In a market town in western India, nearly all the wholesale cloth shops belong to families of one trading caste. A newcomer from another community finds it hard to open a shop there: credit is given mostly to relatives and caste fellows, and quarrels over payment are settled by caste elders rather than in court. Marriages between trading families also bring new business partnerships, and the caste association runs a hostel for the children of its members.
Which sociological idea does this case best illustrate?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Economies are socially embedded
Option (1) Markets work through an invisible hand — Incorrect. The invisible hand is Adam Smith's idea that self-interested exchanges create an ordered market on their own. The cloth market here runs through caste credit, caste elders and marriage ties.
Option (2) Trade follows the policy of laissez-faire — Incorrect. Laissez-faire is the policy of the state leaving the market alone. The case is about caste control of trade, and the state plays no part in it.
Option (3) Economies are socially embedded — Correct. Economies are socially embedded when markets are organised by social groups and linked to other institutions. Caste decides who trades, who gets credit and how quarrels are settled, so this market is embedded in caste.
Option (4) Exchange turns goods into commodities — Incorrect. Commodification means things not traded before start being bought and sold. Nothing in the case turns a new thing into a commodity.
NCERT (2026-27): “4.1 Sociological Perspectives on Markets and the Economy … |