Quarterly Journal of Austrian Economics
Exchange Versus Power: Toward a Praxeological Reconstruction of Sociology
Volume 2, No. 1 (Spring 1999)
No reasonable man can contend that the relations between price and supply is in general, or in respect to certain commodities, constant. We know, on the contrary, that external phenomena affect different people in different ways, that the reactions of the same people to the same external events vary, and that it is not possible to assign individuals to classes of men reacting in the same way. . . . The mathematical economists. . . formulate equations and draw curves which are supposed to describe reality. In fact they describe only a hypothetical and unrealizable state of affairs.
—Ludwig von Mises
Human Action: A Treatise on Economics (p. 348)
It is a great fault of symbolic pseudo-mathematical methods of formalizing a system of economic analysis . . . that they expressly assume strict independence between the factors involved and lose all their cogency and authority if this hypothesis is disallowed. . . . Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.
—John Maynard Keynes
The General Theory of Employment, Interest, and Money (pp. 297–98)
The following is an attempt to unravel a major tangle in contemporary sociological theory and research. Sociologists tend to ignore the clear distinction between exchange and power in social life. This peculiarity by itself can account for a great deal of the victimization and exploitation sociologists ponder in their theoretical writings and purport to find in empirical research.
It will be argued here that the problem stems from two related but distinguishable branches. The first, which is taken up in section one, is an endemic confusion between positive and logical theory that goes beyond simple inadvertence. Sociologists seek a profundity and seriousness in their work that belies the constraints entailed in any consistent theoretical perspective. Switching implicitly, and perhaps unconsciously, from one paradigm to another provides an illusion of scope which, though it may be within the legitimate reach of the social philosopher, is clearly out of the grasp of a social science. There can be no objection to social philosophy when it is clearly identified, but when it is put in the place of a logically consistent mode of analysis—or of understanding—it works a sleight-of-hand that would convince the unwary that the latter has been fairly derived from the former.
Section two focuses on the other branch, which is the sociological concept of “unequal exchange.” Sociologists in the main have never accepted exchange on a purely conceptual level. What they view as exchange in social life has been defined so broadly as to encompass virtually the universe of interaction itself. Unmistakable signs of the resort to coercion by a party to social interaction can thus be construed by the sociologists as evidence of an inequity inherent in exchange. Robbery at gunpoint can be described in the language of social exchange, simply by changing or to for in the imperative command, “Your money or your life!” It is in this way that one can portray even the most personal interactions as essentially political acts. As we have heard it repeated monotonously since the 1960s, marriage is political and sex is the purest manifestation of power.
The major implications of these theoretical oddities, as outlined in the first two sections, provide the substance of section three. Concerns here are focused first on the dangers inherent in sociological confusions between voluntary exchange and coercion and, second, on the manner in which sociology might be most easily reoriented. The discussion is carried over briefly into a fourth and concluding section that addresses the longstanding difficulties sociologists have experienced in coming to grips with the phenomenon of change.
A smattering of remarks pertaining to the recent historical context of the ideas unfolded herein has been included to accommodate readers for whom it may be unfamiliar. In no sense, however, can the following be taken as a study in the history of ideas. Despite the sharpness of criticism, it should be emphasized here at the outset that there is no reason to suspect the discipline would wither from the scene were sociologists to surrender their ideological beliefs. To the contrary, the social sciences provide an arena in which praxeology can develop simultaneously along a number of divergent dimensions. By default, over the past generation or so, economists or the economically trained have taken over substantial portions of the work being done in history, political science, and sociology. One may welcome or deplore this invasion of traditional turfs, as it were, but, if nothing else, it serves to demonstrate the intrinsic value of the various substantive divisions of social reality. The work that can be accomplished in the sociological arena will prove inexhaustible.
