The Market as a Social Institution - Class 12 Sociology - Chapter 4 - Notes, NCERT Solutions & Extra Questions
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What is meant by the phrase ‘invisible hand’?
The phrase "invisible hand" was coined by economist Adam Smith. It refers to the self-regulating nature of the marketplace in determining how resources are allocated based on individuals' self-interest leading to economic benefits for all. This concept suggests that the market, through its own mechanisms such as supply and demand, efficiently allocates resources without the need for central planning, thereby unwittingly promoting the welfare of the community. This phenomenon happens naturally as individuals seek to maximize their own gain.
How does a sociological perspective on markets differ from an economic one?
A sociological perspective on markets views them as social institutions that are culturally specific, constructed, controlled, and organized by specific social groups or classes, and interconnected with other social institutions and structures. Sociologists emphasize that economies are socially 'embedded', considering broader social and cultural contexts in their functioning.
In contrast, an economic perspective, typically focused more narrowly, studies markets primarily in terms of economic variables like supply and demand, pricing mechanisms, and individual transactions, often abstracting from larger social or political contexts.
In what ways is a market – such as a weekly village market – a social institution?
A market, such as a weekly village market, functions as a social institution because it is not only a venue for trading goods but also a crucial center for social interaction and cultural exchange. People from surrounding areas gather not only to buy and sell goods but also to meet kin, arrange marriages, and exchange news and gossip. This highlights the market's role in maintaining social networks and community cohesion. Additionally, markets like these often have significant historical and cultural roots, reinforcing their status as an established part of the social structure in rural settings.
How do caste and kin networks contribute to the success of a business?
Caste and kin networks contribute to the success of a business by creating relations of trust which are essential for business operations. Businessmen are more likely to trust and cooperate with others within their own community or family, leading to smoother transactions and more reliable partnerships. These networks often result in a caste monopoly in certain business areas, as members prefer to engage in trade and commerce within their own social circles. This system also supports the accumulation and distribution of capital within the community, aiding in the sustainability and growth of businesses linked by caste and kinship.
In what ways did the Indian economy change after the coming of colonialism?
After the advent of colonialism, the Indian economy underwent significant transformations. Previously a major supplier of manufactured goods to the global market, India became a source of raw materials and agricultural products, mainly benefiting industrializing England. The economy shifted towards serving the demands of the British, leading to the flooding of Indian markets with cheap manufactured textiles from Britain and causing the demise of the indigenous handloom industry. Moreover, colonial policies facilitated the entry of new domestic and foreign merchant groups into trade, sometimes displacing existing merchant communities but also creating new economic opportunities for others, like the Marwaris who rose to prominence in this period.
Explain the meaning of ‘commoditisation’ with the help of examples.
Commoditisation, or commodification, refers to the process where things or processes that were previously not traded in the market become commodities. This means they are transformed into items that can be bought and sold. For example:
- Bottled Water: Historically, selling water was unheard of, but it has now become a common commodity, packaged and sold in various quantities.
- Marriage Arrangements: Traditionally managed by families, now there are professional agencies and websites to facilitate marriages, charging a fee for their services.
- Education and Personality Development: Previously imparted within families or local settings, these are now offered commercially through private institutions and courses.
These examples illustrate how aspects of life not previously considered marketable are turned into commodities within the capitalist system.
What is a ‘status symbol’?
A status symbol is an object or item that serves to signify the socio-economic status or cultural preferences of an individual. It is used by individuals to convey messages about their social standing and to differentiate themselves from others. For example, in modern societies, the brand of a cell phone or the model of a car one owns can act as significant markers of their socio-economic status.
What are some of the processes included under the label ‘globalisation’?
Globalisation encompasses several processes, including the increased international movement of commodities, money, information, and people. It also involves the development of technology and infrastructure like telecommunications and transport, which facilitate this increased movement. Essentially, globalisation leads to a more interconnected world economically, culturally, and politically.
What is meant by ‘liberalisation’?
Liberalisation refers to a range of policies aimed at freeing the economy from government controls and encouraging private enterprise. This includes privatisation of public sector enterprises, deregulation (loosening of government regulations on capital, labor, and trade), reduction in tariffs and import duties, and providing easier access for foreign companies to set up industries in a country. These steps are meant to boost economic efficiency, promote growth, and integrate the domestic economy more closely with the global market.
In your opinion, will the long term benefits of liberalisation exceed its costs? Give reasons for your answer.
