Abstract
This paper investigates the historical relationship between the emergence of public choice theory in the 1960s and the problem of racial discrimination. Drawing upon archival research, I argue that foundational public choice scholars brought together four distinct strains of anti-discriminatory theory to grapple with the challenges posed by segregationist public policy instruments during the Civil Rights era. They include (1) the treatment of racial discrimination as regulatory capture, which is typified in the work of Frank Knight and W. H. Hutt; (2) the treatment of discrimination as an efficiency problem, building upon the closely related Chicago school insights of Gary Becker and Milton Friedman; (3) the treatment of discrimination as a constitutional problem, as seen in extensions of the framework of James M. Buchanan and Gordon Tullock; and (4) historical analysis of discriminatory institutions, also as seen in the work of Tullock. Together, the four components provided the basis of a comprehensive economic critique of discrimination that has since been neglected in the literature on the history of economic thought, and that offers far-reaching insights into the academic literature on race and the continued problem of discriminatory institutions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
The relevant body of literature is concentrated around, though not exclusive to, Nancy MacLean’s (2017) depiction of Buchanan’s program at UVA as a covert extension of the segregationist “Massive Resistance” movement in post-Brown v. Board of Education Virginia. Other scholars that cite MacLean often extend or amplify MacLean's charges of racism against public choice. Kimberle Crenshaw (2019, p. 8) accordingly writes that “the public choice paradigm developed at the University of Virginia … linked attacks on a broad range of public institutions (especially public education) with the preservation of American apartheid.” Wendy Brown (2019, p. 62, 194) writes that the “Virginia Public Choice school of neoliberalism” exercised a “deliberate aim … to replace democracy with white rule.” Acknowledging the paucity of direct evidence to support its racism charges, the literature often claims an esoteric derivation of the same. Thus, Crenshaw continues, “the core logic of an entire academic subfield [public choice] was implicitly constituted around assumptions of white supremacy, even as it disavowed any racial intent and animus.” For other examples of recent works that make similar charges and inferences against the Virginia scholars or public choice theory as a whole, see Moreton (2017), Stewart (2018), Schirmer and Apple (2018) and Temin (2018).
For a more recent application of the same argument drawing upon public choice methodology, see Goff et al. (2002).
Buchanan’s invitation for Knight to serve as the inaugural visiting professor in this lectureship series reflects their own shared philosophical interests, dating back to Buchanan’s graduate studies under Knight’s mentorship at the University of Chicago.
In a now-lost letter that is known indirectly from subsequent correspondence, Knight wrote Buchanan in advance of his arrival to announce his intention of lecturing on civil rights issues. Knight expressed some concern about “racists” on the UVA campus who might object to or disrupt his foray into that subject. Buchanan answered to allay his fears, suggesting that campus opinion included a full range of views from the segregationist “citizens councils to active supporters of the NAACP program.” As Buchanan concluded, “regardless of whether or not you share my views on this, there should be no cause for concern about freedom of expression on the whole problem.” See Buchanan to Knight (1957, October 24), housed in the Knight Papers at the University of Chicago.
Frank Knight, Lecture notes for May 9, 1958, Knight Papers, University of Chicago, Box 49.
Ibid.
Nutter to Edgar Shannon, February 5, 1963, and accompanying correspondence, Papers of the University President, Special Collections, University of Virginia, Box 16; “Economic Man and Human Being,” Knight Papers, University of Chicago, Box 51. Nutter also arranged for Harris to deliver an accompanying lecture at Virginia Union University, a historically black institution in Richmond where Harris completed his undergraduate work in 1922. Harris, suffering from advanced stomach cancer at the time, passed away in November 1963. Knight edited portions of his TJC lecture and secured its posthumous publication. See Harris (1964).
See, in particular, Knight’s eulogy for Harris. Knight Papers, University of Chicago, Box 23.
