How I Became a Relational Economic Sociologist and What Does That Mean? *

From Relational Embeddedness to Relational Work

In the early 1980s, as economic sociologists took on economists’ standard accounts, they focused their efforts on demonstrating that social organization served as crucial context for shaping individual action. Context analysts examined standard economic phenomena, such as labor markets, commodity markets, or corporations, showing how social organization constrained or facilitated the options of economic actors. They spoke about the “embeddedness” of economic phenomena in social processes, centering their analyses on organizational structures and interpersonal networks.

Centering explanation on individual choice within constraint, this context approach made the implicit assumption that economists had gotten at least some phenomena, such as bargaining, right. What was missing, according to the economic sociologists? Economists, argued context theorists, had neglected the social context that mattered, such as previously existing connections among potential economic partners. As Mark Granovetter explained in a 1988 interview with Richard Swedberg:

What I mean by “embeddedness” is that the economic action of individuals as well as larger economic patterns, like the determination of prices and economic institutions, are very importantly affected by networks of social relationships. I think that for the economic action of individuals the embeddedness of individuals in networks of social relations is in most contexts extremely important, and you rarely see this taken into account in economic arguments. ²

Context analysts injected a crucial sociological voice into the analysis of economic phenomena, vigorously shaking up orthodox economic models’ fundamental precepts. It’s time, however, to probe further, moving, as Randall Collins has urged, “beyond embedding.” ³ More than a decade ago, in his Structures sociales de l’économie, Pierre Bourdieu similarly pushed for bolder explanations of the economy, impatiently declaring that: “Strategies aimed at ‘correcting’ the errors or omissions of a paradigm without challenging the paradigm itself . . . remind me of Tycho Brahe’s heroic efforts to save Ptolemy’s geocentric model from the Copernican revolution.” ⁴

Blasting its “residual economism,” Greta Krippner offers a more sustained, trenchant critique of embeddedness. ⁵ Embeddedness theorists, most notably network analysts, Krippner claims, have left “the hard core of instantaneous market transacting outside the realm of economic sociology.” ⁶ By dividing the world of relations into embedded and arm’s-length ties, for example, the field perpetuates the illusion of an asocial market sphere. Thus, paradoxically, “the concept of embeddedness posits that the world of the market exists apart from society even as it attempts to overcome that divide.” ⁷ Isabelle This Saint-Jean echoed this critique in L’ Année sociologique:

When authors state that “economic facts” are “embedded” in the social . . . they suppose that there is something we can identify as “economic” which at the same time can be distinguished from the “social” . . . In a way, they are themselves drawing the boundary they are trying to question. ⁸

The objections multiply. Alejandro Portes starts off his lucid assessment of economic sociology’s theoretical corpus complaining about the “disturbing return to ‘embeddedness’ as if it were everything that, by way of theoretical contribution, contemporary economic sociology has to offer.” ⁹ Still worse, he later notes, the concept of embeddedness, a metatheoretical assumption, is often erroneously treated as an explanatory mechanism, which results in impoverished accounts of specific economic transactions. Voicing similar concerns, Fred Block posits that, “despite twenty years of work, embeddedness has not generated a robust set of concepts that help us to make sense of different types of economic activity.” ¹⁰ And in a 2006 interview, Michel Callon impatiently declared that unless their approaches become more experimental, the social sciences are condemned to an ineffectual incantation of “embeddedness! embeddedness! hoping this magical word will disqualify economic theory.” ¹¹

Why the embeddedness bashing? We can explain it in part as a predictable historical shift in paradigms. Embeddedness certainly has had its day, profoundly transforming our understandings of economic activity. We might therefore expect that the field is ripe for a conceptual shift. More substantively, however, for many of its critics, embeddedness does not go far enough in debunking standard economic models. Skeptics complain that the concept typically assumes a social container within which economic processes, not fully conceived as socially constituted, operate. In this view, social relations, Krippner and Alvarez note, “affect the economy from the outside.” ¹² Harrison White made that point forcefully in Markets from Networks: “Producers are not just embedded in a market, as the sociologist Mark Granovetter (1985) would argue.” Instead, White notes, “They actually constitute the market’s interface in, and as the set of, their perceptions and choices.” ¹³ David Stark likewise challenges embeddedness’s lingering allegiance to what he calls “Parson’s Pact,” by which sociologists agree to lay claim “on the social relations in which economies are embedded,” but not the economy itself. ¹⁴

To move forward, therefore, economic sociology must become even more transgressive by focusing on the meaningful and dynamic interpersonal transactions that make up all forms of economic activity. In this alternative view, negotiated interpersonal transactions, not the individual, become the starting point for social processes. Once we agree with the premise that economic transactions are fundamentally social interactions, the search is on for a better theory of social process to account for economic activity. A relational work approach moves toward such a theory. It posits that in all areas of economic life people are creating, maintaining, symbolizing, and transforming meaningful social relations. As they do so, moreover, they are carrying on cultural symbolic work. The goal, therefore, is to study variability and change in those social relations.

