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1.1 Introduction
6.1 Introduction

6.2 The Nature of Modern Society

6.3 Economic and Demographic Changes

6.4 Urbanization

6.5 Changes in Working Lives and Social Structure

6.6 Modernization: Secularization and Rationalization
Modernisation: Problems of Mass Society

6.7 Modern Society and World Society

6.8 New Developments in Social Structure

6.9 Summary

6.10 Exercises


The previous two Units of this Block focused on the transformations in the realm of State and Economy. This is the last Unit of the Block and talks about new social configurations that were ushered in by the process of modernity. Far reaching, profound and irreversible changes took place in virtually every section of the society, e.g., new demographic profile, erosion of traditional communities, declining hold of religion, secularization of life in general, massive, transfers of population both forced and voluntary – from villages to cities, creation of new and large urban centre, and creation of new jobs and occupations. All these changes were limited to, and product of, a new type of economy which established strong roots in some parts of the world around the 18th – 19th centuries. This Unit elaborates each of these aspects in detail.


Modernity can best be approached against the background of what went before. A broad distinction may be drawn between agrarian and industrial; rural and urban societies. The most rapid changes with regard to these distinctions took place during the 19th and 20th centuries, when the hierarchical categories that had endured in the (mainly) agrarian societies for millenia began to change irrevocably. Industrial structures took much of their characteristic form from the rejection of pre-industrial ways, and modernity derived meaning and momentum by contrast with what went before. Thus modernization may be viewed as a process of individualization, specialization and abstraction. Firstly, the structures of modern society take as their basic unit the individual rather than the group or community. Secondly, modern institutions perform specific tasks in a socio-economic system with a complex division of labour in contrast with the peasant family. Third, rather than attaching rights and prerogatives to particular groups and persons, or being guided by custom or tradition, modern institutions tend to be governed by general rules and regulations that purport to be rationally, if not
24 scientifically conceived.

Class society in the 19th century emerged from the estates hierarchy of feudalism. Gradually at first and then more rapidly after the advent of the industrial revolution the classifications of landlord and peasant began to be supplemented by that of capitalist and worker, although it would be simplistic to suggest that the older class divisions were replaced by the new ones. The socialist (especially marxist) political tradition, however, predicated its analyses upon the fact that capitalist relations of production were bound to subsume all social relations within its ambit, and promote the appearance of two major classes, bourgeois (capitalist) and worker. Alongside this, modern industrial society saw the new emergence of strata like the professionals, intelligentsia, and the lower middle class or petty bourgeoisie.


World population had reached about 500 million by the middle of the 17th century. During this time tendencies towards population growth were checked by starvation and disease. The Industrial Revolution of the 18th century engendered certain changes. From about 1700 there was a rapid population explosion. Since then global population has increased more than eightfold, reaching 4.8 billion by the mid-1980s, and more than six billion by 2000. Thus, not only population but its rate of increase has also accelerated since the advent of industrialization. Europe’s population doubled during the 18th century, from roughly 100 million to almost 200 million, and doubled again during the 19th century, to about 400 million. Europe was also the location for the pattern known as the demographic transition. Improvements in public health and food supply brought about a drastic reduction in the death rate but no corresponding decline in the birth rate. This contributed to a population explosion in the 19th- century. Only later did the phenomenon emerge of urbanized populations voluntarily lowering their birth rates. The century of Russian and Soviet industrialization that began in the 1880s also illustrates the link between industrialization and population.

The developing societies experienced rapid population growth after 1945, at rates greater than the West. Medical science reduced the high death rates, and the birth rates showed little tendency to fall. Attempts by governments to persuade non- Westerners to have smaller families failed. One result was the persistence of youthful populations in societies - people under 15 made up more than 40 percent of the populations of the Third World, as compared with between 20 and 30 percent in the industrialized world. The high birth rate in these societies was because industrialization was fragmentary, modern classes took much longer to emerge, and it remained rational for the bulk of the population to continue to have large families to share in labour and provide security for parents. Lower fertility would come, it was argued, when wealth was more evenly distributed and social security systems well established.

