The Strength of Weak Ties Once Again

|Peter Boettke|

In 1973, the sociologist Mark Granovetter pioneered an understanding of how the market and commercial society operates.  The textbook neoclassical model of atomistic markets did not capture the reality of the social relationships that enable commercial society to function, and for individuals within that setting to achieve their goals --- from finding a job to starting a business.  Granovetter titled his idea "The Strength of Weak Ties" and built his idea not on the basis of neoclassical economics but on social network analysis.

A new article in Science raises the link between these social networks and generalized prosperity.  The greater diversity of social connections available, the greater the prosperity of the city or region under examination.  What do you think the implications of such a finding are for our understanding of the market economy and commercial society?  How do you think this finding compares to Mises's discussion of Ricardo's Law of Association?  How about to Adam Smith's and F. A. Hayek's discussion of the cooperation of strangers evidenced in the complex coordination of the division of labor required to produce the common woolen coat in Smith's time or a #2 pencil in Hayek/Friedman's time?  What do you see as the intellectual link between classical and new institutional (including market process) analysis of the market economy, and the sociological and social network analysis of the market economy?

HT: Karol Boudreaux

Comments

[Troy Camplin]

I read the same article with great interest myself. It makes me think that a lot of work could/should be done on social bond strengths and their relationship to information/knowledge communication. I would think that the 150 rule of social groups would also be of interest here. It has occured to me that complex societies emerge precisely because we are able to divide our time among different small groups (<150). Even if we work for a megacorporation, how many of the departments are over 150? And do we really know more than 150 people at work? The same can be said of churches, clubs, and varios other organizations and institutions. <150 friends? <150 family? We put these people into their specialized categories, and are thus able to associate with far more than the 150 we eolved to be comfortable with. Another way specializaton benefits us and results in more complex societies.

[liberty]

As briefly noted in the article, there is nothing to evidence that diversity did not result from prosperity - the direction of causality.

Sure, it is intuitive that if you have broad, diverse social contacts this may help in finding a new job, etc. (But is it more important than education, training, the regulatory / tax structure? Who knows.)

However, it is also clear that those who have already found prosperity have much more cause and ability to travel, to try different activities, venues and cuisines, to meet people during leisure activities or cultural events, etc.

The richest cities tend also to have the most travelers, and the wealthiest people tend to travel the most, visiting the most places and therefore having the most diverse group of friends. But, these are results of being wealthy not its cause.

[Dain]

liberty,

I wonder if Ronald Inglehart's views can be of some help here. Basically lifestyle issues, informed by differing values, become grounds for differentiating oneself from others, not wealth per se. Wealth sets an obvious baseline for the possibility of travel, but I can offer some anecdotal evidence (on a smaller scale - I can't personally witness global travel patterns) that personality has more to do with getting out and about, meeting new people, and just generally diversifying your experiences.

I know all kinds of folks, all more or less equally broke. Some still live with their parents, others have gone abroad. Some formed bands and toured, others stayed local and just rented movies from Blockbuster all the time.

[David Andersson]

Jason Potts (an economics professor at the University of Queensland) has done some very promising work on network modeling of economic interaction, where he argues that the key weakness of orthodox neoclassical economics is the underlying assumption that all nodes (individuals, firms etc.) are equally well connected to one another. And, yes, Potts does like Hayek.

There is also some interesting papers by Paul Ormerod on network connectivity and the matching of jobs and people in the labor market.

[Peter Boettke]

David,

You might like to know that Jason Potts's work has been used in our upper-level PhD field courses in market process analysis for several years. Dick Wagner teaches out of the book. Also, I have used Peyton Young's work as well.

Pete

[Troy Camplin]

SoTroyunds like I need to read Ormerod. I have yet to figure out how to use my network connectivity to match jobs to me in the labor market. :-)

[liberty]

Dain,

There may be some truth to what you say - but my experience differs from yours. I will give you a few examples. In New York I know some people from poor or "working class" backgrounds, and some from middle class or upper class backgrounds. Among the former there tends to be fairly little diversity of connections - but this is because they tend to live in poor neighborhoods, go to school with other low-income families, and they (famously) spend the money they do have on an SUV that never leaves the city rather than on travel. This behavior is cultural.

The middle and upper class kids were often sent on a European vacation during or after high school, had parents with diverse friends and knowledge, often had a country home or traveled to see relatives outside of the city annually, etc. They were taught about how to have diverse connections from an early age.

In London you have a similar phenomenon: even the poor here can travel to Spain, France etc, but those from "working class" backgrounds tend to travel to Spain and then just go to the pub there and meet Spanish equivalents of their mates from London. Again, it is cultural. They are not taught to seek out diverse connections.

Now, consider a rural example: in New Mexico, in the poorer areas there was almost no diversity--there were whites and hispanics (about 50/50) but they were all pretty similar. Nobody had connections outside of their local area. In the rich areas - like Santa Fe and Taos - there were many more diverse connections. There were lots of people who visited the area just for vacations, there were people of all income classes within the town limits, with all kinds of professions, etc. But again, this was because the city was wealthy - wealthy people came there because it had something to offer.

Finally - none of this means that the poor cannot become rich. One way might be to somehow break the cultural barrier and teach the poor to make diverse connections - however, I think a vibrant economy is enough. Consider immigrants in New York: they come to NY and live in a completely isolated neighborhood in general, with no diversity whatsoever because they cannot even speak any language but their native tongue. Yet, they frequently become wealthy, or at least middle class. *Then* they make sure that their children learn English and make more diverse connections--but that is once their kids are already far better off than they. Once middle class, it is easy for these kids to make connections. Once again the wealth comes first and the diversity of connections follows.

[Troy Camplin]

Interestingly enough, there is an article in Science that addresses this exact thing. They show a positive correlation between diversity of connections and wealth and suggest that it is the connections which cause the increase in wealth. Poor people only know friends and family. Those who seek out diversity have more opportunities presented to them. There is likely a positive feedback somewhere too, so it's likely going to be hard to figure out which came first -- diversity of bonds or wealth.

[coach outlet]

It sounds so good.*

[topills.com review]

If we have legal restrictions that make it hard for poor people to get healthcare services, including information on, e.g., birth control .