The Systems of Exchange is a classification scheme of exchange systems using concepts from network analysis, economics and cultural sociology.  This classification shows "the free market" is but one possible type of economy and that other types are not best understood as imperfections.  See the full article published in Academy of Management Review 2004, Vo 29, No. 1, 28-49.

The Systems of Exchange (SOE) framework is a theoretical alternative to the dominant “free market” logical model of classical economics. Sociologists have long argued that this model is inadequate for representing the wide range of empirically observed economic actions and organizations. Economists assume this idealized market and treat deviations from the ideal as “market imperfections.” But Biggart and Delbridge, like many social scientists, argue that this fictional ideal is a poor basis for understanding the wide variety of empirical economic phenomena.

Instead of positing a logical model, the authors developed an empirically grounded typology of exchange that organizes systems according to actors’ logics of action and the structure of social relations between actors. Borrowing from Weber’s distinction between instrumental and substantive logics of actions and Parson’s distinction between universalistic and particularistic social relations, the authors created a classification scheme that results in four qualitatively distinctive types: Price, Associative, Moral, and Communal Systems of Exchange. The authors argue that these four different Systems of Exchange should be viewed as substantively different, rational systems rather than deviations from an idealized market.

The SOE typology offers research advantages for the empirical analysis of economic action. It neither assumes that all exchange relations are variations of a single model, nor each economic system a historically unique arrangement.

Each of the four systems of exchange assumes a particular economic logic that, in turn, supports complementarities between the social construction of normative economic actors, social relationships of a particular type, pricing systems, and regulatory–organizational schemes. The typology supports analysis at multiple levels, including individual and corporate actors. It can be used to develop hypotheses about the conditions under which various systems emerge as well as causal explanations of how systems change from one type to another.

The Systems of Exchange website provides many tools for learning about the framework and incorporating it into the classroom and offers inspiration for research in economic sociology. Users can download the original article by Biggart and Delbridge by clicking on the typology image on this page, and they can consult the FAQs for additional clarification.

A separate tab on the website includes case studies to illustrate the differences between the four systems of exchange. The case studies draw on examples from multiple industries and settings to highlight how differing economic logics can lead to substantial variations in organizational structure and outcomes. For example, one case study examines the moral logic that has supported the spread of pay-as-you-can restaurants around the world. Other case studies detail how an associative logic underpins joint ventures between airline companies as well as Tupperware parties to sell solar panels. The case studies also illustrate the complexity of mixed systems and transitions between systems

The Teaching Resources tab includes ideas for teaching the framework to undergraduate students. 

Readers can continue the discussion by posting comments on the blog or suggesting new examples to cover. We also invite original contributions to the blog or additional teaching resources, which you can send to nwbiggart@ucdavis.edu. Contributed blog posts can feature original research or current events that can be interpreted within the systems of exchange framework. As the website continues to develop, we also plan to highlight journal articles from multiple disciplines that have used the SOE framework.

We believe the Systems of Exchange website will be a valuable tool for economic sociology instructors and students. We hope that the analytical framework and teaching resources will help students to develop an appreciation for the logics of diverse exchange relations. Furthermore, we hope that the article and website will contribute to economic sociology and management research about the conditions that support different exchange relations and precipitate transitions and conflicts between systems. We invite your contributions and suggestions for additional resources to develop.

Citations:

  1. Biggart, Nicole and Rick Delbridge. (2004). “Systems of Exchange.” Academy of Management Review 29(1): pp. 28-49.
  2. Parsons, Talcott. (1968). (First published in 1937.) The Structure of Social Action Volume II: Weber. New York: Free Press.
  3. Weber, Max. (1978). Economy and Society. Berkeley: University of California Press.