Economic growth became the defining feature of modern polities, especially in the first industrializing nations, of western Europe and North America. This transformed the nature of society. Underlying this phenomenon were technological change, the replacement of human and animal power by coal and oil-driven engines; the freeing of the labourer from customary ties and the creation of a free market in labour; the concentration of workers in the factory system. A pivotal role was to be performed by the entrepreneur. Later industrialisers were able to dispense with some of these - the Soviet Union industrialized on the basis largely of a regulated rather than free labour market and did away with large-scale entrepreneurship, and Japanese entrepreneurs were sustained by strong state involvement in industrialization. Certain
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states - such as Denmark and New Zealand industrialized through the commercialization and mechanization of agriculture, rendering agriculture another industry.

Mechanization made a large portion of the rural labour force superfluous, and the proportion of the labour force employed in agriculture dropped steadily. This ‘sectoral transformation’ was one of industrialization’s most obvious effects. Most workers came to be employed in the production of manufactured goods and in services rather than in agriculture. In the United Kingdom and the United States, by the mid-
1970s more than 95 percent of the employed population were in manufacturing and services and less than 5 percent in agriculture. In Japan, in 1970, more than 80 percent of the employed population were in manufacturing and services, and less than 20 percent in agriculture. In pre-industrial agrarian societies, on the other hand, typically 90 percent of the adult population are peasant farmers or farm workers.


Industrialization brings a growth in trade and manufactures. To serve these activities it requires centralized sites of production, distribution, exchange, and credit. It demands a regular system of communications and transport. It multiplies the demand that political authorities establish a dependable coinage, a standard system of weights and measures, a reasonable degree of protection and safety on the roads, and regular enforcement of the laws. All these developments conduce to a vast increase in urbanization. Industrialism concentrated mass populations in cities. Modern urbanism differs from pre-industrial urbanism in quantitative reach and intensity; in new relationships between the city and society. Thus, in imperial Rome, the high point of pre-industrial urbanism, only 10 to 15 percent of Romans lived in cities. Whereas in typical agrarian societies 90 percent or more of the population are rural, in industrial societies it is not uncommon for 90 percent or more to be urban.

In the United Kingdom, in 1801 about 20% of its population lived in towns and cities of 10,000 or more inhabitants. By 1851 it was 40% and if smaller towns are included, more than half the population was urbanized. By 1901, the year of Queen Victoria’s death, the census recorded 75% of the population as urban. In the span of a century a largely rural society had become a largely urban one. The pattern was repeated on a European and then a world scale. At the beginning of the 19th century, continental Europe (excluding Russia) was less than 10 percent urbanized, by the end of the century it was about 30 percent urbanized (10 percent in cities with
100,000 or more), and by the mid-1980s, the urban population was more than 70 percent. In the United States in 1800, only 6 percent of the population lived in towns of 2,500 or more; in 1920 the census reported that for the first time more than half of the American people lived in cities. By the mid-1980s this had risen to nearly 75
% the same as Japan’s urban population - and more than two-fifths of the population lived in metropolitan areas of one million or more. In the world as a whole, in 1800 no more than 2.5 percent of the population lived in cities of 20,000 or more; by
1965 this had increased to 25 percent, and by 1980 to 40 percent. It is estimated that by the year 2000 about half the world’s population will be urban.

There has also been a growth of very large cities. Cities of more than one million inhabitants numbered 16 in 1900, 67 in 1950, and 250 in 1985. The fastest rates of urban growth were to be found in the underdeveloped nations. For the rapidly expanding populations of overpopulated villages, cities were a means of escape and opportunity. Between 1900 and 1950, while the world’s population as a whole grew by 50 percent, the urban population grew by 254 percent. In Asia urban

growth was 444 percent and in Africa 629 percent. By the mid-1980s, Africa and Asia were about 30 percent urbanized, and Latin America nearly 70 percent. Cities such as São Paulo (15 million), Mexico City (17 million), and Calcutta (10 million), had mushroomed to rival and even overtake in size the large cities of the developed West and Japan. Urbanization in the underdeveloped nations did not carry with it the benefits of industrialization. The result has been the rapid growth of slums in or on the outskirts of the big cities. About four or five million families in Latin America live in slums and the numbers in Asia are far larger.

