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Race, Liberalism, and Economics

Race, Liberalism, and Economics

David Colander
Robert E. Prasch
Falguni A. Sheth
Copyright Date: 2004
Pages: 344
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  • Book Info
    Race, Liberalism, and Economics
    Book Description:

    Noneconomists often think that economists' approach to race is almost exclusively one of laissez-faire.Racism, Liberalism, and Economicsargues that economists' ideas are more complicated. The book considers economists' support of markets in relation to the challenge of race and race relations and argues that their support of laissez-faire has traditionally been based upon a broader philosophical foundation of liberalism and history: what markets have and have not achieved in the past, and how that past relates to the future. The book discusses the concepts of liberalism and racism, the history and use of these terms, and how that history relates to policy issues. It argues that liberalism is consistent with a wide variety of policies and that the broader philosophical issues are central in choosing policies.The contributors show how the evolution of racist ideas has been a subtle process that is woven into larger movements in the development of scientific thought; economic thinking is embedded in a larger social milieu. Previous discussions of policies toward race have been constrained by that social milieu, and, since World War II, have largely focused on ending legislated and state-sanctioned discrimination. In the past decade, the broader policy debate has moved on to questions about the existence and relative importance of intangible sources of inequality, including market structure, information asymmetries, cumulative processes, and cultural and/or social capital. This book is a product of, and a contribution to, this modern discussion. It is uniquely transdisciplinary, with contributions by and discussions among economists, philosophers, anthropologists, and literature scholars.The volume first examines the early history of work on race by economists and social scientists more generally. It continues by surveying American economists on race and featuring contributions that embody more modern approaches to race within economics. Finally it explores several important policy issues that follow from the discussion.". . . adds new insights that contribute significantly to the debate on racial economic inequality in the U.S. The differing opinions of the contributors provide the broad perspective needed to examine this extremely complex issue."--James Peoples, University of Wisconsin-Milwaukee"There is an immense economic literature on racial discrimination, employing a variety of models and decomposition methods. This volume makes a unique contribution by focusing on the philosophical assumptions at the root of this analysis and by presenting many sides of the very vigorous debate surrounding these controversial issues."--Thomas Maloney, University of Utah"By focusing upon the progress of analytical technique, historians of economic thought have grossly neglected the symbiotic relation of economics to public policy and ideology. This collection of essays offers a most welcome breach of disciplinary apartheid. Seizing upon recent research in the almost forgotten writings about race of Classical economists and their contemporaries, it relates nineteenth-century ideas to current debates about economic discrimination and other manifestations of racism. As the writing is both learned and lively, the book should appeal both to the generally educated reader and to teachers of courses in multiculturalism."--Melvin Reder, Isidore Brown and Gladys J. Brown Professor Emeritus of Urban and Labor Economics, University of Chicago

    eISBN: 978-0-472-02484-1
    Subjects: Business, Economics, Sociology, Political Science
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Table of Contents

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  1. Front Matter (pp. i-vi)
  2. Table of Contents (pp. vii-viii)
  3. Introduction (pp. 1-18)

    Economic reasoning is often presented as a technical exercise-optimizing, solving for second—order conditions, or relating costs to benefits. It certainly involves such issues, but in reality the techniques of economics are simply elements of a broader reasoning process that leads from basic philosophical principles to policy precepts. As John Maynard Keynes put it, “economics is not a set of conclusions; it is a method of analysis, a way of thinking, that, when used correctly, leads its practitioner to correct conclusions.” As the teaching of economics has come to focus more on the technical aspects of constrained maximization, the broader...

  4. PART I Classical Economic and Early Approaches to Race
    • Apes, Essences, and Races: What Natural Scientists Believed about Human Variation, 1700–1900 (pp. 21-55)
      Brendan O’Flaherty and Jill S. Shapiro

      Throughout the eighteenth and nineteenth centuries, both social scientists and natural scientists addressed the question of why Europeans and some of their descendants dominated the rest of the world militarily and economically. They also tackled the deeper and more fundamental questions of what human beings are, how they fit into the scheme of the natural world, and how they differ from one another.

      In this chapter, we will try to give a brief overview of what those answers were and how they changed. We will not try to demonstrate direct links between natural scientists and economists; such close textual analysis...

    • The Negro Science of Exchange: Classical Economics and Its Chicago Revival (pp. 56-84)
      David M. Levy and Sandra J. Peart

      For analytical purposes, are economic agents—humans—the same or not? In this chapter, we argue that, historically, the debate between those who trusted in markets and those who did not followed logically from different answers to this question. Starting with Adam Smith, classical economists held that humans are the same in their capacity for language and trade. They concluded that since markets are useful for some agents, they are beneficial for all of us. But the supposition of homogeneous competence was widely questioned in the nineteenth century by those who held that significant differences exist among humans, only some...

    • Contextualizing David Levy’s How the Dismal Science Got Its Name; or, Revisiting the Victorian Context of David Levy’s History of Race and Economics (pp. 85-99)
      Susan Zlotnick

      InHow the Dismal Science Got Its Name(2001), David Levy opens with an analysis of an 1893 depiction of John Ruskin, author ofUnto This Last(1862), one of the most influential nineteenth-century attacks on classical economic theory. Levy turns to this image, the cover illustration ofRuskin on Himself and Things in General(1893), for visual proof that proslavery attitudes are embedded in the early Victorian critique of the free market. The image is a striking one. It represents Ruskin as St. George, doing battle with a man dressed in banker’s garb—replete with spats, waistcoat, and moneybag....

