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Chapter 4.indd   53 9/1/2022   2:56:19 PM
2024-25
We usually think of markets as places where things are bought and sold.  In 
this common everyday usage, the word ‘market’ may refer to particular markets 
that we may know of, such as the market next to the railway station, the fruit 
market, or the wholesale market.  Sometimes we refer not to the physical place, 
but to the gathering of people – buyers and sellers – who constitute the market.  
Thus, for example, a weekly vegetable market may be found in different places 
on different days of the week in neighbouring villages or urban neighbourhoods.  
In yet another sense, ‘market’ refers to an area or category of trade or business, 
such as the market for cars or the market for readymade clothes.  A related 
sense refers to the demand for a particular product or service, such as the 
market for computer professionals.
What all of these meanings have in common is that they refer to a  specific 
market, whose meaning is readily understandable from the context.  But what 
does it mean to speak of ‘the market’ in a general way without refering to any 
particular place, gathering of people, or field of commercial activity ?  This 
usage includes not only all of the specific senses mentioned above, but also 
the entire spectrum of economic activities and institutions. In this very broad 
sense, then, ‘the market’ is almost equivalent to ‘the economy’.  We are used to 
thinking of the market as an economic institution, but this chapter will show 
you that the market is also a social institution.  In its own way, the market 
is comparable to more obviously social institutions like caste, tribe or family                                discussed in Chapter 3.  
4.1 Sociological Per SPective S on Market S
      and the e cono My The discipline of economics is aimed at understanding and explaining how 
markets work in modern capitalist economies – for instance, how prices are 
determined, the probable impact of specific kinds of investment, or the factors 
that influence people to save or spend.  So what does sociology have to contribute 
to the study of markets that goes beyond what economics can tell us? 
To answer this question, we need to go back briefly to eighteenth century 
England and the beginnings of modern economics, which at that time was called 
‘political economy’. The most famous of the early political economists was Adam 
Smith, who in his book, The Wealth of Nations, attempted to understand the 
market economy that was just emerging at that time. Smith argued that the 
market economy is made up of a series of individual exchanges or transactions, 
which automatically create a functioning and ordered system.  This happens 
even though none of the individuals involved in the millions of transactions 
had intended to create a system.
Modern economics developed from the ideas of early thinkers such as Adam 
Smith, and is based on the idea that the economy can be studied as a separate 
Indian Society
54
Chapter 4.indd   54 9/1/2022   2:56:19 PM
2024-25
Page 3


Chapter 4.indd   53 9/1/2022   2:56:19 PM
2024-25
We usually think of markets as places where things are bought and sold.  In 
this common everyday usage, the word ‘market’ may refer to particular markets 
that we may know of, such as the market next to the railway station, the fruit 
market, or the wholesale market.  Sometimes we refer not to the physical place, 
but to the gathering of people – buyers and sellers – who constitute the market.  
Thus, for example, a weekly vegetable market may be found in different places 
on different days of the week in neighbouring villages or urban neighbourhoods.  
In yet another sense, ‘market’ refers to an area or category of trade or business, 
such as the market for cars or the market for readymade clothes.  A related 
sense refers to the demand for a particular product or service, such as the 
market for computer professionals.
What all of these meanings have in common is that they refer to a  specific 
market, whose meaning is readily understandable from the context.  But what 
does it mean to speak of ‘the market’ in a general way without refering to any 
particular place, gathering of people, or field of commercial activity ?  This 
usage includes not only all of the specific senses mentioned above, but also 
the entire spectrum of economic activities and institutions. In this very broad 
sense, then, ‘the market’ is almost equivalent to ‘the economy’.  We are used to 
thinking of the market as an economic institution, but this chapter will show 
you that the market is also a social institution.  In its own way, the market 
is comparable to more obviously social institutions like caste, tribe or family                                discussed in Chapter 3.  
4.1 Sociological Per SPective S on Market S
      and the e cono My The discipline of economics is aimed at understanding and explaining how 
markets work in modern capitalist economies – for instance, how prices are 
determined, the probable impact of specific kinds of investment, or the factors 
that influence people to save or spend.  So what does sociology have to contribute 
to the study of markets that goes beyond what economics can tell us? 
