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MERCATUS STUDIES IN
POLITICAL AND SOCIAL ECONOMY

Living Better Together


Social Relations and Economic Governance
in the Work of Ostrom and Zelizer
Edited by
Stefanie Haeffele · Virgil Henry Storr
Mercatus Studies in Political and Social Economy

Series Editors
Virgil Henry Storr, Mercatus Center at George Mason University,
Fairfax, VA, USA
Stefanie Haeffele, Mercatus Center at George Mason University, Fairfax,
VA, USA
Political economy is a robust field of study that examines the economic
and political institutions that shape our interactions with one another.
Likewise, social economy focuses on the social interactions, networks,
and communities that embody our daily lives. Together, these fields of
study seek to understand the historical and contemporary world around
us by examining market, political, and social institutions. Through these
sectors of life, people come together to exchange goods and services, solve
collective problems, and build communities to live better together.
Scholarship in this tradition is alive and thriving today. By using the
lens of political and social economy, books in this series will examine
complex social problems, the institutions that attempt to solve these prob-
lems, and the consequences of action within such institutions. Further,
this approach lends itself to a variety of methods, including fieldwork,
case studies, and experimental economics. Such analysis allows for deeper
understanding of social phenomena, detailing the context, incentives, and
interactions that shape our lives. This series provides a much-needed space
for interdisciplinary research on contemporary topics on political and
social economy. In much of academia today, scholars are encouraged to
work independently and within the strict boundaries of their disciplines.
However, the pursuit of understanding our society requires social scien-
tists to collaborate across disciplines, using multiple methods. This series
provides such an opportunity for scholars interested in breaking down the
boundaries of disciplines in order to better understand the world around
us.
Stefanie Haeffele · Virgil Henry Storr
Editors

Living Better
Together
Social Relations and Economic Governance in the
Work of Ostrom and Zelizer
Editors
Stefanie Haeffele Virgil Henry Storr
Mercatus Center Mercatus Center
George Mason University George Mason University
Fairfax, VA, USA Fairfax, VA, USA

Mercatus Studies in Political and Social Economy


ISBN 978-3-031-17126-0 ISBN 978-3-031-17127-7 (eBook)
https://doi.org/10.1007/978-3-031-17127-7

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG 2023
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and
retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc.
in this publication does not imply, even in the absence of a specific statement, that such
names are exempt from the relevant protective laws and regulations and therefore free for
general use.
The publisher, the authors, and the editors are safe to assume that the advice and informa-
tion in this book are believed to be true and accurate at the date of publication. Neither
the publisher nor the authors or the editors give a warranty, expressed or implied, with
respect to the material contained herein or for any errors or omissions that may have been
made. The publisher remains neutral with regard to jurisdictional claims in published maps
and institutional affiliations.

Cover illustration: Cienpies Design/Alamy Stock Vector

This Palgrave Macmillan imprint is published by the registered company Springer Nature
Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Contents

1 Introduction: Connecting Elinor C. Ostrom


and Viviana A. Zelizer 1
Stefanie Haeffele and Virgil Henry Storr
2 Why and How Do Social Relations Matter
for Economic Lives? 11
Viviana A. Zelizer
3 What Relational Work Brings to the Study
of the Political Economy 29
Victoria Reyes
4 “Circuits of Commons”: Exploring the Connections
Between Economic Lives and the Commons 51
Carolina Dalla Chiesa, Valeria Morea,
and Francesca Sabatini
5 Testing Circuits of Commerce in the Distant
Past: Archaeological Understandings of Social
Relationships and Economic Lives 77
Crystal A. Dozier
6 Bringing the Family Back In: Political Economy
and the Family in Liberal Theory 101
Brianne Wolf

v
vi CONTENTS

7 Polycentric Institutions of Intimacy 135


Jayme S. Lemke
8 Beyond Relief: Understanding the Cuban Diaspora’s
Remittance-Sending Behavior 163
Anne Hobson and Stefanie Haeffele
9 The Economic Circuits of Social Movements 185
V. Miranda Chase
10 Captains’ Mail Circuits: Examining Social Relations
in Letter Transfer, 1700–1774 215
Hannah Knox Tucker
11 Institutional Diversity in Social Coordination
Post-disaster 237
Laura E. Grube
12 Wartime Governance in the Syrian Civil War 267
Jennifer L. Hudson
13 The Institutional Diversity of Online E-commerce
Platforms in China 293
Minjun Yuan and Wanlin Lin

Index 325
List of Contributors

Chase V. Miranda Babson College, Wellesley, MA, USA


Dalla Chiesa Carolina Department of Arts and Culture, Erasmus
University, Rotterdam, The Netherlands;
Leuphana University, Lüneburg, Germany
Dozier Crystal A. Department of Anthropology, Wichita State Univer-
sity, Wichita, KS, USA
Grube Laura E. Beloit College, Beloit, WI, USA
Haeffele Stefanie Mercatus Center at George Mason University, Fairfax,
VA, USA
Hobson Anne George Mason University, Fairfax, VA, USA
Hudson Jennifer L. School of Politics, Security, and International
Affairs, University of Central Florida, Orlando, FL, USA
Lemke Jayme S. Mercatus Center at George Mason University, Fairfax,
VA, USA
Lin Wanlin The University of Hong Kong, Pok Fu Lam, Hong Kong
Morea Valeria Department of Architecture and Arts, Iuav University of
Venice, Venice, Italy
Reyes Victoria University of California, Riverside, CA, USA

vii
viii LIST OF CONTRIBUTORS

Sabatini Francesca Department of Architecture, Alma Mater


Studiorum, University of Bologna, Bologna, Italy
Storr Virgil Henry Mercatus Center at George Mason University,
Fairfax, VA, USA
Tucker Hannah Knox Copenhagen Business School, Copenhagen,
Denmark
Wolf Brianne Political Theory and Constitutional Democracy, Michigan
State University, East Lansing, MI, USA
Yuan Minjun The University of Hong Kong, Pok Fu Lam, Hong Kong
Zelizer Viviana A. Princeton University, Princeton, NJ, USA
List of Tables

