NCERT Notes for Class 12 Sociology Chapter 4 THE MARKET AS A SOCIAL INSTITUTION


NCERT Notes for Class 12 Sociology Chapter 4 THE MARKET AS A SOCIAL INSTITUTION, (Sociology) exam are Students are taught thru NCERT books in some of the state board and CBSE Schools. As the chapter involves an end, there is an exercise provided to assist students prepare for evaluation. Students need to clear up those exercises very well because the questions with inside the very last asked from those.

Sometimes, students get stuck with inside the exercises and are not able to clear up all of the questions.  To assist students, solve all of the questions and maintain their studies without a doubt, we have provided step by step NCERT Notes for the students for all classes. These answers will similarly help students in scoring better marks with the assist of properly illustrated Notes as a way to similarly assist the students and answering the questions right.

NCERT Notes for Class 12 Sociology Chapter 4 THE MARKET AS A SOCIAL INSTITUTION




What is Market

  • Sociological Perspective on

Markets and Economy

o Adam Smith’s view

  • Invisible hand
  • Free market
  • Weekly ‘Tribal Market’

o Changes in Tribal market

o Social Importance of Markets – Alfred Gell



Caste-based Markets and Trading Networks in Pre-colonial and Colonial India

o Pre-colonial India

  • Nattukottachettiyars
  • Nagarathar Banks
  • Social Organisation of Market




Colonial India

Capitalism as a Social System Commodification and Consumption

Globalization – Interlinking of Local, Regional, National and International Markets

Debate on Liberalisation – Market versus State

  • Market – places where things are bought and sold.
  • Now ‘the market’ in a general way without referring to any particular place, gathering of people, or field of commercial activity.
  • ‘The market’ is almost equivalent to ‘the economy’.
  • The market as an economic institution
  • Market is also a Social Institution.

Sociological perspectives on Market and the Economy

  • Eighteenth century England and the beginnings of modern economics, which at that time was called ‘political economy’.
  • According to Adam Smith, in his book, The Wealth of Nations’
  • Market economy is affected by Individual transactions.
  • There appears to be an unseen force that convert what is good for individual in to what is good for society.
  • Individual self-interest drives capitalist economy
  • When buyers and sellers make rational decisions the economy works well

Invisible hand: Society overall benefits when individuals possess their own selfinterest in the market as it is stimulating the economy and creating more wealth.

  • Adam Smith’s theory was called laissez-faire theory.
  • French phrase meaninglet them act, leave them alone.
  • Modern economists tried to study economy which functions independent of other factors and social contexts.
  • Sociologist wanted to study economic institutions in a larger social environment.
  • According to Sociologists –
    • Markets are organized by social groups or classes
    • Markets are influenced by other social institutions and processes.


A Weekly ‘Tribal Market’ In Dhorai Village, Bastar, Chattisgarh

  • In most agrarian societies around the world, 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, as well as moneylenders, entertainers, astrologers, and a host of other specialists offering their services.
  • These periodic markets link different regional and local economies together, and link them to the wider national economy and to towns and metropolitan centres.
  • Weekly tribal market: Is the major institution for the exchange of goods as well as for social intercourse. especially in the hilly adivasioccupied regions.
  • Where settlements are far-flung, roads and communications poor, and the economy relatively undeveloped.
  • It is the major institution for the exchange of goods as well as for social intercourse.
  • Local people come to the market to sell their agricultural or forest produce to traders, who carry it to the towns for resale, and they buy essentials such as salt and agricultural implements, and consumption items such as bangles and jewellery.
  • But for many visitors, the primary reason to come to the market is social – to meet kin, to arrange marriages, exchange gossip, and so on.


The colonial rule brought about many changes

  • Incorporate the tribal in to national economy by constructing roads.
  • Exporting minerals and rich forest produce
  • Exploited by money lenders and traders
  • Market for tribal labour emerged –center of exploitation
  • Many of whom resisted colonial rule through their so-called ‘tribal rebellions’
  • Tribalswere also recruited as labourers to work on plantations and mines
  • Due to all these changes, local tribal economies became linked into wider markets, usually with very negative consequences for local people.
  • The entry of traders and moneylenders from outside the local area led to the impoverishment of adivasis, many of whom lost their land to outsiders.

