Indian Society Chapter 4 The Market As A Social Institution

It refers to some sort of an unseen force at work that converts what is good for each individual into what is good for society. Interest of society is looked after automatically when individual interest is looked after maintaining judiciously. E.g. Sanitation in and around one's own home, protects ipso-facto the whole colony from mosquito-bite and malaria.

Difference between sociological and economic perspective on markets:

(i)    Economy approach is aimed at understanding and explaining how markets work in modern capitalist economies while sociological approach is based on the phenomenon of adherence of interests of society or all people to the looking after judicious way of an individual interest. Father of economics viz. Adam Smith himself has called this phenomenon or force as “invisible hand'. He has angued that society overall benefits when individuals pursue their own self-interest in the market because it stimulates the economy and creates more wealth. Thus, sociological perspective observed markets as social institution.

(ii)    Economic perspective assumes economies/economy as a separate part of society because it has its own laws to guide. However, sociologists have attempted to develop an alternative way of studying economic institutions and processes within the larger social framework.

(iii) Economic prospects do study upon individual buyers and sellers and supports economic philosophy or laissez-faire (i.e. noninterference of government in private enterprises) or free market while sociologists view markets specific cultural formation of social institutions. According to them, markets are often controlled by particular social groups or classes and they have specific connections to other institutions, social processes and structures. They say economies composing markets are socially embedded.

Weekly market as a social institution.

(i) These bring together people from surrounding villages and also attract traders from outside the local area.

(ii) These link local tribal economy to that of outside and establish economic relationships between tribal people and others.

(iii) The layout of the market symbolises, the hierarchical inter-group social relations.

(iv) Market system in weekly haats or markets acts as social hierarchy. Eg. The wealthy and high ranking Rajput jewellers and middle-ranking local Hindu traders sit in the central zones while the tribal sellers of vegetable and local wares sit in the outer circles. Refer to adivasi village market in Bastar (Chattisgarh).

Contribution of caste and kin to success of a business.

(i)    Castes had their own systems of banking and credit E.g—Hundi (credit note instrument) allows merchants to engage in long-distance trade.

(ii)    A merchant in one part of the country was allowed to issue a Hundi that would be honoured by merchant in another place because of caste and kinship networks.

(iii)    Communities like Nattukottai of Tamil Nadu had developed their own trading networks. Their banking and trade activities were embedded in the social organisation.

(iv)    Banks were basically joint family firms and structure of business firm was the same as that of the family.

(v)    Prior to colonial period, there was Jajmani system or non-market exchange system in vogue. It was also based on caste and kin-ties.

(vi)    The structures of caste, kinship and family were oriented towards commercial activity and business was carried out within these social structures.

Changes in Indian economy after colonisation.

(i)    It created disruptions in production, trade and agriculture Eg. Demise of handloom industry.

(ii)    Indian economy began to link to the capitalist economy of the world.

(iii)    India was left mere source of raw materials, and agricultural products and merely consumer of imported machine made goods.

(iv)    Some merchant communities could improve their position by accommodating changed circumstances. These were Marwari communities who took advantage of cities like Calcutta, spread their trade and money-lending business throughout the country.

Commoditisation:It was the transformation of non-commodity (viz. things not bought and sold for money in the market).

Examples:(i) Labour or skills become things that can be bought and sold in the market for wage, fee in terms of money.

(ii)    Sale of kidneys by the poor to cater to rich patients who need kidney transplants.

(iii)    Marriage for fee are arranged by marriage bureau and through websites.

(iv)    There are courses conducted on charge hr teaching cultural and Social skills while in earlier times, these were taught in an automatic way and through interaction of children with their parents in family.

This term was coined by Max Weber, one of the founders of sociology. It exhibits the difference in consumption trends in society based on their earnings and economic status. In contemporary India, the brands of cell phone or the model of car-owned by middle class are important markers of their socio-economic, status.

These processes are Business Process Outsourcing (BPO) industries Eg. call centres, software services industries, virtual markets, E-male services etc. These all processes are increasing extension and integration of markets around the world. Business processes in NASDAQ, Bombay stock exchange, Delhi Stock Exchange etc. also fall in globalisation phenomena. Under globalisation, flow of commodities, money, information and people las also development of computers, telecommunications and transports are the trends which have integrated the world markets.

liberalisation is a policy that comprises privatisation of public sector enterprises (viz selling government-owned companies to private companies), loosening of government regulations on capital, labour and trade, reduction in tariff and import duties so that foreign goods can be imported more easily. This includes allowing easier access for foreign companies to set-up industries in India. In briefs, this change can be stated as marketisation or laissez-faire (alone or let it be or free market) the term coined by Adam Smith, the father of economics. It is use of market-based processes, free from government control or policies to extract solution of problems in society, politics and economy. These processes advocate complete deregulations.

