led researchers to new per- Berger Dore 1996,Boyer Drache 1996, spectives on development and comparative Hall Soskice 2001,Hollingsworth et al. capitalisms. 1994).Markets were not given by outsiders, Scholars in this field looked back to but instead reflected the social and politi- Polanyi's(1957)The Great Transformation for cal construction of each society,where the inspiration(see Block Evans 2005 for a re-history and culture surrounding class rela- view of the literature on the links between tions and the various kinds of interventions by states and markets).Polanyi argued not only governments produced unique institutional that the creation of markets required states, orders. but also that the formation of capitalist mar- Organizational theory,much of which was kets would produce social chaos.In response,centered in business schools,was concerned he suggested that governments would have with understanding how the managers of to intervene in markets to stabilize them firms read the demands of their environ- and to provide social protection for work-ments and adjust their organizational struc- ers and rules to guide the interactions be-tures in line with those contingencies(Miles tween groups of capitalists.The ways they 1980).Although managerial theory rejected did this would necessarily be contingent and some of the tenets of economics(March et al. implied that historical institutional variation 1958,Simon 1957),such as perfect informa- could help explain cross-national variation in tion and perfect rationality,the purpose of market structures.The rejection of the tele- the firm was still to adjust to the world of Fligstein·DauterANRV316-SO33-06 ARI 24 May 2007 10:6 markets. In essence, they discovered that the atomized, price-taking actors, with perfect and symmetrical information assumed by neo￾classical theory, did not seem to exist empiri￾cally. Social relations seemed to be crucial to the functioning of markets and market actors in a myriad of ways. Although all these sub- fields began to criticize economics, they did so from different perspectives and for differ￾ent reasons, and the critiques internal to the logics of these fields were the first moves to￾ward the creation of a contemporary sociology of markets. It is useful to understand these de￾bates in order to make sense of the different theoretical voices in the sociology of markets. Political economy in the 1960s was domi￾nated by modernization theory. This perspec￾tive sought to explain how economically un￾derdeveloped countries might develop along the lines of industrialized nations. Generally, studies in this vein focused on how similar cultural and structural features in develop￾ing nations, characterized as traditional, could be overcome with the emulation of institu￾tional models extant in developed countries to promote economic growth (Eisenstadt 1973, Kerr 1960, Lerner & Riesman 1963, Rostow 1961). Critiques of modernization theory in political economy led researchers to new per￾spectives on development and comparative capitalisms. Scholars in this field looked back to Polanyi’s (1957) The Great Transformation for inspiration (see Block & Evans 2005 for a re￾view of the literature on the links between states and markets). Polanyi argued not only that the creation of markets required states, but also that the formation of capitalist mar￾kets would produce social chaos. In response, he suggested that governments would have to intervene in markets to stabilize them and to provide social protection for work￾ers and rules to guide the interactions be￾tween groups of capitalists. The ways they did this would necessarily be contingent and implied that historical institutional variation could help explain cross-national variation in market structures. The rejection of the tele￾ological convergence of institutions toward Western models implied by the economic un￾derpinnings in much of modernization theory led scholars to look into how the evolving in￾stitutions of capitalism (laws, regulations, and institutionalized practices) came to regulate the relationships between firms, owners, gov￾ernments, and workers in ways that produced fundamental differences in the market struc￾tures of these societies. As development projects took off, first in Japan and then later in Taiwan and Korea, scholars delved into how local arrangements between governments, economic elites, and workers provided the conditions of economic growth in both developed and less developed societies (Amsden 1991; Aoki 1990; Dore 1973, 1987, 1997; Evans 1995; Johnson 1982; Wade 1990). Meanwhile, the study of com￾parative capitalisms revealed that the rela￾tionships between these groups showed re￾markable diversity and reflected very much a historical, cultural, and national trajectory (Campbell et al. 1991, Campbell & Lindberg 1990, Fligstein & Choo 2005). This perspec￾tive suggested that governments, workers, and capitalists produced market structures that were different across countries (Albert 1993, Berger & Dore 1996, Boyer & Drache 1996, Hall & Soskice 2001, Hollingsworth et al. 1994). Markets were not given by outsiders, but instead reflected the social and politi￾cal construction of each society, where the history and culture surrounding class rela￾tions and the various kinds of interventions by governments produced unique institutional orders. Organizational theory, much of which was centered in business schools, was concerned with understanding how the managers of firms read the demands of their environ￾ments and adjust their organizational struc￾tures in line with those contingencies (Miles 1980). Although managerial theory rejected some of the tenets of economics (March et al. 1958, Simon 1957), such as perfect informa￾tion and perfect rationality, the purpose of the firm was still to adjust to the world of 110 Fligstein · Dauter Annu. Rev. Sociol. 2007.33:105-128. Downloaded from www.annualreviews.org Access provided by Shanghai Jiaotong University on 02/04/15. For personal use only