Widget Image
HomeCulture & SocietyDominion of the Plutocrats: Cause and Effect

Dominion of the Plutocrats: Cause and Effect

poverty

By Siwan Anderson

Anthropologists and sociologists have long emphasised the notion of a ‘dominant’ caste to understand village life in India. M N Srinivas first defined the term ‘dominant caste’ to refer to the caste in the village which is numerically strong and also wields the greatest economic and political power (Srinivas 1987). Louis Dumont later insisted that dominance arises solely from economic power rather than factors such as numerical strength, and that this power flows exclusively from control of land (Dumont 1970). This latter definition of caste dominance is the one now commonly used in the literature and is the one used here; the ‘dominant’ caste refers to the caste group owning the majority of land. This sociological and anthropological literature is somewhat dated now, but the notion of the dominant caste seems to still play an important role in understanding some key economic and political outcomes in rural India today. Research of mine has investigated some important implications of this dominant caste phenomenon (see Anderson 2011).

Upper and Lower Caste Domination

Data from the bordering districts of rural Uttar Pradesh and Bihar reveal that there are essentially two dominant caste groups in this region; the upper castes (primarily made up of Brahmins and Rajputs) and the backward agricultural caste (known as BACs, who are in this case mainly Yadavs).

Approximately half of all villages are dominated by an upper caste, while the other half is dominated by a lower BAC.

Approximately half of all villages are dominated by an upper caste, while the other half is dominated by a lower BAC. Comparing outcomes across these two types of villages reveals dramatic differences. In particular, lower caste [BAC, other backward caste (OBC), scheduled caste (SC)] households living in villages dominated by BACs have substantially higher incomes compared with their counterparts who live in high caste dominated villages, even controlling for their differences in assets, education and so forth.

It is not that surprising to find some measure of social fragmentation significantly impacting individual well being.

The variation in caste dominance here could be picking up a type of ethnic difference: the villages where the upper castes are also present (the upper caste dominated villages) are more ethnically diverse than those where only lower castes reside (the BAC dominated villages). Much previous work has demonstrated a negative correlation between ethnic diversity and economic outcomes, consistent with the findings here. It is thought that more ethnically diverse communities have greater difficulty sharing public goods and resources, and are less able to impose social sanctions that prevent collective action failures. The hierarchical Indian social structure could also explain the finding that lower caste incomes are higher in low caste dominated villages.

Trade and Water

The traditional village economy revolved around a hereditary caste hierarchy that prescribed individuals´ occupations.Upper castes were the landowners, middle-ranked (backward) castes the farmers and artisans, and the lowest-ranked (scheduled) castes the labourers who performed menial tasks.

Given these historical patterns, we may well expect lower castes to fair better in villages where no upper castes are present. Via tenancy or credit relations, upper caste landlords might be able to exploit the lower castes, meaning that the lower castes will be better off where the upper castes are not present.

poverty

The main way that low castes lose out in high caste dominated villages appears to be a breakdown in the functioning of private groundwater markets. | Photo Courtesy: Flickr.

However, neither low public good access, exploitative tenancy nor exploitative credit relations explain the large losses visited upon lower castes residing in high-caste dominated villages. The main way that low castes lose out in high caste dominated villages appears to be a breakdown in the functioning of private groundwater markets.

These markets are ubiquitous and highly important in arid areas, but our empirical results suggest that upper caste water sellers are unable to easily trade with lower caste water buyers.

As a result, in villages where the dominant landowning caste, who own the majority of the private groundwater extraction mechanisms, is an upper caste, there appears to be a severe inefficiency in the distribution of groundwater. The implications of this trade breakdown in a poverty stricken part of India are dramatic: all else being equal, lower caste water buyers have agricultural yields that are 45% higher if they reside in a village where the majority of water sellers are of the same caste compared to one where they are not.

