Beckert 325 between these social interactions and the macro phenomena that are the focus of politi- cal economy? To comprehend the"expansive dynamism of capitalism"9 one needs an understand- ing of the micro processes underlying macro outcomes.0 Although social interaction is partly based on routines,the"reflexive"part of human agency can be described as decisions.It is this part of social interaction that I am focusing on.Decisions are based on expectations regarding outcomes.Thus it is expectations that establish which eco- nomic activities are pursued or abstained from.However,under conditions of funda- mental uncertainty,expectations cannot be understood as being determined through calculation of optimal choices taking into account all available information,but rather are based on contingent interpretations of the situation in the context of prevailing institutional structures,cultural templates,and social networks. The suggestion brought forward is that the dynamics of capitalism looked at from the perspective of social interaction can be analyzed proceeding from the notion of fictional expectations.By the term"fictional expectations"I refer to present imaginar- ies of future situations that provide orientation in decision making despite the incalcu- lability of outcomes.12"Fictionality"in economic action does not mean the "falsity"or "fantasy"that is also conveyed in the word fiction.Instead,it refers to the future being unforeseeable so that expectations,rather than being forecasts,must inhabit the mind as imagined future states of the world.Expectations under conditions of uncertainty should be understood as pretending future states of the world,allowing actors to act as ifthis imaginary would indeed become the"future present."13 Actors are motivated in their actions by the imagined future state and organize their activities based on these mental representations.Fictional expectations in the economy take narrative form as stories,theories,and discourses.Because these representations are not confined to empirical reality,fictionality is also a base of creativity in the economy and thereby a source of the dynamics of capitalism.Including the notion of fictionality opens up a way to understanding the microfoundations of the economy's dynamics and growth. The notion of fictional expectations is directed against the concept of "rational expectations"constituting the microfoundation of much of modern macroeconomics. Assuming market pressures and the systematic use of all available information,ratio- nal expectations theory14 states that the predictions actors make with regard to eco- nomically relevant variables in the future are correct,in the aggregate,because all individual errors are random.Hence,the predicted outcomes do not differ systemati- cally from the resulting market equilibrium.As a consequence,the uncertainty entailed in the future is transformed into a state predictable by forecast,allowing for the ratio- nal calculation of optimal choices. Many have criticized the assumption that decisions in economic contexts can be understood as utility maximization based on rational expectations.The critiques doubt the assumptions that actors can gain a full understanding of their environ- ment,I5 and that they have the cognitive capabilities to process the available informa- tion.16 Behavioral economists emphasize the role of cognitive biases,17 Austrian economists point to the unknowability of the future due to novelty.18 The complexity of decision situations,unforeseeable interaction effects,and genuine novelty through Downloaded from pas.sagepub.com at Shanghai Jiaotong University on February 4.2015Beckert 325 between these social interactions and the macro phenomena that are the focus of politi￾cal economy? To comprehend the “expansive dynamism of capitalism”9 one needs an understand￾ing of the micro processes underlying macro outcomes.10 Although social interaction is partly based on routines, the “reflexive” part of human agency can be described as decisions. It is this part of social interaction that I am focusing on. Decisions are based on expectations regarding outcomes. Thus it is expectations that establish which eco￾nomic activities are pursued or abstained from. However, under conditions of funda￾mental uncertainty,11 expectations cannot be understood as being determined through calculation of optimal choices taking into account all available information, but rather are based on contingent interpretations of the situation in the context of prevailing institutional structures, cultural templates, and social networks. The suggestion brought forward is that the dynamics of capitalism looked at from the perspective of social interaction can be analyzed proceeding from the notion of fictional expectations. By the term “fictional expectations” I refer to present imaginar￾ies of future situations that provide orientation in decision making despite the incalcu￾lability of outcomes.12 “Fictionality” in economic action does not mean the “falsity” or “fantasy” that is also conveyed in the word fiction. Instead, it refers to the future being unforeseeable so that expectations, rather than being forecasts, must inhabit the mind as imagined future states of the world. Expectations under conditions of uncertainty should be understood as pretending future states of the world, allowing actors to act as if this imaginary would indeed become the “future present.”13 Actors are motivated in their actions by the imagined future state and organize their activities based on these mental representations. Fictional expectations in the economy take narrative form as stories, theories, and discourses. Because these representations are not confined to empirical reality, fictionality is also a base of creativity in the economy and thereby a source of the dynamics of capitalism. Including the notion of fictionality opens up a way to understanding the microfoundations of the economy’s dynamics and growth. The notion of fictional expectations is directed against the concept of “rational expectations” constituting the microfoundation of much of modern macroeconomics. Assuming market pressures and the systematic use of all available information, ratio￾nal expectations theory14 states that the predictions actors make with regard to eco￾nomically relevant variables in the future are correct, in the aggregate, because all individual errors are random. Hence, the predicted outcomes do not differ systemati￾cally from the resulting market equilibrium. As a consequence, the uncertainty entailed in the future is transformed into a state predictable by forecast, allowing for the ratio￾nal calculation of optimal choices. Many have criticized the assumption that decisions in economic contexts can be understood as utility maximization based on rational expectations. The critiques doubt the assumptions that actors can gain a full understanding of their environ￾ment,15 and that they have the cognitive capabilities to process the available informa￾tion.16 Behavioral economists emphasize the role of cognitive biases,17 Austrian economists point to the unknowability of the future due to novelty.18 The complexity of decision situations, unforeseeable interaction effects, and genuine novelty through Downloaded from pas.sagepub.com at Shanghai Jiaotong University on February 4, 2015