The Adventures of Calculation: On Social Embeddedness of Economic Rationality

According to Max Weber and modern economic theory, rational calculation of economic decisions is one important basis of modern, rational capitalism. Rational calculation, however, presupposes that actors know the relevant decision parameters and are not confronted with fundamental uncertainity. But rational calculation encounters limits since market actors are limited in their relevant knowledge: Actors are thus confronted, on the one hand, with coordination problems that can be resolved only through the social embeddedness of economic action. On the other hand, it is the limits to rational calculation that constitute the dynamics of modern capitalism.