Sociology Class 12 NCERT Notes Chapter 4

The Market as a Social Institution

Capital: An accumulated fund of invertible resources capital such as to grow, to
add to itself this in the process of accumulation.

through the use of wage labour.

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Capitalism: A system of commodity production, or production for the market,

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Class: An economic grouping based on common or similar position in the social

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relation of production, levels of income and wealth, lifestyle and political
preferences.

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Commodification: The transformation of a non-commodity (i.e., something that is

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not bought and sold for money in a market) into a commodity.

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Commodity: A good or service that may be bought or sold in the market.
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Commodity fetishism: A condition under which social relation become
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expressed as relations being things.
Consumption: Final use of goods and services by people who have purchased
them (consumers).
Economic anthropology: A subfield of socio-cultural anthropology that studies
the entire range of economics and cultures found in the prehistoric, historic and
ethnographic records, especially non-market economic systems.
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Globalisation: A complex process of economic, social, technological,
cultural and political changes that have increased the
interdependence, integration and interaction among people and
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economic actors (companies) in desperate locations.
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Jajmani System: Non-market exchange of produce, goods and
services within the (North) Indian village without the use of money,

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based on the caste system and customary practices.

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Labour power: Capacity for labour; the mental and physical
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capabilities of human beings that are used in the process of
production. (As different from labour, which is work performed).
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Laissez Faire: An economic philosophy that advocates free market
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system and minimal government intervention in economic matters.
Liberalisation: The process whereby state controls over economic
activity are relaxed and left to the market forces to decide the general
process of making laws more liberal or permissive.

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Marketisation: The use of market based solution to solve
social, political or economic problems.

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Market: A situation where through the medium of money
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between the buyers and sellers.
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transactions of buying and selling of things are decided

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Stock Market: A market for stocks or shares in companies. It

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is the place or mechanism for buying
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and selling of such
shares.
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Surplus values: Increase in the value of investment or return
of capital.
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Virtual market: A market that exists electronically and
conducts transactions via computers Telecommunication
media. It is also known as paperless market.

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Market is a place of interaction between the buyers and sellers, producers and consumers in
respect to goods and services.
Social Aspect of Market
• Interchange and interaction among people.

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• It is a place where there is exchange of information and building of relationship.

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Economic Perspective

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• Distribution, production, consumption of goods and services, as well as investments.
Adam Smith

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1. Self-interest

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— Every individual is interested/works for his own self-interest.

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— When every individual thinks in this way, it contributes to the profit and growth of the country.
2. Invisible Hand
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— The government hand is less, we have more hand (role over the economy)
— The individuals decide the supply and demand economy.
— Laissez Faire leave us alone let it be’ the government should not interfere in the private sector.

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Sociological Perspective
• Social and cultural aspect of the market (a lot of social activity takes place in
the market).
• It is controlled by social groups, caste and class.
Market
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(1) Weekly Market (2) Traditional Communities
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e.g. Dhorai village in Bastar district, Chhattisgarh, the tribal and non-tribals

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come from nearby villages and towns to buy and sell items (food, honey, salt,
baskets, tools, beads, jewellery)

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— Besides buyers and sellers, there are entertainers (performers, magicians,
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games, rides etc.).
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— Moneylenders also come.
— This kind of market is typical of villages, cities and towns.
— In tribal and hilly areas, weekly market is a huge occasion for them to
interact with their friends and kins (Social meeting place).
— There is economic as well as social interaction.
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Changes in the tribal market
• In the colonial period many developments took place.
• Forests were cleared for laying down of roads, railways and industries.

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• They were displaced and were not given alternative homes, their occupation
had to change.

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• Non-tribals (dzlws)-moneylenders and traders exploited them.

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• The local economy integrated regional market integrated national market.
• The British took tribal products and sold them in cities.

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• Tribals were isolated and hence exploited.
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Seating arrangement in the weekly arrangement
• Given by anthropologist Alfred Gell the centre portion is occupied by the non-
tribals.
• Rich dikus selling semi precious stones to tribals but non-middle class,
Second level- middles class, Periphery tribals and lower castes.

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Even the interaction between tribals and non-tribals traders are
different:
• Tribals and non tribals purely business their position in society is

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different so they have nothing in common except the market.

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Exchange of items

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• Tribals are not only sellers but buyers as well.

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• Common items are not available on every day basis.
• They wait for the weekly market to buy goods.
Caste Based markets
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Precolonial Period
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1. Market system was quite well developed.
2. Non-market exchange money is not directly involved and barter
system (exchange of goods) was in practice.

