Economic Institution

Economy as an Institution:

Economic Institution in sociology and anthropology refers to the way of performing, economics activities. Through these institutions, economic necessities of a community are fulfilled. Not only economic institutions are limited in fulfilling of economic necessities but also they affect the whole society and culture. Hence economic institutions are the focal point of study. Economic institutions are more concerned with the production of goods and services, consumption and distribution.

               Economic Institution is a way of working system. Organizational structure, and its legal activities, what we call in general cannot be called an economic institution. In sociology and anthropology economic institution means those organization that are developed from ancient times and the form of economic activities and relationship that are prevalent even today.

              

Economic Institution in sociology and anthropology means the way of conducting economic activities in society. The system of production, consumption and distribution of goods and services as per the custom and the requirement of society in each society, be it the traditional or rural or modern or urban, we call it economic institution. These economic institutions mainly focus on three aspects. Firstly, the type and quantity of goods and services to be produced, secondly, how to exploit the existing natural resources like land, mines, forest, water resources and human resources for production of goods and services and the availability of such resources and thirdly, to whom goods and services need to produce etc. Each economic institutions work actively in each historical period considering these three aspects.

Economy as an adoptive institution of society:

There happens to be a intimate relationship between economy and social institution. There is one possibility of change in the form of economy due to the form of society, its situations, demands and desires, nature of consumption, culture, religion, values and beliefs. It means that the socio-cultural state and nature determines the state and nature of economy. On the flipside economy also determines the nature and forms of socio-cultural system. Relaying on these two analyses, we can claim that economy is an adoptive institution of society. 

Economy is the process of operation of social system, which continuously affects the society. Economy means the integrated system of consumption, production, distribution and exchange. The process of consumption, production, distribution and exchange depends upon human desires, which is also affected by cultural and geo-physical aspect. To ease their livelihood pattern human selects certain economic system, relationship and behaviors. Economic system is selected on the basis of types of production and their benefits to the society.

Economy cannot be understood excluding it from society and culture. As per social desires, if production processes are forwarded, change also occurs in total production system. Economy, indeed, is an adaptive institution in society. Hence, various economics are developed in a social system. 

Economic institution and socio cultural life:

Economic Institution has a direct relationship with social life. The following points will clarify this argument.

1. Economic system and division of labor
2. Economic system and social structure
3. Economic System and occupation
4. Economic system and production, consumption and exchange system
5. Economic system and stratification and social relationship

Task of Economic Institution:

Economy is the unified form of production system, distribution, exchange and consumption. We generally understand the technique of production, relationship among the production units, impart of technology, produced goods, while speaking about economy. We can describe the task of economy as follows:

1.Production:

Production is the main task of economy. Production means the construction, development and growth of goods and services. Production of such goods and services is made for the household level to community level and national level. Household level production is mainly of primary nature, where family is only focused while producing. For example subsistence based cultivation, animal husbandry, small scale cloth and wares, and tools are produced for the consumption by certain communities only and not for selling.

In industrial society production is made in large scale using the mass equipments, machines, technology and resources. Large scale produced goods and services are delivered into external market. Production mechanisms are prepared as per the demand of the market and more and more profit is expected from production. This kind of production is made in industrial capitalist societies. Modern capitalist economy has begun displacing traditional knowledge, skills, ways, methods, capacities etc, which ultimately promote industrial dependency and extinction of community based production and skills.

2.Distribution:

Distribution means the process through which goods and services are delivered to targeted groups. Through distribution process goods and services are extended to communities. While distributing, if the nature of production is primary, or if the production quantities are limited and if the production is subsistence based, such goods are distributed to specific and communities only. After industrialization, when goods are produces in extensive way, the importance of distribution is highlighted. The distribution process of global marked-based goods and services of industrial states is broadened.

            In the present world, transportation and other infrastructure are developed to ease the distribution process of goods, produced by multinational companies, in concerned countries. Political and economic treaties are made between the concerned countries to make easier the distribution globally. But the unequal distribution of income has promoted the imbalances in the economy in the present world. The gap between rich and poor is increased globally. The main factor behind this is the inability of the state mechanism to deliver development process equally to each class and strata of people living in the country.