Table 4.1 A few characteristics of the two approaches 67


Table 11.1 Types of goods 242
Table 11.2 Broadmoor, number returned and percent
of pre-Katrina population returned 257
Table 13.1 Governance mechanisms of e-commerce platforms
in China 305
Table 13.2 Interview list of e-commerce fieldwork 2021 315

ix
CHAPTER 1

Introduction: Connecting Elinor C. Ostrom


and Viviana A. Zelizer

Stefanie Haeffele and Virgil Henry Storr

In the social sciences, models are abstractions that help us to understand


the social world. Just as a map is a representation of the physical world
that guides individuals as they navigate their environments, social scien-
tific models are used to study how people make decisions, cooperate to
solve problems, coordinate their actions with others, or engage in conflict.
While models necessarily leave out a great deal of detail about the social
world, if they completely smooth out the differences between individ-
uals and the possibility of contestation, these models can behave less like
lenses and more like blinders, limiting our view of the complexities, capa-
bilities, and limits of social life. Elinor C. Ostrom and Vivianan A. Zelizer

S. Haeffele (B) · V. H. Storr


Mercatus Center at George Mason University, Fairfax, VA, USA
e-mail: shaeffele@mercatus.gmu.edu
V. H. Storr
e-mail: vstorr@mercatus.gmu.edu

© The Author(s), under exclusive license to Springer Nature 1


Switzerland AG 2023
S. Haeffele and V. H. Storr (eds.), Living Better Together,
Mercatus Studies in Political and Social Economy,
https://doi.org/10.1007/978-3-031-17127-7_1
2 S. HAEFFELE AND V. H. STORR

are two prominent and influential scholars that have expanded our world-
view, pushed back on constricting models and methods, and advanced
social science to better understand our complex world.
Elinor C. Ostrom was the first woman to win the Nobel Prize in
Economic Sciences, in 2009, for her pioneering work on the capabilities
of everyday citizens around the world to devise, implement, and main-
tain governance arrangements for common-pool resources (see Ostrom
2010). Trained as a political scientist, she contributed to several disci-
plines, including political science, economics, public policy, sustainability,
and natural resource management. She also advanced research using
multiple methods, including fieldwork, game theory, and experimental
economics, and built a vibrant workshop at Indiana University and global
scholarly network with her husband, Vincent Ostrom (Aligica and Boettke
2009; Tarko 2017; Lemke and Tarko 2021).
Despite being told to steer away from economics early on in her
academic career, Ostrom paved a path for women and minorities in the
social sciences, highlighting how a diversity of backgrounds, disciplines,
and methods better enables us to study and understand real-world prob-
lems and the importance of governance from the ground up (Poteete,
Janssen, and Ostrom 2010). This holistic approach to institutional anal-
ysis is a corner stone of her work. Over the course of her lifetime, she
wrote over 30 books and edited volumes and hundreds of scholarly arti-
cles, won dozens of awards, and served as the president of the American
Political Science Association, International Association of the Study of
Common Property, Midwest Political Science Association, and Public
Choice Society.1
Ostrom left a vibrant legacy as a truly diligent scholar, encouraging
mentor, and lovely person. Upon her death, Rick K. Wilson and Catherine
C. Eckel (2013) remarked how Ostrom was hardworking, connected,
and grounded in her academic and personal life. Kenneth J. Arrow et al.
(2012, 13136) assert that “Elinor Ostrom was a profoundly important
scholar, a great teacher and mentor, an energetic presence in any conver-
sation, and a warm and generous person. She combined personal and
scholarly virtues in a seamless and authentic way.” Ever breaking bound-
aries, Ostrom redefined the commons and the capabilities of people and
communities (see Nicole 2014; Nordman 2021). Vlad Tarko (2017, 169)
declared her a “role model for the social scientists.”
Viviana A. Zelizer, the Lloyd Cotsen’50 Professor of Sociology at
Princeton University, likewise, has contributed ground-breaking work
1 INTRODUCTION: CONNECTING ELINOR C. OSTROM … 3

across multiple fields. She has advanced the interdisciplinary field of


economic sociology, highlighting the complex social context of economic
exchange. Her work emphasizes the interconnectedness and vibrance
of social relations in economic activity, ranging from the complexity of
money to the links between markets and intimacy. Through her notion
of “circuits of commerce,” for instance, Zelizer points out the ways that
communities develop shared norms, practices, and accountability around
particular types of exchange. Such an understanding of the complex world
counters the distinct approaches often found in social science that delin-
eate relations and interactions into neat spheres of economic, political,
and social.
Zelizer has authored seven books and a plethora of academic arti-
cles, won dozens of awards, and served in many professional associations
and committees.2 And, like Ostrom, Zelizer has made a lasting impact
among scholars and students, not only making theoretical and empirical
advancements but breaking barriers for women, immigrants, and minori-
ties all while being an exemplar of curiosity and empathy in the academy.
Charles Tilly states that, “Viviana Zelizer has long been known as the
world’s most astute, discerning, and original cultural analyst of economic
processes.”3 And Jeanne Lazarus (2020, 24) describes her contributions
when she was awarded an honorary doctorate, along with Joseph Stiglitz,
at Sciences Po in Paris: “Viviana Zelizer brought to economic sociology,
if you will pardon the pun, a voix différente and a voie différente, ‘a
different voice’ and ‘a different path.’ She has succeeded in making gifts,
the circulation of money within the family, consumption, and the informal
economy central to inquiry.”
Both Ostrom and Zelizer enrich social scientific discourse with how
they approach social science, how they conceive of social relations, and
how they illuminate the complex lives of everyday people. Unfortunately,
the traditions they inspire are not really in conversation with one another
but are rather in parallel. There is, however, much to be learned from
collaboration among these two approaches. This volume is an effort to
bring these discourse communities together.