Weekly market as a social Institution

  • Exploitative economic relationships between adivasis and others Astudy of a weekly market in Bastar district.
  • This district is populated mainly by Gonds, an adivasi group.

At the weekly market,

  • local people, including tribals and non-tribals (mostly Hindus)
  • Outsiders – mainly Hindu traders of various castes.
    • Forest officials also come to the market to conduct business with adivasis.
    • The market attracts a variety of specialists selling their goods and services.
  • Manufactured goods (such as jewellery and trinkets, pots and knives),
  • non-local foods (such as salt and haldi(turmeric)),
  • local food and agricultural produce and manufactured items (such as bamboo baskets)
  • Forest produce (such as tamarind and oil-seeds).
  • 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 – they spend in the market mainly on low-value trinkets and jewellery, and consumption items such as manufactured cloth.


According to Alfred Gell (1982), the anthropologist who studied Dhorai

The market has significance much beyond its economic functions.

For example,

  • The layout of the market symbolises the hierarchical inter-group social relations in this region.
  • Different social groups are located according to their position in the caste and social hierarchy as well as in the market system.
  • The wealthy and high-ranking Rajput jeweller and the middle-ranking local Hindu traders sit in the central ‘zones’, and the tribal sellers of vegetables and local wares in the outer circles.
  • The quality of social relations is expressed in the kinds of goods that are bought and sold, and the way in which transactions are carried out.
  • For instance, interactions between tribals and non-tribal traders are very different than those between Hindus of the same community: they express hierarchy and social distance rather than social equality.


Caste-based Markets and Trading Networks in Pre-colonial and Colonial India

Pre Colonial India

  • Ancient Indian village communities that were relatively self-sufficient
  • Various kinds of non-market exchange systems (such as the ‘jajmani system’) did exist in many villages and regions.
  • Money was used to trade even before the colonial period.
  • Extensive and sophisticated trading networks existed (Silk Route).
  • Our banking system encouraged trades with in India and abroad.
  • Some communities specialized in different trades and they had their own systems of banking and credit.
  • The ‘hundi’ or bill of exchange is one such item that helped merchants to do long distance trade.
  • Tamil Nadu – NattukottaiChettiyars– organized banking and trade activities (Caste based)
  • The structures of caste, kinship, and family were oriented towards commercial activity, and business activity was carried out within these social structures.s
  • As in most ‘traditional’ merchant communities, Nakarattar banks were basically joint family firms
  • So that the structure of the business firm was the same as that of the family.
  • Similarly, trading and banking activities were organised through caste and kinship relationships.
  • For instance, their extensive caste-based social networks allowed Chettiar merchants to expand their activities into Southeast Asia and Ceylon.
  • In one view, the economic activities of the Nakarattars represented a kind of indigenous capitalism.


Social Organisation of Markets – ‘Traditional Business Communities’

  • Many sociological studies of the Indian economy have focused on ‘traditional merchant communities’ or castes such as the Nakarattars.
  • Close connection between caste and economy with regard to landholding, trade and Markets.
  • Traditional business group in India: Vaisyas, Parsis, Sindhis, Bohras and Jains.
  • There are ‘Vaisya’ communities (such as banias in North India), whose traditional occupation has been trade or commerce for a long time
  • 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.
  • Merchant communities did not always have a high status in society o Salt trade was done by a tribal group called the‘Banjaras’


Caste-based specialisation and caste monopoly

  • Reasons for this caste-based specialisation is that trade and commerce often operate through caste and kinship networks, as we have seen in the case of the Nakarattars.
  • Because businessmen are more likely to trust others of their own community or kin group,
  • they tend to do business within such networks rather than with others outside – and this tends to create a caste monopoly within certain areas of business.

Colonialism and Emergence of New Markets

  • Sudden changes in the economy
  • Caused Disruption in production, Trade and agriculture (Ex: the demise of the handloom Industry)
  • Indian economy was closely connected to World economy.
  • After colonialism India was transformed in to a source raw materials and agricultural produce for England.
  • At the same time, 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.
  • The expansion of the market economy in India provided new opportunities to some merchant communities
  • Which were able to improve their position by re-orienting themselves to changing economic circumstances.
    • ‘Marwari’ community was entered the field of business and industries o Most widespread and best-known business community in India –(Birlas). o Like the Nakarattars, the success of the Marwaris rested on their extensive social networks, which created the relations of trust necessary to operate their banking system.
    • Even today Marwaris control more of India’s industry than any other community.

