Labour Market Segmentation and Surplus Extraction: The Indian Case

Abstract

The working class in India is divided on the basis of social identities. This is contrary to the orthodox Marxist position which predicted that introduction of capitalism would phase away pre-capitalist social relations, and envisaged a labour force heterogenous only in terms of skill. The current study incorporates social and cultural differences in the value of labour power of workers, and contributes theoretically to the understanding of labour market segmentation. Our major result is that in a society where the social gap between the deprived and the privileged is significant before the advent of capitalism, the process of surplus extraction in the capitalist system segments the labour force and aggravates the prevailing gap further. Our claims are substantiated through data and historical discussion. Therefore, labour market segmentation is at the core of capitalism, and our results imply that capitalism will not eliminate fragmentation based on social identities.