1.1 Connected Lives and Associational Beings


Much of social science theory has compartmentalized market activity,
government, and the role of society. The leading models of market activity
in the twentieth century focused on competitive equilibrium, and when
4 S. HAEFFELE AND V. H. STORR

real-world markets failed to live up to those standards, efforts for central


intervention to improve social welfare were at the forefront of policy anal-
ysis. These ways of thinking siloed the study of human life into various
disciplines and emphasized particular methods over others. And, while
these contributions provide insight into how people act rationally within
constraints, the implications were often lacking real-world complexity.
Developments in new institutional economics and new economic soci-
ology, along with others, aimed at steering the study of economic action
and interaction back in the interdisciplinary direction. Peter J. Boettke
calls this more complex approach ‘mainline political economy,’ a tradition
that goes back to Adam Smith and that centers around three propositions
of human action: “(1) there are limits to the benevolence that individ-
uals can rely on and therefore they face cognitive and epistemic limits
as they negotiate the social world, … (2) formal and informal institu-
tions guide and direct human activity, and … (3) social cooperation is
possible without central direction” (Boettke et al. 2016, 4). Both Ostrom
and Zelizer push back on conventional theories of social science and
contribute to this mainline tradition.
Zelizer (2011, 5) discusses the three standard ways in which economic
processes were viewed within economics and sociology: separate spheres,
hostile worlds, and nothing-but. The “separate spheres” approach treats
economic and social interactions as separate aspects of life; an individual’s
social ties, community obligations, or familial support are assumed to be
irrelevant while she is engaging in the market, and vice versa. The “hostile
worlds” approach views the intermingling of the market and social life as
leading to disastrous results; rationality and economization corrupt inter-
actions with family and friends, and sympathy and philanthropy erode the
market’s effectiveness. The “nothing-but” approaches recognize that such
dichotomies lack real-world relevance while settling on one characteristic
as the driver for social life, such as power, rationality, culture, or so on.
This seemed specious to Zelizer, who noticed that in the real world,
outside these models, people lived connected lives. A person, with their
background, education, relationships, and ambitions, brings all of them-
selves to the market, politics, and society. We learn about new jobs
through family friends, meet our spouses and closet friends at work, and
get involved in our communities through the businesses we are associated
with. As we advance in our careers, we pay it forward by helping those just
starting their educations or careers and give back to those who helped us
along the way, earmarking money to go back home through remittances
1 INTRODUCTION: CONNECTING ELINOR C. OSTROM … 5

or for our children’s college fund. This nuanced understanding of how


real life occurs has implications for scholarship and for policy. As Zelizer
(ibid., 360) states, “By promoting clearer descriptions and explanations,
a connected-lives approach to the intersection of economic activity and
personal relations, including intimacy, prods scholars, lawmakers, and
policy experts to identify normatively superior combinations.”
Similarly, Ostrom saw a disconnect between theory and practice in
regard to property held in common. The commons include such resources
as water, fisheries, grazing lands, and the internet that are often not
owned individually through private property nor owned and managed
by government. Such resources are difficult to exclude but rivalrous in
nature. A large open pasture can be grazed upon by many livestock,
though any individual patch of grass cannot be consumed by all. Regret-
tably, as Ostrom observed and in the wording of Zelizer, much of the
theory on the commons was influenced by separate spheres and hostile
worlds reasoning.
Ostrom (1990, 2–7) identifies three models used to examine the
commons: the tragedy of the commons, the prisoner’s dilemma game,
and the logic of collective action. In the tragedy of the commons, the
lack of ownership results in overconsumption because each individual
user can consume without the responsibility of maintaining the resource.
The prisoner’s dilemma provides a formal game theory model to show
how individually rational choices lead to a worse social outcome. While
everyone would benefit from cooperating to maintain the commons, their
incentives are to consume without taking responsibility. And, finally, the
logic of collective action supposedly demonstrates that communal coop-
eration is only likely to take place in small-group settings; otherwise,
the incentives of the individuals involved will overpower the potential
social benefits. Ostrom (ibid., 6) concludes that, “At the heart of each
of these models is the free-rider problem. Whenever one person cannot
be excluded from the benefits that others provide, each person is moti-
vated not to contribute to the joint effort, but to free-ride on the efforts
of others.” As a result, policy prescriptions tend to rely on “only way”
approaches—privatization or public intervention is viewed as the only way
out of the tragedy (ibid., 8).
Ostrom challenged this view along several lines. First, privatization
did not always seem like the logical solution. Dividing up grazing lands
could eliminate competition among herders, but also increased risks of a
shortage of feed due to weather, crop yield, and so on. In such instances,
6 S. HAEFFELE AND V. H. STORR