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Jajmani system
• A very solid system based on heredity.
Jajmans-landlords.
Prajans-service class (goldsmith, barber, d
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• Jajmans paid them in kind or cash.
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• The son of Prajans would serve the son of the Jajman.

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• Bartar system was well developed and efficient and slow.

other countries)@
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• Pre colonial spices, cotton (handloom), jute (exported to

• India had its own manufacturing units, very good trading

networks and an extensive banking system (very different
from own banking system today)
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Colonial period
• Nakarattars (now called chettiars) from Tamil Nadu provide an interesting
illustration of how these indigenous trading networks were organised and worked
in colonial period.

communities)
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• Hundi-Credit note which is given to a person from a reliable source (of three

1. Trust within the kins

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2. Strengthen their community, the person is given money, starts their business
and repays the money

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3. Caste to become well known
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• Nakarattars also went to Sri Lanka and the North-East countries.
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Social Organisation of market Traditional Business communities
• Vaishyas were the merchants, traders and the businessmen.
• When the British came, industries were set up and it led to ‘industrialisation’

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• The British didn’t allow Indians to be the heads of the industries, but they let
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the merchants help them.

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• After independence, the merchants took over since they were trained by
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the British (For example, Parsis, Bohras, Jains, Sindhis)

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traders.
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• The Marwaris in North areas, could be very rich or middle class or local

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• Everything is a business, they live very meagrely and put the rest into the
business.
• Birlas, Bajaj, Dalmia@
• Different communities monopolize business like salt, since they wanted
only their community to prosper and to be known for a particular ownership
e.g. there was more trust involved and it was heredity e.g. screwala
(business of screws)
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Colonialism and the Emergence of New Markets
1. Jute, Cotton, silk and spices were available before the colonial period.
— British took cotton from India, sent it to Manchester where the finished
product was sent back to India.

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— People began buying this cloth since it was cheaper and so the handloom
industry in India collapsed.

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— The machines were more productive than the manual labour.

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material.
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2. India was only a manufacturer earlier, but later it became a supplier of raw

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— Also they became consumers since goods came from Britain too.
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— During colonialisation, the Marwaris utilized the opportunities to train
themselves and after independence they took our livelihood since they knew
the tricks and trade.
— During colonial rule, they acted as bankers for the Britishers with finances.
— Even today they own various business since it is hereditary (father to son).

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Understanding Capitalism as a social system
• Given by Karl Marx ‘the haves’ i.e. the industrialists, businessmen and
the “havenots’ i.e. the labourers, workers formed the social system in
market.
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society.
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• He was against a capitalistic society, the “haves’ have everything in

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• It is the “havenots’ who work for the “haves’ and are paid wages.

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• He felt that the labourers were commodities (could pay for them).

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• Market is not only the exchange of services which is important, but
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because of the inter-relationship among the people which is more
important.
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• According to Karl Marx, the labourers are not paid as much as they
should be paid.
• There is a simple value (Profit) which is the extra value in terms of the
wages paid to the labourers in proportion to the work.
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Commodification
• Any item which did not have monetary value before and is being sold e.g. organs,
water, finishing school, wedding planner, agents.
Globalisation

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• Interlinking local economy with global economy.

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• Local —» regional —» National -» global.

countries).
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• Been existing since pre-colonial times but it was very limited (trade with very few

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• Now the amount of trade has increased to other countries and making it a global
village.
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• Started in 1980’s but in 1991, India began interlinking economically with the global

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market through the policy of liberalisation (eco aspect of globalisation).

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• Globalisation comes from all aspects (economic, social, Political, cultural,
ecological, technological).
• Liberalisation is when trade barriers, tariff (tax or imports) were reduced.
• Movement of capital, people, services.
• Privatisation of PSU’s
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1. Call centres-Providing services to different companies all over the
world due to cheap labour and infrastructure is available (India).
2. BPO-Business Process Outsourcing.
3. Outsourcing.
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• When you outsource your work to another company where

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infrastructure, labourer is available for being a support system.

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• Other aspects of a company drat are important (security, aesthetic,
housekeeping) to reduce the problem of formation of trade unions and
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avoid headaches.

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– Production, distribution, sales, marketing of various products.

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– Beneficial for both, company gets work done and the people become
well known and then attain jobs from other greater companies.
• Nasdaq is the stock exchange in Wall Street, New York
• Virtual market

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You can buy/sell stocks using the internet.
• No use of paper currency.
• Also called electronic economy.

