and the E conomy The discipline of economics is aimed at understanding and explaining how markets work in modern capitalist economies – for instance, how prices are determined, the probable impact of specific kinds of investment, or the factors that influence people to save or spend. So what does sociology have to contribute to the study of markets that goes beyond what economics can tell us ? To answer this question, we need to go back briefly to eighteenth century England and the beginnings of modern economics, which at that time was called ‘political economy’. The most famous of the early political economists was Adam Smith, who in his book, The Wealth of Nations , attempted to understand the market economy that was just emerging at that time.
Smith argued that the market economy is made up of a series of individual exchanges or transactions, which automatically create a functioning and ordered system. This happens even though none of the individuals involved in the millions of transactions had intended to create a system. Modern economics developed from the ideas of early thinkers such as Adam Smith, and is based on the idea that the economy can be studied as a separate