The Market as a Social Institution Class 12 Sociology

A market can be defined as a physical or virtual place where goods are exchanged between buyers and sellers. It can refer to a specific location, such as a weekly vegetable market, or a particular field of trade, like the automobile or clothing industry.

Market's Social Dimension

• From a sociological perspective, markets are viewed as socially embedded structures that reflect cultural distinctiveness, such as the traditional tribal haat and established business communities. For instance, the weekly market serves as a platform for residents of nearby villages to trade agricultural products, purchase manufactured goods, connect with relatives, arrange marriages, and seek out specialized services such as astrologers and moneylenders. These periodic markets bring together various regional and local economies and link them to larger urban centers and the national economy.
• In contrast, there are markets that only exist in an electronic sense, represented through electronically stored data and lacking a physical presence.

Economic Perspective

The field of economics encompasses the activities of distribution, production, consumption, investments, and the use of goods and services in contemporary capitalist economies. Its objective is to comprehend and explain how markets operate, including the setting of prices, the effects of various investment types, and the factors that influence people's saving and spending behavior.

Adam Smith's book "The Wealth of Nations" discusses the concept of an "unseen force," known as the "Invisible Hand," which operates in a market economy. This force transforms the pursuit of individual self-interest into a benefit for society as a whole, resulting in economic growth and increased prosperity. This idea is supported by the laissez-faire economic theory, which advocates for a hands-off approach to market regulation.

• Market economy: Smith described the market economy as a collection of distinct exchanges or transactions that lead to a functional and well-organized system.
• Self-interest: Each person has their own interests and pursues them, which, according to Smith, contributes to the nation's prosperity and growth. When individuals act in their own self-interest in the market, it stimulates the economy and generates more wealth, ultimately benefiting society as a whole.
• The concept of the "Invisible Hand" refers to an unseen force that converts individual benefits into societal benefits. Smith used this term to describe the hidden influence that transforms self-interested actions into positive outcomes for the community. In a market economy, individuals dictate supply and demand.

Sociologists’ view on markets

• Markets are social institutions that are shaped by the unique cultural norms of a society. Social groups, castes, and classes play a significant role in the social and cultural aspects of the market, where much social activity occurs. Markets are often managed or dominated by specific social groups or classes and are intricately linked to other social institutions, dynamics, and structures.
• Sociologists often refer to this concept as "socially embedded economies."

Markets:

• Caste-based markets and trading networks

Weekly and recurring markets

• Periodic markets are a crucial component of social and economic organization. Weekly markets serve as a gathering place for people from neighbouring villages to exchange agricultural and other goods for manufactured products and items not readily available in their communities. These markets attract vendors from outside the area, as well as moneylenders, performers, astrologers, and a variety of other experts who offer their goods and services.
• In addition to livestock markets, there are also specialized markets that occur less frequently in rural India. These regular markets serve to connect various regional and local economies to one another, as well as to larger towns, urban centres, and the national economy.
• The weekly market is the primary location for both the exchange of commodities and social interactions. Many individuals visit the market mainly for social reasons, such as meeting with family members, arranging marriages, and exchanging rumours.

Modifications to the tribal market

• The weekly market serves as a crucial social gathering place for individuals in tribal and highland communities to connect with friends and family. Over time, these isolated regions were assimilated into larger regional and national economies under colonial administration. For example, in Dhorai village, located in the Bastar district of Chhattisgarh, both tribal and non-tribal residents travel to the market to buy and sell various goods, including food, honey, salt, baskets, tools, beads, and jewelry.
• As part of this process, roads were constructed in tribal areas and the indigenous population was "pacified" to enable the exploitation of the vast forest and mineral resources. This often resulted in opposition from the locals through "tribal rebellions." Consequently, non-tribal traders, moneylenders, and other residents from the plains began to migrate into these areas.
• As outsiders purchased forest products, money and new commodities entered the system, altering the indigenous tribal economy. Furthermore, tribes were employed as labourers in plantations and mines established during colonization.
• The colonial period saw the development of a "market" for indigenous labour. These changes linked regional tribal economies to larger markets, often resulting in highly detrimental effects on the local population. For example, the arrival of outside traders and lenders caused Adivasis to become impoverished, with many losing their land to outsiders.

Exploitative economic relation in the weekly market

• The weekly market acts as a vital link between the local tribal economy and the external world, serving as a social bridge.
• The exploitative nature of the economic interaction between the Adivasis and outsiders is exemplified by a weekly market in the Bastar district. The majority of the district's population is comprised of Adivasi Gonds, with the weekly market frequented by both Hindu outsiders of all castes and locals, both tribal and non-tribal (mostly Hindu).
• A diverse range of professionals offering goods and services, as well as forest authorities, who do business with Adivasis working for the forest department, are drawn to the market.
• Manufactured goods, non-local foods (such as turmeric and salt), local foods, agricultural produce, manufactured goods (such as bamboo baskets), and forest products (such as tamarind and oil-seeds) are the primary commodities exchanged in the market.
• In the market, caste Hindus are the predominant sellers, while Adivasis are the predominant buyers. Adivasis make money through the sale of agricultural and forest products as well as through wage labor. They use this money to purchase low-quality jewelry, trinkets, and other consumable items like manufactured fabric.

