The economist Hernando de Soto’s The Mystery of Capital: Why Capitalism Triumphs In The West and Fails Everywhere Else was hailed a “revolutionary” book, a “blueprint for the new industrial revolution”. Born of the post-cold war western optimism, published in 2000, it celebrated capitalism “as the only feasible way rationally to organise a modern economy”. De Soto goes on to ask the then relevant question of why capitalism had succeeded in the West but has failed elsewhere. He says this is because the Third World is unable to produce capital. His research across continents show that the total value of savings and assets among the poor is immense; this includes houses built on land whose ownership rights are not recorded, unincorporated businesses with undefined liability etc. But because these assets are undocumented and not integrated into the formal legal economy, they are rendered as “dead assets” that cannot be used as collateral for a loan or used as a share against investment etc. De Soto suggests that in the West, by contrast, “ every parcel of land, every building, ever piece of equipment…is represented in a property document that is a visible sign of a vast hidden process that connects all these assets to the rest of the economy .” His solution therefore is to recognise the value of this “dead capital” by integrating it with formal, legal institutions. The general trajectory of de Soto’s argument is a common one, wherein, the processes of modernisation or capitalist development, accompanied by the necessary property rights and legal institutional integration, will eventually undermine the significance of social identities and their role in affecting economic outcomes.
Reading Professor Aseem Prakash’s Dalit Capital: State, Markets and Civil Society in Urban India , one realises that he has, indirectly, revealed flaws in such arguments. For instance, Prakash’s ethnographic study shows that secure property rights do not always translate into access to formal credit, and that there are complex “social networks” that mediate the relation between the formal and informal sectors. Credit flows are not fair and straightforward, they are layered with currents of discrimination. More generally, he shows that market outcomes are shaped not just by a socially detached demand and supply rationality but is rather embedded in religion, gender, caste, language as well as the informal labour networks, jugaad economy, the shadowy realms of bribery and corruption and all the microcosmically fuzzy informality that comes with our everyday life. The strict binary of formal and informal economies that de Soto assumes, gets fuzzy and diluted for Prakash. Dalit entrepreneurs do not easily receive credit from formal banking institutions even on having secure property rights, because these formal institutions are always and already mediated by the prejudice that Dalits are incapable of running a modern business. So a dhobi residing in Dhobi Katra (a community ghetto) in Lucknow wanting to start a laundry business was disqualified from accessing credit as the very mention of “Dhobi Katra” invoked “condescension and contempt in the minds of credit officials”. For Prakash, the economy is therefore co-constitutive of not just market rationality, but also laden with cultural prejudices of everyday life.
Dalit Capital is about the attempts made by Dalits in middle India (Gujarat, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh) to enter the market as owners of capital and earn their living as well as surplus through trade and commerce. The author provides an analysis that is theoretically insightful and based on sound methodology. The study is based on a reconstruction of business histories of about 90 Dalit entrepreneurs, from 13 districts, located in six states. It needs to be highlighted that 29% of these entrepreneurs have businesses emerging from within their existing caste locations (hair-cutting saloons, leather work, sanitary labour etc), 40% of Dalits entered into general businesses (fuel-wood, handloom material, grocery shops etc), while only 13% of Dalit entrepreneurs entered the traditionally prohibited market for goods and services (educational coaching, food and catering industry, priesthood etc).
This book has none of the chicken-soup-for-the-soul tales of inspirational Dalit triumph over all odds (read triumph of capitalism over rural, pre-modern, traditional) as found in the recently published Defying the Odds: The Rise of Dalit Entrepreneurs (Random House, 2014). Instead, Prakash’ sensitive ear for the narratives of Dalit entrepreneurs produces a far more complex, socially embedded political economy. His book is situated at a cusp — the cusp of the informal and formal; the socio-political and the economic; ranging between the context-specific and the context-independent. And it is the fact that Prakash is so comfortable and fluent at being in this cusp that makes Dalit Capital a fascinating read. His is unlike the neoclassical schools which assume caste to be pre-modern social groups, stagnant and unchanging, that suppresses competition, but will eventually be overcome by the modern liberal nation-state. Instead, he views castes as social networks that regulate credit and labour, thus influencing outcomes in the markets. He does not say Dalits are not able to enter the markets as owners of capital. Rather, he is interested in a certain texture of their “unfavourable inclusion” in markets and the numerous experiences of discrimination faced at the intersection of the state, market and civil society. The relation between Dalit entrepreneurs and the formal economy is mediated by “social networks”, which have the potential of both, facilitating business as well as thwarting it. For instance, despite a notification from the Madhya Pradesh government stating that a specific percentage of total government procurement had to be sourced from Dalit enterprises, Dalits still found it difficult to get their payments released. So, many of them had to involve upper-caste persons as business partners, whose role was merely to ensure the timely release of payments.
In conclusion, three aspects of this book mark a significant contribution to the field: First , the ethnographic data collected based on detailed reconstruction of business histories of Dalit entrepreneurs is of definitive value; Second the conceptual deployment of “social networks” as a relational category in understanding complex inter-caste and inter-institutional relations in the political economy; and Third , making a reasonably strong case for the argument that Dalit owners of capital experience an “unfavourable inclusion” in market processes, though the degree of adversity varies with location and sector of markets.
Dalit Capital - State, Markets and Civil Society in Urban India: Aseem Prakash; Routledge, 912, Tolstoy House, 15-17, Tolstoy Marg, Connaught Place, New Delhi-110001. Rs. 795.
