A bazaar economy no more. Photographer: Dhiraj Singh/Bloomberg
A bazaar economy no more. Photographer: Dhiraj Singh/Bloomberg

(Corrects fourth paragraph to use Bloomberg data and to reflect that Mukesh Ambani is not a Marwari.)

As anyone who has ever studied business in India knows, the country does not offer a level playing field for new entrepreneurs. Not only does the large, if slowly crumbling, scaffolding of India’s socialist heyday allow government and encrusted special dispensations of various kinds to inhibit competition, but there also seems to be a deeply ingrained bias among Indians themselves about who is capable of doing business and who is not.

And who can blame them? For at least two millennia, the "jati," or caste system -- the form of social stratification, and indeed suffocation, unique to Hinduism and India -- has regulated society into different orders of mainly hereditary occupations. According to this vastly influential scheme, which allocates kingship to the so-called warrior castes and religious authority to the priestly castes, business is best done by the mercantile castes, and best scorned by the high or middle castes. When the outsider demands proof of how genes, or a combination of genes and culture, can make for such a head start in the very adult, secular, learnable activities of trade and commerce, the answer is often sounded: “You don't want to compete against a Marwari!”

They seem to have a point. The most ubiquitous of the mercantile castes, the Marwaris have a certain mystique in India for their legendary ability to make and manage money. As Thomas Timberg, author of a recent monograph on the Marwaris, shows, the Marwaris have for hundreds of years served as merchants, bankers, venture capitalists, speculators and brokers, the managers of both trust and risk in the Indian economy.

Although entrepreneurial aspirations have skyrocketed in India since liberalization in 1991, evidence of the old caste-based structure continue to show on surveys of wealth creation. According to the Bloomberg Billionaires list of the world's richest people, three of the nine richest Indians are Marwaris. The combined wealth of Lakshmi Mittal, Kumar Mangalam Birla, and Savitri Jindal is nearly $35 billion.

A group more dispersed and more enduring than even the great business families such as the Rothschilds or the Rockefellers, and enabled by social structure and history as much as dynasty and accumulated wealth, the Marwaris are an interesting example of an indigenous capitalism pursued, one might say, in a partly collectivist spirit, an essential case study of the relationship of capitalism to culture and social organization.

The Marwaris, though far-flung today across India and the world, trace their roots to the harsh desert region around Marwar, in modern-day Rajasthan in western India. The term “Marwaris” is in fact not a caste name but an ethnic catchall for various merchant castes from the region. According to Timberg’s survey, the influence of the Marwaris began to spread outside their traditional domicile around the 16th century, when they emigrated in significant numbers to places as far east as Calcutta (today, Kolkata) and Dhaka (today the capital of Bangladesh) as bankers and financiers to the great Mughal dynasty.

Historically the managers of India’s premodern “bazaar economy” and the bookkeepers and funders of kings, the Marwaris were slowly drawn into the world powers’ battles for control of Indian trade. “Between 1718 and 1730, the East India Company took an average credit of Rs. 4 lakh per year from the Jagat Seth firm,” Timberg writes of one of the earliest diasporic Marwari “great firms.” “As late as 1757 they were lending Rs. 4 lakh per year to the Dutch East India Company and 15 lakh to the French East India Company.”

The firm lent to all comers who seemed creditworthy. Slowly, as British power in India became not just commercial but also political, many Marwari traders linked up with the empire as its local commercial face, becoming commodity brokers in the vast new colonial businesses of tea, opium and jute or agents for British companies. (Some things don't change. When the first-ever McDonald’s opened in India, in Bombay in 1995 -- where I ate my first burger -- it was no surprise that the store was being run in partnership with Amit Jatia, a vegetarian Marwari.)

Later, when the first stock exchange in India -- indeed, Asia -- was established in Bombay in the second half of the 19th century, many Marwaris were quick to jump into what, until very recently, seemed to the more financially conservative sections of Indian society to be just another form of gambling, making and losing vast fortunes in their willingness to take risks. The pan-Indian Marwari network made the financiers in their midst also bankers of a sort, able to supply and redeem an indigenous bill of exchange called the hundi and eliminating the risks of cash transactions.

Socially conservative and tightly knit, the prosperous Marwaris often served as a school of apprenticeship to clan members from more modest backgrounds, many of whom eventually branched out on their own: a kind of Marwar School of Business. Perhaps it’s only in the last three decades or so that the principle of “Education can wait. Business can’t” has been abandoned by the great karta, or head of the Marwaris.

As the Marwari ways became widely recognized -- financial nous, thrift, clan solidarity, appetite for risk, social conservatism, involvement in both religious and secular philanthropy -- so too did their mystique. This subtly reinforced both the stereotype of the grasping Marwari and the occupational-specialization theory of caste, as well as the larger social consensus that man’s life is embedded in the rules and values of his own community, not nation or even self-expression. Looking back at the entries in logbooks and account books of past centuries, we learn so much about the grain of the Indian past.

In post-liberalization, as the allure of a new pan-Indian corporate “MBA culture” distinct from the old community-and-apprenticeship way of thinking about business has taken hold, the prospect of a life in entrepreneurship has for the first time become widely dispersed across Indian society. The question now being asked of the Marwaris, especially their large pool of family-owned firms of the brick-and-mortar variety, is: Can they continue to hold their own in the economy of the 21st century?

Paradoxically, this challenge has been accompanied by an upswing in social status. “The Marwari has never quite earned the respect from Indian society that he has yearned for,” wrote the Indian corporate guru and business historian Gurcharan Das. That is now changing rapidly as Indian values become more unapologetically materialist. Perhaps now we all want to be Marwaris.

To contact the writer of this article: Chandrahas Choudhury at chandrahas.choudhury@gmail.com.

To contact the editor responsible for this article: Brooke Sample at bsample1@bloomberg.net.