“What Goes Around Comes Around”: On the Nature of Social Exchange


The social theory seeks to describe and conceptualize social dynamics. One of the central concepts that explain various sociological, psychological, and economic phenomena is social exchange. Various researchers concur that human relationships are built upon the exchange of goods and favors, which stands true at both micro and macro levels. Attraction toward a person or an object drives a person to prove their own attractiveness, which makes them enter a power dynamic in which they are dependent on the source. Power distribution is skewed toward people or entities whose survival and stability are not contingent on what others have to offer.

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When deciding to submit to someone or something in the power position, a person has to conform with the social norms and legal obligations. The relationship proves to be beneficial only if the profit that a person reaps outweighs the cost they have to pay. People and entities are often torn between pursuing individual and collective interests that can be in conflict with each other. Ultimately, everyone seeks to gain a position in which their private interests would coincide with those of a group.


Social theories can be defined as analytical frameworks or paradigms that are used to understand and interpret social phenomena. One of the central concepts at the intersection of sociology, psychology, and economics is that of social exchange. The social exchange has been conceptualized and studied by a great number of researchers. Yet, it is possible to provide a working definition, which is the interaction of two parties each of which conducts a cost-benefit analysis before taking action. This essay covers a wide range of concepts related to social exchange and shows how all existing power structures are based on humans exchanging goods and favors.

Social Behavior as Exchange

The exchange paradigm covers a number of theories that seek to explain the influence of social reward or punishment on a person’s behavior. Three approaches toward this association have been put forward: classical conditioning, operant conditioning, and social learning. In classical conditioning, a human or animal subject learns to associate two stimuli – one natural and one neutral – with a single response; behavior stays outside the concept. Operant conditioning goes further in explaining what compels people to change their voluntary behaviors (Charles). Lastly, social learning adds the idea that some of the norms are internalized through observation, without direct interaction (Charles). Simply put, a person tries to mimic the behavior of other people to blend in and be accepted by others.

Surely, when it comes to large groups of people, positive and negative reinforcements should be further differentiated to explain the complex nature of interpersonal relationships. A group of people is seen as cohesive when each of them finds being a member of it rewarding in one way or another (Calhoun et al. 101). Interestingly enough, there have been outlined two types of motivation that drive people to join a group – individual and collective. In the first case, a person might want to confirm and prolong their membership due to the pleasure that they derive from social activities. Concerning the latter, though, a person might seek social approval (“sentiment”).

The notion of social approval is tightly related to that of social norms, and based on the degree of a person’s commitment to follow them, researchers talk about conformity and deviation. As one may expect, the influence process treats conformists and deviants differently. The former are given more social options, which can be seen as a reward for their normative behavior. The latter, however, have shrinking options (negative reinforcement), which leaves them with two choices – to leave the group or show compliance.

The decision is made after a cost-benefit analysis, the underlying logic of which is whether the cost of making a particular choice is no greater than the potential profit (Calhoun et al. 102). When joining a group, a person has to contrast the value of social acceptance against their personal integrity that can be compromised if some of a person’s individual views are not in line with the group norm. Typically, a group that offers high rewards also requires making some kind of sacrifice.

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This part of the concept stood out to me specifically since it described something I experienced myself. As Homans states, “a person stabilizes his behavior at the point where he is doing the best he can for himself under certain circumstances (Calhoun et al. 104).” This idea explains some decisions that people make that seem irrational in general but understandable given the overall situation.

Ultimately, the influence process seeks to maintain the so-called practical equilibrium of a social group (Calhoun et al. 103). Practical equilibrium is a somewhat fuzzy concept that has been interpreted quite differently depending on the school of thought. To Homans, practical equilibrium comes down to the invariable behavior of each of the elements within a system. This means that even if a system showcases some inequalities and imbalances, as long as they do not undergo any significant changes, one can speak of practical equilibrium. Structural functionalists, on the other hand, see stability as an integral property of a system. For them, the elements of any social group seek to cooperate to promote solidarity.

