Can Adam Smith challenge Manu? Caste and the free market in India

The growth of free markets or capitalism does not create better employment for Dalits. It opens up new spaces for them, but several other spaces are also concurrently shut down.

Do you think the market is impersonal? Or oblivious to race or caste?

For mainstream economists, the growth of free markets—via the development of capitalism—would ensure that all race- or caste-based discriminations fade away. A market does not distinguish between a white or a black worker, or an upper-caste or a lower-caste worker. So, if a wage difference exists between two workers of different races or castes (of course, after adjusting for all other differences), competition in the market should create a wage arbitrage and wages should ultimately equalize.

However, evidence is to the contrary. There is no equal …


R. Ramakumar

R. Ramakumar is an economist and a professor at the Tata Institute of Social Sciences.