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Kerala Plus Two Sociology Chapter Wise Questions and Answers Chapter 4 The Market as a Social Institution
The Market as a Social Institution Questions and Answers
In the 18th century, economics was known as …
a) Social economy
b) Political economy
c) Cultural economy
d) Technical economy
Who was the most important political economist of the early period?
a) Karl Marx
c) Alfred Marshal
d) Adam Smith
………… said that individual transactions affect the market system.
a) Karl Marx
b) Adam Smith
c) Alfred Marshal
The French word ……… means giving freedom in the matters connected with market and industry (non- regulated market).
Economic activities of the ……… are similar to those of the capitalists.
Nagarathars (Also known as Nattukkottai Chettiars)
What is the most important book of Adam Smith?
b) Wealth of Nations
c) Communist Manifesto
Wealth of Nations
Who is the person who coined the term ‘invisible hand’?.
a) Karl Marx
c) Alfred Marshal
d) Adam Smith
Anthropologist who made studies in the Dorai village pointed out the social importance of market,
a) Adam Smith
b) Alfred Gell
c) Karl Marx
Who said that In the capitalist production system, labour itself becomes goods’?
a) Adam Smith
b) Karl Marx
c) Alfred Gell
d) Alfred Marshal
Match the following.
|Banjara||The Wealth of Nations|
|Karl Marx||Status symbol|
|Max Weber||Capitalist exploitation|
|Adam Smith||The Wealth of Nations|
|Karl Marx||Capitalist exploitation|
|Max Weber||Status symbol|
What are the different meanings of ‘market’?
These are the different meanings of market:
- A place for selling and buying things (fruit market, wholesale market).
- The coming together of people for buying and selling (weekly market).
- Trade-Business sector (Car market, Ready-made clothes market).
- Demand for special products or services (market for mobiles phones, market for computer professionals).
What are the sociological views about Markets and Economic System?
The main aim of economics is to understand and explain how markets work in the modem capitalist economy. For example, how are prices determined? What are the benefits of certain kinds of investment? What are the factors that make people earn money and spend it? All these questions are answered by economics. Here the question is what contribution the sociologist can make in the study of markets. Sociology tries to go beyond the things that economics tells us. That means, Sociology tells us things about the market which Economics does not tell us. Sociology looks at the changes markets bring in the society.
What role does Sociology have in the study of markets?
To answer this question, we have to look into the England of the 18th century and the starting of Economics. Economics was then called political economy. Among the early political economists, the most famous was Adam Smith. He is known as the Father of Economics. He published a book called “The Wealth of Nations” in 1776. In his book, Smith tried to understand the market system that started at that time.
Smith argued that economic system is made by individual transactions, like a series of buying and selling. It slowly becomes a self-working, orderly system. Market system is not something anybody deliberately creates. The millions of people that made transactions did not have any intention to create a market system. Each individual looks at his personal interest or gain.
When we try for our personal interests, automatically the interests of the society get protected. In other words, what individuals do for their benefit will prove beneficial to the society as a whole. Smith argued that this is brought about by an invisible power. He called this invisible power as “invisible hand”. In his opinion, the capitalist economy is propelled forward by the selfish interests of individuals. It is when buyers and sellers take rational decisions, protecting their interests that the capitalist economy goes forward smoothly.
Smith used the concept of ‘Invisible Hand’ to argue that when people pursue their selfish interests in the market, it proves beneficial to the Society. When they work for their personal interests, it awakens the economy and that way more wealth is produced. Because of this Smith supported the idea of free market. Free market means a market without controls from the government or any other agency. This idea is called laissez-faire. It is a French word. It means leave something alone to do its work.
It is from the ideas presented by early political economists like Adam Smith, modern Economics is developed. Modern economics says that the system of wealth should be studied as a separate part of the society. Economic system works with its own principles. It does not worry about the social and political background. But sociologists had an entirely different viewpoint. They tried to study economics within the larger sociological framework. Thus they developed an alternative method for studying economic institutions.
Sociologists look at markets as social institutions. They observe that markets are formed through special cultural ways. For example, markets are organized and controlled by special social classes. They have special relations with other institutions, social processes and structures.
Sociologists say that wealth systems are set in the society. They point out two examples. One is the weekly market of the Tribal Groups, and the second is the traditional business community and its business chains in colonial India.
What is free market?
Free market means a market which is not controlled in any way by the government or any other agency. This economic vision is called laissez-faire.
Describe the features of weekly markets.
Weekly markets are a central feature of the social and economic activities of agricultural communities. Weekly markets bring people from different villages together. They sell their products and buy those things that are not available in their own villages. Traders from outside, money lenders, artist of various kinds, fortune tellers and such other people also came to the weekly markets with their own purposes. In the Indian villages, there are also special markets at fixed short-term intervals. For example, there are the cattle markets. Such markets bring the economic systems of different places together. They thus get connected to the urban economy and finally to the national economy.
Give a picture of the Doke Market.
