Class 12 Sociology Chapter 4 The Market as a Social Institution NCERT Solutions

Q. What is meant by the phrase ‘invisible hand’?

Answer: The “invisible hand” is the idea, from Adam Smith’s economics, that
when individuals pursue their own self-interest in a free market, buying and selling
according to their own needs, their millions of separate exchanges automatically
combine into an ordered, functioning economic system, even though no single person or
authority planned or intended that system. In this chapter’s own words, 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”, even though
none of the individuals involved “had intended to create a system”. The market appears
to organise itself as if guided by an unseen hand.

Q. How does a sociological perspective on markets differ from an economic
one?

Answer: Economics studies how markets work within modern capitalist
economies on their own terms: how prices are determined, the probable impact of
specific investments, or what makes people save or spend. It largely treats the economy
as a separate part of society that operates according to its own laws, leaving out the
larger social or political context in which markets actually work.

Sociology asks a different question. Sociologists study markets as social
institutions that are constructed in culturally specific ways: markets are often
controlled or organised by particular social groups or classes, and are closely
connected to other institutions, social processes and structures. Sociologists express
this by saying that economies are socially “embedded”. So where economics explains how
a market functions, sociology explains why it takes the particular social shape it
does, in a particular society.

Q. In what ways is a market, such as a weekly village market, a social
institution?

Answer: A weekly village market (a haat) is much more than a place to trade
goods. It brings together people from surrounding villages who come to sell farm
produce and buy manufactured goods, but it also attracts moneylenders, entertainers,
astrologers and other specialists, so it becomes a hub of many kinds of social
activity, not only economic activity.

For many visitors, the chapter says, the primary reason to come to the market is
social: to meet kin, arrange marriages, and exchange gossip. In hilly and forested
areas especially, the weekly market is the major institution for both the exchange of
goods and for social intercourse generally. The Dhorai market study (Box 4.1) shows
this concretely: on the market day it describes, a religious ceremony is in process alongside the trading, and the market
day transforms an otherwise sleepy village into a hub of exchange, sociability and
ritual all at once. This is exactly why the chapter calls a market a social institution,
comparable to caste, tribe or family: it organises real social relationships, not only
economic transactions.

Q. How do caste and kin networks contribute to the success of a business?

Answer: Trade and commerce in India have historically operated through caste
and kinship networks because businessmen are more likely to trust others from their own
community or kin group than outsiders. This trust is the basis of credit and banking
systems built entirely on caste ties. The Nakarattars of Tamil Nadu (Box 4.2) ran a
caste-based banking system in which loans and deposits moved between members according
to business territory, residential location, descent, marriage and shared cult
membership, with no government-controlled central bank: reputation and community trust
alone sustained public confidence.

The hundi (a bill of exchange, like a credit note) worked the same way: a merchant in
one part of the country could issue a hundi that a merchant in another part would honour,
because both belonged to the same trade and kinship network. The Marwaris’ rise during
the colonial period is another example: their success rested on extensive social
networks that created the trust their own banking and moneylending system needed. In
each case, doing business within one’s own community, rather than with outsiders,
tends to create a caste monopoly in that particular line of business, and the shared
trust within the network is what makes credit, banking and long-distance trade possible
without formal legal enforcement.

Q. In what ways did the Indian economy change after the coming of
colonialism?

Answer: Before colonial rule, India was, for centuries, a major manufacturer
and exporter of handloom cloth (both ordinary cotton and luxury silks) and other goods
such as spices, which were in great demand in the global market, especially in Europe.
Pre-colonial India already had well-organised manufacturing centres, indigenous merchant
groups, trading networks and banking systems, including the hundi.

Colonialism produced major upheavals: production, trade and agriculture were
disrupted. The best-known example is the demise of the handloom industry, caused by the
market being flooded with cheap manufactured textiles from England. India’s position in
world trade reversed: it changed from being a major supplier of manufactured goods to
becoming 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 Europeans, entered trade and business, sometimes allying with existing
merchant communities and sometimes forcing them out. But the expansion of the market
economy also gave new opportunities to some merchant communities, such as the Marwaris,
who re-oriented themselves to the changing economic circumstances and, in some cases,
continued to hold economic power even after Independence.

Q. Explain the meaning of ‘commoditisation’ with the help of examples.

Answer: Commoditisation (or commodification) is the process by which
something that was earlier not traded in the market becomes a commodity: something that
can be bought and sold. The clearest example the chapter gives is labour itself: under
capitalism, workers must sell their labour power in the market to earn a wage, which
Marx says happens only in capitalist societies.

