Production is affected by social factors because production itself is a social activity. In the process of manufacturing a certain article or growing foodgrains, people enter into definite relationships with each other. These relationships are shaped by the rules regarding ownership, and use of community resources.
Production is not only a social activity, but also a socially defined activity. In a way, it is the social which determines what production is or is not. The object that is considered valuable by society called a product. A product has value in use and value in exchange. Value in use refers to the value the; one derives from using a thing or object, such as, cigarettes have no use value for non-smokers, but for smokers they have.
Economic System of Simple Society
Simple societies are spread over nearly the entire range of natural environments and are not confined only to one or two regions. They are found in the dense equatorial and tropical forests, in the hot and cold deserts and in the rich alluvial plains. They are found also in the foothills and high range of mountains, in the savannas, sea coasts and in the islands. The diversity of natural environment has resulted in the diversity of economies practised by such societies. Due to the simple technology which these societies have, the impact of the natural environment is considerable. But the simple societies even with their simple technology have spirit to face the harsh nature.
Based on the mode of production of material goods for subsistence, economies in simple societies can be grouped into the following types, such as, hunting and gathering, pastoral, shifting cultivation and settled cultivation.
Exchanges in simple societies were not always of economic nature. But it sometimes serves the other social ends. It confers prestige to donors and receivers of goods. In some other cases, occasions of gift giving, are also ceremonial in nature to institutionalised relationships among the people. Often, the purpose of exchanging goods is to maintain amicable relations between groups to minimise the possibilities of conflict.
In simple societies, though markets function as a place for economic transaction, it also has social meanings, such as meeting place and as centres of administration and for dissemination of information.
Economic System in Complex Society
Complex Society is basically industrial. In this system, instead of being influenced and controlled by the environment man tries to control it. Thus, instead of being dependent on his physical circumstances man is relying more and more on the circumstances created by technology. In complex societies we find that technical skills are valued very much. Unskilled labour is valued but much less. All this is reflected in the wage structure. Administration and management services are very prestigious. Thus, in complex societies large organisations are very important.
Non-Economic Determinants of Economic Behaviour
The non-economic factors provide the requisite social climate in which the seed of economic development can germinate to full bloom. Therefore, it would be unwise to underestimate the importance of sociological and psychological factors. An underdeveloped economy is not only required to raise the level of investment in order to initiate growth, but is also required to gradually transform the social, religious and political institutions which act as obstacles to economic progress.
Weber, for example, has illustrated that a particular religion is responsible for the emergence of capitalism in Europe. Religion of Jains has hindered them to participate in agricultural activities, where there are chances that insects might get killed.
It is the exchange of goods and services according to the law of supply and demand. The predominant feature of market exchange is that goods and services are bought and sold at a money price which is determined by the impersonal forces of supply and demand. Market exchange is the most pure economic model of exchange. In this form of exchange, social or political goals are less important than economic goals. Therefore, market exchange is also known as money exchange or commercial exchange. These exchange systems involving money emerge when an economy develops to the point where supplies of food regularly exceed the needs of those engaged in food production. Market exchange depends on how much people desire a particular goods or services, and how much they must give to obtain them. Every time we speak of selling something or buying something we need, we are using terms associated with market exchange such as buy, sell, discount, price, money, cost, profit, loss, etc. These words express various aspects of the many different transactions that characterise our complex market economy.