Title page book Foundations of social theory

Foundations of social theory ---- Rational choice in the social sciences

Publication: Harvard University Press (1990, Cambridge)

First insertion on Heterodox Gazette Sam de Wolff: 10 may 2019

E.A. Bakkum is a blogger for the Sociaal Consultatiekantoor. He loves to reflect on the labour movement.

The book Foundations of social theory is a source of inspiration for your reviewer. This is still true, although it was read long ago for the first time, in 2015. The famous sociologist J.S. Coleman describes in his book models of mutual interactions between social actors. An actor is an individual or an organization. Coleman translates these models in mathematical formulas, which greatly increases the accessibility for your reviewer. But also those, who dislike mathematics, will enjoy the book, because Coleman has gathered all formulas, and hidden them in the last chapters. The preceding chapters, two-thirds of the whole, are purely verbal discussions, without formulas.

The size of the book is impressive, almost 1000 pages. Although Foundations of social theory is a sociological work, many themes are discussed, also from politics, the administration, and economics. Here Coleman exhibits his scientific versatility. For, he uses without effort various concepts from sociology, economics, philosophy, psychology and even the public administration. Although naturally the explanation of these concepts can merely be succinct, it stimulates a further study and provides for a solid foundation. Moreover, Coleman is skilled in integrating all those concepts. This makes him a universal scientist. He does clearly prefer the rational choice paradigm, an approach with a high level of abstraction and philosophical roots. The abstraction evidently has the disadvantage, that factors are ignored, which can yet be decisive.

Coleman uses methodological individualism. Actors have an individual interest. They act purposively, based on rationality. Their transaction is an exchange, which yields a certain utility for both. According to Coleman the exchange can also be immaterial, for instance respect and status1. This is a clever finding. Thanks to the exchange a social equilibrium is formed. Sometimes a service and the service in return are separated in time. Then the transaction is only possible, as long as there is sufficient trust. Then the transaction becomes a lottery, with a slightly uncertain outcome. The reputation of the actor becomes important, and partly determines the costs of the transaction. The loyal reader knows, that the Gazette has thoroughly studied this, in many columns. Similarly, relational trust and networks are dominant subjects in Foundations of social theory.

Coleman recognizes the importance of power in transactions, but according to him it is more rational than emotional. The power determines the degree, in which the actor can defend his interests. The power of an actor is the weighed sum of all his material and immaterial properties. The weighing factor of a certain good is determined by the need, that society feels for this good. So the weight is a variable at the macro level. It determines the exchange rate of the various goods2. Individual power can hurt the collective. Coleman notably couples the problem of power abuse to the so-called external effects. Institutions somewhat limit the individual power. But they are themselves the result of a social struggle for power.

Even the control over events can be given up, to a leader. This is an exchange as well. Thus an informal group can form, or a formal hierarchy. Coleman calls this social (corporate) actors. Groups defend the interests of their members. Coleman pays much attention to the principal-agent problem. He even proposes a psychological model, where the individual internally consists of a principal and an agent. He also analyzes the co-management and the participation, which is needed in order to control the leader(s). A part of this phenomenon is the formation of coalitions. But theories of revolution are also discussed.

Norms and rights are rules, which are accepted by the majority. They are institutions and thus variables at the macro level. Formal institutions are supported by a corporative actor or manager. The constitution is the collective norm for the whole society. It derives its legitimacy from consensus. Norms protect interests, and thus create stability. They prevent that individuals enrich themselves at the cost of the collective. So the norm is not an exchange between two individuals. Since norms are accompanied by supervision and sanctions, power is required. This is commonly group power. Coleman analyzes the supervision with the help of game theory. Supervision enforces beneficial behaviour, but also causes costs3.

Note that this analysis of norms assumes rational behaviour. It ignores the internalization of norms, for instance thanks to socialization. Socialization requires an internal change of individuals. But according to Coleman the social morals are mainly a derived phenomenon, which are the result of conflicting interests4. So morals are endogenous. Here Coleman introduces the phenomenon of social capital5. Social capital implies trust, so that norms are more respected. This is also beneficial for the economy, because the transaction costs diminish. Individuals honour their obligations According to Coleman this capital is stored in the relational networks. An additional advantage of such networks is, that they spread power.

Coleman extensively analyzes the relation between families and corporate actors, such as enterprises. This chapter 22 connects the rational choice paradigm to pedagogy. The corporate actors withdraw the adults from their family. Therefore the socialization of children becomes increasingly a task of education and the state. Although the analysis remains neutral, yet Coleman seems to worry somewhat about the reduction of family life. Coleman also worries about the industries, which by means of psychological methods influence the consumers. Here, as an exception, Coleman is tempted to an emotional outburst6. Your reviewer is shocked. In such situations Coleman accept the active state. The public administration must connect the macro policy to the micro level, more than presently. The citizens must get more information.

The final 300 pages of the book try to summarize the preceding ideas in formulas. This is mainly interesting for connoisseurs, like your reviewer, who adore the mathematical abstraction. Coleman is skilled in mathematics. He describes the individual needs with a Cobb-Douglas utility function. Furthermore he assumes, that each exchanged good is valued with the market price7. In that way he succeeds in computing the distribution of goods. From this the distribution of power is derived. He also presents methods for calculating the effect of transaction costs and trust. That is an impressive achievement, although the practical applicability is unclear8.

  1. This is intuitively logical. But some circles criticize this assumption of Coleman, because the exchange value of immaterial goods is often difficult to determine. Your reviewer acknowledges this objection, but believes that it is not a problem. For, it simply implies, that the practical application of the theory must be limited to exchange actions, where the exchange value is well defined. (back)
  2. On p.139 and further Coleman uses this model for explaining the individual efforts of pupils at school. (back)
  3. In chapter 16 Coleman analyzes the supervision in organizations. Here he enters the field of labour economics. (back)
  4. Coleman shares this idea with the economist K.G. Binmore. Other thinkers believe, that norms are partly innate, or at least the direct consequence of innate inclinations. (back)
  5. Coleman is sometimes considered to be the mental father of the concept of social capital. (back)
  6. On p.634 Coleman writes: "There may be developing (...) a condition which may be described as parasitism. Corporate actors are the parasites, and natural persons are the hosts. (...) Corporate actors control the system. (...) [The natural persons] become, in effect, slaves, maintained at a level of satisfaction that is less than the maximum possible given their resources". The attack is atypical and one-off for Coleman. This radical standpoint is evidently quite controversial. (back)
  7. This assumption is somewhat remarkable, because Coleman mainly studies interactions in small groups. There a unit price can not emerge, because the exchange rate is determined by individual preferences. Coleman does not explain clearly, what in such situations is the meaning of this unit price. (back)
  8. Your reviewer can not find any empirical applications of the formulas of Coleman in his library. (back)