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Sociology | Class 12 | The Market as a Social Institution

A market is a location where goods are bought and sold, a meeting of buyers and sellers (such as the weekly vegetable market), or a particular line of work (such as the market for cars or ready-made clothing).

Market's Social Dimension

Sociologists see markets as culturally distinctive social structures that are "Embedded" in society, such as the weekly tribal haat and the established business community.

The weekly market brings together residents of the neighbouring villages to trade agricultural products, buy manufactured items, and meet relatives, arrange marriages, and more. It also draws traders, moneylenders, astrologers, and other specialists. These regular markets bring together many regional and local economies and connect them to the larger national economy, towns, and urban centres.

The market only exists in terms of electronically stored data and not in a physical sense.

Economic Perspective

Distribution, production, consumption, investments, and the use of products and services

The study of economics aims to comprehend and explain how markets function in contemporary capitalist economies, such as how prices are set, the likely effects of particular investment types, or the variables that motivate people to save or spend money.

Adam Smith

Adam Smith wrote about a "unseen force" (the "Invisible hand") at work in a market economy that transforms what is good for each individual into what is good for society in his book "The Wealth of Nations." As a result, the economy is stimulated and more wealth is produced. This can be demonstrated through the laissez-faire economic theory, a French expression that means "leave alone" or "let it alone."

  • Market economy: According to Smith, the market economy is composed of a variety of discrete exchanges or transactions that logically result in a working, well-ordered system.

  • Self-interest: Everyone has their own interests and pursues them. When everyone has this style of thinking, it benefits the nation's prosperity and expansion. When people act in their own best interests in the market, the economy is stimulated and more wealth is produced, which helps society as a whole.

  • An invisible force at work that transforms what is beneficial for each individual into what is good for society is known as the "Invisible Hand." Adam Smith referred to this unseen influence as "the invisible hand." Individuals control the economy of supply and demand.

Sociologists’ view on markets

Markets are social institutions that are built in ways that are particular to a given culture. The market's social and cultural component (a lot of social activity takes place in the market controlled by social groups, caste and class). Markets, for instance, are frequently managed or controlled by distinct social groups or classes and have particular ties to other institutions, social dynamics, and structures.

This concept is frequently expressed by sociologists using the phrase "socially embedded economies."


  • Weekly Market

  • Caste-based markets and trading networks

Weekly and recurring markets

A key aspect of social and economic organisation is periodic markets.

People from neighbouring villages congregate at weekly markets to trade agricultural or other goods for manufactured goods and other items that aren't readily available in their communities.

They draw vendors from outside the neighbourhood, as well as moneylenders, performers, astrologers, and a plethora of other experts who market their goods and services.

There are also specialised markets that happen less frequently in rural India, including livestock markets.

  • These regular markets connect the many regional and local economies to one another, as well as to the larger national economy, towns, and urban centres.

  • The main location for both the exchange of commodities and social interactions is the weekly market. Many people visit the market primarily for social reasons like meeting family members, setting up marriages, exchanging rumours, etc.

Modifications to the tribal market

The weekly market provides a significant opportunity for people in tribal and highland communities to engage with their friends and family (Social meeting place). Over time, the weekly market has evolved. These isolated regions were eventually integrated into the larger regional and national economies after being placed under the administration of the colonial power. For instance, in the Dhorai village in the Bastar district of Chhattisgarh, both tribal people and non-tribal people travel there to buy and sell goods (food, honey, salt, baskets, tools, beads, jewellery)

Roads were constructed in tribal areas, and the indigenous populace was "pacified" to allow for the exploitation of the vast forest and mineral resources there. Many of the locals had opposed colonial control through so-called "tribal rebellions."

As a result, traders, moneylenders, and other non-tribal residents from the plains began to move into these regions.

As forest products were sold to outsiders, money and new types of items entered the system, changing the indigenous tribal economy.

Additionally, tribes were employed as labourers on plantations and mines developed during colonisation.

The colonial era saw the development of a "market" for native labour. Due to all of these modifications, regional tribal economies were linked to larger markets, frequently with highly detrimental effects on the local populace. For instance, the arrival of outside traders and lenders caused the Adivasis, many of whom lost their land to outsiders, to become impoverished.

Exploitative economic relation in the weekly market

The weekly market serves as a social bridge between the neighborhood's tribal economy and the outside world.

An examination of a weekly market in the Bastar district serves as an example of the exploitative nature of the economic interaction between Adivasis and outsiders.

Adivasi Gonds make up the majority of the population in this district. Locals, predominantly Hindu outsider traders of all castes, as well as both tribal and non-tribal (mostly Hindu) locals can be found at the weekly market.

The market attracts a range of professionals offering their goods and services, and forest authorities also travel there to do business with Adivasis who work for the forest department.

The main commodities traded in the market are manufactured goods (such jewellery and trinkets, pots, and knives), non-local foods (like salt and Haldi (turmeric), local foods, agricultural products, manufactured goods (like bamboo baskets), and forest products (such as tamarind and oil-seeds).

The traders who transport the forest products to towns buy the goods that the Adivasis bring with them. In the market, caste Hindus make up the majority of the sellers while the purchasers are predominantly Adivasis. Adivasis make money from the sale of forest and agricultural products as well as from wage work. They spend this money on low-quality jewellery, trinkets, and other consumable items like manufactured fabric.

Significance of markets beyond their economic functions

According to anthropologist Alfred Gell, the non-tribals live in the centre of the population, while the periphery is populated by lower castes and tribals. Rich dikes sold semi-precious stones to non-middle class tribals.