herders would have to devise new arrangements to exchange resources


(ibid.). Second, it was epistemically problematic to assume that govern-
ment agencies could manage, monitor, and enforce consumption laws in
ways that provided more social benefit than the local actors.
Instead, Ostrom theorized that maybe the actors themselves could
come up with governance arrangements to maintain their commons, and
then documented this theory in practice with case studies from around
the world (ibid.). “Instead of presuming that the individuals sharing a
commons are inevitably caught in a trap from which they cannot escape,”
Ostrom (ibid., 14) argued that “the capacity of individuals to extricate
themselves from various types of dilemma situations varies from situation
to situation.” They do so through associational relations—they delib-
erate, devise rules, and monitor one another. In other words, they actively
participate in their own governance within their community to “deal
creatively and constructively with perverse problems such as the tragedy
of the commons” to “change the situation themselves” (ibid., 21).
In contrast to hostile worlds models, both Ostrom and Zelizer
sought to understand more complex phenomena that seemed to blur
the clean distinctions of markets, government, and relational life. Zelizer
(2011), for instance, continually observed what she termed as “circuits
of commerce.” In many circumstances, in both the short term and long
term, commerce has a particular relational connection that does not neatly
reflect the conventional notions of markets, firms, networks, or bureau-
cratic hierarchies. As Zelizer (ibid., 304) argues, we observe circuits of
commerce “when we find complex and variable coexistence between
people’s social ties and their economic transactions.”
Circuits of commerce include remittance flows, the complex finances
of childcare, and creation of local monies, reward systems, and alternative
accounting schemes. They have the following characteristics:

(a) distinctive social relations among specific individuals; (b) shared


economic activities carrier on by means of those special relations;
(c) creation of common accounting systems for evaluating economic
exchanges, for example, special forms of monies; (d) shared understandings
concerning the meaning of transactions within the circuit, including their
moral valuation; and (e) a boundary separating members of the circuit from
nonmembers, with some control over transactions crossing the boundary.
(ibid., 304)
1 INTRODUCTION: CONNECTING ELINOR C. OSTROM … 7

Likewise, Ostrom examined how governance structures were devised


for common-pool resources and developed a set of criteria, termed insti-
tutional design principles, that were common among successful efforts.
They include:

1A. User Boundaries: Clear and locally understood boundaries between


legitimate users and nonusers are present.
1B. Resource Boundaries: Clear boundaries that separate a specific
common-pool resource from a larger social-ecological system are
present.
2A. Congruence with Local Conditions: Appropriation and provision
rules are congruent with local social and environmental conditions.
2B. Appropriation and Provision: Appropriation rules are congruent
with provision rules; the distribution of costs is proportional to
the distribution of benefits.
3. Collective Choice Arrangements: Most individuals affected by a
resource regime are authorized to participate in making and
modifying its rules.
4A. Monitoring Users: Individuals who are accountable to or are the
users monitor the appropriation and provision levels of the users.
4B. Monitoring the Resource: Individuals who are accountable to or are
the users monitor the condition of the resource.
5. Graduated Sanctions: Sanctions for rule violations start very low
but become stronger if a user repeatedly violates a rule.
6. Conflict Resolution Mechanisms: Rapid, low cost, local arenas exist
for resolving conflicts among users or with officials.
7. Minimal Recognition of Rights: The rights of local users to make
their own rules are recognized by the government.
8. Nested Enterprises: When a common-pool resource is closely
connected to a larger social-ecological system, governance activities
are organized in multiple nested layers (Ostrom 2010, 653).

These rules and characteristics allow community members to create their


own governance structures, monitor for free riders, and adapt to changing
circumstances.
The similarities and complementarities between the circuits of
commerce that Zelizer described and the governance arrangements that
Ostrom highlighted are worth noting. Indeed, a line of research that
8 S. HAEFFELE AND V. H. STORR

might be productively advanced would be to connect the scholarship of


Zelizer’s circuits and Ostrom’s arrangements. Both Ostrom and Zelizer
believed that people are innovative and capable of making their own
rules to engage in self-governance. Such people—rational, adaptable, and
entrepreneurial—complicate our world, both for social scientists to try to
understand and for policymakers who hope to improve lives. Embracing
this complexity, thus, both shows how as a society we are finding ways to
live better together all of the time and adds perspective as we strive for
further development and social change.

1.2 Structure of the Volume


This volume brings together scholars from a variety of disciplines and
who use a variety of methods to engage in a discourse on social science
as influenced by Ostrom and Zelizer. The volume begins with an essay
by Zelizer, reflecting on the connections between her own work and
Ostrom’s. Then, in the chapters that follow, there are discussions on why
political economy benefits from stressing that individuals live connected
lives and are associational beings, how reading Ostrom and Zelizer
together brings something important to the conversation, and how to
incorporate these ideas into other disciplines such as archeology, history,
and security studies as well as topics like the family, disaster recovery, and
e-commerce. There are discussions of new circuits of commerce in Cuban
remittance networks, activist communities in the Amazon, and in the mail
delivery systems of the past, combined with Ostrom’s concepts of poly-
centricity and institutional diversity. This volume hopefully serves as an
opening of a discourse into these scholars and their ideas for years to
come.

Notes
1. See Ostrom’s CV here: https://ostromworkshop.indiana.edu/pdf/CVs/
eostrom_vitae.pdf.
2. See Zelizer’s most recent CV here: https://sociology.princeton.edu/sites/
g/files/toruqf1236/files/people-cv/zelizer_cv_1.pdf.
3. Quoted in his praise for Zelizer (2005).
1 INTRODUCTION: CONNECTING ELINOR C. OSTROM … 9