Yes, escalation of its costs has become all apparent and manifested in events of suicides by peasants, unemployed workforce, all time rise in the graph of crimes eccentric type and strong-hold of MNCs in almost all business activities in India. Following reasons can be given for their dreadful tremulations and clamours in Indian society :

(i) Subsidies and support prices have been withdrawn from agriculture and farmers have been directly exposed to competition from farmers in other countries because as per the norms of liberalisation, import of agricultural products is allowed.

Earlier to liberalization, Indian agriculture was protected from the world market by support prices and subsidies. Support prices help to ensure a minimum income for farmers because at these prices, the government pays to buy / procure agricultural produce. Subsidies are concessional prices charged for agricultural inputs like fertilisers, diesel oil from peasants and that part of price is borne with the government. Now both of these have been withdrawn. Hence, farmers are the sufferers.

(ii) Foreign goods and brands have entered in Indian market because of liberalised Exim Policy. These are much cheaper than the products manufactured in India. In these circumstances, it has became difficult for manufacturers (companies) to stand in the market. This would gradually pull down the shutters of Indian entrepreneurs and corporate bodies.

(iii) Privatisation has led to loss of employment to a greater extent. Employment in unorganised sector is increasing but the security of jobs, better salary and permanent jobs cannot be expected in this unorganised sector. Problems like exploitation, uncongenial working hours and conditions are raising their heads which is evident from a number of case filed in law courts, strikes and unrest among employees reported by media since last two decades on day-to-day basis.

We can establish this fact on the following grounds:    

(i) As per Varna system during Vedic era, Vaisyas were the communities assigned both business and trading activities.

(ii) Besides Vaisyas, there were other caste groups entered into trade. They tend to acquire Vaisya status in the process of upward mobility.

(iii) The Parsis, Sindhis, Bohr as and Jains are other groups with distinct religious or other community identities but entered into trade.

(v) It is evident that during the colonial period long distance trade in salt was conducted by Banjaras, a marginalised tribal group.

(vi) Particular nature of community institutions and ethos give rise to a different organisation and practice of business.

Kinship is that part of culture which deals with notions or ideas about relatedness or relationship through birth and marriage. The kinship organisation refers to a set of persons recognised as relatives either by virture of blood relationship or by virtue of marriage relationship. According to G. Duncan Mitchel 'When we use the term kinship we are referring to people who are related by consanguinity affinity. Consanguinity is a relationship based on supposedly common blood relationship. A consanguine is a relative who was born in the family as well as one who was adopted in the family concerned.

Functions of kinship:Kinship in India represent the diversities of marriage customs and practices. It is not possible to talk of kinship in India at the level of all India generality. Kinship as an organisation in India is mostly an aspect of regional cultures. Iravati Karve has talked about four regions i.e. North, South, East and West in India. Many others, however, talk abovt two systems of kinship in India. (a) The North Indian and (b) the South Indian.

North Indian and the South Indian Kinship systems are also known as Aryan and Dravidian Kinship systems.

I. The positive impacts of globalisation.

(i) This process is based on the basic premise of free market. It is presumed that the free market begets competition and increase efficiency which is lacking in controlled markets.

(ii) Foreign investment flows into the domestic economy and domestic economy becomes strong and boisterous.

(iii) Globalisation guarantees increased employment opportunities. It is a great blessing for those countries having very large popular Eg. China and India.

(iv) It would take care of the issues of social justice because it ensures economic development through the integration of economies of the world.

(v) It will provide a safety net for the diadvantaged groups.

(vi) It increases cooperation and solidarity among business partners at the international level.

(vii) Values of reciprocity and solidarity among nations are supposed to usher in an era of world peace and amity.

(viii) It is opening many opportunities for millions of people around the world. United Nations Study, 2004 suggests that it offers enormous potential to eradicate poverty in the twenty first century.

II. The Negative Impacts of Globalisation

(i) It has given rise to serious risks for third world countries because most of them are not competitive at international level. Owing to this gains of economic growth are not evenly distributed among different countries.