As dominant paradigms shift, so do the problems available for investigation. ¹⁵ Examining economic phenomena as the formation and negotiation of relations as well as the construction of meaning and the organization of categories, a relational work approach broadens economic sociology’s subject matter. It certainly includes firms and markets, but it also ranges over households, immigrant networks, informal economies, welfare transfers, organ donations, and more. In the process, it breaks down artificial boundaries between the supposedly sturdier “real” economic spheres—such as firms and corporations—and allegedly peripheral or less seriously economic domains.

To be sure, relational approaches within sociology have a long tradition, which in the past decade or so has gained increasing visibility and influence. What’s more, within contextual economic sociology, namely what Mark Granovetter calls “relational embeddedness” studies, scholars have centered their analyses on the variable configuration and strength of social relations. ¹⁶ Concentrating on what Brian Uzzi vividly describes as “the network architecture of material exchange relationships,” these studies have repeatedly demonstrated, often with sophisticated models, how networks shape economic performance and individual decision making. ¹⁷

The goal here, however, is not to review this vast literature’s contributions or its limitations, but to redirect our efforts. The objective is to move beyond an approach that centers on “embedding relations”—how existing social ties constrain or facilitate economic activity—toward one that focuses on “constitutive relations.” How can we analyze the continuously negotiated and meaningful interpersonal relations that constitute economic activity? What else beyond efficient outcomes, risk reduction, or economic performance guides the relational process?

The concept of relational work offers an entry into those relations’ content, variation, and change. By relational work, I mean the creative effort people make establishing, maintaining, negotiating, transforming, and terminating interpersonal relations. Relational work goes on continuously, shaping boundaries that differentiate relations that might become confused with deleterious consequences for one party, both parties, or third parties.

Does relational work apply exclusively to the management of economic transactions? Certainly not. People engage in relational work as they negotiate and differentiate their ties to others in multiple domains of their lives, including religious, political, civic, or other social interactions. The specific contours and elements of relational work, of course, vary since meanings and practices will diverge. Exploring relational work for economic activity, however, dramatizes the process, as it occurs in a domain supposedly impervious to such efforts.

This expansive definition is also how Tilly conceptualized relational work. More generally, during the last fifteen or so years of his life, Tilly unceasingly pursued a relational agenda for sociology, arguing that interpersonal exchanges have a logic that doesn’t reduce to individual consciousness or to location within social structure. Interaction, he was determined to demonstrate, produces structure. Startling his followers by shifting his analytical lens away from “big structures, large processes, and huge comparisons,” Tilly’s Why? closely examined small-scale relational processes. ¹⁸

Intrigued by the variety of reasons people give to account for their behavior, Tilly proposed a relational account of such reason-giving. Why? uses a simple scheme to survey how and why people offer explanations, excuses, justifications, and accounts. It makes a compelling case for reason-giving as a way of creating, maintaining, transforming, or terminating interpersonal relations. Specifically, reason-giving, in Tilly’s view, performed four kinds of crucial relational work: “creation of new relations, confirmation of existing relations, negotiating shared definitions of the relations at hand, and repairing damaged relations.” ¹⁹

Notice for example, he tells us, how people repair relations by justifying their actions, as when “someone who has inflicted damage on someone else tells a story to show that the damage was inadvertent or unavoidable and therefore, despite appearances, does not reflect badly on the relationship between giver and receiver. The phrase ‘I’m sorry, but . . .’ often starts a story that does relational repairs.” It thus performs relational work. ²⁰ The idea of relational work, Tilly buoyantly declared, “sings out.” ²¹

To be sure, multiple versions of relational work exist. If you Google the term, you find more than seven million entries that range from management advice (how relational work contributes to the bottom line) to politeness studies’ linguistic analyses (polite and impolite speech and behavior as part of people’s relational work). Most significantly, however, feminist scholars, whether actually using the term “relational work” or not, have amply documented the gendering of relational efforts. From Arlie Hochschild’s pathbreaking investigations of emotional labor, to the analysis of care work, feeding work, kin work, volunteer work, and more, studies have traced women’s crucial contributions (paid and unpaid) to the maintenance of relations. Moreover, feminist research, departing from standard network analyses, has paid serious attention to the substance and content of relations, not only their structure. As Fred Block observes: “the focus on relationships and emotional work has been one of feminism’s key empirical and theoretical contributions, and a systematic attention to the role of relational work in economic sociology might finally bring these concerns to the core of the sociological enterprise.” ²² Note the irony that it may take feminist theory to bring relational work into the predominantly male economic sociology territory. ²³

Relational work, in my own framework, certainly includes gender as one feature of relational efforts involved in economic activity. Introducing gender into what are ostensibly simply profit-maximizing economic transactions allows a window into the relational work involved in those transactions. More specifically, by studying gender we are able to observe participants in economic activity negotiating gender identities and relations where gender-blind economic analyses postulate the priority of interests and resources (the same would be true for other salient identities, such as race or ethnicity).