Resources
Aligica, Paul Dragos, and Peter J. Boettke. 2009. Challenging Institutional
Analysis and Development: The Bloomington School. Abingdon-on-Thames:
Routledge.
Arrow, Kenneth J., Robert O. Keohane, and Simon A. Levin. 2012. “Elinor
Ostrom: An Uncommon Woman for the Commons.” PNAS 109 (33):
13135–13136.
Boettke, Peter J., Stefanie Haeffele, and Virgil Henry Storr, eds. 2016. Mainline
Economics: Six Nobel Lectures in the Tradition of Adam Smith. Arlington, VA:
Mercatus Center at George Mason University.
Lazarus, Jeanne. 2020. “Viviana Zelizer Receives Honorary Doctorate from
Sciences Po: Praise by Jeanne Lazarus.” Economic Sociology: The European
Electronic Newsletter 21 (3): 23–27.
Lemke, Jayme, and Vlad Tarko, eds. 2021. Elinor Ostrom and the Bloomington
School: Building a New Approach to Policy and the Social Sciences. Newcastle:
Agenda Publishing.
Nicole, Wendee. 2014. “Tipping the Scale: How a Political Economist Could
Save the World’s Forests.” Mongabay, May 29. https://news.mongabay.
com/2014/05/tipping-the-scale-how-a-political-economist-could-save-the-
worlds-forests/
Nordman, Erik. 2021. The Uncommon Knowledge of Elinor Ostrom. Washington,
DC: Island Press.
Ostrom, Elinor. 1990. Governing the Commons. Cambridge, UK: Cambridge
University Press.
———. 2005. Understanding Institutional Diversity. Princeton: Princeton
University Press
———. 2010. “Beyond Markets and States: Polycentric Governance of Complex
Economic Systems.” American Economic Review 100 (June): 641–672.
Poteete, Amy R., Marco A. Janssen, and Elinor Ostrom. 2010. Working Together:
Collective Action, the Commons, and Multiple Methods in Practice. Princeton:
Princeton University Press.
Tarko, Vlad. 2017. Elinor Ostrom: An Intellectual Biography. London:
Rowman & Littlefield International.
Wilson, Rick K., and Catherine C. Eckel. 2013. “Elinor Ostrom: ‘A Magnificent
and Irreplaceable Treasure.’” Southern Economic Journal 79 (3): 486–495.
Zelizer, Viviana A. 1979. Morals and Markets: The Development of Life Insurance
in the United States. New York: Columbia University Press.
———. 1985. Pricing the Priceless Child: The Changing Social Value of Children.
New York: Basic Books.
———. 1994. The Social Meaning of Money. New York: Basic Books.
———. 2005. The Purchase of Intimacy. Princeton: Princeton University Press.
———. 2011. Economic Lives: How Culture Shapes the Economy. Princeton:
Princeton University Press.
CHAPTER 2

Why and How Do Social Relations Matter


for Economic Lives?

Viviana A. Zelizer

Elinor Ostrom deeply appreciated the sort of interdisciplinary dialogue


she so vigorously fomented with her own research and with Vincent
Ostrom, at the Indiana University Ostrom Workshop they co-founded.

This paper adapts my keynote lecture prepared for the launching of the Ostrom
Speaker Series celebrating the 10th anniversary of Elinor Ostrom’s Nobel Prize
in Economics, sponsored by the Mercatus Center at George Mason University’s
F. A. Hayek Program for Advanced Study in Philosophy, Politics, and
Economics on October 17, 2019. I draw substantial portions of the paper from
Zelizer (2011, 2015). I am grateful to Stefanie Haeffele and Virgil Storr for
their generosity and editorial efforts to make this volume possible. Stefanie also
wonderfully coordinated my initial visit.

V. A. Zelizer (B)
Princeton University, Princeton, NJ, USA
e-mail: vzelizer@princeton.edu

© The Author(s), under exclusive license to Springer Nature 11


Switzerland AG 2023
S. Haeffele and V. H. Storr (eds.), Living Better Together,
Mercatus Studies in Political and Social Economy,
https://doi.org/10.1007/978-3-031-17127-7_2
12 V. A. ZELIZER

Ostrom repeatedly decried disciplinary blindfolds for cramping intellec-


tual progress by training scholars into, as she described it, “separate
languages that do not help us identify the common work parts of all
this buzzing confusion that surrounds our lives” (Ostrom 2005, 5). She
would surely welcome this volume’s effort to bring together an interdis-
ciplinary team of scholars working toward shared understandings of our
economic lives. In this essay, I bring my own perspective as an economic
sociologist to pay tribute to an Economic Sciences Nobel Prize-winning
political scientist.
Although Ostrom and I never met nor corresponded and despite the
fact that our conceptual frameworks and methodologies differ, we have
shared a lifetime quest to figure out how people manage to organize their
economic activities. This pursuit has become an integral part of the Hayek
Program for Advanced Study in Philosophy, Politics, and Economics’
mission, with its program uniquely designed to facilitate meaningful
interdisciplinary dialogue. While too often such efforts reduce to window-
dressing, the program’s publications and course curricula certify its bona
fide cross-disciplinary bridge building. Not only have Peter Boettke and
Virgil Storr taught economic sociology courses but the department incor-
porated economic sociology as a field of studies, arguably a first for an
economics department. All this means we share an understanding that
social relations and culture matter in economic lives.
As it turns out, an intellectual highlight of my last few decades has
been the growing exchange of ideas with economists. Most memorably,
years ago, Avinash Dixit, Professor of Economics Emeritus at Princeton
University, and I co-organized an Economics & Sociology workshop—
the first at Princeton, hosting speakers from both disciplines whose work
focused on the social organization of economic life. Plus, and also a first,
we co-taught a graduate seminar on issues of common interest to both
disciplines. I was further drawn into the world of economics as member of
the advisory council for the Paris School of Economics, as it re-organized
the teaching of economics in Paris.
But, of course, Elinor Ostrom’s revisioning of economic activity
goes much beyond celebrating cross-disciplinary exchanges. With
bold concepts, methodological versatility, refusal to accept theoretical
straightjackets, and unrelenting persistence, Ostrom pioneered a radical
rethinking of economic activity. From my perspective as an economic
sociologist, one of her most transformative contributions was paying
close attention to the critical significance of social relations for explaining
2 WHY AND HOW DO SOCIAL RELATIONS MATTER … 13

