With the resurgence of far left politics in places like the UK and US, the narrative that capitalism is a destructive force that seeks profit at any cost has increasingly been doing the rounds.

This argument can be persuasive, but only if you ignore the transformative power of markets. India is a case in point, as noted in a recent Cato Institute paper by Swaminathan Anklesaria Aiyar.

The caste system has long been part of Hindu culture in India, which has a deeply entrenched social hierarchy consisting of four major divisions, with priests and intellectuals at the top and farmers and labourers at the bottom.

Dalits, also known as untouchables, constitute a fifth group, and are so low down the social order that they are not officially considered as an actual category.

In the past, there were very few prospects for social mobility among the dalits, who customarily held the filthiest occupations. Physical contact with upper castes, let alone access to higher education, was prohibited.

Hindu belief in reincarnation meant that the wider society, traditionally, had little interest in improving dalits’ living conditions. As Aiyar states, “being reborn into terrible living conditions [was] rationalised as just punishment for earlier sins”.

But discrimination can be costly, not only for the dalits but also for firms missing out on valuable workers. When markets become more competitive, these costs loom large.

Early efforts to end caste discrimination through new laws and parliamentary reservations were largely futile.

However, Aiyar’s paper shows the liberal reforms of the early 1990s have spurred an unprecedented social revolution in India.

Capitalism has helped destroy feudal values and old-money, upper-caste strongholds, furthering the social revolution. Once taboo, dalit-owned businesses are now flourishing. Entrepreneurial endeavours have seen thousands of millionaires emerge from the dalit caste where none existed before.

While some critics of capitalism may see these reforms as giving rise to unbridled consumerism, this consumerism has given a measure of personal dignity and pride to dalits, such as making former luxuries like toothpaste, shampoo and electric fans affordable.

“The dalit revolution is still in its early stages, but is unstoppable”, Aiyar states. The benefits conferred by economic freedom, especially for those at the very bottom of the socio-economic ladder are undeniable. And India’s economic reforms reveal the blessings of capitalism for the world's poorest.