Even the way that tribal traders and non-tribal traders communicate differs

The only thing that tribals and non-tribals have in common is the market because of their differing social status.

Exchange of items

  • Native Americans are buyers and sellers.

  • The availability of common commodities varies everyday.

  • To make purchases, they wait until the weekly market.

Caste-Based markets Precolonial Period

  • The market mechanism was very sophisticated.

  • A barter system (trade of things) was in use and there was no non-market exchange of money.

Jajmani system

In the Jajmani economic system, lower caste individuals provided various services to upper caste individuals in exchange for grains. It is also distinguished by an unbroken hereditary link, wherein the kameen is required to provide services to a certain jajman for the remainder of his life. The Jajman and Kameen families become reliant on one another because of the relationship's permanence.

The Colonial era

Tamil Nadu's Nakarattars, now known as Chettiar, offer an intriguing example of how these indigenous commerce networks were set up and operated during the colonial era. The Nakarattars travelled to Sri Lanka and the nations of the North-East.

Social Organisation of market Traditional Business communities

  • The Vaishyas were traders, businessmen, and merchants.

  • Industries were established after the British invasion, which resulted in "industrialization."

  • Indians were not allowed to run the industries, but the British allowed the merchants to assist them.

  • The merchant class (such as Parsis, Bohras, Jains, and Sindhis) dominated after independence since they had received British training. In the north, Marwaris may be exceedingly wealthy, middle-class, or local traders.

  • Different communities monopoly industries like salt because they wanted only their community to grow and be renowned for a specific ownership, such as screwala, where there was more trust involved (business of screws).

The emergence of new markets and colonialism

The onset of colonialism in India led to significant economic disruptions, impairing trade, agriculture, and production. The downfall of the handloom sector as a result of the oversupply of cheaply made textiles from England on the market is a well-known example.

India started to become more closely connected to the global capitalist economy during the colonial era. India used to be a significant exporter of manufactured goods to the global market before it was colonised by the British. Indian cotton was shipped to Manchester by the British, who then delivered the final product back to India. Since it was less expensive, people started purchasing this clothing, which led to the collapse of India's handloom sector.

Following colonisation, she developed into a producer of agricultural and raw materials as well as a consumer of manufactured goods, both of which were largely for the advantage of industrialising England.

New groups (particularly the Europeans) began engaging in trade and business, often by forcibly evicting pre-existing merchant towns.

Some merchant communities in India saw new opportunities as a result of the market economy's growth; these communities were able to strengthen their position by adapting to the shifting economic landscape.

In several instances, new towns formed to take advantage of the colonial economy's prospects, and they retained their economic dominance long after independence. For instance, the Marwaris took advantage of the possibilities to train themselves and, after independence, they stole our way of life because they were skilled in the trade. They served as bankers for the British subjects during colonial administration. Due to its inherited nature, they still own a variety of enterprises today (father to son).

Understanding Capitalism as a social system

According to Karl Marx, the market's social structure was created by "the haves," or industrialists, businessmen, and "have nots," or labourers and workers.

He opposed a capitalist society in which the "haves" control all aspects of life.

The "have nots" are the ones who perform work for the "haves" and receive pay.

He believed that the workers were simply commodities (could pay for them).

The market exists because of the relationships between individuals, which are more significant than the trade of services, which is also vital.

Karl Marx claimed that workers are not compensated to their full potential.

Profit is a straightforward concept that represents the additional value in terms of the compensation given to labourers in proportion to their labour.


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.


  • connecting the local and global economies.

  • been around since before the colonial era, although it was quite scarce (trade with very few countries).

  • It is now a global town because of the increased trade with other nations.

  • India started to connect economically with the world market in the 1980s, but it wasn't until 1991 thanks to the liberalisation strategy (an eco aspect of globalisation).

  • Globalization affects all facets of life (economic, social, Political, cultural, ecological, and technological).

  • Liberalisation is when trade barriers and tariffs (tax or imports) were reduced.

  • movement of goods, services, and capital.

  • Privatization of PSU


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).


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.


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


  • The modifications implemented as part of the liberalisation programme have boosted economic expansion and allowed international businesses access to the Indian market.

  • There are now many foreign-branded products available that weren't before. Increasing foreign investment is thought to support employment growth and economic expansion.

  • The privatisation of public corporations is intended to improve their performance and lessen the burden of management on the government.

  • There is wealth, progress, and development because of the inflow of foreign capital and currency.


  • India will experience a net negative impact, meaning that the costs and drawbacks outweigh the positive effects.

  • Access to a global market may be advantageous for some sectors of Indian business (such as software and information technology) or agriculture (such as fish or fruit), but it will be detrimental for other sectors (such as automobiles, electronics, or oil seeds) because they cannot compete with foreign manufacturers.

  • Due to the legalisation of agricultural product imports, farmers in India are now subject to competition from growers outside.

  • As foreign goods and brands entered the market, small manufacturers were exposed to international competition, and some were unable to compete.

  • The privatisation or closure of public sector businesses has resulted in job losses in some industries and an increase in employment in the unorganised sector at the expense of the organised sector.

Support price

Because support prices are the prices at which the government agrees to purchase agricultural goods, they aid in ensuring a minimum income for farmers.


Agricultural costs are reduced by subsidies since the government covers a portion of the cost of inputs (such as fertilisers or diesel oil).

Because support prices and subsidies are against this form of government meddling in the market, liberalisation reduces or eliminates them. As a result, many farmers are unable to support themselves adequately through their farming.


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