Test: The Market as a Social Institution - Humanities/Arts MCQ

The most famous of the early political economists were adam smith, who, in his book, the wealth of nations, attempted to understand the market economy that was just emerging at that time.

This economic philosophy was also given the name laissez-faire, a french phrase that means leave alone or let it be. Modern economics developed from early thinkers’ ideas such as adam smith and is based on the idea that the economy can be studied as a separate part of society that operates according to its own laws, leaving out the more prominent social or political context in which markets operate.

In contrast to this approach, sociologists have attempted to develop an alternative way of studying economic institutions and processes within the larger social framework. Sociologists view markets as social institutions that are constructed in culturally specific ways.

They attract traders from outside the local area and moneylenders, entertainers, astrologers, and a host of other specialists offering their services and wares. In hilly and forested areas (mainly inhabited by Adivasis), where settlements are far-flung, roads and communications are poor, and the economy is relatively undeveloped, the weekly market is the primary institution for the exchange of goods as well as for social intercourse. Local people come to the market to sell their agricultural or forest produce to traders, who carry it to resale towns. They buy essentials such as assault and farming implements and consumption items such as bangles and jewellery.

The entry of traders and moneylenders from outside the local area led to Adivasis’s impoverishment, many of whom lost their land to outsiders. The weekly market as a social institution links between the local tribal economy and the outside. The exploitative economic relationships between Adivasis and others are illustrated by a study of a weekly market in Bastar district.

At the weekly market, you find local people, including tribals and non-tribals (mostly Hindus) and outsiders, mainly Hindu traders of various castes. Different social groups are located according to their position in the caste and social hierarchy as well as in the market system. The wealthy and high-ranking Rajput jeweller and the middle-ranking local Hindu traders sit in the central zones and the tribal sellers of vegetables and local wares in the outer circles.

Economic transformation was thought to have begun only with the advent of colonialism. Economic transformation was assumed that India consisted of ancient village communities that were relatively self-sufficient and that their economies were organised primarily based on non-market exchange.

An important exchange and credit instrument was the hundi, or bill of exchange (like a credit note), which allowed merchants to engage in long-distance trade. Because trade took place primarily within the caste and kinship networks of these communities, a merchant in one part of the country could issue a hundi that would be honoured by a merchant in another place. The Nattukottai Chettiars (or nakarattars) of Tamil Nadu provide an interesting illustration of how these indigenous trading networks were organised and worked.

Merchant communities did not always have a high status in society; for instance, during the colonial period, the long-distance trade in salt was controlled by a marginalized tribal group, the banjaras.

Many Marwari families accumulated enough wealth to become moneylenders, and by acting as bankers also helped the commercial expansion of the British in India.

One of the founders of modern sociology, Karl Marx, was also a critic of modern capitalism. Karl Marx understood capitalism as a system of commodity production, or production for the market, through the use of wage labour.

Two basic classes of capitalists are:
1. Who owns the means of production (such as the factories), and workers.
2. Who sells their labour to the capitalists.

Human beings themselves were bought and sold as slaves in earlier times, but today it is considered immoral to treat people as commodities.

Think of the advertisements that we see every day on television and roadside hoardings and the meanings that advertisers try to attach to consumer goods in order to sell them. One of the sociology founders, Max Weber, was among the first to point out that people’s goods and use are closely related to their status in society.

In the era of globalisation, a period in which the world is becoming interconnected not only economically but also culturally and politically.