Understanding Economic Inequality Through the Lens of Caste

TL;DR: In this paper, the authors use insights from the caste system to elaborate on three elements of economic inequality: uneven dispersions in resource endowments, uneven access to productive resources and opportunities, and uneven rewards to resource contributions.

Abstract: Research on economic inequality has largely focused on understanding the relationship between organizations and inequality but has paid limited attention to the role of institutions in the creation and maintenance of inequality. In this article, we use insights from the caste system—an institution that perpetuates socio-economic inequalities and limits human functions—to elaborate on three elements of economic inequality: uneven dispersions in resource endowments, uneven access to productive resources and opportunities, and uneven rewards to resource contributions. We argue that economic inequalities persist because these three different elements of inequality feed from and reinforce each other. Our study underscores the potential of the caste lens to inform research on economic inequality as well as organizational theory and practice.

Summary

ECONOMIC INEQUALITY AND THE CASTE SYSTEM

• Economic inequality is an area that warrants organizational research because firms are central to wealth creation in a society and thus have an undeniable role in societal economic inequality (Bapuji, 2015) .
• Taking a broader view of income inequality, at the societal level, Bapuji et al. (2018) argued that value distribution mechanisms that follow the shareholder wealth maximization principle contribute to income inequality by handsomely rewarding executives and shareholders, and giving a short shrift to employees, government and the society at large.
• Echoing this argument, some scholars have defined inequality as "the uneven distribution of economic resources, such as income and wealth, as well as, of other social resources, such as information and social integration, which contribute to income or wealth as intervening variables" (Haack & Sieweke, 2018:2) .
• Institutions shape and construct these identities, subjecting individuals to existing norms, practices and regulations.
• As the authors elaborate later, the caste system influences every aspect of socioeconomic life in the Indian subcontinent and elsewhere, through prescriptions that prohibit and restrict actors in particular social arrangements.

Features of Caste System and their effect on Social Life

• Originating from the Portuguese term 'casta', or something that is pure, "caste" was used by invaders of India in the 16 th century, to refer to the social stratifications that existed among the inhabitants of the Indian subcontinent (Saha, 1993) .
• The top three castes (Brahmins, Kshatriyas and Vaisyas) together are called the savarnas or "upper" castes.
• While positioning an individual in a social hierarchy is the first feature of the caste system, the second is restricted upward mobility, which aimed to maintain the ritualistic purity of the caste (Strauss, 2017) .
• In contrast to this potential mobility within the middle and upper regions of the caste system, mobility was not possible for the Dalits and other "lower" castes.
• Such restrictions on housing created physical distances between members of different castes, and also ghettoized Dalits by confining them to village outskirts (Munshi, 2017) .

Mobility Enhancement Initiatives

• The affirmative action program or the reservation system created by the Indian government has been an important intervention aimed at improving the socioeconomic mobility of "lower" castes.
• These castes were categorized as (i) scheduled castes 9 (SC), which included all castes that were previously considered as untouchable and now known as Dalits, (ii) the scheduled tribes (ST) were the indigenous tribes and now known as Adivasis, and (iii) Other Backward Castes (OBCs) who were from the Sudra category (Hoff, 2016) .
• Their presence in the higher echelons of these institutions is scarce (Kumar, 2017) .
• In IIT Kanpur, a premier institute of technology in India, less than one percent of teaching staff (3 out of 394) belonged to the SC, ST, and OBC 9 Census conducted during the British colonial rule have arguably codified and formalized the numerous sub-castes into various schedules, a practice that continued in Independent India.
• This influence on the cognition of individuals only solidifies the stratifications; this vicious cycle is maintained as "people construct institutions, and institutions continue to shape understandings" (Hoff, 2016:9) .

INDIVIDUALS

• Caste identity shaped (and continues to shape) the economic lives of individuals in fundamental and sedimented ways by determining the occupations that they had access to (Qureshi, Sutter & Bhatt, 2017) .
• Brahmins were given occupations as priests, scholars, educators, ministers, and advisors.
• Kshatriyas pursued roles as kings, ministers, administrators, soldiers, and land owners.
• As a result of the caste-based assignment of occupations, 72-73% of the total population was relegated to job categories that included "farm, fish, hunt, log" or other 'lower-rung' occupations (Deshpande, 2001) .
• The authors discuss this inequality by examining three elements of economic inequality: endowment of resources, access to resources, and rewards to labour (Bapuji, 2015) .

