Did Caste System Produce India's Best Entrepreneurs?

Being a person with a keen intellectual interest in economics on the one hand in addition to the business culture and income growth among citizens of large countries, China and India have featured severally on this blog. In reviewing literature and other discussions on these countries, I have come to see the human tendency to carefully pick out what cultural aspects have contributed to the rapid rise of incomes and human development across societies. I had missed this article by Durcharan Das, in the NYT and received it from a discussion group a couple of days ago.

This story is especially poignant for me because of two reasons. First, I visited India less than two weeks after the terrorist attacks in Mumbai to which the author refers. Notwithstanding the fact that I was visiting New Delhi and not ground zero, I could clearly tell that the tenor of the public voice was that there's to be no fear shown because the terrorists would declare victory against all India. To that extent, I agree with the writer's suggestion that there was an audit about the failures that allowed the killings to take place without any overreaction that would betray fear. The Bombay Stock Exchange's index and other proxies for business activities were not affected adversely.

The second point was that on my third trip to this great nation built upon an old civilization, I could still clearly see the effects of long-standing discrimination and injustice owing to the caste system. I am therefore appalled that the author alludes to the caste system as a possible cause of the growth of the country due to the creation of strict entrepreneurial class known as the Vaishyas. I am surprised that a person whose name suggests Indian heritage can reasonably argue this point because stratification has always existed in India for ages. So how come it has only spurred rapid growth in the last two decades? That a preponderant amount of the Indian nationals appearing in the Forbes List are Vaishyas cannot be evidence of the success of the caste system because of the inherent self-selection and the failure to account foe the adverse effects of the same system on lower caste Indians. Indeed, if the caste system conferred exclusive advantages on the Vaishya caste, then their appearance on the Forbes list speaks to its success at limiting the capability of the other caste groups.

Malcolm Gladwell argues in his most recent book, Outliers, that what is often perecived as the special ability by a selected group may be the result of differences and decisions that provided an advantage. It may well be that a status conscious society is less willing to provide capital, business education or other amenities that allow the lower caste children to become leading businessmen too.

One only needs to review the indicators recording the special and economic achievements of India's lower caste people to realize that the picture drawn by Durcharan Das is far from complete. My thinking is that all factors considered, the caste system is not a positive factor in India.