Understanding Capitalism as a Social System

Karl Marx

  • Capitalism as a system producing different commodities to be sold in the Market.
  • All economic systems are also social systems.
  • Each mode of production gives a specific class structure.
  • Economy, Both goods and the relation between people who are involved in the process of production of these goods.
  • Under the capitalist mode of production, labour itself becomes a commodity, because the workers in a factory sell their labour power and earn wages.
  • This gives rise to two basic classescapitalists, who own the means of production (such as the factories), and workers, who sell their labour to the capitalists.
  • The factory owners make profit by paying the workers less than their due.
  • Surplus value goes to the owners.


Commodities and Consumption


  • It occurs when things that were earlier not traded in the market become commodities. (For instance, labour or skills become things that can be bought and sold).
  • According to Marx and other critics of capitalism, the process of commodification has negative social effects.
  • In earlier times, human beings themselves were bought and sold as slaves, but today it is considered immoral to treat people as commodities.
  • In contemporary India, we can observe that things or processes that earlier were not part of market exchange become commodified.
    • Examples: professional marriage bureaus and websites that help people to find brides and grooms for a fee.
    • Many private institutes that offer courses in ‘personality development’, spoken English, and so on, that teach students (mostly middle class youth) the cultural and social skills required to succeed in the contemporary world.



  • In modern societies, consumption is an important way in which social distinctions are created and communicated.
  • The consumer conveys a message about his or her socioeconomic status or cultural preferences by buying and displaying certain goods, and companies try to sell their goods by appealing to symbols of status or culture.
  • Max Weber – coined the term ‘Status Symbol’ – to describe the attitude of the people in buying and using goods.
    • For example, the brand of cell phone or the model of car that one owns are important markers of socio-economic status.
  • Life style also helps to differentiate Status groups.


Globalization – Interlinking of Local, Regional, National and International Markets

  • 1980s have in an era of liberalisation and Globalisation
  • Entire world is increasingly interconnected economically, politically and Culturally.
  • Globalisation includes international movement of commodities, money, information, people and technology.
  • A central feature of Globalisation is the increasing extension and integration of markets around the world.
  • Any changes in the market anywhere on the globe as an immediate impact all over the world.
    • 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 loss of business and jobs here.
    • The software services industries and business process outsourcing (BPO) industries (such as call centres) are some of the major avenues through which India is getting connected to the global economy.
    • Companies based in India provide low-cost services and labour to customers located in the developed countries of the West.
  • Under globalisation, not only money and goods, but also people, cultural products, and images circulate rapidly around the world, enter new circuits of exchange, and create new markets. Products, services, or elements of culture that were earlier outside of the market system are drawn into it.
    • An example is the marketing of Indian spirituality and knowledge systems (such as yoga and ayurveda) in the West.
    • An example is the famous annual fair in Pushkar, Rajasthan, to which pastoralists and traders come from distant places to buy and sell camels and other livestock.
    • While the Pushkar fair continues to be a major social and economic event for local people, it is also marketed internationally as a major tourist attraction.
    • The fair is all the more attractive to tourists because it comes just before a major Hindu religious festival of KartikPoornima, when pilgrims come to bathe in the holy Pushkarlake.
    • Thus, Hindu pilgrims, camel traders, and foreign tourists mingle at this event, exchanging not only livestock and money but also cultural symbols and religious merit.


Debate on Liberalisation – Market versus State

  • Started in the late 1980s.

Liberalisation includes

    • Privatisation of public sector enterprises
    • Removing governmental control on capital, labour and trade
    • Reduction of 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.
  • All these changes lead to Marketisation.
  • Market or Market based processes are to be used to solve social, political and economic problems.
  • Supporters of Marketisation believe that removing government controls will promote economic growth and lead to prosperity.
  • Many thinkers believe thatliberalisation and Globalisation will have attendant evils and adversely impact Indian industry and agriculture.
    • Our industries are small scale or cottage Industries. They cannot effectively compete with foreign companies.


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