Urbanism cannot be understood simply by statistics of urban growth. It is a matter, too, of a distinctive culture and consciousness. City life can detach people from their traditional communal moorings, leaving them morally stranded and so inclined to harbour unreal expectations and feverish dreams. In the very number of social contacts it necessarily generates, it may compel individuals to erect barriers to protect their privacy. At the same time, cities promote diversity and creativity; they are the agents of change and growth. The French sociologist Émile Durkheim, declared great cities to be ‘the uncontested homes of progress’, where alone minds were
‘naturally oriented to the future.’ Whereas pre-industrial cities were surrounded by the countryside and dependent on the peasantry, modern urbanism reversed this relationship. The countryside now became dependent on a single economic system centred on the cities. Political and economic power resided in the city; industrial and financial corporations became the dominant landowners, replacing individual proprietors. Rustic life no longer significantly affected the values and practices of the larger society. The city came to symbolize industrial society, dictate the style and set the standard for the society as a whole.


In pre-industrial and peasant societies families were the basic unit of production; and subsistence the aim of productive activity. From weavers in 18th-century England, to coal miners in 20th century colonial India, men, women and children could all be found performing different tasks in a co-ordinated work-process. More often than not this labour would be remunerated in piece-rates, or through the putting-out system, based on advances. The families might also be able to cultivate small plots of land, and have access to common lands or forests for fuel and jungle produce. In the Western world, the experience of industrialization disrupted the family economy. (It is noteworthy that these aspects are modified considerably in the so-called developing countries, where casual, informal and seasonal labour is widespread, and takes into its ambit the employment of children and women as members of work-gangs).

Modern industrial economic processes have done away with the economic function of the family as production sites shifted to factories. Most family members have become landless agricultural labourers or factory workers. Work for subsistence has been replaced by work in the factories, and for wages. In the less developed world, conditions remain similar to what they were in the early stages of industrialization in the West. Families struggle to maintain traditional collective unity, and continue to pool their resources, and make regular visits to homes in villages. Their wages still contribute to a common family fund. In the absence of a comprehensive system of social security, villages and families fulfill the role. Despite this, workers’ lives, whatever their location, have become dependent upon the capitalist system of wage labour, and the place and functions of the family have undergone a qualitative shift. The extended families of the pre-industrial and early
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industrial periods, have given way to nuclear families of parents and dependent children.

Under modern social structures, work has become the principal source of individual identity. This has been accompanied by a massive increase in the division of labour that went beyond artisanal specialization, what Adam Smith and Karl Marx called the ‘detailed’division of labour, in the work task itself. The tasks involved in fabricating a product, are fragmented and allocated to several individuals as a means of increasing productivity. This division of labour is the basis for the heightened productivity of modern capitalism. The latter is also associated with the innovations of entrepreneurs like Henry Ford who introduced the moving assembly line and the ‘scientific management’ techniques of Frederick Taylor with his ‘time and motion’ studies.

In modern industrial society, economic position and relationships have become the key to social position. While wealth was always important in determining social position, it was not the central determinant. Other aspects of social being, such as membership of this or that community, race, religion, age and gender were of great importance in determining positions in the social hierarchy. But industrial society has subordinated all these principles to the economic one. The position of the individual in the production system and the marketplace gives him or her a place in a particular class. Property ownership and education levels affect market position. Karl Marx predicted that these trends (still evolving in his time) would leave two main economic classes, the propertyless workers, or proletariat, and the capitalist owners, or bourgeoisie. It is a matter of debate among sociologists of modern society whether these processes of class differentiation are still moving in the direction suggested by Marx. Although it is true that economic relationships have not completely eliminated non-economic determinations of social status, (a fact that carries a great deal of political significance), it may also be argued that the subordination of human productive activity to capitalist markets and the wage-labour form is proceeding uninterrupted.


Max Weber called modernization a process leading to ‘the disenchantment of the world.’ It eliminates all the supernatural forces and symbols which pre-modern cultures use to explain natural and social phenomena; substituting for these the modern scientific interpretation of nature. Only laws and regularities discovered by the scientific method are admitted as valid explanations of phenomena. This process of secularization tends to displace religious institutions, beliefs and practices, in favour of reason and science, a process first observable in Europe toward the end of the
17th century. With colonialism, secularization was exported to the non-European world. Although religion has not been driven out from society, and although the public may hold traditional religious beliefs alongside scientific ones, religious phenomena have lost their centrality in the life of society as a whole. Right-wing political movements worldwide do indeed resort to the evocation of religious symbolism as a means of mobilizing public sentiments in favour of conservative programmes. This tendency however, does not obviate the basic fact that religious establishments have lost control of political power in the modern state.