But relational work—the effort of establishing, maintaining, negotiating, transforming, and terminating interpersonal relations—is not only a gendered specialty. It applies more broadly to all participants in economic activity. What, then, are specific processes that make up relational work involving consumption, production, distribution, and asset transfer?

Relational Packages and Relational Work: Ordinary Practices and Legal Disputes

Consider first four elements we find in all economic activities:

Variable connections among such elements constitute what we can call relational packages. These consist of combinations among (a) distinctive interpersonal ties, (b) economic transactions, (c) media, and (d) negotiated meanings. Thus, the relationship between X and Y might fit into the category of friends or the category of lovers, each with its own meanings, economic transactions, and media, determining for example who pays, how, when, for what, how much, how often, for how long, and with which currency. The identity or social category of transactors (e.g., gender, race, age) introduces further crucial variation in relational packages. ²⁴

Relational work consists of creating viable matches among those meaningful relations, transactions, and media. ²⁵ The actual character of the economic activity will therefore vary, and significantly, by features of the relations among transactors, type of transaction, and media. As they differentiate their social relations in this way, furthermore, people establish a boundary separating each relationship from others that resemble it in some regards. In Purchase of Intimacy, I note that relational work becomes especially consequential when relations resemble others that have significantly different consequences for the parties. In such cases, people make extra efforts to distinguish the relations and mark their boundaries:

To the extent that two relations are easily confused, weighty in their consequences for participants, and/or significantly different in their implications for third parties, participants and third parties devote exceptional effort to marking what the relationship is and is not; distinctions among birth children, adopted children, foster children, and children taken in for day care, for instance, come to matter greatly for adult-child relations, not to mention relations to the children’s other kin. ²⁶

More generally, Purchase of Intimacy draws on the concepts of relational packages and relational work to explain how people manage “connected lives” as they establish multiple links between their economic transactions and intimate relations. Instead of viewing economic activity and intimate relations as two separate spheres hostile to each other, I identify how people constantly mingle economic activity with intimacy. But they do not do so randomly: it matters greatly that the type of economic transaction matches the meaning of the particular intimate relation.

Not any economic transaction is compatible with any intimate relation. On the contrary, people work hard to find economic arrangements that both confirm their sense of what the relationship is about and sustain it. If you are my casual girlfriend but not my wife, we don’t share a checking account; if you are my patient but also my friend, I won’t charge you, but you might give me a gift. In the world of courtship, couples have historically differentiated among categories of relations: engagement, dating, treating, hooking up, and more; and they mark those relations apart from both marriage and prostitution. In each case, we see participants engaging in delicate, consequential relational work as they match each of those relations to specific sets of economic transactions (such as varied forms of payments and gift exchanges) and media (money, engagement rings, and more). ²⁷

For a poignant illustration of relational work, take the case of Christine Oxley, drawn from a New York Times report about the consequences of the 2008 recession. Oxley became part of what the Times described as a growing “underground banking system” of jobless Americans turning to family members and friends for financial assistance. ²⁸ Fifty-six-year-old Christine and her husband had lost their jobs in 2008. Their troubles intensified after Mr. Oxley suffered a heart attack and the couple had no health insurance coverage for his hospitalization.

Forced to ask her elderly great-aunt for $40,000, Ms. Oxley insisted on drawing a legal contract that required payment within five years, despite the fact that the money would have been eventually hers as an inheritance. Oxley explains: “I wanted her to know I wasn’t going to walk away from this and I wasn’t trying to get a handout.” She wanted to establish her aunt’s donation as a loan rather than a handout or even a down payment on a future inheritance. To preserve her dignity and independence, it mattered greatly to her—as it often does to others in similar situations—to mark the relationship as lender-borrower, not benefactor-welfare recipient.

Legal disputes offer an illuminating window into how institutional third parties intervene in the arbitration of intimacy and economic activity. To be sure, intimate relations only become legal cases in rare circumstances; most of the time, intimately connected people work out their differences without litigation. But once intimate disputes turn into legally contested economic transactions, we find courts engaging in a form of relational work that both parallels and differs from everyday practices. Courts, like ordinary people, do not segregate spheres of intimacy and economic transaction. Instead, they engage in their own complex process of matching certain forms of intimacy to particular types of economic transactions and media, making them subject to legal action: enforcement, compensation, and penalties.