Power and Paradigms
Introspection and observation conspire to suggest that people employ means to achieve ends. The most sophisticated among us have realized for some time that the proposition can neither be proved logically, nor established empirically, but there is nothing between nature and artifice to stay us from recognizing it as a fundamental axiom of action. If we follow Rothbard (1962, p. xi) in adding a subsidiary postulate which establishes “a variety of human and natural resources,” we will picture a world in which individuals choose from a variety of potential means in order to achieve a multiplicity of ends. Conversely, of course, one may assume instead that choice is illusory in the sense that means and ends have already been determined by some suprahuman agency; or empty because the pairing of means and ends is invariant, save for remediable ignorance and error; or powerless because the world is a chaotic place in which the relation between means and ends is utterly arbitrary.
Disregarding the province of powerless choices on the grounds that it lies beyond anyone’s measure of science, we are left with an action theory that incorporates choice and the deterministic realms of illusory and empty choice. For these latter, the varieties of natural and human resources appear as stimuli, one upon another, in patterned arrangements of such sensitivity and complexity as may defy complete scientific solution for an indefinite period. In the interim, terms like stimulus, cause, or independent variable can be used interchangeably. One could extend the list to include such words as “trigger,” “exciter,” or perhaps “coerce.” The elimination of choice abolishes “action” in favor of “behavior,” which, in turn, can be referred to as the dependent variable, the response, the effect, or even “compliance.” Where choice is disallowed, nothing remains but cause and effect and special definitions of power become otiose.
Max Weber’s apposite definition of political power (1921, pp. 52–56) is, therefore, an item of some theoretical importance to sociology, first in that he saw fit to provide it, but also by way of its universal currency and acceptance among sociological theorists and researchers. Political power, as Weber said, consists both in the monopolistic use of physical force by government to exact compliance from the citizenry, and, more importantly, because of the frequency with which it is used in everyday life, the credible threat that physical force will be availed if in the absence of timely compliance.
Insofar as sociologists allude to power, coercion, compulsion, physical force, etc., they signal a commitment to the theory of action, which cannot then be shunted aside in favor of one variety of behavioral theory or another. This practice of inconsistency, so deeply ingrained in the discipline, has been defended by George Ritzer (1980), among many others, on the ground that sociology is a multiple paradigm science. Ritzer speaks volubly of a micro-macro continuum (1990, p. 347), while others describe the micro and macro as discrete yet co-valid perspectives (e.g., Blau 1977, p. 3). Co-validity implies validity at the same moment in the sense indicated by the solution to a set of simultaneous equations—but this is out of the question. The systems of independent and dependent variables which are the fruit of a macro or positive methodology appear from the standpoint of logical theory as unanticipated outcomes of spontaneous individual actions (e.g., Hayek 1937). From an action perspective the positive laws amount only to spurious correlations which can be considered predictive only insofar as prevailing expectations and the interaction patterns which emerge from them remain as they have been. The independent variable of such systems appears to the action theorist as the reification of some set of unexamined relationships which are themselves dependent upon the circumstances of the moment and that can only be appended to theory in the form of special assumptions. For the positivist, of course, action, with its paraphernalia of interactive choices, is no more than a clever trick that unenlightened men and women play on themselves. Logical and positive theories stand at the antipodes. Sociology may indeed abide as an affair of multiple paradigms, but they are not co-valid and the continuum is a creature of art.
Unlike politics, theory cannot flourish as an accommodation between rival perspectives. An academic discipline can certainly function as a big tent which tolerates competing viewpoints including even the hiatus of positive explanation versus logical understanding that has animated sociology for so many decades. The alternative of slurring this fundamental distinction, however, by means of recurring ad hoc references to continua and co-valid viewpoints is tantamount to obscurantism. It may seem reasonable to suppose that a social science can explain phenomena, on the one hand, while it develops a basis for the understanding of those same phenomena on the other, but this is an illusion. The phenomena are not the same. If social behavior can be explained via the axioms of positive science, the impulse toward understanding will evaporate. The very ideas of action, understanding, and choice will give way to the essentially meaningless laws of positive science. The idea that the ultimate data of dualistic or pluralistic interpretations of experience can be traced back to a common source is a metaphysical interpretation rather than an assumption which could be any part of an experimental natural science (Mises 1962, pp. 117–20).
