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The Market as a Social Institution moneylending. Like the Nakarattars, the success of the Marwaris rested on their extensive social networks, which created the relations of trust necessary to operatetheirbankingsystem.ManyMarwarifamiliesaccumulatedenoughwealth to become moneylenders, and by acting as bankers also helped the commercial expansion of the British in India (Hardgrove 2004). In the late colonial period and after Independence, some Marwari families transformed themselves into modern industrialists, and even today Marwaris control more of India’s industry than any other community. This story of the emergence of a new business community undercolonialism,anditstransformationfromsmallmigranttraderstomerchant bankers to industrialists, illustrates the importance of the social context to economic processes. 4.2 U nderstanding C apitalism as a Social S ystem One of the founders of modern sociology, Karl Marx, was also a critic of modern capitalism. Marx understood capitalism as a system of commodity production, or production for the market, through the use of wage labour. As you have already learned, Marx wrote that all economic systems are also social systems. Each mode of production consists of particular relations of production, which in turn give rise to a specific class structure. He emphasised that the economy does not consist of things (goods circulating in the market), but is made up of relations between people who are connected to one another through the process of production. Under the capitalist mode of production, labour itself becomes a commodity, because workers must sell their labour power in the market to earn a wage. This gives rise to two basic classes – capitalists, who own the means of production (such as the factories), and workers, who sell their labour to the capitalists. The capitalist class is able to profit from this system by paying the workers less than the value of what they actually produce, and so extracting surplus value from their labour. Marx’s theory of capitalist economy and society provided the inspiration for numerous theories and debates about the nature of capitalism throughout the nineteenth and twentieth centuries. C ommoditisation and C onsumption The growth of capitalism around the world has meant the extension of markets into places and spheres of life that were previously untouched by this system. 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. According to Marx and other critics of capitalism, the process of commodification has negative social effects. The commodification of labour is one example, but there are many other examples in contemporary society. For instance, there is a controversy about the sale of kidneys by the poor to 61 cater to rich patients who need kidney transplants. According to many people, human organs should not become commodities. In earlier times, human beings Reprint 2026-27