Legal disputes, therefore, concern how those four elements—relations, transactions, media, and meanings—are defined and matched. Courts must first establish the relationship among the parties (e.g., is this a married couple or are they cohabitors?) before determining which are appropriate and legally valid transactions and media for that particular relation. A divorcing couple might contest, for example, whether an earlier purchase of an automobile from their pooled funds was a gift from spouse to spouse, a common investment in the household, or a business deal. How the law adjudicates among “relational packages” is certainly consequential for the parties involved. Note that in the case of the Oxleys, the Internal Revenue Service might question whether the monetary transaction between aunt and niece was indeed a loan or instead a covert—and therefore taxable—family gift.

To be sure, legal relational work is not confined to intimate disputes. Consider for instance legal scholar Noah Zatz’s novel examination of prison labor’s contested employment status. ²⁹ There is no debate over the fact that inmates in the United States engage in extensive economic activity, from building furniture to what Zatz calls “prison housework” such as cleaning and cooking prison meals. ³⁰ But do such efforts constitute “real” employment? What distinguishes an ordinary worker from an inmate laborer and, more generally, market employment from penal work? To answer this question, employment law, Zatz argues, relies on relational packages and relational work. ³¹

Included within employment law’s relational package, Zatz shows us, we find conceptions of what constitute proper worker–employer relationships, economic transactions, and payment media. Such legally conceived “relational markers,” as Zatz calls them, serve as boundaries differentiating prison labor from ordinary employment. For instance, the employment relationship—conventionally defined as a freely entered wage contract between worker and employer—contrasts with prison workers’ economic dependence on their employer (the prison) for basic subsistence needs of food, clothing, and shelter.

As for transactions, a few courts, Zatz reports, define inmates’ payments as “gratuities,” whereas most characterize payments as compensation for work. Yet the economic activity in which inmates engage is sometimes classified as rehabilitation or job training, which frames the exchange as a noneconomic therapeutic or educational transaction. ³²

What about media? Although ordinary workers typically receive unregulated cash payments, prisons may direct inmates’ hourly or daily wages to specific uses such as victim restitution or confine the monies to special restricted accounts. Prisons can further regulate inmate money by paying in scrip valid only within the prison or by offering “good time” credits, which translate into reduced sentence length. Zatz explains that courts do not usually rely on such earmarking of prisoners’ earnings to distinguish prison labor from market work; however, these particularized media nevertheless signal differences in categories of work. ³³ Prison labor is further differentiated by restrictions on the circulation of inmate-produced goods. ³⁴

Legal definitions of prison–inmate relations, transactions, and media, while continuously contested, set the boundaries for a specific type of economic activity performed within the confines of a prison. Courts, Zatz explains, “Engage in relational work . . . invoking the presence or absence of various relational markers and assembling them into a coherent picture of the relational package that best fits prison labor.” Such “relational packages” have direct consequences for prisoners’ labor rights and responsibilities, including their right to demand minimum wage. ³⁵ It also affects their tax status: for the IRS, for instance, inmates’ earnings do not count as earned income for purposes of figuring the earned income credit. ³⁶

Courts’ relational work, moreover, extends beyond adjudicating boundaries in particular prison labor cases. Because of their authoritative role, courts also provide influential templates for subsequent relational work. Prisons actively incorporate into their organization those relational markers recognized and enforced by the courts. Employment law, notes Zatz, does not merely regulate an existing labor market; it “is part of a constitutive legal environment.” ³⁷

Meanwhile, within their enclosed and tightly supervised world, prisoners themselves routinely engage in private forms of relational work as they negotiate their social ties with other prisoners and with guards. They differentiate those relations with varying forms of transactions, including compensation, barter, favors, blackmail, and gifts. And inmates regularly create their own accounting systems, inventing currencies for prisons transactions, most famously trading with cigarettes, sex, and drugs (after prisons banned smoking, mackerel seemed to replace cigarettes as a popular exchange medium). ³⁸ Still a different set of “relational packages” appear in prisoners’ ties to wives, fiancés, and girlfriends, in which participants negotiate over a variety of economic transactions (gifts, payments, allowances, treating) and media (cash, food, clothing, calling cards). ³⁹

The concept of relational work involved in economic activity—the matching of meaningful relations, media, and transactions—whether applied to private interactions or legal intervention, provides analytical tools for analyzing the constitution of economic transactions. To further explore the approach, I focus next on monetary differentiation. How does a relational approach advance our understanding of how money works? More specifically, how do we explain money and more generally media as resources for relational work?