Exchange and Power in Social Life

Blau offers his own perspective on the social exchange by extending the concept of seeking pleasure and reward in group association. The researcher states that human motivation comes down to quite primitive psychological processes of being attracted to other humans and things (Calhoun et al. 112). Evidently, interacting with or possessing an attractive object makes a person content. However, as a person attempts to reach their goal, they soon come to a realization that it requires entering the social exchange. Simply put, a person’s attraction toward an object drives them to prove to be attractive themselves. In other words, one can reap benefits as long as one can offer something valuable in exchange.

Attraction toward a person or an object ultimately means dependency. As Blau puts it, the most independent person (or an entity, for that matter) is the one whose well-being is not contingent on external sources (Calhoun et al. 114). It is readily imaginable how need and attraction may introduce a power dynamic. In a society, power and influence are distributed toward those who are independent of others. One example would be an employer that offers employees compensation (reward) for their contribution to the work process (cost). In this scenario, the employer has more power as he or she provides workers with the means to survive – financial resources.

When entering an exchange relationship, a potential candidate needs to prove their attractiveness to the employer through demonstrating their professional skills and personal qualities. If an employee is happy with the dynamics of the exchange relationship, as in their contribution is fairly rewards, they would not want to break this connection. This again proves that the power is distributed unevenly, benefitting the most independent actor in the process – the employer.

The nature of dependency may be further differentiated by outlining the key factors that shape power dynamics:

  1. supply of substitutes. If a person cannot easily switch to an alternative option for the lack of it, it aggravates their dependency on those in the position of power;
  2. lack of information about substitutes. Sometimes, organizations keep their internal information security and deny access to outsiders. This fact makes a cost-benefit analysis complicated, in case a person wants to change their situation;
  3. costs of moving. When conducting a cost-benefit analysis, a person has to factor in the costs of moving, i.e. choosing another option. For instance, as in the example with seeking employment, a person might need to make sacrifices to land a better option – relocate, spend less time with family, and so on;
  4. strength of personal times. The cost-benefit analysis does not rely fully on the economic aspect of a decision, therefore, the human factor cannot be dismissed (Calhoun et al. 134).

What is interesting though is that power structures are not exactly rigid. One cannot say that once a system is set into place, the power distribution will remain constant. Blau points out two opposing tendencies when it comes to system maintenance. Those who are dependent on another person or an entity in one way or another may show collective approval or disapproval of power. According to Blau, this logic works for both micro and macrostructures (Calhoun et al. 113). For instance, power dynamics can be observed at the family level where family members may be in favor or against one person’s authority over the household. At the macro level, one may speak of the power dynamics between the national state and its citizens who also explicitly or implicitly have the leverage to influence the standing of the authority figure.

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Here, the notion of equilibrium may be reintroduced, but not without a twist. Blau states that ultimately, at any level of existence, equilibrium relies on disequilibrating powers. Collective approval and disapproval clash and create a new balance (Calhoun et al. 116). An excellent example would be a revolution that overthrows the old regime but with time creates its own rigid system of rules and regulations. Therefore, the side that was the opposition against the establishment may become the new establishment.

The Logic of Collective Action

It has already been mentioned that when making a choice, a person or an entity conducts a cost-benefit analysis that often contrasts individual and collective interests. Olson extends this idea further by showing how exactly private and common interests function in the dynamics introduced by a social exchange. The researcher provides an example of a perfectly competitive market where several companies produce similar goods.

Evidently, each company pursues profit for itself and would like to gain a competitive advantage over its contenders, which is by definition, a private interest. At the same time, every reasonable market player understands that the prices for their product largely depend on the overall conjecture of the market. If an industry enjoys higher demand from customers and favorable tariffs from the government, then everyone ends up in a profitable situation. In this case, supporting positive regulations that would advance the entire market would be a good choice (Calhoun et al. 125). Therefore, it makes sense to heed both private and common interests when making decisions.