Hutt’s earliest opposition to apartheid appears to date to at least 1937, when he authored a series of letters and columns in the Cape Times and the Cape Argus expressing concerns about the opportunities for political discrimination that appeared to be emerging under the South African government’s attainment of sovereign independence under the Status Act of 1934. Hutt contended that the public had been “hoodwinked” by provisions adopted after the law was passed that imperiled an already-limited extension of the franchise to some members of the Cape’s colored community under colonial rule. Additional laws ostensibly intended to strengthen labor union interests and regulate the emergence of monopolies appeared to contain discretionary provisions that permitted their selective application along racial and religious lines. Hutt predicted that those measures would be used to advantage white trade unions at the expense of blacks, accurately so as the apartheid regime confirmed. See, in particular, the clippings “Prof. Hutt and Our Status”, “Entrenchment,” “Frightening Powers in the Monopoly Bill” and “Professor Hutt’s Reply of August 23, 1937” in Box 23, W.H. Hutt Papers, Hoover Institution.
In a recent work with several historiographical commonalities to the above-noted critics of Virginia School public choice, Quinn Slobodian (2018, p. 173) misconstrues the passage as imparting a racial motive to Hutt’s thesis. As Slobodian tells it, his objection to apartheid really was an objection to majoritarian government, such that “the fact that blacks were the majority population in South Africa made the situation exceptionally perilous, in [Hutt]'s view.” The reliability of Slobodian’s account is undermined by his convenient omission of the very next line, in which Hutt (1964, pp. 115–116) illustrates his critique of unconstrained political majorities with the example of “the majorities in the white constituencies… have wanted to humiliate the non-Whites. Let us be under no illusion on that point".
Hutt to the Sunday Telegraph, writing as “Progressive”, March 29, 1961, Box 14, Hutt Papers, Hoover Institution.
The UVA appointment also was arranged with the assistance of F.A. Hayek. See Hutt to F.A. Hayek, May 20, 1965, Box 7, Hutt papers, Hoover Institution.
Gordon Tullock, Memorandum on Apartheid (ca. 1958), Tullock Papers, Hoover Institution.
Thomas Jefferson Center for Political Economy, Annual Report for 1964. Papers of the University President, Special Collections, University of Virginia, Box 23.
Syllabus for Seminar on the Economics of South Africa, 1966, Hutt Papers, Hoover Institution.
Buchanan to W. Arthur Lewis, July 24, 1965. Gordon Tullock Papers, Hoover Institution; Lewis (1965).
Becker (1959, p. 49) also acknowledges circumstances where employers in a non-segregated business may experience pressure from the general community to adopt discriminator restrictions against minority groups. Such pressures are also subject to collective action problems affecting their enforcement.
Becker (1957). Talk on Discrimination to a Church Group. Unpublished manuscript, September. Gary Becker Papers, University of Chicago.
One important early attempt to situate Becker’s findings within price theory may be found in an analysis of monopoly and competition by Alchian and Kessel (1962), along with accompanying responses by Becker and Martin Bronfenbrenner.
Becker, “Talk on Discrimination”.
Friedman (1955). “Education and the State,” recorded lecture, June 23, in Institute for Humane Studies Miscellaneous Records, Box 3, Hoover Institution.
Friedman to Nutter, March 2, 1959, Milton Friedman Papers, Hoover Institution.
Nutter, G. Warren. Audio Recording, Remarks on Education, Mont Pelerin Society, Oxford, UK, 1959. Mont Pelerin Society Papers, Hoover Institution.
“Free Choice in Schools to be Topic,” Charlottesville Daily Progress, April 23, 1960; Friedman to Yeager, February 1, 1961, Friedman Papers, Box 35. Evidence that Friedman continued to watch the Virginia voucher experiment may be found in his transcribed comments from a 1965 conference in Chicago. While acknowledging that Virginia’s tuition grant system originated in the segregationist backlash to Brown v. Board of Education, Friedman went on to note that “the first request for tuition grants came from some people who wanted to move their children from a segregated to an integrated school.” To Friedman, that observation suggested that the incentives of the voucher mechanism in practice had served to counteract legislative intentions. He noted that UVA professor Rutledge Vining was in the audience for the event and likely was aware of a similar conclusion reached in a statistical analysis of the Virginia tuition grant program the previous year by the TJC under Buchanan supervision. That report contained a conspicuous addendum by Nutter and Buchanan, endorsing the restriction of voucher access “in the case of private schools that exclude pupils on the basis of race.” See Ketchum, Marshall D. and Strunk, Norman, eds. “Proceedings of the Conference on Savings and Residential Financing”, United States Savings and Loan League. Chicago, IL, May 6–7, 1965; Thomas Jefferson Center for Political Economy, 1965. “Report on the Virginia Plan for Universal Education”, Occasional Paper No. 2, p. 19.