Earmarked Money as Relational Work

As we have already seen, media, most notably money, are crucial components of relational packages and relational work. People regularly employ money as a means of creating, transforming, and differentiating their social relations and economic transactions. Countering standard models of a single, fungible money, for the past twenty years sociologists and other social analysts have begun mapping money’s pervasive differentiation, its integration into the whole range of interpersonal ties and economic transactions. ⁴⁰ Money and other media are defined as flexible adaptations to multiple social ties rather than inevitably conforming to identical laws of exchange. This approach, furthermore, challenges rigid divisions between so-called real money—consisting only of legal tender imposed by powerful political and financial authorities—and other forms of socially created currencies. ⁴¹

Relational explanations attach multiple monies and monetary practices to social relations, arguing that people regularly differentiate forms of monetary transfers in correspondence with their definitions of the sort of relationship that exists between them. They adopt symbols, rituals, practices, accounting systems, and physically distinguishable forms of money to mark distinct social relations. People work hard to maintain such distinctions: they care greatly about differentiating monies because payment systems are a powerful way to mark apart different social ties. Each of these ties has a different meaning, and each one therefore calls for different forms and rituals of payment. Different currencies, as Randall Collins perceptively notes, “exist to differentiate the levels of capitalist markets today, from financial instruments accessible to the highest financial circles, down to the earmarked currencies of poor people’s welfare payments.” ⁴²

Consider the differentiation of household monies. Wives’ earnings are often treated differently from their husbands’ income; they are assigned particular uses, such as vacations, childcare expenses, or a college fund. Such distinctions have a long tradition. In the early twentieth century, for instance, among U.S. farm families, women’s egg money and butter money was distinguished from their husbands’ wheat money or corn money. Her money provided for the family’s daily expenses; his paid for mortgages and new machinery. And as more married women entered the labor force their earnings were dubbed as “pin money,” often treated as a more frivolous income than their husbands’. Alice Kessler-Harris has shown how such distinctions mattered in determining married women’s wages in the 1920s. Regardless of women’s actual financial need or their skills, employers assumed women’s income was supplementary to male earnings. ⁴³

The form, frequency, and timing of monetary transfers between parents and children, meanwhile, represent markers of their own distinct relationship. Consider what happens when standard “relational packages” are challenged, as with the growing phenomenon of “boomerang kids,” adult children who, for financial reasons, return home to live with their parents. Should parents charge those children rent, require help with living expenses, or expect regular assistance with household chores? According to media reports, a great deal of variation exists among parental strategies, with some parents, for instance, requiring rent payments but refunding the money when the child moves out to live independently, as “a reward for good financial behavior.” ⁴⁴ As they work out such financial arrangements, parents and children are negotiating new definitions of their relationship: uncertain as to which is the “right” monetary transfer for their refashioned domestic economy. ⁴⁵

Negotiations about informal exchanges across households reveal a different set of transactions, relations, and media, as well as their own distinctive patterns of relational work. Colin C. Williams, for instance, uncovered a culture of what he calls “paid favours.” ⁴⁶ Interviewing households in urban neighborhoods of British cities about material help they gave or received from wider kin, acquaintances, and neighbors, Williams found that those favors were often compensated with money. In this system, which Williams calls “not-for-profit monetized exchange,” the payment turned out to be an important relational medium. In some cases, the money served to maintain social ties (e.g., it avoided souring relations in case the favor was not reciprocated) or as a mechanism for redistribution. Paying an out-of-work relative for fixing a broken window, for example, was a way to dispense needed income as compensation for work rather than humiliating charity. As one employed woman explained, “it was a little job to give him [uncle] some pocket money.” ⁴⁷

Similarly, suppliers of favors often charged a relative for a job they would not afford to get done otherwise. In some cases, however, the payment was unacceptable, as when the supplier expected retribution in the form of a specific favor, such as babysitting. Moreover, Williams found that fees for paid favors varied contingent on the parties’ relationship: for example, the closer the relation the more the price fell below the market norm. Among close relations, when the payment was intended to prevent unpleasantness in case of unreciprocated favors, no more than a token fee was expected, but the price increased for more distant social relations. ⁴⁸

Similar relational work occurs outside households in the world of firms and corporations. Here too, people introduce monetary distinctions that serve to create and maintain significantly different sets of social relations and transactions; they correspond to distinct social ties and their meanings. Wage payment by the hour, for instance, implies a distinctly different sort of relation between employer and worker than an annual salary. Discretionary forms of payments such as bonuses or prizes represent their own categories of relations among the parties. When people struggle over such payments, of course, they often quarrel over the amount of money due, but they also frequently fight over the form of payment and its appropriateness for the relation in question.