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• Satyam was the first Indian company to register with Nasdaq.

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• New, York, London, Tokyo are the financial capitals.
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• Pushkar Fair is the biggest casual market in India.
• Buffalo, cow, cattle are sold and bought near Ajmer, Rajasthan.

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• Pushkar lake-auspicious and considered sacred, during the
Karthik Purnima month of the Hindu calendar; a dip in the lake for
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washing away of heads and fulfilment of wishes.
• Many international tourists visit the place.
• Has a symbolic value (exchange and intermingling of culture
around the world).
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Liberalisation (Marketisation in free market)
• Reduction of trade barriers, tariffs.
• Movement of people, capital, services from one place to another (technology,
goods).
• Economic aspect of globalisation.
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• Privatisation of the PSU’s (Laissez Faire).

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• Marketisation shows low produces and consumers (derived and supply) control the
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market forces.

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• Markets are controlling the social, economic and political problems of the country.

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• Making it more globalised.

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• The member of disadvantages are more than the advantages but globalisation is

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here to stay for the development of the country.
• More efficiency, more competition helps to reach maximum potential and improve
quality.
• Some industries get benefit from this (fruits, automobiles).
• Support price and subsidies should not be given.
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Disadvantages of Liberalisation
1. There are some sectors which have (IT, seafood, fruits) increased in
exports.

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Electronic goods and automobiles have come down since foreign goods
are of better quality.

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2. In rural areas one family faces a lot of competition from the foreign
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families.

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-» Variety of fruits, support price, subsidies

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Advantages of liberalisation
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1. Commodities which were not available to us earlier are available now.
2. Privatisation-better efficiency and quality, due to competition.
3. Foreign investment and foreign exchange coming into the country,
therefore, there is prosperity, growth-and development.

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4. Increased employment for skilled labourers.
• Support Price: The government gives to the families at a certain price
which is much less than the normal price.

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• Subsidies: When the government reduces the price and gives it to

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people at a low price e.g. Kerosene oil, rice, water, electricity.

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-> The deficit or difference in the price is paid by the government.
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In rural society, support price means the government fixes a particular
rate by which they buy the products from the farmers e.g. if 1 kg wheat is

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for Rs. 40 and it goes up to Rs.70, the government will still buy it for Rs.
40.
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—> Liberalisation says subsidies and support price should not be given
by the government. Especially hybrid seeds, fertilizers and insecticides.
Why?
—> Unemployment has gone up for the unskilled labourers, increases in
the unorganized sector in India 70% are in the unorganized sector.
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1.What is meant by the phrase ‘invisible hand’?
Ans. According to Adam Smith, every person looks for his own self-
interest and in pursuit of this in-tum works for the self-interest of all . In

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this sense, there seems to be an unseen force at work that converts what
is good for each individual into what is good for the society. This unseen

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force was called the “invisible hand’

economic one?
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2. How does a sociological perspective on markets differ from an

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Ans. Adam Smith and other thinkers developed the ideas of modem

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economics. It is based on the idea that the economy can be studied as a

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separate part of society that operates according to its own laws, leaving
out the larger social or political context in which market functions.
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On the other hand, sociologists have tried to develop an alternative way
of studying economic institutions and processes within the larger social
frameworks. In this way, ; sociologists consider markets as social
institution which are made in culturally specific ways. Sociologists
maintain that economies are socially ‘embedded’.
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3. In what ways is a market—such as a weekly village market—a
social institution?
Ans. Though markets are places of economic interaction, since they are
based on a particular social context and social environment, we can

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also regard them as social institutions where a specific kind of social
interaction take place.

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Periodic markets (or weekly markets) are a central feature of social and
economic organization. They give a chance to surrounding villages to

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interact with each other while they sell their goods.

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In villages, in tribal areas apart from regular markets, specialised
markets are also organized where specific products are sold such as in
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the fair of Pushkar in Rajasthan. Thus, traders from outside come and

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also moneylenders, entertainers, astrologers and other specialists
offering their services and product.
Therefore, these periodic markets just do not fulfil local needs, they link
the villages with regional economies and sometimes national
economies. Thus in tribal areas they help in maintaining
interconnections, which makes these markets a social institution.
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4. How do caste and kin networks contribute to the success of a
business?
Ans. In the precolonial period on wards, India had an extensive trading
connection, not only within the country but also outside.

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These trading connections were made by merchant groups who did

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extensive internal and external trades and mostly they were organized as
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a community based on their same caste or kinship and they did business
on the basis of trust, loyalty and understanding that prevailed within their
community.