The process of rationalization touches many more areas, such as the capitalist economy, with its calculation of profit and loss. For Max Weber, it referred to the establishment of a rational system of laws and administration in modern society. He saw the highest development of the rational principle in the impersonal and impartial rule of rationally constituted laws and procedures: the system of bureaucracy. Bureaucracy was the

modern alternative to traditional and ‘irrational’ considerations of kinship or culture, its power, the triumph of the scientific method in social life. Although he was aware that bureaucracy could be despotic in actual operation, Weber nevertheless believed that trained officials were ‘the pillar both of the modern state and of the economic life of the West.’ However, Weber stressed that modern rationalization did not lead to entire populations becoming reasonable or knowledgeable.

Modernization: Problems Of Mass Society

Another feature of modern society is the emergence of the mass phenomenon, which tends to merge rather than distinguish classes, and counter-balance the rise of modern individualism with the decline of local communities and the acceleration of political centralization. Political and cultural centralization and uniformity have been interpreted as pointers to the creation of a ‘mass society’. Tocqueville a 19th C. French scholar had warned that individuals lacking identification with strong intermediate institutions would become atomized (‘alienated’, in Marx’s language), and seek the protection of authoritarian governments. The rise of totalitarian movements in the 20th century showed that these tendencies were real and present in all modern societies. These tendencies signified a new stratification of elite and mass, and theories appropriate to that. Even a class party like Lenin’s incorporated a belief in this stratification with its concept of ‘vanguard’ and ‘rank and file’. Fascist sociology recognized only the division between leader and mass, Stalinist sociology that between Party and People, with the latter consisting of the three ‘classes’ of intelligentsia, peasant, and worker in non-antagonistic relationship, as a single mass.

Mass society has brought new problems, matching social progress with social pathology. Urbanization has meant crowding, pollution, and environmental destruction. The decline of religion and community has removed restraints on appetite, while competitive capitalism that stimulates expectations cannot provide everyone with the means for their realization. Modern life has seen an increase in suicide, crime and mental disorder. As mass political parties have come to monopolize civic life, individual citizens have retreated into daily life. These phenomena have put a strain on civic loyalties and the willingness of people to participate in political life. Political apathy and low turnouts at elections have called into question the democratic claims of modern liberal societies. A similar concern has been raised with regard to the spread of mass communications in the 20th century. The uniformity and conformity bred by the press, radio and television have been seen to threaten the pluralism and diversity of modern liberal polities, and a reminder of the totalitarian tendencies that lie beneath the surface of modernity.

Industrialism was found to have created new pockets of poverty. Despite steady economic growth, between 15 and 20 % of the population remained permanently below (officially defined) poverty levels throughout the industrial world. Did industrialism by its very mechanism of growth create a new category of poor who could not compete according to the ‘rationality’ of the new order? The communal and kinship supports of the past having withered away, there appears to have been no alternative for the failed and the rejected but to become claimants and pensioners of the state.

Some might see these as signs that modernity is fractured, that human-kind will need ultimately to re-think the utility of modernization and industrialism. Karl Marx offered the most systematic analysis of this ‘alienation’. The industrial worker is estranged from his labouring activity because of the compulsions of class: he has no control over the terms and conditions of the disposal of his product. Unlike traditional artisanship, modern labour processes do not require his constructive and creative
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faculties. The industrial system of production is phenomenally powerful; but this power is achieved at the cost of reducing workers, to mere labour-power, semblances of humanity. Marx believed that the high productivity of human labour in modern industrial systems could free human beings from a greater part of the burden of work; but not until modernity severed its links with capitalism.


Western industrialization rapidly became the model for the whole world, and western modernity an example to be followed by all nations. Colonies or clients of Western powers, were ‘developed’ along these lines before they attained independence. Apparently the only viable polity in the modern world was industrial society, and only industrial societies could be active global agents. Thus Japan, humiliated by the West in mid-19th century, industrialized and became one of the most powerful societies in the world.