Take, for instance, the issue of perquisites. Calvin Morrill’s study of thirteen U.S. corporations identifies regular markers of boundaries between middle managers and top managers. In the case of top managers, corporations, reports Morrill, regularly paid for what some executives called multiple “goodies” including first-class transportation (e.g., private planes and limos); child care at exclusive day care centers; special office furniture and equipment (computers, health equipment, and Jacuzzis); plus miscellaneous items and functionaries (boats, private chefs, massage therapists, athletic trainers, dog groomers, private security personnel). Top executives, notes Morrill, frequently measured their success in terms of access to such perquisites rather than sheer income alone. ⁴⁹

Sometimes relational boundaries are enforced by segmenting media. In her astute observation of futures traders, Caitlin Zaloom documents how traders discipline and focus their workplace efforts by creating a local market medium, the “ticks” or price intervals that measure trading gains and losses for a financial product. Traders, Zaloom found, translated their accounts’ dollar balance into the “abstract market measurement” of ticks. Ticks furthermore remained segregated from traders’ private dollars: “specific to the time and space of trade. [They are] not exchangeable for food, mortgage, tuitions, cars, and vacations that draw the trader into a web of relationships outside the market arena.” ⁵⁰ Thus, paradoxically, in order to construct a market currency, traders must first remove money’s persistent personal markers. “It takes orchestrated effort,” Zaloom observes, “to maintain the segregation of market and ‘outside’ currencies.” ⁵¹ “Like poker chips,” she adds, “ticks are tokens that belong to an enclosed world.” ⁵²

People thus perform relational work by means of multiple monetary distinctions. But how do they make such distinctions? One major set of practices people adopt repeatedly is the earmarking of currency so that its proper destination becomes obvious and compelling. Earmarking consists both of symbolic distinctions and of practices ranging from the keeping of cash in separate containers to the decoration of legal tender so it becomes a personalized gift. Earmarking techniques fall into three broad categories:

Notice that earmarking corresponds to the socially constructed boundaries of social relations: each of these currencies is acceptable for only some social relations and transactions. Monetary earmarking, thus, is a relational practice by which people perform relational work. The more delicate the relational work going on, moreover, the more extensive will be the earmarking of currencies. In his study of organ markets, for example, Kieran Healey has shown policymakers’ efforts to earmark monies exchanged for organs. Staying away from direct cash payments to donors and their families, other more appropriate media are proposed, such as stipends for donor families toward funeral expenses (paid directly to the funeral home), or health insurance premium reductions for donors. ⁵⁵

Collins takes the argument about money’s variable relational significance even further by arguing that such distinctions underlie contemporary differentiations of economic class: “We are increasingly in a world in which economic class is meaningful largely if one stays within the circuits of exchange that generated that money.” ⁵⁶ The “entire structure of social class,” Collins concludes, can therefore be conceived as “a variety of circuits of money used to enact particular kinds of social relations.” ⁵⁷ The “upper class,” for instance, engages “in circulating money as ownership, and in the process linking tightly with one another in webs of negotiation.” At the other extreme, participants in illegal monetary circuits protect themselves against regulators by creating their own “rituals and symbols of every day encounters.” ⁵⁸

To further clarify the relational grounding of monetary differentiation, I turn to a comparison with an alternative explanation of earmarking.

Earmarked Money as Mental Accounting

With their ingenious model of mental accounts, behavioral economists have made parallel observations about monetary differentiation by showing how different media and economic activities occupy distinctive positions within a cognitive space. Richard Thaler, one of its leading proponents, defines mental accounting as “a set of cognitive operations used by individuals and households to organize evaluate, and keep track of financial activities.” ⁵⁹ People, for instance, often allocate their rent money, entertainment money, or investment money to separate mental accounts in ways that influence their consumption and savings choices. Unexpected funds, furthermore, seem to occupy a different cognitive space than a salary or other forms of routine income, even when the sums involved are identical. People are likely to spend such windfalls less cautiously and more rapidly.

What explains mental accounting? Thaler points to the efficiency of such strategies, suggesting they “evolved to economize on time and thinking costs and also to deal with self-control problems.” ⁶⁰ Jonathan Levav and Peter McGraw, meanwhile, add an intriguing affective variant to the categorization process, “warming” cognitive partitions with an “emotional accounting.” ⁶¹ Here feelings evoked by particular kinds of money create “affective tags” that influence its uses. In a series of experiments, Levav and McGraw show how a negative tag on a windfall, for instance, means the emotionally tarnished money will be more likely to be spent (and thereby cleansed) on what they call virtuous (e.g., charity) or utilitarian products rather than hedonic goods. Among other results, they found respondents who received a cash gift from an uncle just diagnosed with a serious illness avoided purchasing a stereo with that money.

Note, however, that whether it’s Thaler’s efficiency explanation or an affective model, the focus remains on individual accounting. Relations appear (as with the uncle in the example) as context, but not explanation. A study of favor reciprocation actually subsumes relational processes into a cognitive theory of “relationship accounting” that parallels mental accounting. Here people create a mental ledger of favors offered versus favors received. ⁶²

Mental accounting thus represents the individual counterpart of relational earmarking, two distinguishable yet interdependent processes. One sees monetary variations as cognitive or emotional computations leading to often-unexpected budgetary choices. The other sees monetary differentiation as emerging from interactions among persons and marking distinctive social relations and meaning systems.