Endowment of Resources to Different Castes

• The distribution of resources critical to production processes -financial and non-financial resources, as well as tangible and intangible resourceswas typically based on the caste one was born into.
• In Uttar Pradesh, an overwhelming majority (over 90%) of the Scheduled Castes fell into the category that owned 'less than five acres of land'.
• The caste system has not only endowed the "upper" castes with tangible resources such as land and capital, but has also endowed them with intangible resources such as knowledge and status.
• Through generations of inheritance, Brahmins remained the owners and custodians of ancient knowledge encoded in various scriptures, as well as cultural knowledge, such as arts, dance, and music.
• Modernization has further diminished the status of Sudras as technology and mass-production have made their skills redundant, which resulted in them resorting to physical labor to survive (Bayly, 1999) .

Differential Access to Resources and Opportunities

• The differences in endowments of wealth, land, knowledge, and status meant that those with higher resources are able to have better access to resources and productive opportunities.
• As a result, their physical and cognitive development is far better, while the development of those without resources suffers (Elmes, 2018) .
• Ritual status within the caste system was reinforced by the foods one consumed and avoided (Stevenson, 1954) .
• Crimes against Dalits normally go unreported due to lack of confidence in authorities, the shame associated with reporting the crime, and threat to their socioeconomic activities (Sharma, 2015) .
• Second, the hierarchy and prejudice inherent in the caste system enabled better access to "upper" castes, and hindered the access of "lower" castes to dignity, educational and financial institutions, and to systems of justice and governance.

Unequal Reward Systems

• The caste system underpins the system of economic activity and determines an individual's occupation and, thus, income they receive from pursuing those occupations (Desai & Dubey, 2012) .
• As a result, they made up most of trading communities in the Hindu social system and earned their income through commissions and profit margins.
• Furthermore, the jobs performed by "lower" castes did not give them recognition.
• The discrimination faced by Dalits and Adivasis in labour markets has also been found in the businesses run by them.
• While the value of economic activity in the cluster and the margins of "upper" caste factory owners increased, the incomes of Dalit shoemakers remained stagnant or witnessed a decline (Knorringa, 1999) .

Elements of Economic Inequality and Their Interrelationships

• The caste lens has enabled us to identify various types of resources useful for economic activity, such as wealth, status, and knowledge.
• These characteristics intrinsic to cultural capital are shaped by dominant classes and fortify the divisions in class.
• In addition to providing better access to productive resources, resource endowments also influence access to productive opportunities.
• As a result, they can create or make use of available productive opportunities better than those who are from asset-poor families.
• The shareholder-focused management of corporations results in top executives and shareholders (who are more likely to be from asset-rich families) receiving a much higher share of wealth created in organizations; whereas employees, suppliers, and buyers receive very little (Bapuji et al., 2018; Sjoberg, 2009) .

DISCUSSION

• Organizational researchers have recently turned their attention to economic inequality because organizations are at the center of wealth creation and distribution.
• This research has begun to examine the role of organizational strategies and practices in creating income inequality at the societal level (Bapuji et al., 2018; Cobb, 2016) , and how income inequality shapes the institutional environment for business (Bapuji & Neville, 2015; Beal and Astakhova, 2017; Beal et al., 2017) .
• Scholars have argued that studying institutions that shape individual and organizational action can yield important insights about economic inequality (Amis et al., 2017; Davis, 2017) .
• Further, previous research has limited its attention to economic dimensions such as income and wealth and has not developed the construct of economic inequality.

Contributions to Economic Inequality Research and Future Research Opportunities

• The authors paper makes two important contributions to organizational research on economic inequality.
• First, it enriches the construct of economic inequality.