Japan’s experience confirmed that there were several routes to modernity. Britain, Western Europe and the USA had industrialized on the basis of individual entrepreneurship and the free market economy. In Germany and Japan, the state and political elites played a major role, in organizing and planning development, and restricting foreign access to home markets in the interests of native industry. Following the Russian Revolution of 1917, there came the authoritarian model of modernization under the one-party state. Many developing countries in Asia, Africa, and Latin America industrialized according to economic plans drawn up by political elites and imposed upon their populations. Independent India, instituted formal liberal democracy, but its industrialization was guided by the Indian National Congress, identified with the struggle for independence. There were also the African socialisms of Kwame Nkrumah’s Ghana and Julius Nyerere’s Tanzania, the Chinese socialism of Mao Zedong, the Cuban socialism of Fidel Castro, and the Yugoslav socialism of Josip Broz Tito. All these became models of development to certain Third World societies.

The experiences of Japan and the Soviet Union suggested a general pattern of late development appropriate to nations that attempted to industrialize in the late 19th or early 20th centuries. This involved protectionism, control of unions, and centralized banking and credit. Late developers put the state at the centre of modernization. India under colonialism underwent the ironic fate of state-sponsored economic development supervised by a foreign elite committed to the Victorian economic ideology of laissez-faire (a policy of non-interventions in the economic affairs) at home. In Japan, the Soviet Union and China the state supervised industrialization, made major decisions about investment, transport, communications, and education. Mass communications became agencies of mass socialization.

Industrialization has taken place within a context of world industrialization, in a world system of states of unequal power. Towards the end of the 20th century the ideological divisions between West (the developed capitalist nations) and East (the socialist nations), became obsolete with the collapse of communist regimes in the USSR and Eastern Europe. Increasingly primary emphasis is being placed on levels of economic development: the differentiation is known as the ‘North-South’ divide – a somewhat misleading term, not least because Australia in this divide is placed in the ‘North’ and North Korea in the ‘South’. Some commentators also speak of First, Second, and Third Worlds.

Immanuel Wallerstein a leading American economist, argues for a single world

capitalist economy, expanding outward from northwestern Europe since the 17th century. He classifies countries according to their power within the system. There are Core countries that include the United States and Japan; ‘semi-peripheral countries’, include Brazil, eastern European states and China; ‘peripheral countries,’ include the poor countries of Africa and Asia. Wallerstein’s model recognises the internationalization of the industrial economy. Nation-states, whether capitalist or communist, are becoming increasingly subordinate to world economic developments. Thus, the politics of energy procurement are global in nature, just as much as military strategy. Capital investment and growth are global issues, and multinational corporations are significant actors on the world stage, busy establishing a new international division of labour. Manufacturing units are shifted from place to place, depending on considerations such as the presence of cheap labour, compliant governments and tax-havens. In this sense multinational corporations embody the interdependence of core and periphery nations.


Industrialism has unfolded as a system of ceaseless innovation. In its core-countries, it has virtually eliminated the peasantry, and is now creating automated technologies that can increase productivity while displacing workers. Manufacturing once accounted for about 50% of the employed population of industrial societies, but is now shrinking to between 25% to 30%. New employment is now available in the service sector, which accounts for 50% to 66% of the work force and over half the GNP. These occupations - in government, health, education, finance, leisure and entertainment- are called white-collar jobs, and indicate an expansion in health, education and public welfare. The population in the core countries has become healthier and better educated. The ‘knowledge class’ of scientific and technical workers have become the fastest-growing occupational group. Pure sciences and technology have become even more closely inter-linked. This is evidenced in heavy investments in research and development, especially in industries such as information technology, pharmaceuticals, bio-genetics, aeronautics and satellite communications. The social sciences also generate complex models of sociological and economic forecasting.

