NCERT Textbook - Market as a Social Institution Notes | Study Old & New NCERTs for IAS Preparation (Must Read) - UPSC

UPSC: NCERT Textbook - Market as a Social Institution Notes | Study Old & New NCERTs for IAS Preparation (Must Read) - UPSC

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 Page 1


2020-21
Page 2


2020-21
Indian Society
62
W
e 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 PERSPECTIVES ON MARKETS
AND THE ECONOMY
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.  Each person looks only to their
own self-interest, but in the pursuit of this self-interest the interests of all – or
of society – also seem to be looked after. In this sense, there seems to be some
2020-21
Page 3


2020-21
Indian Society
62
W
e 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 PERSPECTIVES ON MARKETS
AND THE ECONOMY
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.  Each person looks only to their
own self-interest, but in the pursuit of this self-interest the interests of all – or
of society – also seem to be looked after. In this sense, there seems to be some
2020-21
The Market as a Social Institution
63
sort of an unseen force at work that converts what is good
for each individual into what is good for society.  This unseen
force was called ‘the invisible hand’ by Adam Smith.  Thus,
Smith argued that the capitalist economy is driven by
individual self-interest, and works best when individual
buyers and sellers make rational decisions that serve their
own interests. Smith used the idea of the ‘invisible hand’ to
argue that society overall benefits when individuals pursue
their own self-interest in the market, because it stimulates
the economy and creates more wealth. For this reason,
Smith supported the idea of a ‘free market’, that is, a market
free from all kinds of regulation whether by the state or
otherwise.  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 the ideas of early
thinkers 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 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 ‘TRIBAL MARKET’ IN DHORAI VILLAGE, BASTAR, CHATTISGARH
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.
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)
2020-21
Page 4


2020-21
Indian Society
62
W
e 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 PERSPECTIVES ON MARKETS
AND THE ECONOMY
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.  Each person looks only to their
own self-interest, but in the pursuit of this self-interest the interests of all – or
of society – also seem to be looked after. In this sense, there seems to be some
2020-21
The Market as a Social Institution
63
sort of an unseen force at work that converts what is good
for each individual into what is good for society.  This unseen
force was called ‘the invisible hand’ by Adam Smith.  Thus,
Smith argued that the capitalist economy is driven by
individual self-interest, and works best when individual
buyers and sellers make rational decisions that serve their
own interests. Smith used the idea of the ‘invisible hand’ to
argue that society overall benefits when individuals pursue
their own self-interest in the market, because it stimulates
the economy and creates more wealth. For this reason,
Smith supported the idea of a ‘free market’, that is, a market
free from all kinds of regulation whether by the state or
otherwise.  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 the ideas of early
thinkers 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 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 ‘TRIBAL MARKET’ IN DHORAI VILLAGE, BASTAR, CHATTISGARH
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.
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)
2020-21
Indian Society
64
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 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
2020-21
Page 5


2020-21
Indian Society
62
W
e 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 PERSPECTIVES ON MARKETS
AND THE ECONOMY
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.  Each person looks only to their
own self-interest, but in the pursuit of this self-interest the interests of all – or
of society – also seem to be looked after. In this sense, there seems to be some
2020-21
The Market as a Social Institution
63
sort of an unseen force at work that converts what is good
for each individual into what is good for society.  This unseen
force was called ‘the invisible hand’ by Adam Smith.  Thus,
Smith argued that the capitalist economy is driven by
individual self-interest, and works best when individual
buyers and sellers make rational decisions that serve their
own interests. Smith used the idea of the ‘invisible hand’ to
argue that society overall benefits when individuals pursue
their own self-interest in the market, because it stimulates
the economy and creates more wealth. For this reason,
Smith supported the idea of a ‘free market’, that is, a market
free from all kinds of regulation whether by the state or
otherwise.  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 the ideas of early
thinkers 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 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 ‘TRIBAL MARKET’ IN DHORAI VILLAGE, BASTAR, CHATTISGARH
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.
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)
2020-21
Indian Society
64
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 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
2020-21
The Market as a Social Institution
65
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.
According to Alfred Gell (1982), the anthropologist who studied Dhorai, the
market has significance much beyond its economic functions. For example, the
layout of the market symbolises the hierarchical inter-group social relations in
this region. 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. The quality of social relations is expressed in the kinds of goods
that are bought and sold, and the way in which transactions are carried out.
For instance, interactions between tribals and non-tribal traders are very different
than those between Hindus of the same community: they express hierarchy
and social distance rather than social equality.
   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.
65
BOX 4.1
2020-21
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