Other examples from the chapter: the sale of human organs, such as kidneys, by poor
people to rich patients needing transplants, which many people believe should not
happen at all; marriage, which used to be arranged only by families but is now handled
by professional marriage bureaus and websites for a fee; and personal and social skills,
once taught only within the family, now sold by private institutes offering
“personality development” and spoken-English courses. The growth of private schools,
colleges and coaching classes is described as the commodification of education itself.
Activity 4.2 uses bottled water as a simple, everyday example: something not sold at all
a generation ago that is now bought and sold everywhere, as ordinary as any other
commodity.

Q. What is a ‘status symbol’?

Answer: A status symbol is a good whose ownership signals a person’s social or
economic standing. Max Weber, one of the founders of sociology, first pointed out that
the goods people buy and use are closely tied to their status in society, and he coined
the term to describe this. The chapter’s own example: among the middle class in India
today, the brand of cell phone or the model of car a person owns is an important marker
of socio-economic status. Consumption, in other words, is not only about the practical
use of a good; it also carries symbolic meaning, communicating something about the
buyer’s social position, which is exactly why advertisers try to link their products to
a desirable lifestyle or status (Activity 4.3).

Q. What are some of the processes included under the label ‘globalisation’?

Answer: Globalisation covers several trends together. The chapter names: the
increase in international movement of commodities, money, information and people; and
the development of technology (such as computers, telecommunications and transport) and
other infrastructure that allows this movement to happen. A central feature of
globalisation is the increasing extension and integration of markets around the world,
so that a change in one market can have a profound impact somewhere else far away (the
chapter’s example is a US economic slump, such as after the 9/11 attacks, affecting
India’s software industry). Under globalisation, not just money and goods but also
people, cultural products and images circulate rapidly, entering new circuits of
exchange and creating new markets, drawing things once outside market exchange into it,
for example the marketing of yoga and ayurveda in the West, and the growth of
international tourism.

Q. What is meant by ‘liberalisation’?

Answer: Liberalisation is a range of economic policies that India adopted
from the late 1980s, shifting away from state-led development. It includes: the
privatisation of public sector enterprises (selling government-owned companies to
private companies); the loosening of government regulations on capital, labour and
trade; a reduction in tariffs and import duties so foreign goods can be imported more
easily; and allowing easier access for foreign companies to set up industries in India.
Another word for such changes is marketisation, meaning the use of markets or
market-based processes, rather than government regulations or policies, to solve
social, political or economic problems, including deregulation, privatisation of
industries, and removing government controls over wages and prices.

Q. In your opinion, will the long term benefits of liberalisation exceed its
costs? Give reasons for your answer.

Answer: This is an opinion question, so give your own view, but support it
from the chapter’s own evidence on both sides rather than an opinion alone.

Case for benefits exceeding costs. Liberalisation stimulated economic growth
and opened Indian markets to foreign companies; foreign investment is supposed to help
economic growth and employment; and privatisation is supposed to increase the
efficiency of companies that were government-run, reducing the government’s own
financial burden. Sectors like software and information technology, and parts of
agriculture such as fish or fruit, have gained from access to a global market.

Case for costs exceeding benefits. The chapter is explicit that the impact of
liberalisation “has been mixed”. Sectors such as automobiles, electronics and oilseeds
have struggled because they cannot compete with foreign producers. Indian farmers now
face competition from farmers in other countries because agricultural imports are
allowed, while support prices and subsidies, which used to protect them, have been
reduced or withdrawn, leaving many farmers unable to make a decent living. Privatisation
and the closure of some public sector industries have led to job losses in some sectors
and the growth of unorganised-sector employment, which offers less regular and
lower-paid work than the organised sector.

A balanced answer should conclude that the effects are uneven across sectors:
gains for some, real costs for others, exactly as the chapter itself concludes, rather
than a one-sided “liberalisation is good” or “liberalisation is bad” claim.

Q. Visit a market or shopping area in the town or city where you live. Find out who the important traders are. To which community do they belong? Are there particular areas of business that are controlled by particular communities, for instance, jewellery shops, kirana (provisions) shops, the hardware trade, furniture making shops, and so on? Visit some of these shops and find out about the traders who run them and their communities. Are they hereditary family businesses?

Answer: This is a field activity, so your findings will come from your own market. A good way to do it and write it up:

• Make a simple table with four columns: line of business (jewellery, kirana, hardware, furniture and so on), names of the main shops, the community of the owners, and whether the shop is a hereditary family business (how many generations it has run).
• Ask politely and record only what people are willing to tell you. Ask how the shop started, who supplies it, and whether suppliers, partners or staff come from the same community or family.
• Look for the pattern the chapter describes. You may find that one line of business in your town is run mostly by one community, and that many shops are family businesses handed down over generations.
• Explain it in the chapter’s terms. Trade and commerce often operate through caste and kinship networks. 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 outsiders, and this tends to create a caste monopoly within certain areas of business. The Nakarattars and the Marwaris are the chapter’s own examples of such networks.