The Mysteries of Exchange
Unfortunately Weber also used the term “power” in reference to an empirical probability that one individual might exact compliance from another by means of a frown, a gesture, or some other intimation of hope or displeasure not amounting to a coercive threat. The typical case is that of the person who accepts the unwanted suggestions of another in his or her own interest in maintaining or furthering a valued relationship. This is a straightforward interpersonal exchange which should be clearly distinguished from apprehensions of physical force. If the compliance is strictly onesided, which is to say that no advantage is sought by the donor, the action belongs in the category of “autistic exchange” wherein “the donor acquires the satisfaction which the better condition of the receiver gives to him” (Mises 1998, p. 196).
To whatever degree Weber may have sown confusion by using power as a term to designate compliance irrespective of its source, his contemporary Carl Menger fathomed the conceptual subtleties of interpersonal exchange with uncommon clarity. After more than a century his lucid discussion retains a freshness that can be appreciated by anyone newly approaching the subject. Menger recognized the powerful tendency to regard “the magnitude of price as the essential feature of an exchange.” Given the obtrusiveness of prices in the exchange process and our ability to measure their magnitudes, he found it unremarkable that we tend to regard “the quantities of goods in an exchange as equivalents.” Appearances to the contrary notwithstanding, any such commonsensical conclusion precipitates a confusion from which the mainstream of sociological thinkers have yet to emerge. “Commodities that are equivalents in the objective sense of the term do not exist—even on given markets and at a given point in time” (Carl Menger 1871, pp. 192–93; emphasis in original). What Menger said of commodities, of course, is predicable of the counters of any interpersonal exchange, but it is perhaps worth remarking on the ease with which a mistake stemming from the formal properties of money was carried over into nonmonetary exchange.
This is not the place to trace the recent history of the sociological conception of unequal exchange. It permeates the journals in which sociologists most commonly publish but it is seldom treated as the object of explicit discussion. During his rise to prominence within the ranks of sociological theoreticians, Alvin Gouldner stated matter-of-factly that objective value equivalence between “things exchanged” could be “measured by economists or other social scientists” (1960, p. 172). The absence of discussion supporting this remarkable assertion suggests that Gouldner simply accepted it as a portion of the received knowledge of social science. Speaking more generally, sociologists conceive the relative values of goods and services in a linear fashion which predates the concept of marginal utility. They treat these relations as having been normatively established through a give and take of interpersonal exchanges between members of the sorts of definable groups characteristic of static agricultural or even preliterate societies. At bottom sociologists are suspicious of the notion that people exchange for mutual benefit. Evidently they languish in a mercantilist world where interpersonal exchange is a zero-sum affair that necessarily produces winners and losers at each encounter. Such a perspective creates “the need for a ‘privileged point of view on the world,’ of the intervention of an organ reckoned to be endowed with a ‘superior’ understanding, ‘not spoilt’ by interests” (Infantino 1998, p. 39).
Against the constraints of this mercantilist backdrop, the sociological mainstream has never challenged the categories of force and fraud. While power is recognized as physical force, however, it has been said to differ only in degree “from the power that rests on the supply of needed benefits” (Blau 1964, p. 125). Lurking just behind the dubious formulation of needed benefits, of course, is the idea that some few individuals will be able to dominate the lives of the many by their control of resources. Contra Mises (1927, p. 100), employment is seen as a favor which the enterpriser may bestow or withhold, respectively to the workers’ salvation or ruin. The preoccupation of sociologists with public employment has given rise to the idea that employers in general tend to pay wages which exceed their workers’ marginal product—and this for the express purpose of reducing them to dependency. As Blau put it, “The more employees prefer their own job to any possible alternative, the more dependent are they on their employer and the more power does he have over them” (Blau 1964, p. 120).
With formulations like these, exploitation is worked into the very essence of the employment relation, not because of anything having to do with dispositions of surplus value, but simply because the sociologist wills it. Wages which are too low constitute “an exchange of things unequal in value” which is a core meaning of exploitation (1960, p. 166), Wages which are too high, however, become exploitative by enabling one individual to coerce another. Lester Thurow (1973, p. 70) at least had the courage to say that a factor which “is paid more than its marginal product is an exploiter.”
