Social Stratification & Inequality: Systems, Impacts & Business

TAKEAWAYS:

• Stratification ≠ mobility: Societies rank people into layers (classes, castes, or status groups) that limit opportunities unless disrupted by education, law, or economic shifts.
• Three dimensions of inequality: Economic (wealth), social (prestige), and political (power) interact—e.g., a Daraz seller’s caste may limit access to bank loans despite high sales.
• Theories clash: Functionalists see stratification as rewarding talent; conflict theorists call it a tool for elites (e.g., NEPSE’s favoritism toward big shareholders).
• Nepal’s double bind: Caste and gender stratification collide—e.g., Dalit women face triple discrimination in jobs, healthcare, and political representation.
• Business leverage: Companies exploit stratification (e.g., Khalti’s "premium" services for urban elites) or mitigate it (e.g., Pathao’s low-cost rides for daily-wage workers).
• Hidden costs: Inequality fuels corruption (e.g., NTC’s favoritism toward politically connected contractors) and stifles innovation by silencing marginalized voices.

1. What Is Social Stratification?

Social stratification is the division of society into hierarchical layers based on access to resources (wealth, power, prestige). Unlike social differentiation (which groups people by roles like "doctor" or "farmer"), stratification implies unequal rewards and life chances.

How Stratification Works

mindmap
  root((Social Stratification))
    Characteristics
      Hierarchical: Layers are ranked (e.g., upper, middle, lower class)
      Persistent: Positions are passed across generations (e.g., Chaudhary Group heirs)
      Universal: Found in all societies (even "egalitarian" ones have subtle hierarchies)
      Structured: Rules (laws, norms, culture) maintain the system
    Types
      Class: Economic-based (e.g., Nabil Bank’s "gold" vs. "standard" account holders)
      Caste: Birth-based (e.g., Nepali *jajmani* system tying Dalits to menial jobs)
      Status Group: Prestige-based (e.g., "old money" vs. "new money" in Kathmandu)
      Estate: Political-legal (e.g., feudal lords vs. serfs in medieval Europe)

2. The Three Dimensions of Inequality

Inequality isn’t just about money. Sociologists track three interlocking dimensions:

Worked Example: NEPSE’s Stratified Market Nepal’s stock exchange reflects all three dimensions:

• Economic: Big shareholders (e.g., Chaudhary Group) control 50% of trading volume.
• Social: Upper-caste investors dominate boardrooms; Dalit traders are excluded from broker networks.
• Political: Government-linked firms (e.g., NMB Bank) get preferential listing rules. Result: A feedback loop—wealthy elites stay wealthy, while small investors (e.g., tea-stall owners) lose savings in volatile markets.

3. Theories Explaining Stratification

A. Functionalist Perspective (Consensus Theory)

Core Idea: Stratification is necessary—it motivates people to fill critical roles (e.g., doctors, engineers) by offering rewards.

flowchart TD
  A["Society Needs Specialized Roles"] --> B["Some Roles Require More Training/Sacrifice"]
  B --> C["Rewards (Money/Power/Prestige) Incentivize People"]
  C --> D["Stable Hierarchy Emerges"]
  D --> E["Example: Ncell Pays CEOs Millions to Attract Top Talent"]

Critique:

• Ignores exploitation (e.g., Daraz’s gig workers earn ₹50/day while executives fly private).
• Assumes rewards are fair—but who decides what’s "critical"? (e.g., sanitation workers are "essential" but paid poverty wages).

B. Conflict Perspective (Marxist/Feminist)

Core Idea: Stratification is a tool for elites to maintain control over resources.

flowchart TD
  A["Elite Groups Control Resources"] --> B["Use Laws/Culture to Justify Inequality"]
  B --> C["Example 1: Nepali Caste System"]
  B --> D["Example 2: Global Wage Gap (Women Earn 38% Less Than Men)"]
  C --> E["Dalits Forced into Low-Paying Jobs"]
  D --> F["Nepali Women in Tech Earn 40% Less Than Men (World Bank 2022)"]

Real-World Tie-In: Kathmandu Traffic

• Wealthy: Drive cars, use flyovers (built with public funds).
• Middle Class: Ride bikes, stuck in congestion.
• Poor: Walk or take crowded microbuses—no infrastructure for them. Conflict Theory: Roads are designed to serve elites, not mobility.

C. Symbolic Interactionism

Core Idea: Stratification is reinforced through daily interactions (language, symbols, stereotypes).

Example: Khalti’s "Premium" Services

• Symbol: Gold-colored app icon for "Khalti Pro" (₹500/month).
• Message: "Only the elite can afford convenience."
• Reality: Many users are middle-class but feel shamed into paying for status.

4. Social Stratification in Nepal: Caste and Gender

A. Caste Stratification

Nepal’s jati system (260+ castes) is officially abolished but persists in:

• Occupational segregation: Dalits historically tied to "untouchable" jobs (e.g., leatherwork, sanitation).
• Marriage barriers: Upper-caste families reject inter-caste matches.
• Political exclusion: Only 3.6% of parliament seats are held by Dalits (2022).