This evidence suggests that social or cultural differences can result in lost opportunities to trade, even for relatively simple and homogeneous goods.Relative to trade in complex, heterogeneous, quality varying goods or services, trade in private water markets should be relatively simple. Such trade usually consists of a simple two-way agreement between two people residing within close proximity (a proximity usually shared by their families for generations). That this trade breaks down, particularly as the documented gains from trade are enormous, is at least suggestive that underlying distrust, as roughly measured by caste dominance as a measure of social distance, may be a crucial reason behind the lack of development of markets in other more complex contexts.

Caste Dominance and Political Power

Data from rural Maharashtra reveal an alternative route for which the dominant caste hypothesis comes into play. In this context, roughly half of the villages are dominated by the Maratha caste, and the remainder by a lower ranked BAC caste.

In my research, with Patrick Francois and Ashok Kotwal (Anderson et al. 2011), we find that Maratha dominance has real effects in determining both economic and political outcomes.

In my research, with Patrick Francois and Ashok Kotwal (Anderson et al. 2011), we find that Maratha dominance has real effects in determining both economic and political outcomes. Specifically, villages where Marathas are the largest single land-owning caste, are villages where governance seems worst of all: pro-poor policies are rarely implemented, fewer centrally available resources make their way into the village, and Gram Panchayat leaders expend less effort in obtaining resources. But these are also the villages with highest levels of cross-caste cohesion. There seem to be more cases of cross-caste insurance, thriving social networks, strong levels of agreement in the conduct of village policy, cohesion in the priorities for village governments, and high rates of collective donation to village activities and festivals. Moreover, these Maratha dominated villages are characterised by a puzzling set of economic findings. They tend to exhibit both lower wages to workers but higher productivity on agricultural lands and higher profits reported by landowners.

In subsistence economies, the poor place a huge premium on help during hard times, for which they are willing to give up substantial long-term gains.

In subsistence economies, the poor place a huge premium on help during hard times, for which they are willing to give up substantial long-term gains. We argue that the rural Maratha elites are able to take advantage of this fact to make modern institutions work in their own interests. The data lead us to the hypothesis that upper caste Maratha landlords, through a patron-client relationship that has continued through history, induce their clients (lower caste poorer farmers and the landless who supply the local workforce) to vote in the Gram Panchayat elections according to the landlords´ wishes in exchange for a system of personalised insurance for times of crisis, such as illness in the family. Maratha landlords are thus able to block the poverty alleviation schemes that would have had beneficial impact on the wellbeing of clients in the long run but hurt the Maratha land owners by increasing agricultural wages. What is striking is that the gratitude the clients (lower castes) feel toward their patrons is so internalised that the answers to social capital questions in our survey give a very positive picture of the social relations in the village.

Our findings are reminiscent of James Scott’s description of clientelist systems at work in the agrarian societies of Southeast Asia in his celebrated book The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia (Scott 1979).

In a broad sense, our paper provides evidence of how the vested interests of the dominant caste elites that developed over hundreds of years persist under the veneer of modern institutions and still affect policy outcomes.

Daron Acemoglu and James Robinson have theoretically analysed how political institutions can influence economic outcomes by distinguishing between ‘de jure’ and ‘de facto’ political power (Acemoglu and Robinson 2008). In the course of history, a society may move from being a dictatorship to a democracy (a change in de jure political power) but the elite may take actions to neutralise this change to some extent or even fully by building their de facto power and using it to advantage retarding development in the process. Their model can imply a pattern of captured democracy whereby a democratic regime may survive but select economic institutions favouring the historical elite. The story we tell here is similar. A modern democracy with liberal principles and well-designed rules has been imposed on a traditional caste-based society. Though a welcome move that has brought democracy to the rural population of India, it is one which has the potential to be subverted by the traditional hierarchical caste structure.


Dr. Siwan Anderson is an Associate Professor of Economics at the University of British Columbia in Canada. She is a member of the Canadian Institute for Advanced Research (CIFAR), a fellow of the Bureau for Research and Economic Analysis of Development (BREAD), and an associate of Theoretical Research in Development Economics (ThReD).

This article was originally published on Ideas for India.

Featured Image Source: Flickr

Fresh insights delivered to your phone each morning. Download our Android App today!