The argument for individuals says that people earmark money for a wide variety of ultimate expenditures, some of which are quite personal and without external object—e.g., saving obsessively for a retirement that never comes. In that view, earmarking for particular social relations simply constitutes a special case. The argument for social relations says that earmarking for self-indulgence is the special case (self as object) of a general arrangement in which interacting people create special currencies for many, most, or even all different relationships.

Even self-indulgence, moreover, connects to others. If I decide to splurge an unexpected book royalty on a fancy pair of boots, I am deciding not to spend it on dinner out with friends or a new pair of sneakers for my child. Or if my grandmother gives me some money to spend on a vacation, my subsequent self-indulgence reproduces my relationship to her. The history of the relationship, moreover, will affect spending (as shown by Levav and MacGraw’s experiments). If I bear a grudge toward my grandmother for a past offense, I may deliberately spend the gifted money on something other than a vacation. If she dies before I spend the money, however, I might feel compelled to obey her wishes. ⁶³

The distinction between individual and relational accounting is more than rhetorical: in the first view we might expect a given person’s array of special monies to display a lot of stability and to vary considerably among persons as a function of life history; in the second, we might expect otherwise disparate people who are closely connected to have similar arrays of special monies. Those expectations differ significantly. However, because life histories and social relations intertwine, we should expect difficulty, at times, in distinguishing sharply between both types of accounting.

Still, the effort is necessary. Although mental accounting clarifies crucial features of monetary earmarking, if we stop at individual mechanisms we explain only select features of the process. Most cognitively or emotionally established categories remain mysterious unless we understand that they emerge from social interaction and their content depends on that interaction. They become means of relational work. The relative value assigned in mental accounts to gains and losses should therefore vary depending on the consequences of that accounting for relations to others. When we earmark money for our child’s college fund, for instance, we are affirming our parental relationship to that child. On the other hand, by gambling the money away we would seriously undermine that connection—unless the gambling was a means to obtain monies for some morally justifiable goal and similarly valued relation, such as subsidizing another child’s emergency surgery.

To compare both perspectives, take the case of Christmas savings clubs. From a standard economic perspective, these low- or no-interest savings accounts remain puzzling arrangements. Why should people relinquish profit by depositing money in restricted accounts? Mental accounting proponents, however, explain depositors’ apparent irrationality as evidence of how individuals use institutions for self-control or as precommitment devices, in this case protecting themselves from using those funds for other purposes. ⁶⁴

Yet the history of Christmas savings clubs suggests that these accounts also guarded funds away from specific others. ⁶⁵ It appears that during the clubs’ heyday in the early half of the twentieth century most users were working-class wives. The women likely relied on the clubs as a valuable institutional device for safeguarding holiday monies from other household members, especially their husbands. Indeed, the Christmas money was often reserved for domestic necessities such as a washing machine or a daughter’s new coat. For housewives without access to earned income, moreover, the segregated Christmas money spared them from what was often considered the humiliating need to extract gift money from their wage-earning husbands. ⁶⁶

Thus, not only individual self-control but also negotiated household relations accounted for at least some of the Christmas clubs’ great success in the United States. More specifically, Christmas club deposits were, in part, an outcome of relational work by wives, husbands, and children (and perhaps other kin), contesting which monies were to be spent, by which family member, when, for what purposes, for which recipient. For wives, the earmarking of Christmas money increased, albeit weakly, their financial autonomy vis-à-vis their husbands.

Currently, aside from respectful mutual references, the mental accounting literature and relational analyses of money remain ensconced within their own domains with no sustained effort at serious collaboration. In his presidential address to the American Economic Association, George Akerloff took some steps toward a possible rapprochement. Mental accounting explanations of people’s consumption practices, Akerloff urged, should consider causal effects of decision makers’ norms about “how money should be spent.” ⁶⁷ In this valuable model, however, norms remain principles internalized by individuals, a crucial “missing motivation” that nonetheless does not include in a systematic way norms’ relational grounding; therefore, social relations are still missing. Norms along with mental accounts and practices are continuously affirmed, challenged, and transformed by our relations to others. ⁶⁸

Monetary differentiation as relational work opens up an exciting research agenda. Relational work theorists must specify when and how monetary earmarking emerges from, sustains, or challenges relations to others. We need to identify or even predict patterns in the ways people match various types of relationships with monetary differentiation: why and how does it matter who earns the money, who spends it, on what, and when? Can we anticipate where, how, and when certain forms of earmarking monies emerge and change? When are earmarks more likely to be contested and by whom? Can we expect different types of earmarking techniques by social class? When do people resist monetary earmarking, preferring instead the ambiguity of unmarked funds as a relational strategy? ⁶⁹

If social relations are central we should find that: (a) others characteristically have some say in an individual’s expenditure of earmarked money, (b) holders of special money spend it only on particular others, or at least on particular classes of others; (c) recipients of certain kinds of money will spend that income differently, depending on the social tie with the provider; (d) changes in monetary usage will correspond closely to changes in social relations, e.g., those that occur with age or disability; (e) expressions of anger, shame, and resistance at processes (e.g., imprisonment, expulsion from a country, inflation) that erase important distinctions among monies and the corresponding social relations.

