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This article presents an analysis of the plight of Bihar, India's poorest state, based on Rawlsian microfoundations as contrasted with those underlying neoclassical economics and rational choice theory. While these two disciplines conceive of the individual as a rationally self-interested utility-maximizing agent, Rawls credits the individual with a reasonable as well as a rational capacity. A Rawlsian analysis, therefore, identifies and explains the principles upon which political action in Bihar has been based. Rather than focus on the failure to establish conditions for competitive markets or the maximizing strategies of political actors, this article identifies conflicts between democratic principles of equality and hierarchical principles of caste as central causes for Bihar's stark conditions. [ABSTRACT FROM AUTHOR]