Market-resistent institutions

When Past Holds the Future : The Retention of Market-Resistant Institutions

Introduction

Societies can be differentiated on the basis of the extent of market penetration . The least modernized societies are not only economically disadvantaged but also suffers from the loss of growth potentials . Such societies are marked by their retention of structures and institutions which are not market friendly . The purpose of this essay is to examine the major reasons that make societies closed to establishing market friendly institutions and structures

Resisting the Market

In non-market based economies , the information

and energy flows between the four major functions such as adaptation , goal attainment integration and pattern maintenance are extremely weak or minimal . The social subsystems of economy , culture and polity here are rigid and inflexible . It is always important to remember that economy is not separated from the society and political and cultural factors do play a decisive role in the (re )shaping of the economy . Still , advanced societies are marked by better differentiation of economy from polity and culture . In an embedded economy , economy is fully submerged in society as a whole . Here , social institutions are multifunctional and economic relations are embedded in broader social relations (Holton 1995 ,

.18 . In this context , an economic function such as commodity exchange has social , political and cultural meanings as well . In market-resistant societies , economic functions have larger influence in shaping social bonds and cultural features . On the contrary , in a market based economy , the mechanisms of price determination and calculations of cost-benefit...