THE MARKET AS A SOCIAL INSTITUTION 

Market

Market is a place of interaction between the buyers and sellers, producers and consumers in respect for goods and services. Market is a social institution rather than an economic institution. Market as a Social Institution: Interchange and interaction among people and it is a place where there is exchange of information and building of relationships. Market as a Economic Institution: Distribution, production, consumption of goods and services, as well as investments.

Sociological Perspectives on Markets and the Economy

Adam Smith : He supported the idea of ‘free market’ and this economic philosophy is called ‘‘Laissez-Faire’’.

Market economy : 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.

Self-interest : Every individual is interested/works for his own self-interest. When every individual thinks in this way, it contributes to the profit and growth of the country. Society overall benefits when individuals pursue their own self-interest in the market, because it stimulates the economy and creates more wealth.

Invisible Hand : 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.

Sociologists View on Markets : Markets are 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’.

Weekly Based Market

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. 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. The weekly haat is a common sight in rural and urban India. The weekly market is the major institution for the exchange of goods as well as for social intercourse.

Changes in the Tribal Market

Weekly market 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 non tribal people from the plains into these tribal areas. Tribal were also recruited as labourers to work on plantations and mines that were established under colonialism. Due to all these changes, local tribal economies became linked into wider markets, usually with very negative consequences for local people.

Exploitative Economic Relationships

The weekly market as a social institution links the local tribal economy and the outside. And this economic relationship is exploitative between Adivasis and non-tribes.

Case study -weekly market in Bastar district

This district is populated mainly by Gonds, an Adivasi group. At the weekly market, we can see 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 Adivasi's 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, non-local foods, local food and agricultural produce and manufactured items, and forest produce etc.

The forest produce that is brought by the 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.

Significance of markets beyond its economic functions 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. Even the interaction between tribals and non-tribals traders are different: Tribals and non-tribals purely business their position in society is different so they have nothing in common except the market. Interaction between tribals and non tribal traders are very different than those between hindus of the same community and they express hierarchy and social distance rather than social equality.

Caste Based Markets and Trading Networks

Some traditional accounts of Indian economic history shows that India’s economy and society are seen as unchanging. Economic transformation was thought to have begun only with the advent of colonialism.

Caste Based Markets- Precolonial Period : Market system was quite well developed and non-market exchange money was not directly involved and the barter system (exchange of goods) was in practice, the barter system was well developed

Jajmani system : A very solid system based on heredity. Jajmans paid them in kind or cash.

Pre colonial period spices, cotton, jute were exported to other countries. India had its own manufacturing units, very good trading networks and an extensive banking system and credit.

Colonial Period : Nakarattars (now called chettiars) from Tamil Nadu provide an interesting illustration of how these indigenous trading networks or indigenous capitalism were organised and worked in colonial period.

Hundi-Credit note which is given to a person from a reliable source (of three communities-caste, kinship, community relations). Nakarattars also expanded their activities to South East Asia and Celyon(Sri Lanka).

Social Organisation of Markets- Trading Business and Communities

‘Vaisyas’ constitute one of the four varnas – an indication of the importance of the merchant and of trade or business in Indian society since ancient times. There are some caste groups that have entered into trade. Such groups tend to acquire or claim ‘Vaisya’ status in the process of upward mobility.

There is a complex relationship between caste status or identity, and caste practices, including occupation.

The ‘traditional business communities’ in India include not only ‘Vaisyas’, but also other groups with distinctive religious or other community identities, such as the Parsis, Sindhis, Bohras, or Jains and sometimes tribes (also like salt trade by banjaras during colonial period).

Caste based specialization is that trade and commerce often operate through caste and kinship networks and this tends to create a caste monopoly within certain areas of business.

Colonialism and the Emergence of New Market

The advent of colonialism in India produced major upheavals in the economy, causing disruptions in production, trade, and agriculture like cheap manufactured textiles from England.

In the colonial era India began to be more fully linked to the world capitalist economy. Before being colonised by the British, India was a major supplier of manufactured goods to the world market.

After colonisation, India became a source of raw materials and agricultural products and a consumer of manufactured goods, both largely for the benefit of industrialising England.

New groups (especially the Europeans) entered into trade and business, sometimes in alliance with existing merchant communities and in some cases by forcing them out.

In some cases, new communities emerged to take advantage of the economic opportunities provided by colonialism, and continued to hold economic power even after Independence.

