ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Caste as Social Capital

The Tiruppur Story

There are suggestions that caste networks can be used as a means to reduce transaction costs and promote economic development. Based on critiques of the "social capital for development" literature and the experience of the knitwear cluster in Tiruppur, this article contends that caste-based economic networks reinforce socio-economic hierarchies and generate new forms of exclusion.

The authors thank Atul Sood and M S S Pandian for their useful comments on an earlier draft.

Like caste, its defenders too have a number of avatars. The most recent one is being promoted by proponents of the free market and Hindu right-wing ideologues. They view caste as a “driver of development” and as a form of “social capital”. Taking his cue from the book Trust: The Social Virtues and the Creation of Prosperity where Francis Fukuyama argues that culture constitutes 20% of the missing element in economics, S Gurumurthy, ideologue and convenor of the Swadeshi Jagaran Manch,1 looks at caste as the missing cultural element in the Indian context. He claims that caste is a safety net or a shock absorber that counteracts the problems posed by an expanding individualistic and acquisitive ethic. As he reasons,

Caste is a very strong bond. While individuals are related by families, castes link the families. Castes transcended the local limits and networked the people across. This has prevented the disturbance that industrialism caused to neighbourhood societies in the West, resulting in unbridled individualism and acute atomisation.2

Gurcharan Das, writer and newspaper columnist, and R Vaidyanathan of the Indian Institute of Management-Bangalore (IIM-B), make similar arguments. Das argues that the caste structure provides rules of self-restraint which smoothen market functioning by providing the required trust between economic agents. Caste also, according to him, provides knowledge and capital. He claims,

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