Political-Cultural Approach to Market Institutions

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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) processes within a market which reflect two types of political projects: the internal firm power struggle (who will control the organisation and how it will be organised) and the power struggle across firms to control markets. Instability and Actors There are three phases in market formation: emergence, stability, and crisis. Differing conditions of market stability produce different kinds of politics. A stable market is defined as a market in which the identities and status hierarchy of firms (the incumbents and the challengers) are well known and a conception of control that guides actors who lead firms is shared. Markets in crisis are susceptible to transformation. There are two forms of potential sources of instability in markets: (1) the tendency of firms to undercut one another's prices, and (2) the problem of keeping the firm together as a political coalition. In markets, the goal of action is to ensure the survival of the firm (other authors might argue the goal of action is creating shared value. But this is probably a rumour). Actors will adopt different strategies to achieve this depending on the environment (quite smart…...

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