Case Study: Nabil Bank’s Loan Bias

• Dalit applicants rejected 3x more than upper-caste applicants for the same loan profile (study by Forum-ASJA, 2021).
• Why? Bank managers use caste-based stereotypes (e.g., "Dalits are unreliable").

B. Gender Stratification

• Economic: Women earn 38% less than men (World Bank).
• Political: Only 29% of parliament seats are held by women (2023).
• Social: "Women’s work" (e.g., farming, childcare) is undervalued.

Worked Example: Pathao’s Gender Pay Gap

• Male drivers earn ₹450/day; female drivers earn ₹350/day for the same routes.
• Symbolic Interaction: Female drivers report harassment from passengers, leading to lower ratings and fewer trips.

5. Dimensions of Social Inequality in Business

Every company faces stratification. Here’s how it plays out:

6. How Businesses Exploit or Mitigate Stratification

A. Exploitative Strategies

1. Tiered Services:
   • Example: NTC offers "gold" internet plans (₹2,000/month) with priority access—only for elite users.
2. Caste-Based Marketing:
   • Example: Himalayan Java ads show upper-caste families drinking coffee—excluding Dalit consumers.
3. Gender Pricing:
   • Example: Dry-cleaning shops in Kathmandu charge 20% more for women’s clothes (stereotype: "women shop more").

B. Mitigating Strategies

1. Affirmative Action:
   • Example: Nabil Bank’s Dalit employee quota (5% of hires).
2. Digital Inclusion:
   • Example: eSewa’s low-cost payment plans for rural users.
3. Transparent Wages:
   • Example: Pathao’s public wage reports (though still gender-biased).

In the Real World

1. Nabil Bank’s Class Divide

   • Idea: Economic and social stratification in banking.
   • How it works: Nabil offers three account tiers:
     • Standard (₹10,000 minimum balance): For middle-class users.
     • Premium (₹100,000 minimum): For elites—includes priority loan approval.
     • Gold (₹500,000 minimum): For Chaudhary Group-level clients—personal relationship managers.
   • Result: A self-reinforcing loop—rich get richer; poor stay poor.

2. Daraz’s Digital Caste System

   • Idea: Social and economic stratification in e-commerce.
   • How it works:
     • Urban elites get same-day delivery (₹500 fee).
     • Rural users wait 3–5 days (or pay extra for "express").
     • Dalit sellers face higher rejection rates for product listings.
   • Business impact: 80% of Daraz’s revenue comes from 20% of users (the wealthy).

3. Pathao’s Gendered Gig Economy

   • Idea: Gender stratification in the sharing economy.
   • How it works:
     • Female drivers earn 25% less than males for the same routes.
     • Passenger harassment leads to lower ratings—fewer bookings.
     • No maternity leave: Drivers lose income when pregnant.
   • Real cost: Pathao’s female driver turnover is 40% higher than males.

Exam Tip

How to Score Full Marks

1. Define + Classify:

   • Always start with a clear definition (e.g., "Social stratification is the hierarchical ranking of people into layers based on access to resources").
   • Follow with types (class, caste, status) and examples from Nepal.

2. Theory Application:

   • Functionalist: Use Nepal’s healthcare system (doctors earn more to incentivize training).
   • Conflict: Use NEPSE’s favoritism (elites control stock markets).
   • Symbolic Interaction: Use Khalti’s "premium" branding (status symbols).

3. Case Study Integration:

   • Nabil Bank: Discuss economic + social stratification in loan approvals.
   • Daraz: Link digital divide to class inequality.
   • Pathao: Analyze gender pay gap + harassment as a barrier.

4. Critical Analysis:

   • Weaknesses of functionalism: "Ignores exploitation—e.g., Ncell CEOs earn 100x more than entry-level staff."
   • Conflict theory strength: "Explains why Dalits are excluded from NTC’s infrastructure contracts."

5. Diagrams = Easy Marks:

   • Draw a stratification pyramid (class/caste).
   • Use a flowchart for functionalist vs. conflict theories.
   • Table: Compare economic/social/political inequality in Nepali businesses.

Common Pitfalls to Avoid:

• ❌ Just listing examples without analysis (e.g., "Dalits face discrimination" → Why? How does this affect business?).
• ❌ Ignoring Nepali context (e.g., using Western examples without linking to Ncell/Daraz).
• ❌ Confusing social differentiation (roles like "teacher") with stratification (unequal rewards).

Final Visual Summary

mindmap
  root((Social Stratification in Business))
    Functionalist View
      "Rewards motivate critical roles"
      "Example: Ncell pays CEOs to attract talent"
    Conflict View
      "Elites exploit the system"
      "Example: NTC favors politically connected firms"
    Symbolic Interaction
      "Daily interactions reinforce inequality"
      "Example: Khalti’s ‘premium’ status symbols"
    Nepali Cases
      Nabil Bank: "Class-based loan tiers"
      Daraz: "Digital divide excludes rural users"
      Pathao: "Gender pay gap in gig work"
    Business Strategies
      Exploitative: "Tiered services, caste-based marketing"
      Mitigating: "Affirmative action, digital inclusion"