Some sociologists have interpreted these phenomena as signifying a movement to a
‘postmodern’, postindustrial society. This may be a semantic exaggeration, given that most changes under late industrialism have flowed from the logic of capitalist industrialization itself, such as mechanizatio and technical innovation, the increase in complexity of industrial organization and the union of science with industry and bureaucracy. But these changes do add a new dimention to modern societies, such as the decline in manufacuring, and the advent of computerized information- processing that can replace masses of white-collar workers. And urbanization may give way to the decentralization and depupulation of many cities as old manufacturing industries decline and new service industries move out. Recent trends in the USA and UK indicate that the countryside has begun to gain population and the cities to lose it. Speaking globally, however, urban life continues to spread over greater areas. Metropolitan areas have merged into the megalopolises, with populations of 20 to
40 million. Chains of contiguous cities and regions with huge populations may be found in the developed as well poorer countries.

These processes embody patterns in contemporary global society. The structural forces of industrialism have produced reactions against large-scale bureaucratic organization, and movements for alternative and intermediate technologies. The
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political realm too, has witnessed such a reaction. All over world, not least in Europe, there have been regional movements for autonomy or independence - ironically, globalization has kept pace with fragmentation. Areas such as Scotland in Britain, Normandy in France, the Basque region in Spain, and several regions in the erstwhile USSR have all developed such movements and aspirations. The break-up of Yugoslavia in the civil war of the 1990s was only the most extreme example of a general trend. New forms of internationalization of the world economy and polity have given rise to new nationalisms. It is arguable that the latest assertions of ethnicity, culture and ‘tradition’ reflect attempts by endangered elites in disintegrating states to mobilize public disquiet towards a new conservative ‘mass politics’. Howsoever historians of the future will see these phenomena, it is undeniable that the process of modernization has reached a significant turning point, and the governing institutions of the post-1945 world order no longer seem capable of managing rapidly changing social, economic and political realities.


This Unit has tried to introduce you to the idea that a new type of society has begun to emerge around the 18th – 19th centuries under the impulse of modern economy. The Unit also discussed some of the features of the new society. One component of this society was a new demographic pattern characterized by tremendous increase in the population brought about mainly by a decline in the death rate, followed by stability brought about by a decline in the birth rate. The new economic pressures also ushered in a process of urbanization because of the growth in trade and manufacture. Family, as a unit of production was replaced by a new production system based on factory. There was also an erosion of traditional structure of the communities, leading gradually to the creation of mass society. Simultaneously there was an increasing secularization of life following a general decline in the control that organized religion had exercised in people, lives. All these changes were profound and cumulatively they changed the profile of the world.

However, it is important to keep in mind that although these developments, described above, are generally associated with the 18th – 19th centuries, they had begun germinating a few centuries earlier. Also the entire world did not change uniformly or at the same time. These changes occurred primarily in the European and the North American societies and many pockets of the world remained untouched by them. Nonetheless, a process of change was set in motion which was to gradually bring more parts of the world into its fold. These changes also constituted a model for development for the rest of the world.

However, a transformation at such a mammoth scale has also brought dislocation and trauma of various kinds. The processes of modernisation have certainly brought material abundance - but in a differentiated pattern that is reflected in the complex nature of social classes and identities. It has brought control of the natural environment
- this too, at the cost of damaging it, some would say, irreparably. Its scientific and technological achievements are impressive, indeed magnificent. At the same time, the spiritual and emotional life of humanity appears to be undergoing immense turbulence, violence and conflict. Modernity’s failures and disasters take place on a global scale, the fate of the world and its inhabitants sealed together in a way no previous generations could have imagined.



1. What are the ways in which human life under modern conditions is different from earlier times?

2. What do we mean by modern society?

3. How is the process of secularization a part of modern social structure?
Capitalist Economy and its Critique


Bourgeoisie, Bourgeois: The bourgeoisie are a social class who make their money from the capital they own. They make money from money, or from owning business. They are distinguished from the landowning aristocracy, who make their money from rents, and the working classes who make their money by their labour. Depending upon the context, sometimes they are used for the middle class or sometimes for the upper class. The word bourgeois is also used as a word for attitudes that some people believe to be typical of bourgeoisie denoting conventional, humdrum, unimaginative or selfish and materialistic, sometimes also as opponent of communist.

Alienation: A separation of individuals from control and direction of their social life. Widely used in German philosophy in the 18th & 19th century, the term has acquired a special meaning after Karl Marx. Marx claimed that human alienation was created by a socially structured separation between humans and their work. It attained its highest intensity under capitalist system where individuals were separated from ownership, control and direction of their work and were unable to achieve personal creative expression.

