Abstract

This paper critically examines the debate between classical economics and economic sociology regarding the nature of economic actions, market behaviours. Classical economics, founded on the works of Adam Smith and David Ricardo, asserts that economic actions are driven by individual rationality and self-interest, independent of social contexts. Conversely, economic sociologists argue that economic actions are deeply embedded within social, cultural, political, legal and historical contexts.

This paper employs a comparative analysis, juxtaposing classical economic theories with sociological perspectives. The study reviews literature and theoretical frameworks to explore arguments for and against the social embeddedness of economic actions. Classical economists emphasize the autonomy of economic systems, driven by market forces and individual self-interest. Conversely, economic sociologists highlight the significant influence of social networks, cultural capital, political and legal contexts, and historical dynamics in shaping economic behaviour. Central to this analysis are Granovetter's concept of embeddedness, Bourdieu's theories on cultural capital, and Polanyi's critique of market autonomy.

The paper concludes that economic actions are significantly influenced by social, cultural, political, and historical contexts. While classical economics provides valuable insights into market mechanisms, the embeddedness perspective offers a more comprehensive understanding of economic behaviour. Integrating both economic and social approaches can lead to a nuanced analysis of market dynamics, acknowledging the complexity of economic actions.

Key words: Economic action, economic sociology, classical economics, market economy, social embeddedness