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An interesting illustration of the use of traditional joint family structure and
kinship and caste networks to build their business can be seen in banking
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and trading activities of Chettiars of Tamil Nadu. They controlled trade and

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banking all over south-east Asia and Ceylon (new Sri Lanka) in the 19th
century and operate as joint family business. This is typical patriarchal
structure of joint family but they used trust, unity and goodwill of kinship to
build their connection. This gives its idea that Indians had their indigenous
version of capitalism, when they ran business for profit, which was centres
around caste and kinship
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5. In what ways did the Indian economy change after the coming of
colonialism?
Ans. The advent of colonialism in India produced major upheavals in the
economy, causing disruptions in production, trade and agriculture. Cheap

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manufactured textiles from England completely destroyed the handloom
industry and made the weavers jobless. In the colonial era, India began to

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be more fully linked to the world capitalist economy. Before being colonised

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by the British, India was a major supplier of manufactured goods to the

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world market. After colonialism, India became a source of raw materials and

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agriculture products and a consumer of manufactured goods, both largely
for the benefit of industrialising England.

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But rather than completely overturning the existing economic institutions, the
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expansion of the market economy in India provided new opportunities to

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some merchant communities, which were able to improve their position by
re-orienting themselves to changing economic circumstances.
In some cases, new communities emerged to take advantage of the
economic . opportunities provided by colonialism.
A good example of this process is provided by Marwaris, probably the most
widespread and best—known business community in India.
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6. Explain the meaning of ‘commoditisation’ with the help of
examples.
Ans. Commoditisation occurs when things that were earlier not traded in
the market become commodities.
For example:
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1. Labours or skills have become things that can be bought and sold.

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2. Sale of human organs, such as kidneys by poor to cater to rich
patients to earii money.
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3. Traditionally, marriages were arranged by families but now
professional marriage bureaus and websites help people to find brides
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and grooms and take a proper fees. Earlier rituals and ceremonies were
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planned out by elders in the family but now it is given as a contract to
marriage planners to plan out the entire ceremony.
4. In earlier times, people could not have even thought that any one could
sell drinking water or charge money for it. But today, we buy bottled water
as a normal commodity i.e. a commodity we can buy and sell.

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7.What is ‘status symbol’?
Ans. Max Weber, coined the term Status symbol’ to describe the relationship
between the goods that people buy as per their social status, i.e., the goods they
buy and use are closely related to their status in the society.

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For example—Brand of cell phones or model of cars are important markers of
socio¬economic status. .

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8.What are some of the processes included under the label ‘globalisation’?

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Ans. In the era of globalisation the world is becoming increasingly interconnected.
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Their interconnections are not only economic but also cultural and political.

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The process of globalisation involves a number of trends, especially the increase

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in international movement of commodities money, information, people and
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development in technology.

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The main feature of globalisation is the increasing extension and integrations of
markets around the globe. It means that changes in a market in one part of the
globe may have a profound impact somewhere else far away.
For example—India’s booming software industry may face a slump if the U.S.
economy does badly as happened after the 9/11 attacks on the World Trade
Centre in New York leading to a loss of business and jobs there.
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9.What is meant by ‘liberalisation’?
Ans. Liberalisation is the process whereby state control over economic
activities are minimised and left to the market forces to decide. In

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general, it is process of making laws more liberal and loosening of
government rules and regulation on capital labour and trade;

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privatisation of public sector enterprises selling government around
companies to private companies, a reduction in tariffs and import duties
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so that foreign goods can be imported more easily.
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•It includes privatisation of public sector enterprises.

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•It allows easier access for foreign companies to set up industries in

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•This is also known as marketisation or market based process to solve
economic, social or political problems.

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10. In your opinion, will the long term benefits of liberalisation
exceed its costs? Give reasons for your answers.
Ans. The changes that have been made under the liberalisation
programme have stimulated economic growth and opened up Indian

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markets to foreign companies. Increasing foreign investment is

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supposed to help economic growth and employment. The
privatisation of public companies is supposed to increase their
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efficiency and reduce the governments burden of running these
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companies.

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However, the impact ef liberalisation has been mixed. Many people

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argue that liberalisation have had or will have, a negative net impact
on India.
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As I think, the costs and disadvantages will be more than the
advantages and benefits, so as some sectors of Indian industry like
software and information technology or agriculture like fish or fruit
may benefit from access to a global market, but other sectors like
automobiles, electronics or oilseeds will lose because they cannot
compete with foreign products and producers.
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