MARKET AS A SOCIAL INSTITUTION

May 19th, 2015
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The discipline of economics is aimed at understanding and explaining how markets work in modern capitalist economies. It is important to understand the role of sociology in understanding the role of markets. For this one has to understand the beginning of modern economics in 18th century.

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MARKET AS A SOCIAL INSTITUTIONThe discipline of economics is aimed at understanding and explaining how markets work in modern capitalist economies. It is important to understand the role of sociology in understanding the role of markets. For this one has to understand the beginning of modern economics in 18th century. The most famous of the early political economists was Adam Smith who in his book The Wealth of Nations attempted to understand the market economy that was emerging at that time. He argued that the market economy is made up of a series of individual exchanges or transactions which automatically create a functioning and ordered system. This happens even though none of the individuals involved in the millions of transactions had intended to create a system. Each person looks only to their own self-interest but in the pursuit of this self-interest the interests of all or of society also seem to be looked after. In this sense there seems to be some sort of an unseen force at work that converts what is good for each individual into what is good for society. This unseen force was called the invisible hand by Adam Smith. Thus he argued that the capitalist economy is driven

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