The sociologist’s solution to this concocted dilemma of exploitation follows as if by logic and suffuses a vast literature which purports to quantify the inequities of market processes everywhere. Implicitly or explicitly it calls forth a rigorous and unrelenting control of prices along with the qualities of goods and services which must ultimately reach into every corner of social existence. In following this track sociology displays remarkable consonance with a Durkheimian impetus which has lasted now just over a century. Émile Durkheim’s antipathy for the market is well documented and provides for measures of control which answer precisely every contemporary complaint concerning putative inequality in the momentary results of market transactions.
Implications and Suggestions
Brushing aside all matters of paradigm and method, the problem for sociology is a plain inability to recognize coercion. If exchange is only a clever disguise for the credible threat of physical force we are left with the dismal task of finding the most congenial oppressor—with sociology to guide us in the quest, of course. At the point where sociology verges on one of the sundry varieties of twentieth-century Marxism, coercion is regarded as any stimulus or inducement to behave or act in a manner deemed inconsistent with “the objective laws of social development” (Weichert 1977, pp. 141–42). In this formulation, or course, whatever propaganda or physical compulsions are needed to insure compliance with objective laws cannot be viewed as coercive any more than we could describe the laws of physics as forces used against humanity at large or to benefit one individual, interest group, class, estate, caste, race, ethnicity, or gender over another.
Robert Fogel and Stanley Engerman (1974) suggested that classical liberals and socialists both have indulged in a myth in expecting coercion, up to and of course including slavery, to give way automatically, as it were, in the face of the tremendous efficiencies, respectively of market systems for the liberals, and for the socialists, scientific methods of production and control. Experiences of the present century have provided a plentitude of evidence for the persistence of coercion in its most grisly manifestations.
An ideology which obscures the distinction between voluntary action and coercion is a dangerous instrument, and one which denies the distinction will ultimately prove deadly, irrespective of the original intentions of political leaders. In this specific regard there is nothing to choose between objective laws of social development and a collective conscience which stands “outside of and above individual locales and contingencies” (Durkheim 1915, p. 444) and forces “the individual to act in view of ends which are not strictly his own” (Durkheim 1893, p. 227). Both necessitate the emergence of a vanguard, a new class (Gouldner 1979), or other named privileged group “that is worth more than the rest of society” (Infantino 1998, p. 155)—to interpret the laws or the will of one metaphysical concoction or another.
The two branches of sociological confusion lately reviewed grow directly from a single root that Hayek (1946) labeled French or Continental conceptions of individualism—but has more lately been described as methodological collectivism. The sociological inability to conceive the categorical significance of voluntary action is virtually entailed in its preference for positive method. As noted above an overarching commitment to methodological collectivism is adroitly masked by the device of a continuum which sets out the individual and the collective as points in a single dimension. So long as this illogical continuum can be protected from criticism, the contentions of action theorists will continue to appear to the sociologist as a congeries of self-serving claims mouthed by the propagandists of a propertied elite.
Pragmatically speaking, however, it may be the zero-sum penumbra of social exchange which is most readily open to critical exposure. Sociologists do not assert the complete onesidedness of every exchange but they are confounded by what they take to be the objective fact of a common lopsidedness in the distribution of benefits. One party to the exchange gets more than the other, or more than he or she would have been willing to take. As a group, sociologists have never accepted the impossibility of making interpersonal utility comparisons and some have defended the practice as methodologically unobjectionable. Resting just beneath this cul-de-sac is the implicit notion that individuals should have—or, better yet are entitled to—the substance of their most fleeting desires. Parenthetically, at least, the matter of entitlement can be read as a demand to know why, in a world of such incredible abundance “unmeasured by a previously established yardstick” (Marx 1859, cited in Hobsbawm 1964, pp. 84–85), anyone’s wishes should go unfulfilled. Mises probably gave the clearest answer when he explained that “perfect satisfaction and its concomitant, the absence of any stimulus to change and actions, belong properly to the concept of a perfect being,” which, as he recounted “is beyond the power of the human mind to conceive” (1976, p. 24). “[M]otorcars, television sets and refrigerators do not make a man happy” as Mises said. “In the instant in which he acquires them, he may feel happier than he did before. But as soon as some of his wishes are satisfied, new wishes spring up” (Mises 1956, p. 4).