economic governance. Countering rationalist individual-driven accounts,


she demonstrated how, when, and why others matter in shaping economic
arrangements. She also shook up standard economic theory by including
cultural norms within her explanatory model and by insisting that abstract
models be grounded in observations of real people involved in economic
activity.
In dialogue with Ostrom’s arguments, this paper presents my own
approach to the study of social relations in the economy. I first briefly
identify a transformation in how economic sociologists, including myself,
have grappled with explaining the place of social relations in shaping
economic activity and then explore how social relations matter for a set
of economic arrangements I call “circuits of commerce.”
To be sure, it is no big news to report that social relations matter
for economic sociologists. From the launching of what is called the
“new economic sociology” in the 1980s, social ties have remained a
staple explanatory element, yet the usual way of introducing social rela-
tions had been as context: as external facilitators or constraints on
economic processes. That is what we mean by the “embeddedness” of
economic phenomena in social processes. Context analysts look at stan-
dard economic phenomena such as labor markets, commodity markets, or
corporations, showing how social networks as context shape the options
of economic actors. Those studies certainly jump-started a major research
agenda focusing on the role of social networks in economic activity.
But twenty-first-century analyses have moved on and away from
context accounts toward the formulation of more subversive explana-
tions of economic activity. In this alternative framework, we identify
social processes and social relations no longer as context but at the very
heart of economic activity, including the previously unexplored territory
of markets and money. In the process, straightforward social network
conceptions of interpersonal ties have shifted to an emphasis on the vari-
able quality, intensity, meaning, and consequences of relational ties among
economic actors. In this alternative view, negotiated and dynamic inter-
personal interactions, not the individual, become the starting point for
economic processes.
At the same time, economic sociologists have expanded the terri-
tory of what we consider to be “core” economic institutions and “real”
economic activity: while studies of capitalist firms and production markets
certainly advance the field, younger scholars increasingly step outside
those domains as they explore household economies, art worlds, markets
14 V. A. ZELIZER

for human goods, care economies, consumption practices, digital plat-


forms, and more. Importantly, this broadened lens breaks down artificial
boundaries between the supposedly sturdier “real” economic spheres
such as firms and corporations and allegedly peripheral or less seriously
economic domains.
What’s more, while in its earliest stages economic sociology remained
allergic to cultural analysis—mostly in an effort to distance itself from
discredited Parsonian notions of an autonomous culture—the field has
now fully legitimized the place of shared meanings in its explanations of
economic activity. Culture no longer conceived as an “autonomous force
behind or above social life but as a constitutive element of social relations”
(Tilly 2008, 183). Most recently, we see a surge of pathbreaking studies
addressing the morality of markets, including financial organizations (e.g.,
Beunza 2019).
I have spent the past four decades trying to make sense of intersections
among economic activities, small-scale interpersonal relations, and shared
culture. In books on the morality of life insurance, the economic valua-
tion of children, the social meaning of money, and intimate economies, I
explored how people manage “connected lives” as they establish multiple
links between their economic transactions and personal relations (see
Zelizer 1979, 1985, 1994, 2005, 2011). Countering what I call mistaken
yet ingrained “hostile worlds” views that define economic activity and
relations as separate spheres necessarily hostile to each other, I show how
people constantly meld personal relations and economic transactions.
But importantly they do not do so randomly: it matters greatly that
the type of economic transaction as well as the form of payment matches
the meaning of the particular relation. I call this matching of relations,
transactions, and media, relational work. In all economic action, I argue,
people, all of us, differentiate among our social relations. For each cate-
gory of relation, people erect a boundary, mark the boundary by means of
names and practices, and designate certain forms of economic transaction
and media as appropriate for the relation, barring other transactions and
media as inappropriate.
That is why we will tip a waiter but not our spouse, we may give
our child a weekly allowance but rarely our grandfather, and we pay our
employee with a salary not a gift certificate (unless it is Christmas). We
all care a great deal about such distinctions: the wrong kind of payment
might sometimes amuse us but will more often shock or offend. Why?
Because mistakes violate our expectations of how social relations should
2 WHY AND HOW DO SOCIAL RELATIONS MATTER … 15

work. Just imagine my shock if one of my students offered me a thick


envelope full of hundred-dollar bills as an incentive to teach a better class.
For a concrete and uplifting demonstration of how forms of payment
matter, consider Elinor Ostrom’s donation of her share of the $1.4
million Nobel Prize money to the Indiana University Ostrom Work-
shop: she transformed a monetary prize into a donation that certified
her meaningful relationship to the workshop. Such distinctions, or what
I call monetary earmarking, defy entrenched assumptions of money’s
fungibility.
In my decades-long exploration of such meaningful economic rela-
tionships, I became increasingly puzzled by the creation of certain
unexpected forms of economic organization, what I identify as “circuits
of commerce.” I was especially intrigued by the management of social
relations in the formation, transformation, persistence, or breakdown of
those circuits.
So let me turn to circuits starting with four examples: (1) why do
immigrants, often at the expense of their own needs, set as a budgetary
priority sending large chunks of their hard-earned money to relatives
in their country of origin? How do such transnational bonds shape the
immigrant economy? (2) When legal tender works so well to bridge
across commodities, transactions, and people, why do people go to great
lengths to produce local alternative currency systems sometimes called
social or “civic currencies,” some of them now digital, with their own
names, rules, membership, trading, and value? and (3) What explains the
popularity around the world of informal lending and savings associations,
such as ROSCAS (rotating credit and savings associations). How is it that
people trust their money to potentially risky networks of acquaintances?
And what explains that such collective arrangements frequently work with
little default and considerable return for all participants? Indeed, Fred-
erick F. Wherry, Kristin Seefeldt, and Anthony Alvarez’s Credit Where
It’s Due: Rethinking Financial Citizenship (2019) reports how lending
circles have been galvanized by organizations such as the Mission Asset
Fund as conduits for the unbanked to obtain formal credit scores. And
finally, from the corporate world: (4) given the fact that corporations set
up hierarchies with clear rewards and mobility, how is it that cliques of
people promoting each other’s welfare arise, frequently trading time off,
swapping shifts, donating leaves, and sharing bonuses? Dan Clawson and
Naomi Gerstel’s Unequal Time: Gender, Class, and Family in Employment
Schedules (2014), a study of health professionals’ time management in a
16 V. A. ZELIZER