(ii) Open competitive markets are pushing the world towards unsustainable levels of inequality.

(iii) Globalisation has increased the pace of labour mobilization towards the western countries and their old parents are feeling insecure in India Similarly, rural people are moving to big cities resulting collapses in civil sanitation and order there and that of the extended families. Money has skipped off sentiments.

(iv)    The structural adjustment policies imposed by IMF and World Bank in Asia, Africa and South Pacific (i.e. third world countries) are disastrous as these have decreased the access to education, health and nutrition to the underprivileged sections of the population. These institutions create the political and legal conditions for global market.

(v)    As benefits of growth are unevenly distributed, the number of people living in poverty fell in mid-1990s but then began to rise again in almost all countries. In the developing countries, the rich can adjust easily to the new environment but the poor are becoming poorer.

(vi) Globalisation has made MNCs the big player of the market because they have capital in abundance. Such a concentration of economic power leads to convenience of political and social power.

(vii) Globalisation curtails social and economic right of common citizens. It adversely effects social policy and reduces the role of state activities for the benefits of welfare of the common people.

In the colonial era, India began to be more fully linked to the world capitalist economy. We can discuss the aspects of new market formed during colonisation period in India as under:

(i) India became a source of raw materials and agricultural products and market for manufactured goods.

(ii) New groups of Europeans in alliance with existing merchant communities entered into trade and business. It has overturned existing economic institutors in India.

(iii) New communities of India who could re-orient themselves in the changed environment of business and trade were like Marwaris represented by industrial families such a Birlas.

(iv) Success of these industrial families rested on their extensive social networks. Their banking system ran all over India doing colonial period.

Conclusion : Thus we see growth of a new business community during colonisation. It illustrates the importance of the social context to economic processes.

When the labovr itself becomes a commodity and sold for wage by labourer it brings in the capitalism. Exchange of labour for wage gives rise to two basic classes i.e. capitalist and worker. The former owns the means of production (i.e. factories, capital, land etc) and the latter sells his labour to the former (i.e. capitalist). The former class thus, pays less than what value produced by the latter and thus, illigally benefited. In the changed state of equal distribution of income and wealth as per stake of labour, capital, enterprise and skill besides other inputs, society is never divided in the classes (i.e. capitalist and that of the proletariat). Karl Marx, the staunch critic of capitalism also accepts this position as one of the social system necessary for the growth of the national economy. He writes— 'All economic systems are also social systems and each mode of production consists of particular relations of production which in turn give rise to a specific class structure'. He emphasised upon economy formed of relations between people who are connected to one another through the process of production and it should not be consisting of commodities (i.e. goods circulating in the market). Thus, he was against commodification and assumed it the main factor engendering capitalism and division of society in two classes.

Conclusion : On the basis of above points, it can be stated that capitalism is also a social system but presently in its deteriorating mode as capital shifted to the hands of a few individuals while majority of people pass their life in pains inspite of their fair share of labour in the process of production. As it is social injustice, class-conflicts, strikes and other subversive activities come into play in long terms.

When the common things that fall in category of etiquette, general liability of every individual to the society are incorporated into the things of trade, this process is called commodification or commoditisation Eg. bottled water. Sociologists oppose this trend and tell that this process has negative social effects. Commodifiation has made blind the society to such an extent that even kidneys, livers etc. internal organs of humanbodies are being sold, however, in clandestine ways for which murders of children and adolescents as per media reports; are committed. Commodification is increasing due to severe conditions of poverty and rapid progress in the field of medical sciences. Modern society being based on capitalism, allows and accepts the idea that a person's labour can be bought or that other services or skills can be provided in exchange for money. Marriages in earlier arranged by families but now there are professional marriage bureaus and websites that help people for a fee to find brides and grooms.

In a way, we can state that Indian society has adapted too much change than before since the inception of globalisation in 1990s. India's society therefore, can be stated a capitalist society in which human values are gradually meeting to commodification or in other words, it is commoditisation under capitalistic assumption of Indian society.

Rise of the new middle class in India

The evergence of the new middle class is an interesting development in the era of economic liberalisation in India. Academic studies had earlier focused upon the character of Indian middle class in general, but it is only recently that the rise of the new middle class has attracted Indian sociologists. Members to this new middle class are government servants, lawyers, school and college lecturers and doctors. The body of merchants, agents of modern trading firms, salaried executives in banking and trading concerns, the middle grade of peasants, proprietors and renters have also been included in this new category.

