Sunday, February 25

“Caste as Social Capital”: This book examines the workings of caste through the lens of business, economics and entrepreneurship

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  • The book “Caste as Social Capital” by R. Vaidyanathan interrogates the role caste plays in the economic sphere in terms of facilitating the nuts and bolts of business and entrepreneurship: finance, markets and workforce.


  • Through this qualitative view of caste, an entirely new picture emerges, which forces one to view the age-old institution of caste in a new light.


  • Many consider caste as an outdated institution, though it thrives in post-liberalization India. That being the case, caste has only been studied from a religious, social and political angle. It is grudgingly accepted that caste has economic ramifications. For instance, the establishment and running of businesses tap into caste networks, both in terms of arranging finance and providing access to a ready workforce.


  • Read an excerpt from the book below.


While the concept of social capital has become fashionable only fairly recently, the term has been in use for more than a century, and its ideas probably go back even further still. The term ‘social capital’ probably first appeared in the 1916 book The Rural School Community Center, published in the United States, that discussed how neighbours could work together to oversee schools.

The author of this work, Lyda Hanifan (1879–1932), who was the supervisor of rural schools in West Virginia, referred to social capital as ‘those tangible assets [that] count for most in the daily lives of people: namely goodwill, fellowship, sympathy, and social intercourse among the individuals and families who make up a social unit’.

It is difficult to come up with a single definition of social capital that is acceptable to all sociologists. In a sense it consists of the shared values, links and world view in society, which helps individuals in groups to trust each other and work together.

The Organization for Economic Co-operation and Development (OECD) defines social capital as ‘networks together with shared norms, values and understandings that facilitate co-operation within or among groups’. In this definition, networks can be thought of as real-world links between groups or individuals—for instance, networks of friends, family members, networks of co-workers and so on. One thing that bears remembering is that often, our shared norms, values and understanding are not as concrete as our social networks. Sociologists sometimes speak of norms as society’s unspoken and largely unquestioned rules, which may not become readily apparent until they are broken. When adults attack a child, for instance, they breach the norms that protect children from harm. Values are often more open to questioning, so much so that societies often debate whether their values are changing. Still, values—such as respect for people’s safety and security—are essential in every social group. Put together, these networks and understandings create trust and, thus, enable people to work together.

While there has been much debate over the various forms that social capital takes, one fairly straightforward approach divides it into three main categories:

1. Bonds: Links to people based on a sense of common identity (‘people like us’)—such as family, close friends and people who share our culture or ethnicity.

2. Bridges: Links that go beyond a shared sense of identity. For instance, distant friends, colleagues and associates.

3. Linkages: Links to people or groups further up or lower down the social ladder. The potential benefits of social capital can be understood by looking closely at social bonds. Friends and families can help us in lots of ways—emotionally, socially and economically. In the United Kingdom, for example, a government survey found that more people secure jobs through personal contacts than through advertisements. Such support can be even more important in countries where the rule of law is weak or where the state offers few social services: clans can fund the education of relatives and find them work, and also look after orphans and the elderly.

Sociologists like Robert D. Putnam have demonstrated that enormous economic benefits flow from social capital. Contrasting the huge economic success of northern Italy with the relative failure of the southern part, he found that in southern Italy, the mafia had eroded social capital and hence stalled economic development. High levels of trust greatly reduce risks and costs, and thus encourage enterprises and innovation while reducing the costs of redress. This implies that within groups, financially assisting each other becomes simpler in terms of lending as well as securing capital for new businesses. So social capital ultimately translates into financial capital.

Gurcharan Das, the corporate chief-turned-author and analyst says, ‘In the nineteenth century, British colonialists used to blame our caste system for everything wrong in India. Now I have a different perspective. Instead of morally judging caste, I seek to understand its impact on competitiveness. I have come to believe that being endowed with commercial castes is a source of advantage in the global economy.’ Joel Kotkin demonstrates these strengths when talking about the case of Palanpur Jains, who have used their caste and family networks in wresting half the global market for uncut diamonds from the Jews.

It is important to understand that the shared sense of community and trust that the Indian commercial castes, like the Marwaris, Jains, Bohras, Chettiars and others, have traditionally demonstrated has acted as a major social capital for them.

Sociologists underline that a nation could be maintained successfully only when people are able to live with each other in groups. The French sociologist Émile Durkheim had earlier noted, ‘A nation can be maintained only if between the state and the individual there is interposed a whole series of secondary groups . . . community orientation creates trust among the members of the society.’

Francis Fukuyama notes that trust has an economic value. He says, ‘The ability to associate depends, in turn on the degree to which communities share norms and values and are able to subordinate individual interests to those of larger groups . . . trust results in social capital.’

Swaminathan Aiyar defines social capital in the following way: ‘Unlike financial or human capital it cannot be owned by individuals, only by social groups. This defines social capital. Being less tangible than financial or human capital it is difficult to measure and so has been ignored in the past. Yet it is an invaluable asset.’

In his 2000 book, Bowling Alone: The Collapse and Revival of American Community, Robert Putnam argued that while Americans had become wealthier, their sense of community had withered. He felt that cities and traditional suburbs had given way to ‘edge cities’ and ‘exurbs’, which were vast, anonymous places where people only slept and worked and did little else. Increasingly, people spent more and more time in the office, in commuting to work and in watching TV alone, and, therefore, had little time for joining community groups, voluntary organizations, and socializing with neighbours, friends and even family. A demonstration of this decline was in the way, Putnam believed, Americans played ten-pin bowling, a popular American sport. He found that although bowling was still extremely popular, Americans were no longer competing against each other in the once-popular local leagues. Instead, more often than not they were bowling alone. This decline of the community networks that once led Americans to bowl together, to Putnam, represented a loss of social capital.

The concept of social capital also has its critics. One arguments states that bonds can hinder people, too. Since tightly knit communities, such as some immigrant groups, often have strong social bonds and individuals rely heavily on relatives or people of the same ethnic background for support, the lack of social bridges might keep them as eternal outsiders from society and hinder their economic progress. Of course, tightly knit groups may exclude themselves too, but they may also be excluded by the wider community. Without ‘bridging’ social capital, ‘bonding’ groups can become isolated and disenfranchised from the rest of society and, most importantly, from groups with which bridging must occur in order to denote an ‘increase’ in social capital. Bonding social capital is a necessary antecedent for the development of the more powerful form of bridging social capital.

Another argument that’s been made is that Putnam got it wrong when he said social engagement is eroding. Instead, it may just be evolving. Rather than joining groups in our neighbourhoods, like bowling leagues, we’re now joining groups made up of people who share our beliefs—on fighting for the environment, gay rights, etc.

These groups—such as a branch of Greenpeace or Amnesty International—may exist in the ‘real’ world, but they may also exist only virtually on the Internet, which is arguably creating whole new ‘communities’ of people who may never physically meet but who share common values and interests.

Not everyone, however, is convinced that these new forms of community have the same value as the more traditional forms.

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