Petite/ Petty Bourgeoisie: A middle class of professionals and small-business people who work for themselves or own small productive facilities.

Industrial Capitalism: The process of developing Capitalist economy founded on the mass manufacturing of goods. Industrialization is associated with the urbanization of society, an extensive division of labour, a wage economy differentiation of institutions and growth of mass communication and mass markets.

Surplus Value: In Marxist theory, this is the value crated by individual labour which is left over, or remains in the product or services produced, after the employer has paid the costs of hiring the worker. It is this value which the worker produces but does not receive which allows the capitalist owner to expand their capital

Class-Conflict: It is a Marxian concept which sees it as a driving force for all historical change. Marx and Engels in their ‘Communist Manifesto’ had proclaimed that ‘the history of hitherto existing society is the history of class struggle’. Even though class- conflict has been seen existing even in pre-modern times, e.g. between the peasants and the feudal aristocracy in medieval period, it is only in the era of capitalism that it is seemed to be getting crystallized as a struggle between the bourgeoisie and the proletariat.

Finance Capitalism: Finance Capitalism is a concept developed by 20th century Marxism and used systematically for the first time by Hilferding (1910). According to him, it actually denotes that state of capitalism where monopolistic banking firms join hands with monopolistic industrial firm to establish control over the sources, means and networks of production, exchange economy etc. According to Lenin, it is actually a characteristic feature of imperialism where banking firms establish their control over the world economy by selective inter linkages.


Modern World :
Essential Components
Constitutional Monarchy: A constitutional monarchy is a form of government established under a constitutional system which acknowledges a hereditary or elected monarch as head of state. Today, it is usually combined with representative democracy, representing a compromise between theories of sovereignty which place sovereignty in the hands of the people & those that see a role for tradition in the theory of government. So, while it is the Prime Minister or elected representative who actually governs the country, the king or queen is seen as symbolic head of the government.

Planned Economy: In a planned economy economic decisions are made on behalf of the public by planners who determine what sorts of goods and services to produce and how they are to be allocated. Since most known planned economies rely on plans implemented by the way of command, they are also termed as command economies. To stress the centralized character of planned economies and to contrast the term with the economic planning required in any rational economy, a more specific term, centrally planned economy is also used. They are usually contrasted with the concept of market economy.


Barrington-Moore, Jr , The Social Origins of Dictatorship & Democracy, Penguin, 1966.

Encyclopaedia Britannica, articles and social structure & process of

Giddens, Anthony, Capitalism and Modern Social Theory: An Analysis of the Writings of Marx, Durkheim and Max Weber, Cambridge, 1971.

Habermas, Jurgen, Post-National Constellation, Cambridge, Polity Press,

Lenin, V.I., The State and Revolution, 1917.

Luhmann, Niklas, Political Theory in the Welfare State, Stanford, Stanford
University Press, 1998.

McLennan, Gregor, Held, David and Hall, Stuart, eds., The Idea of the Modern
State, Open University Press, Philadephia, 1984.

Miliband, Ralph, ‘Marx & the State’, in Jessup, Bot, ed., Karl Marx’s social
& political thought: Critical Assessments, Volume 3, London & NY, Routedge 1990, Hp 14-33.

Miliband, Ralph, Marxism and Politics, Oxford University Press, Oxford,
Roll, Eric, A History of Economic Thought, London, Faber & Faber, 1954. Rostow, W.W., Theorists of Economic Growth from David Hume to the
Present, USA, OUP, 1990.

Wallerstein, Immanuel, The End of the World as We Know It, University of
Minnes of a Press, Minneapolis, 1999.



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1.8 References and Further Reading

1.9 Activities


After studying this unit, you should be able to:

• Understand the concept of Democratic Decentralization;

• Know the evolution and significance of Democratic Decentralization; and

• Describe the Democratic Decentralization pattern in India.


The dawn of 21st century is marked by decentralized governance both as a strategy and philosophy of brining about reforms and changes in democracies. These changes led to such virtues of transparency, responsiveness and accountability and ensures good governance. Today decentralization and democracy are the most significant themes in the development discourse. In the present contex…