Causes of rise and growth of a new middle class

(i)    The contemporary culture of consumerism has given rise to the new middle class. The economic liberalisation initiated in India in the 1990s portrays the middle class as a sizable market which has attracted the multinational corporations (MNCs).

(ii)    Images of urban middle class in the print media and electronic media contribute to the prevalence of images of an affluent consumer.

(iii)    The spread of the consumer items such as cellphones, cars, washing machines and colour televisions has also consolidated the image of a new middle class culture.    

(iv)    We are living in an era of advertising. Impressive advertising images has further helped a lot in increasing the image of the new middle class.

Positive and negative prospects of the new middle class.

(a)    Positive Prospects.

(i)    The new middle class of India has left behind its dependence on self-restraints and protection from state.

(ii)    The newness of the middle class of our country rests on its embrace of social practices of taste and consumption and a new cultural standard.

(iii)    The new middle class is promising and progressive sector of the society. It is always ready to adopt a new ideology for progress of society and that of the country as a whole.

(b)    Negative Prospects

(i) Critics of new middle class of lndia have pointed out the negative effects that middle class consumerism holds in the terms of environmental degradation and a growing indifference towards socio-economic problems of the country.

(ii) Due to growth of liberalisation and globalisation, this middle class has became self-centred and is not caring for the lower classes of the society viz commodification and status symbol are at rise and resulting in varied way detriment to society.

Conclusion : The waves of liberalisation and globalisation have disturbed socio-economic balance and the theory of the 'Survival of the Fittest' propounded by Charles Darwin in his the Origin Of Species is in full swing. The middle class in India is miles away from theory of Sustainable development and the Welfare Economics' composed by Nobel Prize winner Amartya sen. MNCs thrust in an intervention with social institutions and values of India. The situation so formed is in no ways less than that of during East India Company in the beginning of the eighteenth century.

Globalisation:It is a complex series of economic, social, technological, cultural and political changes that have increased the interdependence, integration and interaction among people and economic players (i.e. companies) in disparate locations all over the world. This phenomenon has aroused much interest since the eighties i.e. 1980s.

Chief features of globalisation

(i)    It is one of the distinctive features of the contemporary world. The term is used mostly in an economic sense. It has no nexus with development of cosmos-consciousness in order to become cosmopolitan (viz. universal man).

(ii)    It is actually the wind propelled by the Bretton Woods institutions or twins (viz. I.M.F. and World Bank) who commenced their financial operation in 1947 and gave veto power to United States of America. In opposition of which the G-8. and G-77 were formed in the later year of 1950 CE; In brief; it ultimately favours developed countries and not in favour of third world countries (i.e. Asian, African and Latin American countries) or developing nations.

(iii)    It is the process of integration of world economies in conditions of free markets.

(iv) Free market envisages free flow of trade and capital and movement of persons across national borders.

(v)    It is thus, identified with the new world trade order and opening up of commercial markets.

(vi)    Science and technologies have greatly helped in the growth of globalisation. The whole process is facilitated by newly developed technology for immediate transmission of information.

(vii)    The process of economic integration on world level was interrupted by the world wars. The great economic depression (1929-1934 CE) and restrictions on the movement of people till almost the 1970s were imposed. However, the process of globalisation received new impetus in India during the last twenty six years.

(viii)    Internationalism of production has been taking place in a big way through the MNCs. These corporations or companies treat the globe a single market rather than a set of national markets.

(ix)    Globalisation has opened up new avenues for the MNCs. The era of globalisation has unfolded new opportunities for both developed and developing countries and turning the whole world into a global village in terms of economy however, not in terms of cosmopolitan values which would perhaps see numerous developments for at least a couple of centuries.

Liberalisation : The concept of liberalisation is closely related to globalisation. It is actually the economic content of globalisation. The highly regulated economy is transferred into an outward-looking economy or world economy in this process. It includes a range of policies such as the privatisation of public sector enterprises (viz. selling of government owned comparies to private companies), loosening of government regulations on capital, labour and trade, a reduction in tariffs and import duties to make foreign goods import easier and inviting foreign companies to setup industries in India. It's market based process to solve Social, political or economic problems. Marketisation is preferred in this process as panacea to all ills.