Significance of markets beyond their economic functions

• Alfred Gell, an anthropologist, proposed that non-tribals tend to reside in the center of the population while lower castes and tribals populate the periphery. Semi-precious stones were sold to non-middle class tribals by wealthy dikes.
• Communication between tribal and non-tribal traders varies significantly, with the only common ground being the market due to their differing social status.
• Native Americans engage in both buying and selling, and the availability of common commodities varies daily. They usually wait until the weekly market to make purchases.
• During the precolonial period, the market mechanism was advanced, and a barter system was in place, with no non-market exchange of money. The Jajmani system was distinguished by an unbroken hereditary link, where lower caste individuals provided services to upper caste individuals in exchange for grains.
• In the colonial era, the Nakarattars of Tamil Nadu offer a fascinating example of how indigenous commerce networks were established and operated. The Nakarattars travelled to Sri Lanka and the nations of the North-East.
• In the traditional business community's social organization, the Vaishyas were traders, businessmen, and merchants. Industries were established after the British invasion, and the merchant class dominated after independence since they had received British training.
• India's onset of colonialism resulted in significant economic disruptions, impairing trade, agriculture, and production. Indian cotton was shipped to Manchester by the British, who then delivered the final product back to India, leading to the collapse of India's handloom sector.
• Following colonisation, India developed into a producer of agricultural and raw materials and a consumer of manufactured goods, mostly for the advantage of industrialising England. Some merchant communities in India saw new opportunities as a result of the market economy's growth.
• New towns emerged to take advantage of the colonial economy's opportunities, with the Marwaris serving as bankers for British subjects during colonial administration. They still own various enterprises today due to their inherited nature.

Understanding Capitalism as a social system

• Karl Marx argued that the social structure of the market was created by those who have power, such as industrialists and businessmen, and those who do not, such as laborers and workers.
• He was against a capitalist society where those who have power control every aspect of life, and where those who do not are forced to work for them and receive pay.
• In Marx's view, workers were viewed as mere commodities that could be bought and sold.
• While trade of services is crucial, Marx believed that relationships between individuals were more important and formed the basis for the market.
• According to Marx, workers were not compensated fairly for their labor and profit represented the additional value gained by those in power at the expense of the laborers.

Commodification

• Anything that was formerly without a monetary value but is now being sold in the market, such as organs, water, finishing school, wedding coordinators, and agents.

Globalisation

• The process of linking local and global economies has existed since before the colonial era, but was limited to trade with a small number of countries. However, due to increased trade with other nations, it has become a global phenomenon.
• India began to integrate economically with the global market in the 1980s, but it wasn't until 1991 that the liberalization strategy, a key aspect of globalization, was implemented. Globalization has an impact on various aspects of life, including economic, social, political, cultural, ecological, and technological.
• Liberalization involves reducing trade barriers and tariffs on imports, allowing for the movement of goods, services, and capital. Additionally, privatization of PSU (public sector units) has also been a component of this process.

Outsourcing

• The worker is there to act as a support system when you outsource your task to a corporation with infrastructure.
• Security, aesthetics, and cleaning are further elements of a business that are crucial for preventing hassles and reducing the problem of labour union formation.
• diverse product production, distribution, sales, and marketing.
• Both parties benefit from this situation: the business completes its tasks, while the individuals gain notoriety and land jobs at bigger businesses.
• The stock exchange in Wall Street, New York, is called Nasdaq.

Online market

• You can purchase and sell stocks online.
• There is no use of paper money.
• Likewise known as the electronic economy.
• The first Indian business to register with Nasdaq was Satyam.
• The world's financial centres are New York, London, and Tokyo.
• The largest flea market in India is located in Pushkar.
• Near Ajmer, Rajasthan, buffalo, cows, and animals are purchased and sold.
• Pushkar Lake is considered auspicious and sacred during the Hindu lunar month of Kartik Purnima; bathing in the lake is said to wash away worries and grant wishes.
• The location attracts a lot of tourists from abroad.
• has significant meaning (exchange and intermingling of cultures around the world).

Liberalisation

A wide range of policies are part of liberalisation, including the sale of publicly traded companies to private investors, the relaxation of capital, labour, and trade restrictions, the lowering of import tariffs and duties to make it simpler to buy foreign goods, and the facilitation of foreign business establishments in India.

Marketisation

the process of resolving social, political, or economic issues through the use of markets or market-based procedures as opposed to laws or policies from the government. Deregulation, the privatisation of industries, and the relaxing of governmental regulations over salaries and pricing are a few examples of these. Marketization proponents contend that because private industry is more productive than state-owned industry, these measures will foster economic growth and wealth.

Positive and negative impacts of liberalisation

• Positive: The liberalization program's modifications have resulted in a boost in economic growth, enabling international businesses to enter the Indian market. This has increased the availability of foreign-branded products, which was not previously possible. As foreign investment inflows increase, it is believed that employment growth and economic expansion will be supported. Additionally, the privatization of public corporations aims to enhance their performance and reduce the government's management burden. The inflow of foreign capital and currency has led to progress, development, and prosperity.
• Negative: India's overall impact is expected to be negative, as the drawbacks and costs outweigh the benefits. Although access to the global market can be advantageous for certain sectors, such as software, information technology, or agriculture, it can be harmful to others, such as automobiles, electronics, or oil seeds, as they cannot compete with foreign manufacturers. Farmers in India are now competing with growers outside of the country, thanks to the legalisation of agricultural imports. Furthermore, the influx of foreign goods and brands has exposed small manufacturers to international competition, resulting in some being unable to compete. The privatization or closure of public sector businesses has led to job losses in some sectors and an increase in employment in the unorganized sector at the expense of the organized sector.

Support price

• Support prices, being the prices at which the government agrees to buy agricultural products, help ensure that farmers receive a minimum income.

Subsidies

• Subsidies help to reduce agricultural costs by covering a portion of the input expenses, such as fertilizers or diesel oil, resulting in decreased expenses for farmers.
• However, support prices and subsidies are considered a form of government intervention in the market, and liberalization aims to reduce or eliminate them. Unfortunately, this can lead to many farmers being unable to support themselves adequately through farming.