Social Capital and Caste

Conventional wisdom is that social capitalin India is low because of our historical caste system. By placing people in a rigid hierarchy, and giving some people privileges over others just because of the families they were born into, the caste system prevented people from cooperating as well as they would in a more equitable society – that is what conventional wisdom says.

However, a point that we cannot miss is that despite the caste system placing a hierarchy on people, people from different castes did regularly cooperate and trade with each other. In fact, with caste being tied to hereditary professions, people had little choice but to regularly interact and trade with people from other castes. And this inevitably created social capital.

Putting it differently, the result of the caste system was an unequal but stable society, and this stability led to reasonably good social capital (history might be biased given it was written by people from certain castes, but we don’t see many instances of caste riots or clashes from over 200 years ago). You can think of it as a stable society with “handicaps”, where some people were privileged over others (in fact, there was a hierarchy of privilege), to the extent that it was okay for some people to abuse others in various ways.

Over the last 150 years or so, the caste system has been (rightly) challenged, and we are seeing various movements towards a more equal society. One side effect of this has been that the (unequal) equilibrium that had existed has been disturbed, leading to caste-based antagonism and a fall in social capital.

We are in the process of moving from one (unequal) equilibrium to another (more equal) equilibrium, but until we get there, existing beliefs and biases will continue to be challenged, which means some sets of people will continue to be suspicious of others, and there will be mistrust and thus low social capital.

Originally posted at Pragati Express

Caste, socialism and social capital

Some new research by Dan Ariely (of Predictably Irrational fame) and co shows some interesting correlation between a socialist/communist upbringing and attitude towards lying (The Economist reports this research under the headline “Lying Commies“). While I’m not particularly convinced about the research methodology (sample of 250 respondents under a simulated environment – but then most behavioural research suffers from this problem) I find this research interesting since it supports another hypothesis that my wife and I came up with a few days ago – that India’s low social capital is a consequence of the caste system.

I’ve long maintained that the Indian caste system is perhaps the earliest example of a socialist economy. Assuming that reproductive rates across different castes were similar (there is no reason to believe otherwise) what the caste system ensured was that the relative supply of labour across different occupations remained constant even in small geographical areas, and consequently the relative prices of goods remained broadly constant. We can thus think of the caste system as an instance of a socialist model where each one’s profession is determined at birth, and relative prices are fixed. I will go as far to say that there is no better example of a planned economy than the ancient Indian caste system.

One of the inherent problems of Indian society is the lack of social capital. To use my co-INI blogger Nitin Pai’s framework, Indians value Swaartha (self-interest) over Paraartha (interest of others) to an extent that is far beyond the optimal level. The hypothesis goes that there is an optimal mix of Swaartha and Paraartha that should enter one’s objective function while making decisions in everyday life. For example, do you allow the other car to pass before you so that you avoid the traffic jam or do you rush ahead just because there is space in front of your car? Do you over-graze the commons just because it is there or do you consume it in moderation so that others have something to consume, too? A society with a high degree of social capital gives a higher weight to Paraartha in these objective functions, and people in such societies cooperate more and collectively take decisions that make more sense at the societal level.

Now, societies where life is tough (due to geographical or environmental factors) generally face a higher degree of social capital than those where life is easier. One way to experience this would be to drive from Punjab to Himachal Pradesh. On the wide roads of the Punjab plains, it is dog-eats-dog on the road – people overspeed, overtake like crazy and don’t give too much consideration to others on the road. Once you enter the hills of Himachal Pradesh, though, the whole equation changes. Here, a confrontational paradigm doesn’t get you too far – the narrow roads and winding curves mean that drivers need to cooperate more in order to get their way. Social capital in such societies is naturally higher.

Social capital is sticky in one way – if a particular generation in a particular location has high social capital, it is extremely likely that the preceding generation also had high social capital. The reverse, however, is not necessarily true – social capital can sometimes be destroyed in double quick time (think, for example, of the Lebanese Civil War between 1975 and 1990). Thus, the fact that social capital in India today is low could either be because it was always low, or because there was a particular event that destroyed social capital. Since it is unlikely that there was one event which destroyed social capital in the entire country, it seems more likely that social capital in India has always been low.

Social capital is important in a society where there are no rules – if you have a traffic signal at an intersection, for example, the lights will ensure that there is no jam. However, in the absence of rules (or lights) high degree of cooperation is necessary between drivers in order to lead to higher throughput from the signal. One way of combating a society with low social capital is to have lots of rules – these rules rather than social conventions can then drive the society. The converse is also true – in a highly rule based society there is no real need for social capital, and thus social capital can wear off down the generations.

As explained earlier, the caste system meant that the ancient and medieval Indian society was highly planned and rule based. Complex caste rules ensured that there was a rule for any possible social occurrence which might otherwise require cooperation. A brahmin’s cart and a shudra’s cart on the same one-lane path? There was a rule regarding right of way. Two people reaching the river at the same time to bathe? A rule governed who might swim upstream. And so forth.

My hypothesis is that the rule-based society ancient India had due to the caste system meant that there wasn’t much need for social capital. And thus India has never been a high social capital country (except of course for tracts such as Himachal Pradesh where life has been difficult). To put it another way, we see that a socialist economy from the past ages has led to consistently low social capital.

Which is not that far off from what Ariely et al say in their paper.