G. Warren Nutter, Discriminatory Practices. Philadelphia Inquirer, March 12, 1968.
Note that Nutter’s observation also anticipates the propensity to approach discrimination as a collective mentality in the critical race theory literature.
For a succinct overview of the broader implications of economic discrimination, see Williams (2004).
For a more extensive discussion of Buchanan’s position on racial segregation, see Magness et al (2019).
Tullock to Conrad and Meyer, ca. September 1958, Gordon Tullock Papers, Hoover Institution.
Ibid.
Moes was one of the early departures from UVA’s economics department following political conflict with the administration that began after Edgar V. Shannon took over as the university’s president in 1959. Tullock indicated to Conrad and Meyer that he was responding through his colleague Moes; Moes acknowledges Tullock’s assistance in devising his article’s argument.
References
Alchian, A. A., & Kessel, R. A. (1962). Competition, monopoly, and the pursuit of pecuniary gain. In H. G. Lewis (Ed.), Aspects of labor economics (pp. 157–183). Princeton, NJ: Princeton University Press.
Bauer, P. T. (1959). Regulated wages in under-developed countries. In P. D. Bradley (Ed.), The public stake in union power. Charlottesville: University of Virginia Press.
Becker, G. S. (1955). The economics of racial discrimination. Doctoral Dissertation, University of Chicago.
Becker, G. S. (1957). The economics of discrimination. Chicago: University of Chicago Press.
Becker, G. S. (1959). Union restrictions on entry. In P. D. Bradley (Ed.), The public stake in union power. Charlottesville: University of Virginia Press.
Becker, G. S. (1993). Nobel lecture: The economic way of looking at behavior. Journal of Political Economy,101(3), 385–409.
Bernstein, D. E. (1990). The Supreme Court and “civil rights,” 1886–1908. The Yale Law Journal,100(3), 725–744.
Bernstein, D. E. (1997). Law and economics of post-Civil War restrictions on interstate migration by African-Americans. Texas Law Review,76, 781.
Brown, W. (2019). In the ruins of neoliberalism: The rise of antidemocratic politics in the west. New York: Columbia University Press.
Buchanan, J. M. (1948). Fiscal equity in a federal state. Doctoral Dissertation, University of Chicago.
Buchanan, J. M. (1964). What should economists do? Southern Economic Journal/,30–3, 213–222.
Buchanan, J. M. (1969). Cost and choice: An inquiry in economic theory. University of Chicago Press.
Buchanan, J. M. (1978). University of California Los Angeles oral history interview with Friedrich von Hayek. Los Angeles: Centre for Oral History Research.
Buchanan, J. M. (2005). Three amendments: Responsibility, generality, and natural liberty. Cato Unbound, December 4.
Buchanan, J. M., & Congleton, R. D. (1998). Politics by principle, not interest: towards nondiscriminatory democracy. Cambridge: Cambridge University Press.
Buchanan, J. M., & Tullock, G. (1962). The calculus of consent. Ann Arbor: University of Michigan Press.
Burns, J. (2018). Democracy in chains: The deep history of the radical right’s stealth plan for America by Nancy MacLean. History of Political Economy,50(3), 640–648.
Casey, L. (2017). When privatization means segregation. Dissent, August 9.
Conrad, A. H., & Meyer, J. R. (1958). The economics of slavery in the antebellum South. Journal of Political Economy,66(2), 95–130.
Crenshaw, K. W. (Ed.). (2019). Seeing race again: Countering colorblindness across the disciplines. Berkeley: University of California Press.
Demsetz, H. (1964). Minorities in the market place. North Carolina Law Review,43, 271.
Dollery, B. (1995). Government failure as an explanation for the asymmetric effects of labour apartheid in South Africa. South African Journal of Economic History,10(1), 38.
Egger, J. B. (1994). The contributions of W.H. Hutt. The Review of Austrian Economics,7(1), 107–138.