To answer this question, we need to go back briefly to eighteenth century 
England and the beginnings of modern economics, which at that time was called 
‘political economy’. The most famous of the early political economists was Adam 
Smith, who in his book, The Wealth of Nations, attempted to understand the 
market economy that was just emerging at that time. Smith argued that the 
market economy is made up of a series of individual exchanges or transactions, 
which automatically create a functioning and ordered system.  This happens 
even though none of the individuals involved in the millions of transactions 
had intended to create a system.
Modern economics developed from the ideas of early thinkers such as Adam 
Smith, and is based on the idea that the economy can be studied as a separate 
Indian Society
54
Chapter 4.indd   54 9/1/2022   2:56:19 PM
2024-25
part of society that operates according to its own laws, 
leaving out the larger 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. For example, 
markets are often controlled or organised by particular social 
groups or classes, and have specific connections to other 
institutions, social processes and structures. Sociologists 
often express this idea by saying that economies are socially 
‘embedded’. This is illustrated by two examples, one of a 
weekly tribal haat, and the other of a ‘traditional business 
community’ and its trading networks in colonial India.
A weekly ‘trib Al m Arket ’ in Dhor Ai vill Age , 
b Ast Ar , Ch Attisg Arh In most agrarian or ‘peasant’ societies around the world, 
periodic markets are a central feature of social and 
economic organisation. Weekly markets bring together 
people from surrounding villages, who come to sell their 
agricultural or other produce and to buy manufactured 
goods and other items that are not available in their villages. 
They attract traders from outside the local area, as well 
as moneylenders, entertainers, astrologers, and a host of 
other specialists offering their services and wares. In rural India there are also 
specialised markets that take place at less frequent intervals, for instance, cattle 
markets. These periodic markets link different regional and local economies 
together, and link them to the wider national economy and to towns and  
metropolitan centres.
The weekly haat is a common sight in rural and even urban India. In hilly 
and forested areas (especially those  inhabited by adivasis), where settlements 
are far-flung, roads and communications poor, and the economy relatively 
undeveloped, the weekly market is the major 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 the towns 
for resale, and they buy essentials such as salt and agricultural implements, 
and consumption items such as bangles and jewellery. But for many visitors, 
the primary reason to come to the market is social – to meet kin, to arrange 
marriages, exchange gossip, and so on.
While the weekly market in tribal areas may be a very old institution, 
its character has changed over time. After these remote areas were brought 
Adam Smith is known as the 
fountainhead of contem-
porary economic thought. 
Smith’s reputation rests on his 
five-book series ‘The Wealth 
of Nations’ which explained 
how rational self-interest in a 
free-market economy leads to 
economic well being. 
Adam Smith 
(1723-90)
The Market as a Social Institution
55
Chapter 4.indd   55 9/1/2022   2:56:20 PM
2024-25
Page 4


Chapter 4.indd   53 9/1/2022   2:56:19 PM
2024-25
We usually think of markets as places where things are bought and sold.  In 
this common everyday usage, the word ‘market’ may refer to particular markets 
that we may know of, such as the market next to the railway station, the fruit 
market, or the wholesale market.  Sometimes we refer not to the physical place, 
but to the gathering of people – buyers and sellers – who constitute the market.  
Thus, for example, a weekly vegetable market may be found in different places 
on different days of the week in neighbouring villages or urban neighbourhoods.  
In yet another sense, ‘market’ refers to an area or category of trade or business, 
such as the market for cars or the market for readymade clothes.  A related 
sense refers to the demand for a particular product or service, such as the 
market for computer professionals.
