economic exclusion and inclusive policy
Exclusion on the basis of race, colour, religion, ethnic background, national or social origin exists in many nations under diverse social, economic and political systems. India is just one of them. The concern about exclusion at the policy level is primarily because of its consequences on economic growth, and the inequality and deprivation that it brings to groups excluded and discriminated against. Broadly speaking, social exclusion has been defined as ‘the process through which individuals or groups are wholly or partially excluded from full participation in the society within which they live.’ Two defining characteristics of exclusion are particularly emphasised: the societal relations (or institutions) that cause exclusion and its consequence of deprivation in several spheres through the denial of equal rights.
Amartya Sen draws attention to various meanings and dimensions of the concept of social exclusion, distinguishing between a situation where some people are being kept out, and where some people are being included on deeply unfavourable terms, and described the two situations as ‘unfavourable exclusion’ and ‘unfavourable inclusion’. ‘Unfavourable inclusion’ with unequal treatment may bring on the same adverse effects as ‘unfavourable exclusion’.
Sen also differentiates between ‘active and passive exclusion’. For causal analysis and formulating policy responses, Sen argues that ‘it is important to distinguish between ‘active exclusion’ — fostering of exclusion through deliberate policy interventions by government or other agents (to exclude some people from some opportunity) — and ‘passive exclusion’, which works through the social process. There are no deliberate attempts to exclude but the process may result in exclusion from a set of circumstances.’
Sen further distinguishes the ‘constitutive relevance’ of exclusion from that of its ‘instrumental importance’. In the former, exclusion or deprivation has an intrinsic importance of its own. For instance, not being able to relate to others or take part in the life of the community can directly impoverish a person’s life, in addition to the further deprivation it may generate. This is different from social exclusion of ‘instrumental importance’, in which the exclusion in itself is not impoverishing but can lead to impoverishment of human life.
Further elaboration of the concepts of exclusion or discrimination has come from mainstream economics in the context of race and gender. The mainstream literature throws more light on discrimination that works through markets and has developed the concept of market discrimination with some analytical clarity. In the market discrimination framework, exclusion may operate through restrictions on entry to markets and/or through ‘selective inclusion’, but with unequal treatment in market and non-market transactions (this is close to Sen’s concept of unfavourable inclusion).
These developments in social science literature enable one to comprehend the meanings and manifestations of the concept of social exclusion and its applicability to caste and ethnicity-based exclusion in India. The way in which it has been developed in social science literature, the concept of social exclusion in general and economic exclusion in particular essentially refers to societal institutions (of exclusion), and their outcome (in terms of deprivation). In order to understand the dimensions of exclusion, therefore, it is necessary to understand the social relations which lead to exclusion of certain groups, causing deprivation in multiple spheres — civil, cultural, political and economic. For a broader understanding of the concept of exclusion, insights into the societal process and institutions of exclusions are as important as an understanding of the outcome of deprivation for certain groups.
For conceptual clarity, it is necessary to recognise the group character of exclusions. It is also equally necessary to recognise that economic exclusion or discrimination is independent of income, productivity or merit of individuals in the group. Often, people do get excluded from markets due to lack of income, or from employment due to low productivity or skill, or from admissions due to low merit. In the case of group-based exclusion, on the other hand, the basis of exclusion is group identity and not the economic characteristics of a group. The focus of exclusion is the social group, not the individual. Exclusion necessarily leads to denial of economic opportunities and powerlessness but low income, poor productivity or low merit are not the original criteria. Rather, they are the outcomes of exclusion associated with group identity. This group characteristic needs to be recognised when we discuss policies and remedies against discrimination. It is also possible that some individuals in the group discriminated against may be economically better off and may have some advantage in overcoming the effects of discrimination. But since exclusion has a group focus, they would also suffer from discrimination — perhaps not of same degree and magnitude as the poor members of their group.
Discrimination, growth, inequity and inter-group conflict
Why are we concerned about economic discrimination? Is discrimination only an equity issue, or does it also involve an economic cost to society? Are the costs it imposes on society more social and political than economic? The conclusions of mainstream economic theory indicate that economic discrimination, particularly market discrimination, does hamper growth and creates income inequalities and potential situations for inter-group conflict.
On the consequences of economic discrimination on growth, the theories clearly imply an adverse impact on profits, wages and efficiency in the allocation of labour. Economic discrimination slows down growth by reducing efficiency due to less than optimal allocation of labour among firms and in the economy (fewer than the optimal number of workers are employed, who are discriminated against as they receive wages lower than their marginal product), by reducing work commitment and efforts of workers who perceive themselves to be victims of discrimination and by reducing the magnitude of investment in human capital by groups discriminated against and the return on this investment.
In the case of income distribution, it is quite clear that since exclusion and discrimination involve the denial of access to resources, employment and common facilities, it certainly impoverishes the lives of people from excluded groups. It amounts to the denial of certain basic human rights. Discrimination thus becomes an issue not only of economic growth but also of equity. By exacerbating current inequality between groups, and by contributing to its perpetuation from one generation to the next, discrimination and exclusion also lead to inter-group conflict.
Sukhadeo Thorat is Chairman of the University Grants Commission, Government of India.
He is also Director of the Indian Institute of Dalit Studies and Professor of Economics
at Jawaharlal Nehru University. He lives in New Delhi