What were the changes brought into the Indian society by the coming of Colonialism?
Studies show that with the coming of Colonialism, the unchanging economic system of India began o crumble. With the establishment of colonial rule, a new economic system came up in money, market and trade. It even penetrated the local agricultural economy. Gradually this agricultural economy became part of a wide exchange chain. With this, self-sufficient villages collapsed.
The old studies say that the coming of the colonial rule brought revolutionary changes in the village and urban communities of India. But modern studies do not support this view. The old studies say that before the colonial rule, the Indian economy was immobile. It was self-sufficient. There, exchanges (barters) took place without any interference of market forces. Economy based on money was not there.
All these arguments were denied by the new studies conducted by Bailey, Burton Stein and Sanjay Subramanian. New studies point out that just before the colonial rule, the system of collecting taxes in cash was started in India. Trade was also done using money. There is no doubt that in many villages of India there still was the barter system as found in the Jajmani system. At the same time, many agricultural products and other goods were also sold for cash in the markets. Recent researches show that extensive trade and business chains were in existence in India before the colonial rule.
How were the indigenous trade chains organized in India?
The history of the t mottukkottai Chettiars (Nagarathars) of Tamil Nadu will help us to know about this. The Nagarathars were a famous trade and business community in Tamil Nadu. They had a banking system based on Jati and an extensive business chain. Their community, relatives and family were interested in trade matters. Therefore all their trade activities worked within this social structure. Their banks were institutions run by joint families. Similarly, their trade and banking activities were done through the connections of Jati and relatives. For example, they had extensive Jati-based relations in South East Asia and Sri Lanka. This helped them to extend their business interests into those areas. Some people. say that the economic activities of the Nagarathars were some of kind indigenous capitalism. This raises an important question: Did India have capitalist systems different from those of Europe?
How was the social structure of the markets?
ln India there were many traditional trade communities like the Nagarathars. There is a close relation between Jati system and economic system. This relation can be seen in things like ownership of land and differences in professions. For example, the big land (estate) owners during the colonial times were people belonging to the Upper Classes. It was Jati that determined the profession for each Caste. The relations between Jati and economy are also found in trade and market.
The main profession of Vaisyas, one of the 4 Vamas, is trade! It shows that even in ancient India trade and traders had a high status in society.
There are many Vaisya communities here which have taken up trade as their traditional profession. The Banias of North India are good examples. But trade and business were not the monopoly of Vaisyas. In the traditional trade communities of India, there were. Parsis, Sindhis, Bohras, Jains and also members of other communities. In the trade communities, there were also people who did not have a high status in the society. For example, during the colonial period, it was the Banjaras who controlled the export trade of salt. Banjaras are Low Caste Tribals.
Describe the changes that colonial rule brought to India.
Describe the changes that colonial rule brought to India.
a) It destroyed the handloom industry. When cheap factory manufactured clothes came to India, the Indian handloom industry could not survive in the competition.
b) The Indian economy was strongly linked to the world capitalist system.
c) Before colonisation, India was a country exporting manufactured goods to the world market. But after colonization, India became a place for collecting raw materials for the British factories, agricultural products for their consumption and market to sell their finished goods. Thus all the benefits went to England.
d) New groups – especially Europeans – entered the. trade and commerce market. The new groups either worked with the existing trading communities or ousted them from their trade.
e) In India, a market economy came. It helped some new trade communities to grow. They tried to take advantage of the new circumstances. These communities continued to remain powerful even after independence.
Show how the.new trade communities made use of the opportunities provided by the colonial rule, citing the example of Marwaris.
Marwaris are the most famous and widespread trade community in India. That community includes business magnates like Birla and also the small traders found all over the cities and towns of India. It was during the colonial rule that the Marwaris became so successful in their trade. They took advantage of the opportunities offered by the colonial rule in cities like Calcutta. To engage in trade and money-lending business, they spread across India. Like the Nagarathars, they were able to make use of extensive trade chains and acquire the confidence of the business world.
Many Marwari families made huge amounts of money through trade. They worked like bankers by giving money on interest. Thus they also helped in the development of British trade policies. Towards the end of the colonial rule, and even after independence, the Marwaris continue to march forward successfully. Many Marwari families became modem industrialists. Even now amongst all communities, Marwari community has the biggest share of Indian industries. This story of the Marwaris shows the importance of social background in economic processes.
Examine the evaluation of Marx on capitalism.
Marx saw capitalism as a system for the production of goods. All productions in capitalism aim the market. For production, hired labour is used. In Marx’s view, all economic systems are also social systems. Each style of manufacture (slavery, feudalism, capitalism) gives birth to a certain class structure. Marx pointed out that in the economic system, the only important thing is not just the goods. Relations between people are an important aspect also. People are connected through the manufacturing (Production) process.
In the capitalist production system, labour itself becomes a kind of goods. The workers are forced to sell their work power in the market. This creates two important classes – capitalists and workers.
Write about the views of Marx about Capitalist and Labour classes.