What all of these meanings have in common is that they refer to a  specific 
market, whose meaning is readily understandable from the context.  But what 
does it mean to speak of ‘the market’ in a general way without refering to any 
particular place, gathering of people, or field of commercial activity ?  This 
usage includes not only all of the specific senses mentioned above, but also 
the entire spectrum of economic activities and institutions. In this very broad 
sense, then, ‘the market’ is almost equivalent to ‘the economy’.  We are used to 
thinking of the market as an economic institution, but this chapter will show 
you that the market is also a social institution.  In its own way, the market 
is comparable to more obviously social institutions like caste, tribe or family                                discussed in Chapter 3.  
4.1 Sociological Per SPective S on Market S
      and the e cono My The discipline of economics is aimed at understanding and explaining how 
markets work in modern capitalist economies – for instance, how prices are 
determined, the probable impact of specific kinds of investment, or the factors 
that influence people to save or spend.  So what does sociology have to contribute 
to the study of markets that goes beyond what economics can tell us? 
To answer this question, we need to go back briefly to eighteenth century 
England and the beginnings of modern economics, which at that time was called 
‘political economy’. The most famous of the early political economists was Adam 
Smith, who in his book, The Wealth of Nations, attempted to understand the 
market economy that was just emerging at that time. Smith argued that the 
market economy is made up of a series of individual exchanges or transactions, 
which automatically create a functioning and ordered system.  This happens 
even though none of the individuals involved in the millions of transactions 
had intended to create a system.
Modern economics developed from the ideas of early thinkers such as Adam 
Smith, and is based on the idea that the economy can be studied as a separate 
Indian Society
54
Chapter 4.indd   54 9/1/2022   2:56:19 PM
2024-25
part of society that operates according to its own laws, 
leaving out the larger 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. For example, 
markets are often controlled or organised by particular social 
groups or classes, and have specific connections to other 
institutions, social processes and structures. Sociologists 
often express this idea by saying that economies are socially 
‘embedded’. This is illustrated by two examples, one of a 
weekly tribal haat, and the other of a ‘traditional business 
community’ and its trading networks in colonial India.
A weekly ‘trib Al m Arket ’ in Dhor Ai vill Age , 
b Ast Ar , Ch Attisg Arh In most agrarian or ‘peasant’ societies around the world, 
periodic markets are a central feature of social and 
economic organisation. Weekly markets bring together 
people from surrounding villages, who come to sell their 
agricultural or other produce and to buy manufactured 
goods and other items that are not available in their villages. 
They attract traders from outside the local area, as well 
as moneylenders, entertainers, astrologers, and a host of 
other specialists offering their services and wares. In rural India there are also 
specialised markets that take place at less frequent intervals, for instance, cattle 
markets. These periodic markets link different regional and local economies 
together, and link them to the wider national economy and to towns and  
metropolitan centres.
The weekly haat is a common sight in rural and even urban India. In hilly 
and forested areas (especially those  inhabited by adivasis), where settlements 
are far-flung, roads and communications poor, and the economy relatively 
undeveloped, the weekly market is the major 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 the towns 
for resale, and they buy essentials such as salt and agricultural implements, 
and consumption items such as bangles and jewellery. But for many visitors, 
the primary reason to come to the market is social – to meet kin, to arrange 
marriages, exchange gossip, and so on.
While the weekly market in tribal areas may be a very old institution, 
its character has changed over time. After these remote areas were brought 
Adam Smith is known as the 
fountainhead of contem-
porary economic thought. 
Smith’s reputation rests on his 
five-book series ‘The Wealth 
of Nations’ which explained 
how rational self-interest in a 
free-market economy leads to 
economic well being. 
Adam Smith 
(1723-90)
The Market as a Social Institution
55
Chapter 4.indd   55 9/1/2022   2:56:20 PM
2024-25
under the control of the colonial state, they were gradually incorporated into 
the wider regional and national economies. Tribal areas were ‘opened up’ by 
building roads and ‘pacifying’ the local people (many of whom resisted colonial 
rule through their so-called ‘tribal rebellions’), so that the rich forest and 
mineral resources of these areas could be exploited. This led to the influx of 
traders, moneylenders, and other non-tribal people from the plains into these 
areas. The local tribal economy was transformed as forest produce was sold 
to outsiders, and money and new kinds of goods entered the system. Tribals 
were also recruited as labourers to work on plantations and mines that were 
established under colonialism.  A ‘market’ for tribal labour developed during the 
colonial period. Due to all these changes, local tribal economies became linked 
into wider markets, usually with very negative consequences for local people. For 
example, the entry of traders and moneylenders from outside the local area led 
to the impoverishment of adivasis, many of whom lost their land to outsiders. 