Q. Can you think of other examples of things that have been commodified relatively recently? Remember, a commodity need not only be a thing or object; it can also be a service. Try also to think of things that are not commodities today but could become commodities in the future. What are the reasons why this could happen? Finally, try to think of things that were commodities in the past but have stopped being commodities today (i.e., they used to have market or exchange value before but do not have it now). When and why do commodities stop being commodities?

Answer:

• Recently commodified things and services. Besides bottled water, the chapter itself gives several: arranging marriages (now done by professional marriage bureaus and websites for a fee), social skills such as manners, etiquette and spoken English (now sold as ‘personality development’ courses), and education (the growth of private schools, colleges and coaching classes). You can add examples from your own surroundings, for instance paid services for tasks that families once did themselves.
• Things that could become commodities in the future. This is your own reasoning. The reason the chapter gives for commodification is the growth of capitalism, which extends markets into places and spheres of life that were earlier untouched by it. So anything that becomes scarce, or that people start paying for because it saves time or gives status, can turn into a commodity.
• Things that stopped being commodities. The chapter’s own example is human beings: in earlier times people were bought and sold as slaves, but today it is considered immoral to treat people as commodities. A commodity stops being one when society decides, on moral grounds and usually through law, that it must not be bought and sold. This is also why many people argue that human organs, such as kidneys, should not become commodities.

Q. Make a collection of advertisements from newspapers and magazines. From the collection, choose two or three that you find interesting. For each of these advertisements, try to answer the following questions.
1. What is the product that is being advertised, and what image has been created of that product?
2. How has the advertiser tried to relate this product to a desirable lifestyle or social status?

Answer: Your answer depends on the advertisements you choose. For each one:

• Question 1. Name the product and describe the picture the advertisement paints of it: who is shown using it, where, and what feeling it gives (modern, luxurious, successful, caring and so on).
• Question 2. Show the link to status. The chapter explains that consumption carries symbolic meaning: a consumer conveys a message about his or her socio-economic 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’s term for such goods is status symbol. The chapter’s own example is that among the middle class in India today, the brand of cell phone or the model of car one owns is an important marker of socio-economic status. Point out how your advertisement uses exactly this idea, for example by showing the product with a rich home, a foreign holiday or a high-status job.

Q. What are the new circuits of goods, services, money, and people that have been created at Pushkar because it is now a part of the international tourist circuit?

Answer: Because the Pushkar fair is now marketed internationally as a major tourist attraction, foreign and Indian tourists now travel there alongside the pastoralists and traders who come to buy and sell camels and other livestock, and the Hindu pilgrims who come for Kartik Purnima. The tourists bring money into the fair and pay for services such as travel, stay, guides and food, and for goods sold to visitors; guidebooks such as the one quoted in Box 4.3 advertise the fair abroad. So Hindu pilgrims, camel traders and foreign tourists mingle at one event, exchanging not only livestock and money but also cultural symbols and religious merit.

Q. How do you think the coming of large numbers of foreign and Indian tourists has changed the way in which this fair operates?

Answer: The fair still remains a major social and economic event for local people, but it now also works as a product for sale in another market, the market for tourism. It is advertised to outsiders, and the colour, music, decorated camels and religious ceremonies that were once part of a livestock market are now also a spectacle that tourists come to watch and photograph. More and more of the fair is therefore arranged with visitors in mind, and the people who earn from it now include those who serve tourists, not only livestock traders.

Q. How does the religiosity of the place add to its marketability? Can we say that there is a market for spirituality in India?

Answer: The chapter says the fair is all the more attractive to tourists because it comes just before the major Hindu festival of Kartik Purnima, when pilgrims come to bathe in the holy Pushkar Lake. Box 4.3 describes the religious event building up with the camel fair in incense, chanting and processions to the last night, when thousands of devotees wash away their sins and set candles afloat on the holy water. This religious atmosphere is part of what is sold to tourists. Yes, we can say there is a market for spirituality: the chapter itself gives the marketing of Indian spirituality and knowledge systems, such as yoga and ayurveda, in the West as an example of culture becoming a commodity.

Q. Can you think of other examples of how religions, traditions, knowledge, or even images (for instance, of a Rajasthani woman in traditional dress) become commodities in the global market?

Answer: The chapter’s own examples are yoga and ayurveda marketed in the West, and international tourism, where culture itself becomes a commodity. Images are sold in the same way: a picture of a Rajasthani woman in traditional dress can appear on postcards, travel posters and tourist brochures to sell a holiday. Other examples you can give are festivals and traditional crafts that are packaged and sold to tourists, and traditional knowledge sold as courses or products to buyers abroad.