Capitalists are the owners of the means of production like factory, machinery and land. Labourers are those who live by selling their labour. A product has value because of the work of the labourers. It is the workers
that convert a cheap raw material into a product of high value. The entire profit is taken by the capitalists. (Profit = the cost of the product – production. expenses.) Capitalists try to maximise their profit by giving workers minimum wages. Marx imagined that the labours will fight against this exploitation by organizing themselves and fighting against the capitalists, establishing a Socialist-Communist society. The theory of Marx regarding capitalist economy and society helped in the making of many theories and debates regarding the nature of capitalism.
What is the meaning of materialization?
Two important features of capitalist society are materialization and consumerism. As capitalism grew, markets began to spread all over the world. Markets came in all aspects of human life. With this, the process of materialization also started. Materialization takes place when things not available in the market until then become available. It is a process by which non-goods are changed into goods and made part of the economy. For example, drinking water was not an item for sale. Nobody bought and sold water. When drinking water is bottled and sold – in the market, it becomes ‘goods’ for sale. Materialization takes place. Like that, labour, and skill have been materialized.
A special feature of capitalism is consumerism. Clarify.
Consumerism is a special feature of capitalism. This is becoming more and more significant. Consumerism has symbolic meanings. This, and not economic reasons, makes the importance of consumerism greater.
In the modern society, consumerism creates social differences. When a consumer buys some things and shows them off he is showing his social and economic status or his cultural concerns. Companies, which want to sell their products, attract customers by presenting them as symbols of status and culture. In the advertisements, we see on television, in the media and even on the advertising boards, these techniques for sale are used.
What is globalization? What are it features?
Globalization era means an era when the entire world is mutually connected. The world is connected economically, politically and culturally. This mutual relation is the mark of globalization.
There are many tendencies in globalization. The main tendency liere is the flow of goods, money, information, and people from one country to another. Technology (computer, telecommunication, transport) and internal structure are also factors of globalization. The, most important feature of globalization is the expansion of markets and their linkage.
What are the changes globalization brought in the market?
As a result of globalization, markets expanded in a big way. Not only that important markets of the world have also been linked. With this, the change in one market began to affect other markets also. For example, following the 11 September 2001 (9/ 11) terrorist attack on the World Trade Centre in New York, there was a crisis in the American economy. It seriously affected the software industry in India. It adversely affected our business and professional fields. Many lost their jobs. It is through Software industry, BPO industries like Call-Centres, etc. we get connected to the global economy. Many Indian companies give cheap services to many consumers in developed nations. Indian software industry and other services have a world market.
What do the liberalization policies show?
It was the liberalization policy started in India at the end of the 1980s that led to globalization here. The policy included selling public (government) companies to private organizations, removing control over capital and labour market, reduction of customs and duties on imported goods, allowing foreign companies to start industries in India, etc.
The policy of liberalization is often called marketization. It is solving social, political and economic problems using markets. This includes reducing and removing economic controls, privatizing industries, removing governmental control over prices and wages, etc.
The proponents of marketization believe that it will hasten economic growth and prosperity. It is seen that private industries are far more efficient than public or government industries.
Critically examine the changes liberalization and marketization brought in the Indian economic system.
Liberalization and marketization brought many changes in the Indian economic system. They stimulated economic growth and opened Indian markets to foreign goods. Many things that were not available in the Indian markets are now available here. There was an increase in foreign investment. It was hoped it would help economic growth and create employment opportunities. It was also hoped that the privatization of government enterprises would make them more efficient and also reduce the responsibility of the government to run them. But liberalization had mixed results. Some people feel that liberalization and globalization had negative results in India.
Some industries were benefited by globalization. Software industry, technology, fish farming and fruit farming made good progress as they could enter foreign markets and make gains. But areas like automobile industry, electronics and oil seeds suffered setbacks as they could not compete with foreign competitors.
Indian farmers are facing serious competition from foreign farmers. The reason for this is the permission given to import agricultural products here. In the past Indian farmers were protected from foreign competition by the government, giving them subsidies and base prices for their products. Such support helped the farmers. By giving them base price, the government promised the farmers to buy their products at a minimum price.
Since they were given subsidies to farm, their expenses were not high. But liberalization was against such policies of giving subsidies and base prices. It demanded the slow reduction and final abolition of both subsidies and support prices. With this, it was certain that farmers could not live comfortably with the little they got from their farms. The many suicides of farmers in India show the evils of liberalization and globalization. Globalization adversely affected small manufacturers and traders. They faced stiff competition in the market. Foreign goods and foreign brands captured the markets. Many small manufacturing units had to close down. Many small shops were also had to close because of stiff competition.
Globalization brought serious loss of jobs in some areas. Many lost their jobs in the organized sector. But this increased jobs in the non-organized sectors. While organized labour suffered, un-organized labour gained. But this was not beneficial to the workers. In the organized labour sector, workers are ensured stability of jobs and better wages. But in the un-‘ organized sector nothing of this kind is available.