Farrant, A., & Tarko, V. (2019). James M. Buchanan’s 1981 visit to Chile: Knightian democrat or defender of the ‘devil’s fix’? The Review of Austrian Economics,32(1), 1–20.
Fleury, J. (2012). Wandering through the borderlands of the social sciences: Gary Becker’s economics of discrimination. History of Political Economy,44(1), 1–40.
Fleury, J., & Marciano, A. (2018). The sound of silence: a review essay of Nancy MacLean’s Democracy in Chains. Journal of Economic Literature,56(4), 1492–1537.
Freund, P. A. (1963). New vistas in constitutional law. University of Pennsylvania Law Review,112, 631.
Friedman, M. (1955). The role of government in education. In R. A. Solo (Ed.), Economics and the public interest (pp. 123–144). New Brunswick: Rutgers University Press.
Friedman, M. (1962). Capitalism and freedom. Chicago: University of Chicago Press.
Goff, B. L., McCormick, R. E., & Tollison, R. D. (2002). Racial integration as an innovation: Empirical evidence from sports leagues. American Economic Review,92(1), 16–26.
Greenbacker, J. (1966). Students missed a chance to learn. Daily Tar Heel, March 4.
Halcoussis, D., & Lowenberg, A. D. (1998). Local public goods and Jim Crow. Journal of Institutional and Theoretical Economics,154(4), 599–621.
Harris, A. L. (1964). John Stuart Mill: Servant of the East India Company. Canadian Journal of Economics and Political Science,30(2), 185–202.
Hayek, F. A. (1960). The constitution of liberty. Chicago: University of Chicago Press.
Holcombe, R. G. (2018). A public choice analysis of James M. Buchanan’s constitutional project. In M. James (Ed.), Wagner, R (pp. 577–602). Buchanan. London: Palgrave Macmillan.
Hummel, J. R. (2012). Deadweight loss and the American Civil War: The political economy of slavery, secession, and emancipation. October 1. Retrieved September 1, 2019 from https://ssrn.com/abstract=2155362.
Hutt, W. H. (1964). Economics of the colour bar. London: Institute for Economic Affairs.
Hutt, W. H. (1966a). Civil rights and young “conservatives”. Modern Age,10(3), 231.
Hutt, W. H. (1966b). Unanimity versus non-discrimination (as criteria for constitutional validity). South African Journal of Economics,34(2), 133–147.
Israel, J. (1962). Nonpopulation factors relevant to an acceptable standard of apportionment. Notre Dame Law Review,38, 499.
Kilpatrick, J. J. (1966). Our man at the Golliwog Lounge. National Review,22, 257–258.
Knight, F. H. (1939). Ethics and economic reform. III. Christianity. Economica,6, 24.
Knight, F. H. (1960). Intelligence and democratic action. Charlottesville: University of Virginia Press.
Levy, D. M., & Peart, S. (2019). Towards an economics of natural equals: A documentary history of the early Virginia school. Cambridge: Cambridge University Press.
Lewin, P. (1979). The economics of Apartheid. Doctoral Dissertation, University of Chicago.
Lewin, P. (2000). William Hutt and the economics of Apartheid. Constitutional Political Economy,11(3), 255–264.
Lewis, W. A. (1965). Beyond African dictatorship: The crisis of the one-party state. Encounter,25, 3–18.
Lowenberg, A. D. (1989). An economic theory of Apartheid. Economic Inquiry,27(1), 57–74.
MacLean, N. (2017). Democracy in chains: the deep history of the radical right’s stealth plan for America. Harmondsworth: Penguin.
Magness, P. W. (2015). The American system and the political economy of black colonization. Journal of the History of Economic Thought,37(2), 187–202.
Magness, P. W. (2018). A paradox of secessionism: The political economy of slave enforcement and the union. Public choice analyses of American economic history (pp. 53–68). Cham: Springer.
Magness, P. W., Carden, A., & Geloso, V. (2019). James M. Buchanan and the political economy of desegregation. Southern Economic Journal,85(3), 715–741.
Manhattan Institute. (1983). Hutt: An economist for this century. Manhattan Report on Economic Policy,3(5), 1–11.
Michaels, W. B. (2017). Fifty shades of neoliberal love. In M. Huehls & R. G. Smith (Eds.), Neoliberalism and contemporary literary culture. Baltimore: JHU Press.