Mises’s logic cuts right across the grain of predictions that envision the replacement of consumers by beings who seek only to enhance their abilities as socialist producers, and the Durkheimian necessity for a collective conscience to act as a brake on “excited appetites” which would otherwise “tend to exceed all limits” (Durkheim 1897, p. 383). As the condition for action sans pareil, dissatisfaction is not the odious thing that commonsense musing seems to suggest. Irrespective of any conscious intention, sociologists have cast about either for perfect beings or perfected slaves in fruitless efforts to spare humanity the trouble and irritation of having to act at all.
The obstacles which stand most immediately in the way of a thoroughgoing reorientation of sociological theory and the research it must animate and constrain were surmounted in economics during the seventy years or so which followed the marginalist revolution. Initially the concept of marginal utility has to be understood and embraced, not simply as the appurtenance of some fictional realm of the economic man, but as predicate of human action in all of its manifestations. With this accomplished it would no longer be possible to look at exchange from the distorting perspective of winners versus losers and the door would at least stand open to a modern understanding of interpersonal utility comparisons. From this vantage point methodological collectivism itself could be quietly dismissed without ever becoming the focus of a Kuhnian revolution (Kuhn 1962).
The Malign Neglect of Social Change
Some forty years ago G.L.S. Shackle (1958, p. 105) achieved a great economy of expression in describing predicted man as less than human and predicting man as more. Ludwig Lachmann (1977, p. 88) quoted Shackle’s proposition in a context of the market process but it applies with much greater urgency in the broader realm of praxeology. From time to time, in their exuberance to seize the mantle of predicting men and women, sociologists have claimed the capacity “to control man and his society” (e.g., Merton 1948, p. 210). It would be a disservice to the discipline to suggest that these pretenses of the recent past have seriously intended the ramifications entailed therein.
The action theory which has been proposed as an alternative to this foolish dream opens up the much more satisfying prospect of understanding, at least to some limited degree, “the unanticipated consequences of purposive social action” (Merton 1936). That, of course, is the other side of sociology, promised by Professor Merton a dozen years before his impulse to control. Merton’s efforts to bring this rich field of inquiry into the mainstream of sociological concern was gravely handicapped by his lack of attention to the seminal works of Menger, some fragments of which lay ready to hand in English translation (Menger 1892). Beyond that, however, his efforts, and those of his progeny, have been fundamentally thwarted by an imperfectly examined reliance on positive theory. Mandeville’s (1728) concept of the unintentional order has haunted the fringes of sociology for more than sixty years. Allowed into the mainstream, it would propel sociology in new and challenging directions, but it will remain in waiting for as long as methodological collectivism retains its sway in the discipline.
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Kenneth H. Mackintosh† was professor of sociology at the University of Central Arkansas.
 Discussion in Shackle (1965, pp. 184–96).
 Defined by Mises (1976, p. xvi) as “the general theoretical science of human action.”
 Most notably in history by Fogel (1989) and the “cliometricians,” and in political science by Olson (1965), Buchanan, Tollison, and Tullock (1980) and the large numbers of scholars they have attracted. Becker (1957) led a charge directly into the mainstream of traditional sociological concerns by addressing racial and other forms of “discrimination” in a manner which ran directly counter to the received Marxian protocol.
 For a brief but nonetheless excellent nontechnical historical discussion of Western thinking on the vexed question of determinism versus free will, see Gardner (1983, pp. 100–15).
 Discussion in Shackle (1961, pp. 42–43).
 Because of its importance in human relations it would be well to append fraud to the category of physical force. It is undoubtedly correct to say that fraud which is not buttressed by force will eventually prove unsustainable, but over the shortterm it is coercive in and of itself.
 Although the match is short of perfect, the sociologist’s designations of micro and macro correspond respectively to the aforementioned categories of logical and positive theory.
