econ434notes3 - History of Economic Doctrines Session 3...

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History of Economic Doctrines Session 3 Alternative Theories of Human Behavior II (See the link Behavioral Economics for elaboration.) SOCIOLOGY Sociology is the study of how people interact in both formal and informal social institutions, and how these social structures develop. Sociologists emphasize that human behavior is adaptive and they focus on, among other things, pecking order : class, status , and powe r . Issue: Are humans primarily social animals? Are “socialization” and “self-interest” motives compatible? Note: The importance of relative position is largely ignored by economists, who largely eschew, e.g: “interpersonal comparisons of utility functions.” Relative positioning makes analysis very messy and mathematical optimization almost intractable, so this is a place few economists dare to go. Example: Suppose you can choose: (a) an annual income of $80,000 while all of your neighbors and acquaintances average $90,000 annually, or (b) an annual income of $70,000 while your neighbors and acquaintances average $60,000 annually. The majority of people asked this question choose (b) , which suggests that orthodox economists ignore some insights possessed by sociologists. Organizations and Leadership Max Weber (1864-1920) was a member of the “New” German historical school of economics and c onsidered himself an economist and historian, but today he is remembered primarily as a pioneering sociologist. In his The Protestant Ethic and the Spirit of Capitalism (1905), Weber argued that Christian rhetoric condemning materialistic acquisitiveness actually stimulated capitalism and acquisition. Weber viewed bureaucracy as necessary for the efficient accomplishment of modern tasks, and contrary to e.g., Franz Kafka and several Italian sociologists [below], was
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reasonably optimistic that bureaucracy could be other than largely arbitrary and overwhelmingly authoritarian. Social Homeostasis: Homeostatic systems (organisms, organizations, or entire societies) have developed mechanisms that tend to automatically adjust to shocks, thereby maintaining internal structures and functionality. For example, homeostasis in organisms facilitates adjustments to environmental shocks by stabilizing such metabolic functions as temperature and blood pressure. (Shivering in response to cold, for example, automatically generates heat through friction, and coughing clears the windpipe.) Talcott Parsons (1902-1979) was an American sociologist who believed that social
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econ434notes3 - History of Economic Doctrines Session 3...

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