Moes, J. E. (1960). The economics of slavery in the ante bellum South: Another comment. Journal of Political Economy,68(2), 183–187.
Moes, J. E. (1961). The absorption of capital in slave labor in the ante-bellum south and economic growth. The American Journal of Economics and Sociology,20(5), 535–541.
Moreton, B. (2017). Kochonomics: The racist roots of public choice theory. Boston Review, August 10.
Mueller, D. C. (1993). The “Virginia school” and public choice. In D. Mueller (Ed.), The public choice approach to politics (pp. 431–442). Cheltenham: Edward Elgar.
Myrdal, G. (1944). An American dilemma: The negro problem and modern democracy. Manhattan: Harper Brothers.
North, D. C. (1966). Growth and welfare in the American past: A new economic history. Englewood Cliffs: Prentice Hall.
Nutter, G. W. (1951). The extent of enterprise monopoly in the United States, 1899–1939. Doctoral Dissertation, University of Chicago.
Nutter, G. W. (1969a). Economic aspects of freedom. In Liberty under law, anarchy, totalitarianism. American Bar Association, Standing Committee on Education About Communism.
Nutter, G. W. (1969b). The strange world of Ivan Ivanov. Cleveland: World Publishing Company.
Nutter, G. W. (2020). In P. W. Magness (Ed.), The strange world of Ivan Ivanov, 50th Anniversary Edition. American Institute for Economic Research.
Olson, M. (1965). The logic of collective action. Cambridge: Harvard University Press.
Ostrom, E. (1967). Strategy and structure of interdependent decision-making mechanisms. Workshop in political theory and policy analysis, Indiana University.
Pauly, M. V. (1967). Bibliography of recent works in non-market decision making. Public Choice,2(1), 105–118.
Peltzman, S. (1976). Toward a more general theory of regulation. The Journal of Law and Economics,19(2), 211–240.
Riker, W. H. (1962). The theory of political coalitions. New Haven: Yale University Press.
Roback, J. (1986). The political economy of segregation: The case of segregated streetcars. The Journal of Economic History,46(4), 893–917.
Roback, J. (1988). W.H. Hutt’s the economics of the colour bar. Managerial and Decision Economics,9(5), 65–70.
Roback, J. (1989). Racism as rent seeking. Economic Inquiry,27(4), 661–681.
Saull, R. (2018). Racism and far right imaginaries within neo-liberal political economy. New Political Economy,23(5), 1–21.
Schirmer, E., & Apple, M. W. (2018). (Un)chaining democracy. Education Review//Reseñas Educativas,25, 1–13.
Slobodian, Q. (2018). Globalists: The end of empire and the birth of neoliberalism. Cambridge: Harvard University Press.
Sowell, T. (1981). Markets and minorities. New York: Basic Books.
Stewart, J. B. (2018). The far right’s toxic forbears: Super-wealthy secessionist slaveholders. History News Network, February 25.
Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science/,2–1, 3–21.
Suitts, S. (2019). Segregationists, libertarians, and the modern “school choice” movement. Southern Spaces.
Temin, P. (2018). The vanishing middle class: Prejudice and power in a dual economy. Cambridge: MIT Press.
Thornton, M. (1994). Slavery, profitability, and the market process. Review of Austrian Economics,7, 21–47.
Tullock, G. (1967). The political economy of slavery: Genovese and Davis. Left and Right,3(Spring–Summer), 5–16.
Vanberg, V. J. (2008). On the complementarity of liberalism and democracy: A reading of FA Hayek and JM Buchanan. Journal of Institutional Economics,4(2), 139–161.
Williams, W. E. (2004). Discrimination. The encyclopedia of public choice (pp. 477–481). Boston, MA: Springer.
Wilson, F. (1972). Labour in the South African gold mines 1911–1969. Cambridge: Cambridge University Press.
Wright, R. E. (2017). The poverty of slavery: How unfree labor pollutes the economy. Berlin: Springer.
Author information
Authors and Affiliations
Corresponding author
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Magness, P.W. The anti-discriminatory tradition in Virginia school public choice theory. Public Choice 183, 417–441 (2020). https://doi.org/10.1007/s11127-020-00794-6
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11127-020-00794-6