3.Exchange:

Exchange is the process of buying and selling of goods and services in the market on monetary basis and where goods are sold in cash. Business transaction and exchange are adopted. Today’s modern monetary production system or economy depends upon this process. Each kind of exchange activities are made possible as money is comfortable and acceptable for all. But money cannot be reliable mean in each society. In such situation people get goods through exchange. In some societies, labor has been  major base or tool of exchange.

4.Consumption:

In economy, the propose of production of each goods and services is for consumption. Consumption means the use of goods or services as per human needs and satisfactions. The use of goods and services itself is consumption. The level of consumption is increased if goods and services are produced considering, the demand, desires and necessities of the concerned communities. The role of individual, society and state is important in easing the livelihood system of people raising the socio-economic status of people through the consumption of available resources and means at the community.

Economic Role and Social Significance of Household Level Institution:

The basic unit of each production process is family. Family and household based division of labor, condition of employment, decision process, income or earning, entrepreneurship and consumption directly affect the economy. Household level economic activities and the relationship within it affect positively to the economy. If there is no discrimination in division of labor within home, if there is equal possibility of each member participating within or outside the household activities, such a state contributes positively to the economy. But gender discrimination, age discriminations, unnecessary expenditures, religious prohibitions, conservative customs contributes negatively in the entire economy. However such tendencies are even frequent at the present in our societies.

Economic activities which are performed through family level have economic and social significance as well. Household level economic activities are mainly oriented towards social development, process, unity and advancement. Household economic activities are limited to house and communities. They do have significant impacts on the entire society. Family based production system or income or employment promote self confidence in society. Progress in the family helps community to be civilized, educated and alert. Household level agriculture, tailoring, saving, investment, animal husbandry, division of labor etc, strengthens the entire social welfare.

Economic role and Social Significance of Community level Institution:

Various communities in societies have various types of production techniques. They also have their own ways of subsistence patterns. They have own technique of mobilizing resources and production means, and own practices. All have an impact in the economy.

Economic activities in a gurung community are preformed through the rodhi or nogar an indigenous social and economic institution. In this institution the resources mobilization and community participation are highly expected. Likewise, labor is consolidated and mobilized as per the requirement, through which economic, social and political are fulfilled in a socirty. Bheja in Magar communities, Dhikuri in Tahkali communities, labor exchange (parma) in Bramin and Chetry communities, Ghuti in Newar communities of Nepal and through other various institution substance activities have been conducted, which has also contributed positively in the economy.

Whatever the economy activities held in communities, they all have social and cultural importance. Such economic activities unite various families, caste, language, cultures, etc and strength social unity. Cultures, beliefs, values, religion and customs are applied in economic activities like Parma, Dhikur, Nogar, Rodhi, Bheja etc. in society. Socio cultural necessities are fulfilled through such these activities. For example, inn rural areas ‘mother’s groups’ and similar  other institutions have affected positively to the upliftment of education sector, infrastructure, forest , and irrigation related activities etc. these activities are performed on participation, which also focus on lessening of gender decimation, caste decimation, raising the backward groups, castes, and religions, promoting of mutual corporation and working together. These are what we call the social significance of community level economics activities. In rural areas, the participation of lower caste people has also increased in daily related activities, which has also helped in decreasing the traditional inequalities. This is also an example of social development. Likewise, there do not occur sex and age related decimation in Rodhi and in Bheja resources of a community are mobilized under the guidance of given community. Any society if considers itself secures, it obviously promotes social unity and brotherhood, which ultimately leads to the economic prosperity of that society due to the remarkable participation of its members. 

Economic Role and Social significance of State level institution:

State level financial institutions, which collect and mobilize capital, create national capital and an investment friendly environment. Economic and social development related activities are forwarded through central and local level state institutions. The availability of acts, rules, laws, related to economic development, peace and security and investments obviously contributes to the nation in its way to economic development. In the countries like ours, the role of state in economic development, stability, good governance and progress is must. State can never escape from the economic development related activities. It has the first and the foremost responsibility in eliminating poverty, inequality and backwardness.

State-led economic activities are the only means of entire social development and transformation. When a country involves in an economic revolution, means and resources are widely mobilized and the rate of capital mobilization and construction also extended. Human are more likely to be employed, through which their level of education, health, occupation, freedom, human rights, selection, empowerment, also raised or promoted. The country through this process moves towards social transformation, social and economic disparities can be eradicated. Since economic policies affect entire societies, those policies and programs need to be oriented towards achieving the objective of social development together with economic development. Economic policies obviously can be the fundamental bases of social development.