Interesting questions with multiple answers. Let's start with textbook economics which posits a highly idealized perfectly competitive market (i.e., assumes perfect information, no price-setting, no externalities, no public goods). Such a market does not redistribute from the initial endowments. That is, if you start with very little, you will end up with very little. The tricky part is that endowments are conceived very abstractly, so someone very smart but poor may end up financially well off because of their endowment in inherent intellect. In this sense, markets are supposed to reinforce a meritocratic allocation.

There are multiple problems with this, though. First, different elements in the bundle may not be independent. For example, "inherent intellect" (and it's useful expression vis-a-vis labor market outcomes) is related to parents' education and family resources for schooling. So if you're smart and poor with under-educated parents, your likely still significantly worse off than someone less smart with well-educated parents and a higher family income.

Furthermore, markets are rarely perfect and all the violations of perfect competition give rise to rent-seeking opportunities. If those rent-seeking opportunities are correlated with where you are in the income / wealth distribution, then market economies are likely to exacerbate inequality. For a country like India, this means that in so far as endowments reflect historical caste inequalities, so will market outcomes. Furthermore, if members of the upper castes are in a better position to exploit market imperfections for their own gain, market mechanisms will worsen inequality between the lowest and highest castes. Historically, markets seem to produce some shuffling around of traditional hierarchies, though my perception is that much of that is concentrated in the middle and upper middle of the social order. Sometimes the ruling echelon is unseated (see European aristocracy), but not by those who were previously at the bottom.

Critics of textbook economics will take this further by essentially pointing out that the taking of endowments and socio-political institutions as given blinds one from recognizing that these are themselves reshaped to produce a new ruling hierarchy. Were I somewhat agnostically suggested that one's position in the income / wealth distribution may be correlated with one's ability to capture rents from market imperfections, classical political economy provides strong theoretical reasons why this is the case (e.g., see Adam Smith on the collusion of employers to repress wages).

The point is, there are good reasons to think that markets are more likely to produce new forms of exclusion and a new variety of social stratification (tethered loosely to historical forms), than to outright reduce inequality or produce only inequality that reflects some form of "just" distribution of outcomes.

In order to answer your question it is crucial, in my opinion, to move beyond the myth of ‘free market’ and allocate your analysis in the current global conjuncture. From this perspective, monopoly capital more than ever has become a central player in the global economy. Through mega-mergers and strategic alliances, this fraction of capital has reached unparalleled levels of concentration and centralization: the top five hundred largest multinational corporations now concentrate between 35-40 percent of world income (Foster, McChesne & Jonna 2011).

As the proponents of this neo-Marxist theory of the new dependency see it, the new scenario is characterized by global networks of monopoly capital through which large multinational corporations can expand their services, as well as productive and commercial activities via mechanisms such as outsourcing or subcontracting to peripheral regions in search of cheap labour and a flexible labourforce, and labour arbitrage (Márquez & Delgado Wise 2011; Delgado Wise & Martin 2015). Extractivism and neo-extractivism, through the creation of export platforms that operate as enclaves in peripheral countries are also part of this scenario. But from the perspective of these analysts more relevant is the extension of monopoly capital towards the sphere of scientific and technological innovation. By accessing a mobile and highly qualified workforce formed on the periphery, the large multinational corporations that dominate the world system have managed to lower labour costs, transfer risk and liability coverage, and capitalize visible benefits through the concentration of patents (Delgado Wise, Chávez & Rodriguez 2016).

Another pillar of this new global architecture of monopoly capital is financialization, which involves a growing reliance on fictitious or speculative capital rather than productive capital, a venture that also encompasses sovereign wealth funds, public budgets, pension funds and investment funds formed in the global South (Amin 2010). This generates short-term profits that distort the functioning of the so-called real economy and leads to massive fraud and recurrent crises, as well as the concentration and centralization of capital.

An inescapable feature of capitalism in this form is the deepening of unequal development and the deepening and expansion of social inequalities The global and national dynamics of capitalist development, the international division of labour supported by a system of international power relations, together with the dynamics of extractive capital, have rendered economic, social, political, and cultural polarization more extreme than ever before in human history, leading to what Joseph Stiglitz—Chief Economist at the WB until 2000 —terms ‘the great divide’. As Walden Bello (2006) has argued, it also leads to a profound multifaceted crisis, which undermines the main sources of wealth creation—labour and nature—to the point of a potentially catastrophic outcome. 

I am very thankful to Prof. Wise for this valuable global insight. Adding to your last sentence of 'undermining the main sources of wealth creation- labour and nature'. It reminds me Nearing (1915) who had mentioned the importance of nature as means of production in the Roman ages. People used to give back to the nature what they take even they believed this to be true with land (mountains) and river. But in modern capital centered economy, we are trapped in associating a cost to everything available in nature. In the economics text books also, we see land, labour and capital as input to the production and very cleverly the phrase 'cetere paribus' ie keeping other things constant is used in assuming calculations. I think we are far behind in assuming the real value of land, trees and water we take. And so far, these values are defined by the control ie state or private. Accordingly these are accounted for monetary value. We need a global framework to calculate the real value of these natural treasures. Do we have some research in this line? Also please suggest some more literature on the interaction of market and society.

Dear Mudit Kumar,

Do You have doubts for what You asked?

It is possible to correct inequality partially by implementing basic income for all - the plan Guy Standing is advocating for. But Eastern European counntries are unable to follow the basic income because of still lacking resources.

Markets are rarely perfect and all the violations of perfect competition give rise to rent-seeking opportunities. If those rent-seeking opportunities are correlated with where you are in the income / wealth distribution, then market economies are likely to exacerbate inequality.

Yes, the use of technology has removed some business in the society and therefore leading to exclusion.