Enriching the Construct of Economic Inequality

• The authors argued that resource endowments, access to productive resources and opportunities, and rewards to resource contribution are interlinked, which makes it possible for the perpetuation of economic inequalities in a society.
• The sources of such immobility are rooted in the complex ways in which income and wealth inequalities affect the socioeconomic lives of individuals, rather than the inheritance of wealth alone (Wilkinson & Pickett, 2009) .
• This goes beyond previous conceptualizations that included access to resources as an element of economic inequality, and suggests that the sources of inequality are not just in the differential access to resources; inequality is also influenced by differential access of individuals to productive opportunities.
• Specifically, by extending from 'rewards to labour' to 'rewards to productive resources,' the authors can more comprehensively consider the resource contributions of various stakeholders to value creation and the returns they receive in turn, in the form of compensation, dividends, taxation, and philanthropyall of which contribute to economic inequality at the societal level.
• Further, research in nonbusiness disciplines has shown empirical relationships, but theoretical explanations for those relationships have been fewer.

Institutional Approach to the Study of Economic Inequality

• In doing so, the authors have responded to the calls for an institutional approach to study socio-economic inequalities (Amis et al., 2017; Davis, 2017; Suddaby et al., 2018) .
• Specifically, the caste system was explained and justified as a divine invention based on the philosophy of karma, i.e., you reap what you have sowed in previous births.
• These shared institutional logics confine and delineate the boundaries and identities within which "clusters" of organizations exist, otherwise known as organizational fields (Greenwood & Suddaby, 2006) .
• While in economics institutional infrastructure elements have been assayed in tandem with income inequality, the discipline has mainly directed its attention to corruption, economic growth and bureaucracy (Hinings et.al, 2017) .
• As a unique institution that creates and maintains socioeconomic inequalities, the caste system itself needs to be examined by comprehending its features, the institutional logics that support it, and the institutional infrastructures that perpetuate it.

Contribution to Caste Research in Organizations and Future Research Opportunities

• Organizational scholarship has paid surprisingly little attention to it.
• Occasionally, caste has been used as a demographic characteristic to study populations (e.g., Suar & Gochhayat, 2016) .
• This, in turn, can spur research on how organizations can be made more inclusive, not just for those disadvantaged due to gender, race, ethinicity, age and sexual orientation, but also those oppressed due to caste.
• In conclusion, in this paper the authors have examined the caste system in India and used it as a lens to understand the various elements of economic inequality and the interreleationships between them.
• The authors hope that organizational scholars focus on institutions of socioeconomic inequality in society and their effect on individuals and organizations.

Full text

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UNDERSTANDING ECONOMIC INEQUALITY THROUGH THE LENS OF CASTE
Hari Bapuji
1
Faculty of Business and Economics
The University of Melbourne, Victoria 3010 Australia
E-mail: hari.bapuji@unimelb.edu.au
Phone : +61-3-8344-9867
Snehanjali Chrispal
Faculty of Business and Economics
The University of Melbourne, Victoria 3010 Australia
E-mail: snehanjalia@unimelb.edu.au
Forthcoming in Journal of Business Ethics
Running Head: Caste and Economic Inequality
Funding: None
Conflict of Interest: The authors declare that they have no conflict of interest.
ACKNOWLEDGEMENTS
The authors would like to thank the handling editor Prof. Raza Mir and the anonymous reviewers
for their insightful comments and helpful suggestions. The authors would also like to thank W.E.
Douglas Creed, Krishna Udayasankar, Charlene Zietsma, and Michael Zyphur for their helpful
comments on earlier versions of this article. This paper also benefitted from the comments of
participants of Organisation Studies Research Workshop at the University of Melbourne, as well
as anonymous reviewers of AOM and IABS conferences. The authors express their gratitude to
all of them.
1
Corresponding author

2
Understanding Economic Inequality through the Lens of Caste
Abstract
Research on economic inequality has largely focused on understanding the relationship
between organizations and inequality but has paid limited attention to the role of institutions in
the creation and maintenance of inequality. In this article, we use insights from the caste system
– an institution that perpetuates socio-economic inequalities and limits human functions – to
elaborate on three elements of economic inequality: uneven dispersions in resource endowments,
uneven access to productive resources and opportunities, and uneven rewards to resource
contributions. We argue that economic inequalities persist because these three different elements
of inequality feed from and reinforce each other. Our study underscores the potential of the caste
lens to inform research on economic inequality as well as organizational theory and practice.
Keywords: Caste system, Economic inequality, Income inequality