Ideology behind liberalisation

(i)    The idea of liberalisation is essentially based in the thinking that the economy and society will do much better by reducing the state interventions. It is popularised by the watchword- 'less state, better state'.

(ii)    It emphasises the efficiency aspect of economy. Private enterprises are considered more efficient than the public sector undertakings.

Phases of Liberalisation in India

(i) First phase of liberalisation (1991-94 CE)

The process of globalisation and liberalisation are more predominant in contemporary world. Under such situations, our country is also facing challenges of these processes. A significant transformation has taken place in India since April, 1991. India moved from a highly regulated and inward-looking (introvert) to an outward-looking (extrovert) economy. The dominance of the state in most spheres of activity is giving way to private enterprises. The system of regulation and control of (through different regulations, legislations, licences, permits) declined. The quota permit raj is ending since 1991 phase-wise. From 1991 onwards, numerous structural changes have been introduced in economy. The first phase of reforms (1993-94 CE) focused on the dismantling of controls and regulations in trade and industry. Taxes and tariffs were lowered. All these steps created a conducive climate for private investments both from domestic and foreign investments.

(ii) Second Phase of liberalisation

The process of liberalisation and privatisation has further been accelerated in India during the second phase of reforms. Two major developments in this phase have supported more to this process—

(a) More and more foreign direct investment and (b) downsizing the public sector.

From 1 April, 2001 onwards, all quantitative restrictions have been removed and the market is now open for imported products. Disinvestment in public sector undertaking has not only been initiated, but several corporations have already been sold to private enterprises.

Evaluation of Liberalisation

Bright Side

(a) India has now completed the first post liberalisation decade with satisfactory growth rates.

(b) Inflation has been contained in the postliberalisation period.

(c) Industry is no longer protected from external forces.

(d) More, recently, a break through in the Information Technology (IT) sector has proved skills of Indian professionals who are in great demand in developed countries of the world.lt is expected that IT related services would give boost to the economy in the years to come.

Dark side

(a)    Poverty continues to be one of the most important challenges in after 13-14 years of the beginning of liberalisation in India. Around 26.10 percent of the population is still below the poverty line.

(b)    Unemployment is still a burning problem before India. In fact, situation with regard of employment continue to be grim. During the past 14-15 years, more retrenchment from jobs has taken place because companies have reduced their size or merged to face the rigour of competition. This is happening when the Indian economy is not able to generate sufficient jobs.

(c)    In the era of liberalisation, full employment, universal literacy, primary education (free and compulsory for all), health care and rise in quality of life for all citizens are equally challenging tasks to accomplish.

(d) Handicrafts and household industries are adversely being affected due to liberalisation. Economic liberalisation has affected this sector, which is threatened because of the entry of mechanised products and mass producers of these items in the local markets.

(e) Privatisation is affecting women in several ways. It has already started reducing employment opportunities due to introduction of sophisticated technology both in agriculture and industry.

Sociology embeds markets in social structure and hierarchy. Insteed of assuming market topic of economics, sociology accepts them as social institutions.

Sociologists interpret that phrase in the sense of being buyers and sellers part of society with an appropriate hierarchy and system; series of individual exchanges or trasactions automatically create a functioning and ordered system. Each person looks only to his own self interest but in the pursuance of this self-interest, society interests appear to be looked after in an automatic way.

Suppose someone inspite of being rich does not waste or misuse things while using, consuming or practising with; this he does in view of saving but it engenders natural savings if all people follow this trend. This will result in control on fluctuation in prices of commodities thereby BPL level contained to a great extent.

Adam Smith argues that the capitalist economy is drawn by individual self-interest and its works best when individual buyers and sellers make rational decisions that serve their own interest.

They have attempted to develop an alternative way of studying economic institutions and processes within the larger social framework.

Markets are controlled or in other words, organised by particular social groups or classes and these have specific connections to other institutions, social processes and structures.

People from surrounding villages come to sell their agricultural or other produce and to buy manufactured goods in these markets. Money-lenders, entertainers and a host of other specialists offer their services to local people in there markets. These people come from outside the local area. Thus, these markets exhibit a mass gathering on each week day and an organised society of buyers and sellers is formed A number of people come to meet their kins, to arrange marriages and exchange gossips in these markets.

These were opened by building roads, pacifying tribal rebellions (radicals) and traders, money-lenders and other non-tribal people from plains entered into these areas. It transformed the local tribal economy as they got money for their produce from these people and several new goods came for their consumption. Tribal people were given employment as labourer to work on plantations and mines.

