Markets: an economic and a social view

The word 'market' has many meanings:

• a place, like a vegetable market;
• a gathering of buyers and sellers;
• a field of trade, like 'the market for cars';
• demand, as in 'there is no market for this product';
• the whole economy, as in 'leave it to the market'.

Economists' view: Adam Smith, in The Wealth of Nations (1776), argued that when each person pursues his own gain through exchange, the result is an ordered system that benefits all, as if guided by an 'invisible hand'. Early economics was called political economy. Modern economics studies the economy as a separate part of society, with its own laws, like a machine.

Sociologists' view: markets are social institutions. They are built in culturally specific ways and are shaped by society:

• who can buy and sell, and where, depends on caste, gender, class and community;
• trust, custom and relationships affect prices and deals;
• markets are tied to other institutions: family, religion, politics.

So sociologists say economies are 'embedded' in society: organised by social groups and classes, and linked to everything else in social life.

Example: a customer buys from a shopkeeper of their own community because they trust him, even if the price is slightly higher. A price is not just a number; it reflects relationships.

This chapter looks at markets in India through this lens: a tribal market, traditional trading communities, capitalism and consumption, and globalisation.