http://www.indiadevelopmentblog.com/2008/09/caste-and-indias-new-economic-order.html
Sunday, 21 September, 2008 Caste and India's New Economic Order His imperial majesty Gary Becker recently posted an interesting blog suggesting that India's economic liberalization might be the main reason that caste-based discrimination has decreased over the past couple of decades (link: http://www.becker-posner-blog.com/archives/2008/09/competitive_mar.html). Becker himself is the author of economics' seminal literature on discrimination – in his 1973 paper "The Economics of Discrimination" he demonstrated that employers in competitive markets who discriminate on the basis of race, caste, or other arbitrary factors actually suffer. The intuition behind this paper is remarkably simple – if employers are unwilling to hire minorities who are willing to work for equal or lesser pay than the general population simply because they are minorities, the employer's costs increase and thus their profits decrease. Discrimination hurts the discriminator because it places them at a competitive disadvantage relative to firms who make hiring decisions solely on the basis of profit maximization. Becker discusses an August 29 NYTIMES article (link: http://www.nytimes.com/2008/08/30/world/asia/30caste.html?pagewanted=1&_r=1) which examines the views of Chandra Bhan Prasad, a dalit activist (and former maoist naxalite) who has fervently espoused the view that India's economic liberalization is the main factor that has enabled millions of low-caste Indians to transcend the rigid social boundaries that previously trapped them in degrading and low-income work. Prasad himself is coordinating a massive survey of Dalit households that has revealed, perhaps unsurprisingly, that Dalits are far less likely today to be employed in their traditional caste-defined line of work than before liberalization. Given that India's economic reforms were also paralleled by the ascendance of low-caste politicians, it is difficult to determine whether this newfound upward social mobility is actually the result of economic reforms rather than increased political representation. Becker compellingly argues that simple economic logic implies that there is no doubt such reforms have indeed played a role. India's economic boom, driven primarily by service-sector growth, has resulted in skyrocketing demand for skilled workers. As economic liberalization has forced Indian firms to contend with increased foreign competition, it becomes increasingly costly for such firms to discriminate based on arbitrary factors such as caste – the cutthroat global marketplace has no mercy for those who consider anything other than profits in the way they operate. And in order to maximize profits, firms will necessarily hire the most productive workers willing to work for the lowest pay. Firms that have to bear the cost of discrimination will be incapable of competing with firms that do not. This is the theoretical mechanism by which economic liberalization reduces caste discrimination, and there is anecdotal evidence of it everywhere. Anyone who has spent time in India has seen firsthand that casteism is far less prevalent in urban than rural areas, where it still tends to be quite pervasive. India's urbanization, which has facilitated the emergence of truly competitive labor markets, has also provided an escape route for some lower-caste Indians who are willing and able to compete. To be sure, economic reform is hardly a panacea for casteism in India. In order for liberalization to yield any tangible benefits for the lower castes, members of these castes must at the very least be capable of taking advantage of these emerging opportunities. Sadly and perhaps unsurprisingly, the pervasive lack of education and human capital in Dalit communities has prevented the vast majority from even competing for new jobs in the first place. Prasad himself has recognized this, and repeatedly stresses the importance of education and skill development in empowering his Dalit brethren. It's no secret that India's public education system is horribly broken, something that has and will continue to inhibit the prospects of lower castes seeking upward mobility (not to mention economic growth nationwide). In spite of this, it's quite heartening to see that some real progress is being made. ------------------------------------ ---- INFORMATION OVERLOAD? Get all ZESTCaste mails sent out in a span of 24 hours in a single mail. Subscribe to the daily digest version by sending a blank mail to [EMAIL PROTECTED], OR, if you have a Yahoo! 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