There were very negative consequence as outsiders acquired their lands for mining, setting up industries, lumbering etc. purposes. They were made-labourers and severe pains were inflicted upon them.

Tribal people (Gonds), non-tribal (Hindus), outsiders (Hindu traders of various castes) including forest officials.

(i) Manufactured goods : Jewellery, trinkets, pots and knives.

(ii) Non-local foods : Salt and turmeric (Haldi).

(iii) Local food, manufactured goods and agricultural produce sold by tribal people : Bamboo baskets, tamarind and oilseeds.

Lay-out of market is concentric in a roughly quadrangular patch of 100 yard square ground. In its central zones, wealthy and high-ranking Rajput jewellers and the middle-ranking local Hindu traders lay their stalls. Tribals lay their stall in the outer circles, interaction between Hindus and tribal traders are very different than between Hindus of the same communities. Thus, these markets exhibit hierarchy and social distance between tribal and non-tribal communities.

We can state this fact on the ground of barter system adopted by village communities. For an instance, if someone has wheat but lack of turmeric, he will find turmeric grower and give him wheat in lieu of turmeric. Credit system was based on certain measuring pots E.g. Nauee and Mana (containing items of 2½ kg and 600 grms weight respectively) etc.

Such change was witnessed in rural economy during the period between advent of colonialism and early post-independence. It happened because commercial money economy had gradually penetrated into local agrarian economy. It also brought radical social and economic changes in rural and urban society.

They opined there were existed several non-market exchange systems like Jajmani system but simultaneously, these were incorporated into wider networks of exchange through which agricultural products and other goods circulated.

It is based on the fact that India was major manufacturer and exporter of handloom cloth (both ordinary cotton and luxury silks) and source of many goods like spices which were in great demand in the global market. There were trading communities or castes (Vaisyas) and they had their own systems of banking and credit like Hundi or bill of exchange which allowed merchants to engage in long-distant trade.

(i) It was an organisation of caste, kinship and family.

(ii)    Business activity was carried within that organisation.

(iii)    Traditional merchant communities have established banks basically these were joint family firms.

(iv)    These communities had expanded trading activities through marriage ties which were extended to abroad i.e. Southeast Asia and Ceylon.

(v)    These communities had strong hold in India or such trading activities represented a kind of indigenous capitalism.

Difference between sociological and economic perspective on markets:

(i)    The economic approach is aimed at understanding and explaining how markets work in modern capitalist economies while the sociological approach is based on the phenomenon of adherence of interests of society or all people to the looking after the judicious way of an individual interest. Father of economics viz. Adam Smith himself has called this phenomenon or force as “invisible hand'. He has argued that society overall benefits when individuals pursue their own self-interest in the market because it stimulates the economy and creates more wealth. Thus, sociological perspective observed markets as a social institution.

(ii)    Economic perspective assumes economies/economy as a separate part of society because it has its own laws to guide. However, sociologists have attempted to develop an alternative way of studying economic institutions and processes within the larger social framework.

(iii) Economic prospects do a study on individual buyers and sellers and support economic philosophy or laissez-faire (i.e. noninterference of government in private enterprises) or free market while sociologists view markets specific cultural formation of social institutions. According to them, markets are often controlled by particular social groups or classes and they have specific connections to other institutions, social processes and structures. They say economies composing markets are socially embedded.

1. Colonialism establishment ofrule by one country over another. The British colonialism was based on a capitalist system.
2. Prior to the First World War passports were not widely used for international travel, and in most areas, few people had one.
3. Nation-state pertains to a specific type of state, characteristic of the modern world.
4. A government has the sovereign power within a defined territorial area, and the people are citizens of a single nation. However, nation-states are closely associated with the rise of nationalism.

Changes due to marketization:
(i) Removal of economic controls (deregulations)
(ii) Privatization of industries
(iii) Removing of government control over wages and prices
(iv) Lead to better economic growth

(i) The process of liberalisation includes a range of politics such as the privatisation of public sector enterprises, loosening of government regulations on capital, labour and trade.
(ii) Due to liberalisation reduction in tariff and import duties was made. Now foreign goods can be imported easily.
(iii) The policy of liberalisation is mainly responsible for the globalisation of the Indian economy. This process began in the late 1980s.
(iv) The process of liberalisation and marketisation have stimulated economic growth e.g. branded goods are now available in the markets.