set of health facilities, discovered the prevalence of coworker schedule


swaps. To manage unexpected events such as a family illness or emer-
gency childcare or to free time for attending family events, employees
regularly swapped hours and schedules. In contrast to most studies
focusing on vertical scheduling arrangements between supervisors and
workers, Clawson and Gerstel thus identified a crucial practice initiated
by co-workers: a swapping circuit.
I ask when, why, and how do people create such distinct economic
arrangements? And what are their common properties? Standard thinking
about economic structures does not fully capture what is going on
with the multiple, often surprising ways in which people organize their
economic lives. Many of these economic connections do not function
quite like markets or as firms, hierarchies, or networks, at least in the
conventional understanding of those concepts. And yet we see them
spurting in all sorts of locations. Sometimes we may dismiss them or
not even notice them precisely because they do not fit neatly within
established frameworks.
Elinor Ostrom certainly noticed. In studying economic governance,
she focused her sharp analytical gaze precisely on social arrangements that
did not “closely resemble the standard models of a market or a hierarchy”
(Ostrom 2010, 645). And she set out to understand what she described
as the “wide diversity of institutional arrangements that humans craft to
govern, provide, and manage public goods and common-pool resources”
(ibid., 642).
Indeed, her discovery of common-pool resource governance demon-
strated local communities’ ingenious creation of multiple arrangements
for managing the equitable sharing of forests, freshwater, fisheries, and
more (ibid., 645). By observing what was happening on the ground,
Ostrom’s field studies revealed economic actors creating novel collabora-
tive institutional arrangements independently from or despite government
dictates or market intervention.
What mattered for the creation of such bounded common-pool
arrangements? Not individual rational egoists, as she called them, acting
for short-term profit. Ostrom demonstrates instead the crucial place of
social relations and social communication (including face-to-face interac-
tions) along with shared norms and culture. To be sure, as she recognized,
not all such common resource communities were successful, but when
they worked, they relied on participants’ dynamic social ties as well as
their shared understandings of local norms.
2 WHY AND HOW DO SOCIAL RELATIONS MATTER … 17

Ostrom thus replaced visions of the common’s inevitable relational


tragedy with evidence of participants’ relational resilience and problem-
solving creativity. Her student and friend, political scientist Margaret
Levi, aptly summed it up in her 2018 TedX as she discussed the moral
economy: “Ostrom,” Levi told her audience, “taught us that we are social
and creative human beings who build communities and find solutions to
common problems.”1
There is deep affinity between Ostrom’s common resource pool
communities and my circuits, as both involve often overlooked special
forms of economic arrangements which rely on informal governance in an
exceptional way. Perhaps she and I both noticed these arrangements not
because we are women, but because as women working in male-dominant
fields (in my case economic sociology) we surveyed the economic land-
scape as the Simmelian stranger, which Simmel ([1908] 1971) described
as “freer practically and theoretically”: in our case perhaps less beholden
to mainstream paradigms of what constitutes core economic institutions.
I identify these alternative economic arrangements as circuits of
commerce in an old sense of the word, where commerce meant conver-
sation, interchange, intercourse, and mutual shaping. I will first define
those circuits and then focus on two cases: one, the remittance puzzle,
and second, the college circuit, as an example of a separate category of
organizational circuit.
So first, what are circuits? Like a firm, a clique, or a household, an
economic circuit is a distinctive and widespread form of economic interac-
tion that recurs across an enormous variety of circumstances. How do we
recognize a circuit? By the following characteristics: (a) distinctive social
relations among specific individuals, (b) shared economic activities carried
on by means of those social relations, (c) creation of common accounting
systems for evaluating economic exchanges, for example special forms
of monies, (d) shared understandings concerning the meaning of trans-
actions within the circuit, including their moral valuation, and (e) a
boundary separating members of the circuit from non-members with
some control over transactions crossing the boundary. Relational work
is what sustains circuits as participants create viable matches among those
meaningful relations, economic transactions, and media.
Economists, sociologists, and anthropologists who have noticed
circuits in operation have commonly treated them as imperfect markets,
as institutional contexts for market transactions, or as non-market systems
18 V. A. ZELIZER