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Rising economic inequality around the world, particularly in the developed world, has
been a longstanding area of scholarly inquiry in non-business disciplines (Marsh, 2016; McCall
and Percheski, 2010; Neckerman and Torche, 2007; Piketty, 2014; Wilkinson & Pickett, 2009).
Business organizations not only generate and maintain inequality, but are also affected by its
consequences (Alamgir & Cairns, 2015; Andrews & Htun, 2017; Bapuji, 2015; Bapuji &
Neville, 2015; Bapuji & Mishra, 2015; Jiang & Probst, 2017; Muckenhuber, Burkert, Großschädl
& Freidl, 2015). Therefore, organizational researchers have recently turned their attention to
income inequality to understand how organizations contribute to income inequality, and are, in
turn, affected by it (Beal and Astakhova, 2017; Cobb, 2016; Davis and Cobb, 2010; Fotaki and
Prasad, 2015; Leana and Meuris, 2015). A number of journal special issues on the topic of
economic inequality have firmly placed the topic in the domain of organizational scholarship
(Bapuji, 2015; Bapuji, Husted, Mir & Lu, 2018; Suddaby, Bruton & Walsh, forthcoming).
This burgeoning scholarship on economic inequality has begun to advance theories on
how corporations contribute to income inequality by facilitating economic exchanges (Bapuji,
Husted, Mir & Lu, 2018; Beal, Astakhova & Conaway, 2017; Cobb, 2016), and by shaping the
institutional environments within which those exchanges take place (Beal and Astakhova, 2017;
Beal et al., 2017). It has also begun to theorize how inequality affects the institutional
environment, in which corporations operate (Bapuji, 2015; Bapuji & Neville, 2015; Shrivastava
& Ivanova, 2015; Reinecke, forthcoming). This research has not, however, paid adequate
attention to examine how particular institutions in a society affect economic inequality.
Studying economic inequality from an institutional perspective can yield important
insights to improve our understanding of inequality by complementing an organizational
perspective. For example, an organizational perspective focuses more on economic factors and

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financial dimensions of inequality, such as wealth and income. In contrast, an institutional
perspective can unearth the non-economic and non-financial aspects of inequality rooted in the
sociocultural context of the society. Also, while an organizational approach identifies the
organizational strategies that contribute to income inequality in a society, an institutional
approach can shed light on the institutional forces that affect those organizational strategies
(Davis, 2017). Similarly, inequality is affected by the logics through which existing institutions
are maintained, the identities that current institutions engender, and the everyday social and
organizational practices that legitimize inequalities (Amis, Munir & Mair, 2017).
In addition to paying limited attention to the role of institutions in inequality, previous
research has also paid less attention to theorizing the construct of economic inequality. Although
extant definitions of economic inequality allude to uneven dispersion in resource possession and
access (Bapuji, 2015; Haack & Sieweke, 2018; Mair, Wolf & Seelos, 2016), these definitions
have rarely been contextualized, and the relationship between the elements of possession and
access has not been theorized. Further, scholars often use economic inequality interchangeably
with income inequality and wealth inequality, thus pointing to the need to clarify and elaborate
what economic inequality is.
In this paper, we examine the caste system as an institution to understand how it
perpetuates socioeconomic inequalities. We then use this understanding to elaborate on three
different elements of economic inequality: uneven dispersion in endowments of resources, access
to resources, and rewards to labour (Bapuji, 2015). Specifically, we clarify (i) the financial and
non-financial nature of resources that create and maintain inequality, and (ii) highlight the
interlinkages between resource endowments, access to productive resources and opportunities,
and rewards to productive resources. These interlinkages perpetuate socioeconomic inequalities

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in a society by giving better access and higher rewards to those with greater resource
endowments. Accordingly, we seek to refine and enrich the construct of economic inequality to
better capture its complexity and nuance.
This paper makes two important contributions to organizational research. First, despite
the emergence of a vibrant stream of research on economic inequality, current understanding of
the construct of economic inequality is limited. Our examination of this topic builds on the
earlier definitions of economic inequality to enhance conceptual clarity. Specifically, we (i)
elaborate on the various types of resources, and (ii) highlight the interlinkages between resource
endowment, access and rewards, which serve to perpetuate economic inequality. Further, we
adopt an institutional approach to economic inequality and highlight the potential ways in which
institutional theory can benefit from studying economic inequality, particularly institutions such
as the caste system. Second, the caste system affects the socio-economic lives of over a billion
people in the Indian subcontinent and its diaspora spread around the world, whose caste practices
have come under increasing scrutiny in recent times. Although management researchers have
often used caste as a demographic attribute, they have devoted little attention to examining caste
as an institution and its consequent effect on individuals and organizations. This paper brings a
caste lens into the discourse on organizations and institutions, and highlights the potential of the
caste lens to inform future research on inequality, as well as inform the organizational research
more broadly.
The remainder of this paper is organized as follows. We first describe the caste system as
an institution by outlining its features and relevance to everyday life. We then discuss how the
caste system affects economic inequality by influencing resource endowments, resource access,
and resource rewards in conducting economic exchanges. Later, we conceptualize the