The weekly market as a social institution, the links between the local tribal 
economy and the outside, and the exploitative economic relationships between 
adivasis and others, are illustrated by a study of a weekly market in Bastar 
district. This district is populated mainly by Gonds, an adivasi group. At the 
weekly market, you find local people, including tribals and non-tribals (mostly 
Hindus), as well as outsiders – mainly Hindu traders of various castes. Forest 
officials also come to the market to conduct business with adivasis who work for 
the Forest Department, and the market attracts a variety of specialists selling 
their goods and services. The major goods that are exchanged in the market 
are manufactured goods (such as jewellery and trinkets, pots and knives),                       
non-local foods (such as salt and haldi (turmeric)), local food and agricultural 
produce and manufactured items (such as bamboo baskets), and forest produce 
(such as tamarind and oil-seeds). The forest produce that is brought by the 
A weekly market in tribal area
Indian Society
56
Chapter 4.indd   56 9/1/2022   2:56:20 PM
2024-25
Page 5


Chapter 4.indd   53 9/1/2022   2:56:19 PM
2024-25
We usually think of markets as places where things are bought and sold.  In 
this common everyday usage, the word ‘market’ may refer to particular markets 
that we may know of, such as the market next to the railway station, the fruit 
market, or the wholesale market.  Sometimes we refer not to the physical place, 
but to the gathering of people – buyers and sellers – who constitute the market.  
Thus, for example, a weekly vegetable market may be found in different places 
on different days of the week in neighbouring villages or urban neighbourhoods.  
In yet another sense, ‘market’ refers to an area or category of trade or business, 
such as the market for cars or the market for readymade clothes.  A related 
sense refers to the demand for a particular product or service, such as the 
market for computer professionals.
What all of these meanings have in common is that they refer to a  specific 
market, whose meaning is readily understandable from the context.  But what 
does it mean to speak of ‘the market’ in a general way without refering to any 
particular place, gathering of people, or field of commercial activity ?  This 
usage includes not only all of the specific senses mentioned above, but also 
the entire spectrum of economic activities and institutions. In this very broad 
sense, then, ‘the market’ is almost equivalent to ‘the economy’.  We are used to 
thinking of the market as an economic institution, but this chapter will show 
you that the market is also a social institution.  In its own way, the market 
is comparable to more obviously social institutions like caste, tribe or family                                discussed in Chapter 3.  
4.1 Sociological Per SPective S on Market S
      and the e cono My The discipline of economics is aimed at understanding and explaining how 
markets work in modern capitalist economies – for instance, how prices are 
determined, the probable impact of specific kinds of investment, or the factors 
that influence people to save or spend.  So what does sociology have to contribute 
to the study of markets that goes beyond what economics can tell us? 
To answer this question, we need to go back briefly to eighteenth century 
England and the beginnings of modern economics, which at that time was called 
‘political economy’. The most famous of the early political economists was Adam 
Smith, who in his book, The Wealth of Nations, attempted to understand the 
market economy that was just emerging at that time. Smith argued that the 
market economy is made up of a series of individual exchanges or transactions, 
which automatically create a functioning and ordered system.  This happens 
even though none of the individuals involved in the millions of transactions 
had intended to create a system.
Modern economics developed from the ideas of early thinkers such as Adam 
Smith, and is based on the idea that the economy can be studied as a separate 
Indian Society
54
Chapter 4.indd   54 9/1/2022   2:56:19 PM
2024-25
part of society that operates according to its own laws, 
leaving out the larger 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. For example, 
markets are often controlled or organised by particular social 
groups or classes, and have specific connections to other 
institutions, social processes and structures. Sociologists 
often express this idea by saying that economies are socially 
‘embedded’. This is illustrated by two examples, one of a 
weekly tribal haat, and the other of a ‘traditional business 
community’ and its trading networks in colonial India.