of exchange, but not as distinctive social structures with dynamics of their


own.
Circuits thus expand the repertoire of economic structures deserving
close attention. Where do we find circuits? As my initial queries suggest,
we observe them in a wide range of contexts and social circumstances.
Circuits vary from relatively short-lived or fixed-term (but never instanta-
neous) to long-term; from intimate to impersonal; from equal to unequal;
and from small to large.
Since I introduced the concept of circuits some 20 years ago, other
scholars have also applied the framework to a remarkable variety of
economic arrangements, and they include marvelous studies on the
modeling industry (Mears 2011), art markets (Velthuis 2005), the
commerce of cadavers (Anteby 2010), the provision of personal care
in Brasil (Araujo Guimarães 2021), the sharing of credit cards among
low-income households in Chile (Ossandon 2017), financial innovations
among postbellum US bankers (Polillo 2011), intersections between
cultural markets and politics in Hungary (Molnár 2017), ties between
financiers and elite universities (Eaton and Gibadullina 2020), and
transnational debt circuits (Henchoz et al. 2020; for a theoretical appli-
cation of what he calls “Zelizer circuits,” see Collins 2000). It has been
gratifying to watch the proliferation of circuit research: for instance, in
2019, André Vereta-Nahoum (University of Sao Paulo, Brazil) and Fred-
erick F. Wherry (Princeton University) launched a comparative research
project involving faculty and graduate students on “Circuits of Economic
Life in Times of Crisis.”
As you can see by this list, circuits are not an exotic phenomenon,
outside more conventional economic transactions but emerge in multiple
economic settings not just in the allegedly “softer” economies of the
poor, immigrants, or local currency communities. Nor are circuits archaic
leftovers on their way to extinction, replaceable by more efficient
problem-solving organizations.2
Still, you may wonder, why invent a new concept such as circuits,
when we already have the old reliable network tool? In what ways does
thinking about circuits improve on just thinking about networks? After
all, network analysts have developed an impressive set of tools for deci-
phering economic connections. Network specialists, however, have largely
focused on relatively stable patterns and configurations of social relations.
They have not explored the variable content of transactions or their mean-
ings nor the incessantly negotiated interactions they involve. As I searched
2 WHY AND HOW DO SOCIAL RELATIONS MATTER … 19

for ways to better understand precisely these features, I was drawn to the
concept of circuits.
Circuits flesh out and inject dynamic energy into the network skeleton.
A French scholar vividly characterized my effort as inserting “le coeur
dans les networks” (heart into networks). But circuits, however, are not
simply constituted by adding and mixing culture into networks.
Instead, circuits define a special social structure. Every circuit certainly
includes a network—particular ties and relations—and a boundary. But as
we have seen in the examples I cited, it also contains distinctive cultural
materials, particular forms of economic transactions and media, as well
constant relational negotiation. Circuits therefore are not simply a cultur-
ally sensitive version of networks. Thinking about circuits raises questions
about meanings and relational negotiations (along with emotions and
power as Nina Bandelj (2015, 2020) has so brilliantly demonstrated)
mostly invisible in standard network analysis.
Let’s return to the remittance puzzle. Migrant remittance systems are
a wonder to behold. Almost any time substantial numbers of low-wage
migrants move in streams from low-wage areas to distant high-wage areas
while leaving significant numbers of relatives behind, remittance systems
spring up. They do so without any globally available cultural model, any
promoting worldwide organization, and any legal requirement.
Yet they operate in remarkably similar ways across the globe, with
migrants at their destinations regularly earmarking major shares of their
usually meager wages for transmission to folks back home through
couriers or wire services, or digitally, and receiving accounts of how the
remittances are spent, with recipients in sending communities relying on
the funds for daily maintenance, home improvements, and provisions for
the migrants’ return. At both ends of migration streams, most migrants
attach moral significance to remittances, and shame to those who fail to
pay their share.
Migration scholars have amply documented the economic significance
of these monetary transfers. For 2019, remittance flows to low- and
middle-income countries were estimated by the World Bank (2019) to
reach $550 billion, on route to become the largest source of external
financing for developing countries. But how do these transfers work?
What explains that many migrants give remittances priority overpaying
their own bills in the US?3
20 V. A. ZELIZER

To better understand what’s at stake, listen to how Junot Díaz,


the Dominican-American novelist, reminisces about the poignant special
meaning of his family’s remittance funds in The New Yorker story, “The
Money”:

All the Dominicans I knew in those days sent money home. My mother
certainly did. She didn’t have a regular job outside of caring for us five kids
so she scrimped the loot together from whatever came her way. My father
was always losing his forklift job so it wasn’t like she had a steady flow
ever. But my mother would rather have died than not send money back
home to my grandparents in Santo Domingo. They were alone down there
and those remittances, beyond material support, were a way, I suspect, for
Mami to negotiate the absence, the distance caused by our diaspora. Hard
times or not she made it happen. She chipped dollars off from the cash
Papi gave her for our daily expenses, forced our already broke family to live
even broker. . . All of us kids knew where that money was hidden too-our
apartment wasn’t huge—but we all also knew that to touch it would have
meant a violence approaching death. I, who could take the change out of
my mother’s purse without even thinking, couldn’t have brought myself
even to even look at that forbidden stash. (Díaz, 2011)

Why should we consider Diaz’s household economy as part of a circuit?


Here is a check list of circuit “ingredients”:

1. Which set of distinctive social relations are involved here? Notice


the relational linkages marked by the remittance transfer, connecting
Diaz’s mother and her parents, with consequences for her house-
hold’s other ties, her husband, and her children.
2. Shared economic activities carried on by means of those social
relations? That is the transfer of household funds involved in the
remittance transaction. In Diaz’s account, we also see a decrease
in the family’s consumption in order to safeguard money for the
grandparents.
3. Common accounting systems including special forms of monies:
here the remittance money flows as a distinct currency. Diaz reports
the social but also physical earmarking of that money, hidden in a
special spot and kept separate from the daily housekeeping expenses.
4. Shared understandings concerning the meaning of transactions
within the circuit? Diaz clearly conveys the remittance’s crucial
sentimental almost sacred significance for his mother. And the
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