The Market as a Social Institution

The Market as a Social Institution


Write a brief note on the following—(i) MNCs (ii) Impact of the Great Depression in sociological perspective. (iii) Bretton Woods Twins as propounder of the concept of globalisation.

(i) Multinational Corporations (MNCs) : These are large companies such as Birlas, Nakarattars of Tamil Nadu during colonial India that operated in several countries at the same time. The first MNCs were established in the 1920s. Many more came up in 1950s and 1960s as US business expanded world-wide and western Europe and Japan also recovered to become powerful industrial economies. The world-wide spread of MNCs was a notable feature of the 1950s and 1960s. This was partly because high import tariffs imposed by different governments forced MNCs to locate their manufacturing operations and become domestic producers in as many countries as possible. Liberalisation of economy under Globalisation has further opened the gates everwide for entrance of these MNCs as also a number of other software service industries and Business Process Outsourcing industries (viz. B.P.O.) like call centres. These are connecting India to the global economy.

(ii) Impact of the Great Depression : Causes of the great depression of 1929 CE rose in the western countries but India's being annexation as socio-political relationship (viz. being a colony of Britain) she had to endure with its percussions. We would like to discuss first the causes of that depression :

Causes : (i) Agricultural production incresased several times more than the consumption demand. It was so because several hundreds of thousands people were killed in the first World War. Owing to this agricultural prices took a nose dive. As prices slumped and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to market so as to maintain their overall income. It however, made the situation more dismal.

(ii) Withdrawal of loans by United States of America caused collapse of currencies such as the British Pound sterling.

(iii) Imposition of double import duty by America made the situation worse for European countries.

(iv) Strict recovery of loan amounts by America and farmers could not sell their harvests and thus, households were ruined and businesses collapsed there.

(v) American, banking system collapsed as recovery could not be done to the desired extent.

Impacts on India :

(i) India's exports and imports fell by half between 1928 and 1934 CE :

(ii) Prices of agricultural produce Eg. wheat fell by 50 percent.

(iii) Peasants suffered more when colonial government refused to reduce revenue demand.

(iv) As gunny bags exports fell sharply due to cessation of war, prices of raw jute crashed more than 60 percent.

(v)    Peasants' indebtedness increased. They used up their savings, mortgaged their lands and sold whatever jewellery and precious metals they had to meet their expenses.

Thus, we observe that irrespective of the nature of socio-cultural relations economic changes in one country of the world effect another. Economic activities are, therefore, a part and parcel of the society and thus, we can say them social institutions.

(iii) Bretton Woods Twins : These are I.M.F and World Bank viz the exponents of globalisation since their inception and commencement of financial operations in 1947 CE. Their decision making is controlled by the western industrial powers (viz countries like France, Germany, Britain etc.) and it is the USA who is given an effective right of veto over key decisions of IMF and world Bank. They favoured therefore, only the developed nations and showled severe neglect towards the interests of developing countries. This was the reason, G-77 countries raised their demand for NIEO (New International Economic Order). Floating exchange rates were introduced as a result of their protest. Developing countries from mid 1970s were forced to borrow from western commercial banks and private lending institutions promoted by these Bretton woods twins. This led to periodic debt crise in the developing world and lowered incomes and increased poverty especially in Africa and Latin America. Thus, globalisations, the economic concept is only favourable to MNCs and developed countries as developing countries cannot compete with the global norms of world economy.

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