1. Pre-colonial India had well-organised manufacturing centres as well as indigenous merchant groups, trading networks, and banking systems that enabled trade to take place within India, and between India and the rest of the world.

2. ‘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.

3. The ‘traditional business communities’ in India include not only ‘Vaisyas’, but also other
   groups with distinctive religious or other community identities.

4. Trade took place primarily within the caste and kinship networks of these communities, a
   merchant in one part of the country could issue a hundi that would be honoured
   by a merchant in another place.

The term 'Commodification' can be described as:

1. Commodification occurs when things that were earlier not traded in the market become commodities.

2. According to Marx and other critics of capitalism, the process of commodification has negative social effects.

3. But in modern society, almost everyone accepts the idea that a person’s labour can be bought, or that other services or skills can be provided in exchange for money.

4. Under commodification labour or skills become things that can be bought and sold.

According to the Adam Smith, The 'invisible hand' is an unseen force at work that converts what is good for each individual into what is good for society.

The meaning of 'Commodification' or 'Commoditisation' is explained below:
Commodification occurs when things that were earlier not traded in the market
become commodities. Examples:
 1. Under commodification labour or skills become things that can be bought and sold.
 2. Earlier, human beings themselves were bought and sold as slaves,(like:sale of kidneys) but today it is considered immoral to treat people as commodities.
 3. Traditionally, marriages were arranged by families, but now there are professional marriage bureaus and websites that help people to find brides and grooms for a fee. In this way, things or processes got commodified.
4.  In earlier times, social skills such as good manners and etiquette were imparted mainly through the family. But now through privately owned schools and coaching classes, it also has commodified.

(i) Calcutta exported jute to Dundee.
(ii) Madras exported coffee, sugar, Indigo dyes and cotton to Britain.

The goods that people buy and use are closely related to their status in society. This relationship is termed as status symbol. Example the brand of cell phone or the model of car (or any other example) that one owns or uses are markers of socio-economic status.

The 'Jajmani System' can be defined as the non-market exchange of produce, goods and services within the (north) Indian villages, without the use of money, based on the caste system and customary practices.

1. The advent of colonialism in India produced major upheavals in the economy, causing disruptions in production, trade, and agriculture but still 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.
2. Rather than completely overturning existing economic institutions, 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.
3. 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.
4. A good example of this process is provided by the Marwaris, They became a successful business community only during the colonial period when they took advantage of new opportunities in colonial cities. 

Capitalism is an economic system in which the means of production are privately owned and organised to accumulate profits within a market system.
Features of capitalism: its dynamic, it has potential to grow, expand, innovate, use technology and labour in a way best assured to ensure the greatest profit.

1. If capitalism became the dominant economic system, nation-states became the dominant political form. That we all live in nation states and that we all have a nationality or a national citizenship may appear natural to us today.
2. Before the First World War passports were not widely used for international travel, and in most areas, few people had one. Societies were, however, not always organised on these lines.
3. Nation-state pertains to a particular type of state, characteristic of the modern world. A government has a sovereign power within a defined territorial area, and the people are citizens of a single nation.
4. Nation states are closely associated with the rise of nationalism. The principle of nationalism assumes that any set of people have a right to be free and exercise sovereign power.

According to the Adam Smith, 'Invisible hand' is an unseen force at work that converts what is good for each individual into what is good for society.

Commodification:

1. Commodification 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. 
2. According to Marx and other critics of capitalism, the process of commodification has negative social effects. For example: commodification of labour.
3. In earlier times, human beings themselves were bought and sold as slaves, but today it is considered immoral to treat people as commodities.
4. Traditionally, marriages were arranged by families, but now there are professional marriage bureaus and websites that help people to find brides and grooms for a fee.

A virtual market is the one whose operations are entirely electronic. It can be opened from anywhere around the world, symbolically bringing together investors and market participants at the beginning of each trading day.

1. The advent of colonialism in India produced major upheavals in the economy, causing disruptions in production, trade, and agriculture. Eg. Cheap manufactured textiles from England Completely destroyed the handloom industry and made the weavers jobless.
2. Before being colonised by the British, India was a major supplier of manufactured goods to the world market, but after colonialism, India became a source of raw materials and agriculture and a consumer of manufactured goods.
3. But with the colonialism, 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.
4. In some cases, new communities emerged to take advantage of the economic opportunities provided by colonialism. 'Marwaris' is the best example of this process.