    • John Stuart Mill on Race, Liberty, and Markets (pp. 100-120)
      Falguni A. Sheth

      In the second chapter in this volume, David Levy and Sandra Peart consider classical economics and its revival by the Chicago school and suggest that the racism and pros lavery positions promulgated by such writers as Thomas Carlyle and John Ruskin are closely linked to their anti-free-market—or as Levy and Peart call it, paternalist—attitudes. In opposition to Carlyle and Ruskin stands classical political economist John Stuart Mill, whose antiracism and antislavery positions, suggest Levy and Peart, lie in his free-market economics. They imply that the distinction between Mill and Carlyle applies to comparisons of their modem-day inheritors. They...

  5. PART 2 Neoclassical and Modern Approaches to Racism
    • “Not an Average Human Being”: How Economics Succumbed to Racial Accounts of Economic Man (pp. 123-144)
      Sandra J. Peart and David M. Levy

      Our earlier contribution to this volume showed how racial theorizing was used to attack the antislavery coalition of evangelicals and economists in mid-nineteenth-century Britain. Classical economists favored race-neutral accounts of human nature, and they presumed that agents are equally competent to make economic decisions. Their opponents, such as Carlyle and Ruskin, presupposed racial hierarchy and argued that some people are incapable of making sensible economic or political decisions. They concluded that systematically poor optimizers will be victimized in either market or political transactions.

      In this chapter, we shall show how the attacks on the doctrine of human homogeneity succeeded—how,...

    • One Hundred Years of American Economists on Race and Discrimination, 1881–1981 (pp. 145-181)
      Robert E. Prasch

      Sixty years ago, Gunnar Myrdal observed that American racism represented a pressing dilemma because it coexisted so readily, if somewhat uneasily, with the founding ideas of the United States that it is a “self-evident truth” that “all men are created equal.” Understanding the cause, meaning, and persistence of racial injustice has also presented a dilemma to American economists. Moreover, what they have said and taught on this issue has had important implications for the ideas and ideals of social scientists more generally. As I will show, American economists were often imbued with the ethos of their era, although there were...

    • Racial Discrimination in the Labor Market (pp. 182-204)
      William A. Darity Jr. and Patrick L. Mason

      There is substantial racial disparity in the American economy, and a major cause of this is discriminatory treatment within labor markets. The evidence is ubiquitous and includes careful research studies that estimate wage and employment regressions, help-wanted advertisements, audit and correspondence studies, and discrimination suits that are often reported by the news media. Yet there is broad agreement that there have been periods of substantial progress. For example, Donohue and Heckman (1991) provide widely accepted evidence that racial discrimination declined during the decade 1965–75. Nevertheless, there are some unanswered questions. Why did the movement toward racial equality stagnate and...

    • Liberty and Equality and Diversity? Thoughts on Liberalism and Racial Inequality after Capitalism’s Latest Triumph (pp. 205-237)
      Marcellus Andrews

      Can civil society be a space where free people of divergent and even antagonistic faiths—including tribes in the grip of the delusion of race—live peacefully on the basis of a social contract where all agree to provide for the basic needs of each in the name of equality? No, say the classical liberals, particularly Nobel laureate Friedrich Hayek, whose midcentury warnings about the dangers of centralized government power in the pursuit of egalitarian dreams—socialism—are now seen as the wisdom of a prophet. Capitalism is ascendant in the wake of socialism’s collapse, promising to eliminate mass poverty...

    • The Anatomy of Racial Inequality: A Clarification (pp. 238-256)
      Glenn C. Loury

      InThe Anatomy of Racial Inequality,I have tried to do three things: outline a theory of “race” applicable to the social and historical circumstances of the United States; sketch an account of why racial inequality in our society is so stubbornly persistent; and offer a conceptual framework for the practice of social criticism on race-related issues—criticism that might encourage reflection among our political and intellectual elite and, in this way, promote social reform. In my book, these objectives are subsumed, respectively, in the successive chapters entitled “Racial Stereotypes,” “Racial Stigma,” and “Racial Justice” (Loury 2002).

      Any theory of...

  6. PART 3 Policy Issues
    • Pragmatism, Liberalism, and Economic Policy (pp. 259-274)
      David Colander

      Debates about esoteric topics in history often are conducted because they have importance in setting a context for modem policy debates. The Carlyle-Mill debate discussed in the first part of this book seems to fit that mold. It is important for the modem policy debate about what set of policies is most appropriate to deal with race-associated problems that our society is experiencing. This chapter concerns that modem debate and the contributions that economic reasoning has for that debate.

      Arguments about race, economics, and policy can quickly become complicated. Since the points I want to make with this chapter are...

    • Better Recreational Drugs: Unleashing Technology to Win the War on Bad Drugs (pp. 275-284)
      Vanita Gowda and Brendan O’Flaherty

      The problem with recreational and occupational drugs’ in the United States today is not the drugs we have but the drugs we do not have. We do not have modem drugs that can satisfy the demand for mood-altering and consciousness-changing experiences in a safe and effective way. Instead, we are saddled with old drugs, both legal and illegal, that generally have rather awful side effects—sometimes for their users, sometimes for others, sometimes for both. The current illicit drug situation is particularly harmful to African-Americans, due to the concentration of negative externalities in minority neighborhoods. Clear government policies would probably...

  7. Bibliography (pp. 285-308)
  8. About the Authors (pp. 309-314)
  9. Index (pp. 315-334)