A weekly ‘trib Al m Arket ’ in Dhor Ai vill Age , 
b Ast Ar , Ch Attisg Arh In most agrarian or ‘peasant’ societies around the world, 
periodic markets are a central feature of social and 
economic organisation. Weekly markets bring together 
people from surrounding villages, who come to sell their 
agricultural or other produce and to buy manufactured 
goods and other items that are not available in their villages. 
They attract traders from outside the local area, as well 
as moneylenders, entertainers, astrologers, and a host of 
other specialists offering their services and wares. In rural India there are also 
specialised markets that take place at less frequent intervals, for instance, cattle 
markets. These periodic markets link different regional and local economies 
together, and link them to the wider national economy and to towns and  
metropolitan centres.
The weekly haat is a common sight in rural and even urban India. In hilly 
and forested areas (especially those  inhabited by adivasis), where settlements 
are far-flung, roads and communications poor, and the economy relatively 
undeveloped, the weekly market is the major 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 the towns 
for resale, and they buy essentials such as salt and agricultural implements, 
and consumption items such as bangles and jewellery. But for many visitors, 
the primary reason to come to the market is social – to meet kin, to arrange 
marriages, exchange gossip, and so on.
While the weekly market in tribal areas may be a very old institution, 
its character has changed over time. After these remote areas were brought 
Adam Smith is known as the 
fountainhead of contem-
porary economic thought. 
Smith’s reputation rests on his 
five-book series ‘The Wealth 
of Nations’ which explained 
how rational self-interest in a 
free-market economy leads to 
economic well being. 
Adam Smith 
(1723-90)
The Market as a Social Institution
55
Chapter 4.indd   55 9/1/2022   2:56:20 PM
2024-25
under the control of the colonial state, they were gradually incorporated into 
the wider regional and national economies. Tribal areas were ‘opened up’ by 
building roads and ‘pacifying’ the local people (many of whom resisted colonial 
rule through their so-called ‘tribal rebellions’), so that the rich forest and 
mineral resources of these areas could be exploited. This led to the influx of 
traders, moneylenders, and other non-tribal people from the plains into these 
areas. The local tribal economy was transformed as forest produce was sold 
to outsiders, and money and new kinds of goods entered the system. Tribals 
were also recruited as labourers to work on plantations and mines that were 
established under colonialism.  A ‘market’ for tribal labour developed during the 
colonial period. Due to all these changes, local tribal economies became linked 
into wider markets, usually with very negative consequences for local people. For 
example, the entry of traders and moneylenders from outside the local area led 
to the impoverishment of adivasis, many of whom lost their land to outsiders. 
The weekly market as a social institution, the links between the local tribal 
economy and the outside, and the exploitative economic relationships between 
adivasis and others, are illustrated by a study of a weekly market in Bastar 
district. This district is populated mainly by Gonds, an adivasi group. At the 
weekly market, you find local people, including tribals and non-tribals (mostly 
Hindus), as well as outsiders – mainly Hindu traders of various castes. Forest 
officials also come to the market to conduct business with adivasis who work for 
the Forest Department, and the market attracts a variety of specialists selling 
their goods and services. The major goods that are exchanged in the market 
are manufactured goods (such as jewellery and trinkets, pots and knives),                       
non-local foods (such as salt and haldi (turmeric)), local food and agricultural 
produce and manufactured items (such as bamboo baskets), and forest produce 
(such as tamarind and oil-seeds). The forest produce that is brought by the 
A weekly market in tribal area
Indian Society
56
Chapter 4.indd   56 9/1/2022   2:56:20 PM
2024-25
adivasis is purchased by traders who carry it to towns. In the market, the buyers 
are mostly adivasis while the sellers are mainly caste Hindus. Adivasis earn 
cash from the sale of forest and agricultural produce and from wage labour, 
which they spend in the market mainly on low-value trinkets and jewellery, 
and consumption items such as manufactured cloth.