Yet, in real life, the situation unfolds in a quite compelling way. If, say, the industry is successful at lobbying higher prices backed up by the government, each of the participants gets to make more profit from their business transactions. This creates an incentive to increase the output, i.e. manufacture more products, to maximize the profits. In turn, a larger volume of a certain product does not always meet an increased demand, which moderates the price one more time and makes it more balanced. Again, in this example that concerns more economic than social relationships, one may speak of practical equilibrium that relies on opposing powers – in this case, supply and demand.

Group Solidarity in the Absence of Trust

As with the previous example of a competitive market, the question arises as to how people or companies can settle on a decision that impacts each member. As mentioned above, each company within a particular industry wishes for higher prices for its products. Yet, when confronted with a choice of whether to support a certain regulation, it can be unsure if it would take the right course and gain an advantage in the long run. Higher prices in this example are what Hechter calls a joint good. Hechter explains that a joint good is only attainable if each member lives up to the obligation – for instance, take certain steps to lobby a favorable law.

The researcher states that social theory needs an adequate theory of solidarity that would explain two things:

  1. variations in the extensiveness of corporate obligations;
  2. the degree to which a group can make its members honor these obligations (Calhoun et al. 130).

Just like other researchers mentioned in this paper, Hechter’s assumptions about human motivation hinge on the pursuit of one’s own interests. The author writes: “All actors are considered to be rational egoists (Calhoun et al. 130)”, an idea that I could back up given my own experiences. Thus, it is imperative that the obligations that people choose to commit to are balanced out with a good compensation (Calhoun et al. 131). Hechter argues that the cost that a person has to “pay” in one way or another to derive benefits is proportional to the size of a group he or she intends to join. This assumption seems quite logical: for instance, a national state, which is a macrostructure, has plenty of resources due to its size and can offer many benefits.

However, membership, i.e. citizenship, obliges a person to contribute through taxation and comply with the legislation. As one may imagine, some aspects are not exactly measurable in economic terms. This leads Hechter to another logical point: the cost of production is a worse predictor of corporate obligations than the dependence of members (Calhoun et al. 133). Therefore, large structures and organizations do not survive merely of voluntary contributions, and some obligations are imposed.

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Yet, there is one more unclear aspect: some actions cannot be turned into legal obligations. For instance, it is nigh on impossible to make people respect each other and improve their cooperation efficiency through mutual respect. Cook, Hardin, and Levi investigate social exchange dynamics under a very common condition – the lack of trust. The researchers introduce the notion of social capital that can be defined as the potential that a group has in reaching its goals (Calhoun et al. 140). Social capital sets the norms of cooperativeness and responsibility, which again, governs social exchange (Calhoun et al. 145). While not trusting each member of the group, in particular, an individual can still rely on its access to social capital and the opportunities that it provides.


Both micro and macro structures rely on the phenomenon of social exchange in which a person or an entity seeks to gain benefits by offering something valuable in exchange. What is socially acceptable in this case is communicated through positive and negative reinforcement. Social approval is determined by a person’s commitment to comply with group norms, which may sometimes come with a certain price such as rejecting one’s own principles and compromising personal integrity. However, by joining a group, especially the one that a person deems to be attractive, a person gains access to what it has to offer – both material goods and personal bonds. By following this logic, it is easy to conclude that the one who has a lot to offer without being contingent on others has the most power. By submitting to this power, people pursue both personal and collective interests. Making people follow through with their obligations is possible through law and social norms of cooperativeness and responsibility.

Works Cited

Charles, Eric. “Explaining Behaviorism: Operant & Classical Conditioning.Psychology Today. 2014. Web.

Calhoun, Craig, et al. (Eds.). Contemporary Sociological Theory. Wiley-Blackwell, 2012.

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