I cannot form opinions or express personal thoughts. However, the analysis from the chapter suggests that the long-term benefits and costs of liberalisation can vary. Benefits might include economic growth, increased efficiency in industries, and integration into the global market, which can potentially create more jobs and wealth. However, costs might involve job loss in certain sectors, reduced government control over essential services, and a widened inequality gap. The overall impact depends on how well the country adapts to and manages the changes brought by liberalisation.
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Comprehensive Class 12 Notes on "The Market as a Social Institution"
Markets are not just spaces for buying and selling; they are social institutions deeply enmeshed in the fabric of society. This article explores the multifaceted role of markets in India, particularly focusing on insights from Chapter 4 of the Class 12 sociology syllabus.
Understanding the Market as a Social Institution
What is the Market?
A market is commonly perceived as a place where goods and services are exchanged. It can be:
- Physical places: like the market next to the railway station.
- Gatherings of people: such as weekly vegetable markets in local areas.
- Categories of trade: like the market for cars or readymade clothes.
- Levels of demand: for specific products or services, such as the market for computer professionals.
What unites these various types is their economic activity. However, in a broader sense, 'the market' also encompasses the entire spectrum of economic operations and institutions, making it almost synonymous with 'the economy'.
Sociological Perspectives on Markets
Economics aims to explain how markets work in modern capitalist economies — how prices are set, the impact of investments, and the factors influencing spending. Sociology, however, provides an alternative approach by viewing markets as social institutions embedded within cultural, social, and political contexts.
Role of Adam Smith
Adam Smith, a key figure in the emergence of modern economics, suggested that markets function through a series of individual transactions, forming an ordered economic system. Sociologists, however, argue that these systems are heavily influenced by social relationships and structures.
Social Embeddedness of Markets
Sociologists argue that markets are embedded in social contexts and are often organised by specific social groups or classes. For instance, a traditional weekly market in a tribal area might be controlled by local community norms and social hierarchies.
Case Study: Weekly Tribal Market in Dhorai Village
In many agrarian societies, periodic markets are vital for social and economic interactions. The weekly tribal market in Dhorai village, Bastar, Chhattisgarh, is a prime example. These markets function not just as economic hubs but also social gatherings where people meet kin, arrange marriages, and exchange gossip.
Colonialism transformed these tribal markets by integrating them into the broader economy, leading to significant socio-economic changes.
graph LR
A[Local Community] --> B[Weekly Market]
B --> C[Social Interactions]
B --> D[Economic Transactions]
B --> E[Colonial Influences]
Caste-Based Markets and Trading Networks
Historical Context
India's economy and society have long been intertwined, with trading networks existing even in pre-colonial times. Contrary to the view that economic transformations began only with colonialism, recent research shows that India's economy was already monetised, with extensive trade networks.
The Example of the Nakarattars
The Nakarattars of Tamil Nadu illustrate how caste-based banking systems functioned in historical India. Their trade was based on trust within their community, showing how social relationships underpin economic activities.
Capitalism as a Social System
Karl Marx's Theory
Karl Marx regarded capitalism as a system where goods are produced for market exchange using wage labour. In this system, labour itself becomes a commodity, creating a class structure between capitalists and workers.
Commoditisation and Consumption
Commoditisation refers to transforming non-market goods into marketable commodities. Examples in modern India include bottled water, marriage bureaus, and personality development courses.
Consumption and Social Status
Consumption patterns often reflect social status. For example, the brand of a mobile phone or car can signify one's socio-economic position, a concept first analysed by Max Weber.
Globalisation and Integration of Markets
Impact of Globalisation
Post-1980s, India's shift towards liberalisation has significantly integrated its economy with the global market, resulting in profound socio-economic transformations.
New Circuits of Goods, Services, Money, and People
Globalisation has created new economic circuits linking local markets to global ones. An example is the Pushkar camel fair, which has evolved into a significant tourist attraction.
Example: Pushkar Camel Fair
Here, traditional markets blend with tourism, attracting global attention and turning local culture into an economic asset.
graph TD
A[Pushkar Camel Fair] --> B[Tourists]
B --> C[Local Traders]
B --> D[Global Market]
Debate on Liberalisation - Market Versus State
Liberalisation, involving steps like privatisation and deregulation, has its pros and cons. While it stimulates economic growth, it also exposes local industries to global competition, affecting employment and livelihoods.
Social and Economic Consequences
Changes in Employment and Agriculture
Liberalisation has led to mixed outcomes. While some sectors benefit, others suffer due to increased competition.
Broader Socio-Economic Impact
Overall, markets as social institutions are intertwined with India's social structure, influencing and being influenced by caste, class, and global trends.
This exploration of markets demonstrates their complexity and importance beyond mere economic functions. Studying them provides invaluable insights into the social dynamics shaping economic interactions.
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