Finally, how durable are earmarks? Earmarking practices are obviously reversible. But are they erasable? We need to explore when and how established forms of monetary earmarking reverse or break down, including what Callon calls the process of “departicularizing” currencies that are “entangled in networks of circulation and bearing the marks of the attachments binding it.” ⁷⁰ What sorts of negotiation and rituals are involved in moving monies across boundaries? We should expect that some earmarks will be long-lasting (token institutional currencies); some earmarks carrying strong moral or sentimental attachments will stick perhaps forever, limiting both uses and users (inheritance); whereas some earmarks will turn out to be volatile and short-lived (lottery winnings). ⁷¹ Noting the difficulty in efforts to “disentangle” money, Callon makes a vivid comparison between a financier’s attempts to launder money earned through illegal activities with Lady Macbeth’s attempts to remove that famous spot of incriminating blood. ⁷²

A relational approach to earmarking therefore focuses the analysis on how monetary differentiation is one crucial way in which people manage their social ties to others. Indeed, when partners to a relation violate accepted earmarks, as in my earlier example of a parent gambling away money from a child’s college fund, the culprit will have to engage in the kind of “repair” relational work Tilly identified (see p. 6, this paper) by, for instance, finding ways to justify their actions and preserve the relationship (or terminate it if repair is impossible).

The process and significance of monetary earmarking, however, goes beyond the cases of interpersonal negotiation I have examined. It represents a fundamental feature of modern capitalist economies. Contrary to the presumption that modernity and the expansion of markets led to a homogeneous legal tender, we find instead that not only people, but also states and organizations created highly distinctive uses of money and they worked hard (although not always successfully) to keep earmarked funds segregated. Indeed, between the 1870s and 1930s, governments and other institutions invented extensive systems of earmarking public and private monies precisely as a national market system was being consolidated in the United States, as industrial capitalism flourished, as consumerism boomed, and as the government worked hard to achieve a centralized, uniform legal tender. ⁷³

Consider, for instance, the creation of federal trust funds, which, in contrast to general revenues, are directed to specific programs and obtain their income from earmarked taxes. Social Security, our most prominent trust fund, was so designated by Congress in 1939 to be financed by payroll taxes and its uses restricted to workers’ retirement benefits. Trust funds, as political scientist Eric Patashnik has shown, are financial devices designed to assure long-term political commitments to constituents. ⁷⁴ As “consciously crafted political mechanisms intended by their designers to bind the government to its promises to the public,” trust funds, while often contentious and financially unstable, do crucial political relational work. ⁷⁵ Patashnik notes that although no actual “separate drawer” exists in the Treasury to safekeep Social Security cash, formally differentiating trust funds from general tax receipts facilitates oversight of its proper uses. It also enhances the program’s “moral potency.” ⁷⁶

Through often elaborate and contested processes, earmarking, therefore, blocks money’s fungibility in both public and private life. With varying techniques, governments, organizations, and people fashion monies that match distinct kinds of relations and transactions. ⁷⁷ As a result, earmarked money becomes a tool for interpersonal as well as political relational work. The outcome of such efforts, as we have seen, can be as consequential for public policy as it is for our personal transactions.

Next Steps

Paying serious attention to relational work—the matching of meaningful relations, transactions, and media—unlocks a wide-ranging set of unexplored possibilities and research scenarios for explaining economic activity. While building on the contributions made by embeddedness theory, we should seize new options for broadening and redirecting future investigations. This paper takes some modest first steps in that direction. Here are a few examples of the sort of questions we might pursue:

What determines the kind of social relation that people establish for different sorts of economic transactions, such as buying a used car or renting an apartment? Conversely, how do the kinds of social relations that already exist among the parties to an economic action affect its character and outcome? When buying a house, what difference does it make if buyer and seller are kin, friends, or strangers connected by a real estate agent?

How does the expansion of a certain kind of transaction in a given type of relation, for instance, an increase in asymmetrical gifts or a shift from payment by performance—as opposed to flat rates—affect a relationship? Or how does the breakup of a relationship redefine both economic transactions and type of media among the parties involved?

Beyond such specific queries, here are three general issues for future exploration: creativity versus constraints in relational work, relational variation, and the scope of relational work.