Economic Institutions

Economics Institutions

Economics Institutions defined

The term ‘economic institutions’ is usually used for socially sanctioned such concepts and struc­tures which men have developed in the process of satisfying their material needs. Economic institutions provide basic physical subsistence for society and meet needs for food, shelter, clothing and other necessities of life.

These insti­tutions include production agriculture and industry and the distribution, exchange and consumption of commodities, goods and services necessary for human survival. Secondary economic institutions are credit and banking system, advertising, co-operatives, etc.

In detail, these institutions are studied by the science of economics. Economists study the internal workings of economic system—production, distribution, supply and demand and consumption of goods, taxation, borrowing, saving and spending, and so on.

Functions of Economic Institutions

Following are the functions of economic institution which include

  1. Social stratification,
  2. Power and authority,
  3. Interdependence of other Institutions,
  4. Needs satisfaction,
  5. Employment,
  6. Division of Labor and
  7. Provision of funds.

1. Social Stratification

In capitalist system, there is uneven distribution of resources among people, which create many social classes in society. Individuals in society belong to different classes such as upper, middle and lower class. They can move upward or downward on the social ladder, for instance, if lower class people get access to more resources they move upwards on the social ladder and may become middle class or upper class. And if the resources of upper class diminish they will move downwards and may become middle class or lower class. 

2. Power and Authority

Those who have access and possess more economic resources they are powerful and authoritative in society. Wealth and economic resources are the source of power in society, the holder of wealth can control various agencies of society.

3. Interdependence of other Institutions

Survival of economic institution depends on the cooperation with other institution. Labor force work in different industries which comes from the institution of family and without labor it is impossible to produce. Technical and managerial staff comes from the educational institution. The role of sociologist initiate when workers go on strike and industries get closed. Government formulate rules and regulations for businesses and business owners have to follow those rules. Therefore, cooperation with other institution is mandatory for economic institution.

4. Needs Satisfaction

In modern world, our basic needs have enormously increased. We need industrial and agricultural goods and services to survive in modern world. Economic institutions are obligated to satisfy those needs.

5. Employment

Economic institution creates jobs opportunities for people through which, they can generate income and earn their livelihood. That’s how people in the society satisfy their basic needs. Many businesses are developed under the economic institution.

6. Division of Labor

Economic institution creates jobs for the people who acquire different skill sets. The roles and responsibilities of employee depend on their skills.

7. Provisions of Funds

Economic institution provides economic assistance to other institutions as well. It provides funds to government in the shape of taxes and to the family in the shape of salaries.


Recreational Institutions

Agencies of Socialization

Factors affecting the Individual Behavior

Related articles

Difference between Individual Behavior and Group Behavior

Individual Behavior vs Group Behavior

Organizational behavior is “The study and understanding of individual and group behavior and patterns of structure in order to help improve organizational performance and effectiveness.”(Laurie J. Mullins) Another definition of organizational behavior is “The study of how thoughts, feelings and behaviors of individuals and groups in organizations are influenced by the actual implied or imagined […]

Forces of Socialization

Agencies of Socialization

Socialization cannot take place in a vacuum. Individuals, groups and institutions create the social context for socialization to take place. In general, it may be said that the total society is the agency for socialization and that each person with whom one comes into contact and interact is in some way an agent of socialization. […]

Leave a Reply

Your email address will not be published. Required fields are marked *