Understanding Capitalism as a Social System

Karl Marx was a critic of modern capitalism. Marx understood capitalism as a system of commodity production, or production for the market, through the use of wage labour. Marx wrote that all economic systems are also social systems. Each mode of production consists of particular relations of production, which in turn give rise to a specific class structure.

Under the capitalist mode of production, labour itself becomes a commodity, because workers must sell their labour power in the market to earn a wage. This gives rise to two basic classes :

(i). Capitalists who own the means of production (such as the factories),

(ii). Workers, who sell their labour to the capitalists (so extracting surplus value from their labour).

Commoditization and Consumption

Commodification occurs when things that were earlier not traded in the market but now become commodities like water, organ transplantation etc.

According to Marx and other critics of capitalism, the process of commodification has negative social effects. Market exchange becomes commodified like personality development skills but earlier social skills, and good manners and etiquette were imparted mainly through the family.

Consumption: In modern societies, consumption is an important way in which social distinctions are created and communicated. The advertisements that we see every day on television and roadside hoardings, and the meanings that advertisers try to attach to consumer goods in order to sell them. Weber also wrote about how classes and status groups are differentiated on the basis of their lifestyles and he talks about status symbols where people buy goods related to their status in society. Sociologists study consumption patterns and lifestyles because of their cultural and social significance in modern life.

Globalisation

(Interlinking of Local, Regional, National and International Markets) Been existing since pre-colonial times but it was very limited (trade with very few countries). Now the amount of trade has increased to other countries and made it a global village. Started in the 1980's but in 1991, India began interlinking economically with the global market through the policy of liberalisation ( eco aspect of globalisation). Globalisation comes from all aspects (economic, social, Political, cultural, ecological, technological). Call centres-Providing services to different companies all over the world due to cheap labour and infrastructure is available (India). BPO-Business Process Outsourcing. Other aspects of a company that are important (security, aesthetic) to reduce the problem of formation of trade unions. Production, distribution, sales, marketing of various products. Beneficial for both, the company gets work done and the people become well known and then attain jobs from other greater companies. The growing market for international tourism also shows that culture itself becomes a commodity. Pushkar Fair is the biggest casual market in India( Buffalo, cow, cattle are sold and bought near Ajmer, Rajasthan). Pushkar lake-auspicious and considered sacred, during the Karthik Purnima month of the Hindu calendar, a dip in the lake for 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.

Debate on Liberalisation - Market Vs State

Liberalisation : It includes a range of policies such as the privatisation of public sector enterprises (selling government-owned companies to private companies); loosening of government regulations on capital, labour, and trade; a reduction in tariffs and import duties, so that foreign goods can be imported more easily; and allowing easier access for foreign companies to set up industries in India.

Marketisation : The use of markets or market-based processes (rather than government regulations or policies) to solve social, political, or economic problems. These include relaxation or removal of economic controls (deregulation), privatisation of industries, and removing government controls over wages and prices. Those who advocate marketisation believe that these steps will promote economic growth and prosperity because private industry is more efficient than government-owned industry.

Positive and Negative Impacts of Liberalisation

Positives : The changes that have been made under the liberalisation programme have stimulated economic growth and opened up Indian markets to foreign companies. Many foreign branded goods are now sold, which were not previously available. Increasing foreign investment is supposed to help economic growth and employment. The privatisation of public companies is supposed to increase their efficiency and reduce the government’s burden of running these companies. Foreign investment and foreign exchange coming into the country, therefore, there is prosperity, growth and development.

Negative : A negative net impact on India – that is, the costs and disadvantages will be more than the advantages and benefits. 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 oil seeds) will lose because they cannot compete with foreign producers. Indian farmers are now exposed to competition from farmers in other countries because import of agricultural products is allowed. Small manufacturers have been exposed to global competition as foreign goods and brands have entered the market, and some have not been able to compete. The privatisation or closing of public sector industries has led to loss of employment in some sectors, and to growth of unorganised sector employment at the expense of the organised sector.

Support price : It helps to ensure a minimum income for farmers because they are the prices at which the government agrees to buy agricultural commodities.

Subsidies : Lower the cost of farming because the government pays part of the price charged for inputs (such as fertilisers or diesel oil). Liberalisation is against this kind of government interference in markets, so support prices and subsidies are reduced or withdrawn. This means that many farmers are not able to make a decent living from agriculture. 

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