The Market as a Social Institution

The Market as a Social Institution

Question

How does a sociological prospective on markets differ from an economic one?

Answer

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.

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