 More than a generation past, it may be recalled, Lionel Robbins (1932, p. 114) complained that “not one single ‘law’ deserving of the name, not one quantitative generalization of permanent validity” had emerged from the efforts of the Historical and Institutional Schools over the course of a century. The most spectacular of recent failures may have been the quiet demise of the Samuelson and Solow (1960) version of the Phillips Curve which predicted well throughout the 1960s but reversed its slope as inflationary expectations spread through the population.
 Discussion in Mises (1976, pp. 1–67).
 See, for example, Peter Blau’s discussion (1964, pp. 174–75) of “exchange opportunity lines” which are said to represent a “fair rate of exchange.” Ironically, he reports that “it may be, and often is, to the advantage of both parties to depart from the fair rate of exchange.”
 See Mises’s discussion of wages and public employment (1946, p. 79).
 Blau’s core notion informs contemporary discussions of the “wage premium,” as found, for example in Halaby and Weakliem (1993).
 At this juncture Gouldner attempts to free “exploitation” from its strong association with ideological claims. He half-seriously proposes “reciprocity imbalance” as a substitute for exploitation, which he says is synonymous with “unequal exchange” (1960, p. 167). There is deep confusion here in that exploitation is not ideological for any who hold that value can be objectively measured.
 The American Sociological Review, which is the flagship journal of the American Sociological Association, has averaged better than one such publication per issue for many years. As long ago as 1982 the Association’s guide to publication outlets for sociologists listed at least fifty-six journals as suitable vehicles for these interests (ASA 1982). Efforts to quantify, of course, are restricted to a subset of the econometric techniques of partial analysis.
 Discussion in Mises (1962, pp. 76–78).
 Excellent recent discussion in Infantino (1998, pp. 57–82).
 See, in particular, Durkheim (1960, pp. 111–27, 200–29; and 1897, pp. 361–92).
 It should be noted that the action theorists cited herein have shown no susceptibility to this illusion. The point at issue is that full cognizance of coercion requires its clear separation from exchange, as such. The uncertainty of action virtually guarantees that individuals will enter into wholly voluntary transactions they live to regret, but no amount of ex post rationalization by injured parties or outside observers can derive coercion from the unforseen. The paradox is that outside observers who hold exchange to be coercive in and of itself will have little incentive to look for extraneous coercive elements in interactions which, at least superficially, give the appearance of exchange.
 Sociologists who have been influenced by what is sometimes called a rational-choice or rational-action perspective tend to focus their attention on the latter of these. In a popular text written for introductory students Rodney Stark presents a variant of this idea as the sociological definition of exploitation, to wit, “All profits in an exchange in excess of the minimum amount needed to cause an exchange to occur” (1996, p. 699). Presently, this incomprehensible formulation is running in a seventh edition with no relief in sight.
 The late James Coleman (1990, pp. 769–84), for example, defended his decision to assume the position of the Hindu Brahmin who Robbins (1938) described as holding his own enjoyments and pains to be of infinitely greater magnitude than those of lower caste members. Coleman points out quite correctly that people make these kinds of comparisons quite readily and claims he too should be given this latitude so long as he refrains from rendering any social-welfare prescriptions. As a citizen, of course, Coleman was entitled to his values but he was obliged to surrender them at the threshold of theory.
 Richta, for example, encloses the word “consumption” in quotation marks while calling for scientifically based standards of nutrition, “the rational wardrobe,” models of transport, housing, etc., calculated “to divert a maximum amount of resources to the development of human creative powers” (1969, pp. 167–69).
 Infantino, who is a sociologist, rendered valuable service by explaining that the term economic action merely asserts that individuals operate in a pragmatic field seeking advantages for the sake of which they are willing to incur a variety of costs (1998, p. 39).
 This is a quotation from Robert Merton’s essay “The Self-Fulfilling Prophecy” which was included in every edition of his Social Theory and Social Structure. Recently this fabulously successful treatise has appeared in German and French language editions.
 See Infantino (1998, pp. 83–99) for an excellent account of the narrow margin by which Durkheim himself failed to grasp the essential concept.