Frequently asked questions

Q1. What contributions have the authors mentioned in the paper "Understanding economic inequality through the lens of caste" ?

In this article, the authors use insights from the caste system – an institution that perpetuates socio-economic inequalities and limits human functions – to elaborate on three elements of economic inequality: uneven dispersions in resource endowments, uneven access to productive resources and opportunities, and uneven rewards to resource contributions. Their study underscores the potential of the caste lens to inform research on economic inequality as well as organizational theory and practice. 

Q2. What are the common references to caste?

The most common references to caste relate to its hierarchy, class nature, and discrimination (e.g., Primeaux & Beckley, 1999; Van Luijk, 1997). 

Q3. What is the effect of the uneven distribution of wealth created in corporations?

The uneven distribution of wealth created in corporations enables shareholders andexecutives to accumulate and enhance their resource endowments. 

Q4. What is the effect of low birth weight and increased blood lead levels in poor children?

Low birth weight and increased blood lead levels in poor children have been associated with decreased measures of cognitive functioning, learning disabilities, dropping out of school and so forth (Brooks-Gunn &Duncan, 1997). 

Q5. What was the effect of the hierarchy and prejudice in the caste system?

the hierarchy and prejudice inherent in the caste system enabled better access to “upper” castes, and hindered the access of “lower” castes to dignity, educational and financial institutions, and to systems of justice and governance. 

Q6. Why do crimes against Dalits go unreported?

Crimes against Dalits normally go unreported due to lack of confidence in authorities, the shame associated with reporting the crime, and threat to their socioeconomic activities (Sharma, 2015). 

Q7. How is the caste system being re-legitimized?

In recent times, however, the caste system is being re-legitimized using economic logic, i.e., people were allocated to occupations based on their skills, which then became their caste. 

Q8. What is the role of the caste system in determining access to productive resources?

While the caste system tangibly directs and controls access to productive resources andopportunities, in other contexts, individuals in families with adequate wealth and capital assetsgain higher access to resources that are needed for their emotional, intellectual, and physical development (Elmes, 2018). 

Q9. What can be done to help researchers understand the caste system?

studying the caste system can generate much needed insights about the persistence of institutions, particularly oppressive institutions. 

Q10. What is the role of non-financial resources in the creation of value?

a focus only on labour, which is just one input into the production process, ignores the contribution of non-labour resources – such asknowledge, social capital, and financial capital – to the creation of value. 

Q11. What is the interrelationship between resource endowments and the level of rewards?

This interrelationship, by which resource endowments determines access to productive resources and opportunities, also determines the level of rewards, thus perpetuating economic inequality. 

Q12. How does the article address the inequality in the Indian economy?

The authors discuss this inequality by examining three elements of economic inequality: endowment of resources, access to resources, and rewards to labour (Bapuji, 2015). 

Q13. What can be done to make organizations more inclusive?

in turn, can spur research on how organizations can be made more inclusive, not just for those disadvantaged due to gender, race, ethinicity, age and sexual orientation, but also those oppressed due to caste. 

Q14. What can be learned from the caste system?

The caste system is a unique form of barrier to social mobility, but such insidious barriers exists in all societies, and the insights from caste can be extrapolated to inform those studies, as well. 

Q15. What did the Dalits learn from the Kshatriyas?

As a result, Brahmins had access to education that helped them to learn scriptures, rules, and rituals, while Kshatriyas learnt the art of warfare and public administration. 

Q16. What is the impact of the caste system on organizations?

In recent years, many caste groups have escalated their demand for a share in government educational institutions and in government jobs.