Caste -based markets and trading networks in pre Colonial 
and Colonial i ndia In some traditional accounts of Indian economic history, India’s economy and 
society are seen as unchanging.  Economic transformation was thought to 
have begun only with the advent of colonialism.  It was assumed that India 
consisted of ancient village communities that were relatively self-sufficient, 
and that their economies were organised primarily on the basis of non-market 
exchange. Under colonialism and in the early post-independence period, the 
penetration of the commercial money economy into local agrarian economies, 
An Adivasi Village Market in Bastar
Dhorai is the name of a market village located deep in the hinterland 
of North Bastar district, Chattisgarh … On non-market days Dhorai is a 
sleepy, tree-shaded hamlet straddling an unscaled road which winds it’s way 
through the forest … Social life in Dhorai revolves around two primitive tea-
shops with a clientele of low-ranking employees of the State Forest service, 
whose misfortune it has been to be stationed in such a distant and insignificant  
spot … Dhorai on non-market days – every day except Friday, that is – hardly 
exists at all; but Dhorai on a market day might be a totally different place. 
Parked trucks jam the road … The lowly Forest Guards bustle about in smart, 
newly-pressed uniforms, while the more important officials of the Forest service, 
down for the day, oversee operations from the verandah of the Forest Rest 
House. They disburse payments to the tribal labourers … 
 While the officials hold court in the Rest House, files of tribals continue to 
pour in from all directions, laden with the produce of the forest, of their fields, 
and of their own manufacture. They are joined by Hindu vegetable sellers, 
and by specialised craftsmen, potters, weavers and blacksmiths. The general 
impression is one of richness and confusion, compounded by the fact that 
a religious ceremony, as well as a market, is in process … The whole world, 
it seems, is at the market, men and their Divinities alike. The marketplace is a 
roughly quadrangular patch of ground, about 100 yards square, at the centre 
of which there grows a magnificent banyan tree. The thatched market stalls are 
arranged in a concentric pattern, and are divided by narrow streets or defiles, 
along which customers manoeuvre themselves as best they can in the crush, 
trying to avoid treading on the goods of less established traders, who make use 
of every nook and cranny between the permanent stalls to display their wares.
Source: Gell 1982:470-71.
Box 4.1
The Market as a Social Institution
57
Chapter 4.indd   57 9/8/2022   2:38:53 PM
2024-25
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FAQs on NCERT Textbook - The Market as a Social Institution - Old & New NCERTs for IAS Preparation (Must Read) - UPSC

1. What is a market as a social institution?
Ans. A market as a social institution refers to the system or structure where goods and services are exchanged between buyers and sellers. It is a place where individuals and businesses interact to buy and sell products, thus playing a crucial role in the economy and society.
2. How does a market function as a social institution?
Ans. A market functions as a social institution by facilitating the exchange of goods and services among individuals and businesses. It provides a platform for buyers and sellers to meet, negotiate, and agree on prices. Additionally, markets promote competition, create economic opportunities, and contribute to the overall development of the society.
3. What are the key characteristics of a market as a social institution?
Ans. The key characteristics of a market as a social institution include a network of buyers and sellers, the existence of rules and regulations, pricing mechanisms, competition, supply and demand dynamics, and the presence of intermediaries like wholesalers and retailers. These factors collectively contribute to the functioning and effectiveness of a market.
4. How does a market influence social behavior?
Ans. Markets influence social behavior by shaping consumer preferences, promoting entrepreneurship, and fostering innovation. They encourage individuals to make choices based on their needs and desires, leading to the creation of diverse products and services. Additionally, markets provide employment opportunities, generate income, and contribute to the overall economic well-being of individuals and communities.
5. What is the significance of understanding markets as social institutions?
Ans. Understanding markets as social institutions is significant as it helps comprehend the complex interactions between individuals, businesses, and society. It enables the identification of market failures, the formulation of economic policies, and the promotion of inclusive growth. Moreover, recognizing markets as social institutions allows for a holistic understanding of their impact on various social, cultural, and economic aspects of society.
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