Finance, Forex and Investments

How has the caste system affected India's economy?

Public Comments

1. 1. If you and your descendants are stuck with the same job forever and ever, where is the incentive to innovate? This is where Adam Smith's argument on specialization and division of labor breaks down. Specialization and division of labor increase the opportunities for productivity improvements and decrease the costs, but in and of themselves, these aren't enough. You also need motivation, an incentive, to take advantage of the opportunities. 2. And even if you do see an incentive, the rest of society has an vested social interest in keeping you in your place and so are going to try to deny you what you need to innovate, become more productive, etc. That makes it much harder for those who want and try and so greatly reduces the chances of success.