June 13, 2020 Reading Time: 6 minutes
eugenics society

Earlier this month and in response to the ongoing wave of protests over police brutality, the American Economic Association (AEA) issued a statement calling on economists to grapple with the legacy of racism in the profession.

The sentiments behind this statement are simultaneously admirable and yet also susceptible to misdirection. For example, the document charges that economists have only recently “begun to understand racism and its impact on our profession and our discipline” – a charge that several media reports on the statement repeated. 

As David Henderson notes however, this exact line of inquiry was pioneered in a groundbreaking 1957 book on the subject by Gary Becker. As I’ve further documented, several closely related strains of anti-discriminatory research have played a prominent role in the Public Choice subfield for over 60 years. Claims that race remains a subject of neglect within economics research appear to be severely overstated.

That does not mean the profession is free of other dubious records on matters of race though, and if the AEA wants to tackle this subject seriously they must start by looking inward.

Consider the case of Richard T. Ely, the principal co-founder of the AEA in 1885 as well as its first secretary. His name adorned a distinguished lecture given at the AEA annual meeting until it was reportedly dropped earlier this week, and he is still a towering figure in the history of the organization. He remained something of a senior statesman of the AEA until his death in 1943.

Ely was also an outspoken white supremacist who incorporated eugenic theory into his economic writings. Under his leadership, the AEA published openly racist and eugenic “research” including a notorious 1896 pamphlet on “Race Traits and the American Negro.”

Ely’s works frequently expressed overtly racist and eugenic beliefs. Between the 1890s and 1930s, several generations of college students learned economics from Ely’s introductory textbook, one of the first mass-produced instructional works in the discipline. When browsing its pages they were exposed to the white supremacist theory of “race suicide” – a concept coined by Edward A. Ross, Ely’s student and one of his successors as AEA secretary. 

Ross is perhaps best known today for being fired by Stanford University in 1900, which led to an AEA inquiry condemning the violation of his academic freedom and, later, the founding of the American Association of University Professors (AAUP). Much less discussed is the reason for Ross’s firing at the direction of the university’s co-founder Jane Stanford. Mrs. Stanford objected to a racist speech that Ross gave to a labor rally in San Francisco, in which the economics and sociology professor declared “California, this latest and loveliest seat of the Aryan race, shall not become, if we can help it, the theater of such a stern wolfish struggle for existence as prevails throughout the Orient.” In addition to his early leadership in the AEA, Ross is still a celebrated founding figure of the American Sociological Association and the AAUP.

As Ely’s textbook argued, “The race is dying at the top, the ablest and most successful people have the smallest families.” He continued: “The problem lies in the apparent failure of the most efficient individuals,” by which he meant white northern Europeans, “to multiply as rapidly as certain classes of the less efficient.”

In another openly racist passage, Ely’s textbook turned its attention to what he dubbed “the negro problem to-day.” According to Ely, the economic poverty of African-Americans arose “from their shiftlessness, their ignorance, their dependence upon credit advances in the farming districts, and their alarming concentration in a few occupations, some of which – particularly as they practice them – are neither educational, uplifting, nor developmental.”

The AEA co-founder also turned his racial philosophy to the “problem of immigration.” Ely’s textbook preached alarm that American immigration patterns had shifted from Northern Europe and particularly Great Britain to Mediterranean and eastern European origin points. “There can be no doubt about the real gravity of the problem,” his text instructed students. According to Ely’s twisted reasoning, immigrants were the source of many of America’s economic woes: “The immigrant with his relatively low standard of living has driven out the native workman; and most of the immigrants have shown an unfortunate tendency to linger in the cities of the eastern seaboard, swarming in the slums and intensifying all those social evils which have their origins in urban congestion.”

Such sentiments were alarmingly common among the early leaders of the AEA, most of whom were political progressives who envisioned an active role for government in correcting the alleged failures of the free market and uplifting the interests of the laboring classes – provided that those classes were of white European stock. For immigrants and racial minorities however, Ely recommended a toxic mixture of economic paternalism and eugenic planning.

Ely’s white supremacist beliefs transferred into the work of several of his students, including the aforementioned Ross. John R. Commons, another Ely protégé who served as president of the AEA in 1917, even adapted this line of reasoning into a bizarre eugenic rationalization of American slavery. “Just as in the many thousand years of man’s domestication of animals, the breechy cow and the balky horse have been almost eliminated by artificial selection, so slavery tended to transform the savage by eliminating those who were self-willed, ambitious, and possessed of individual initiative,” Commons wrote in a 1907 book on race and immigration. He continued: “Other races of immigrants, by contact with our institutions, have been civilized [but] the negro has been only domesticated.”

Much like Ely, Commons remains an honored figure in the AEA. An award given to economists by the Omicron Delta Epsilon honor society is named after Commons. Its presentation occurs during another distinguished lecture, held biennially at the AEA meeting.

So how has the AEA responded to increased scrutiny of racist figures like Ely, Ross, and Commons from its own historical ranks? Unfortunately, not very well.

Recent books such as historian Thomas Leonard’s Illiberal Reformers have unearthed extensive documentation of how these progressive AEA founders intertwined eugenic theory into their economic analyses. The rediscovery of this ugly side of the professional association’s origins has prompted calls to drop Ely’s name from the distinguished lectureship (see, for example, Alex Tabarrok’s post here).* A similar case could be made for dropping Commons’ name from the honor society award presentation.

Until this year, the AEA has largely downplayed the issue though.

Symptomatic of this problem is an atrocious review of Leonard’s book that appeared in a 2017 issue of the Journal of Economic Literature (JEL), one of the AEA’s own flagship publications. Rather than engage with the extensive evidence that Leonard presented about the role of racism in the organization’s founding era, the essay by Bernard Weisberger and Marshall Steinbaum charged its author with waging a politically motivated attack on progressive economics.

When the subject of eugenics came up, Steinbaum and Weisberger offered a tendentious string of euphemisms that rebranded Ely and Commons’ overtly racist theorizing as mere “exclusionary” or “exclusionist” viewpoints. They then attempted to rationalize the motives behind progressive eugenics by rebranding it a misguided concern for the plight of white laborers in that era. As I documented shortly after the JEL article came out, their assessment was not only riddled with factual errors – it also displayed clear signs of trying to whitewash the appalling racial record of the AEA’s early leadership.

Consider how Steinbaum and Weisberger excuse away Ely’s white supremacist theorizing in a shorter synopsis of their JEL piece for the online journal Democracy:

It’s easy to see where exclusionary attitudes could develop here. By restricting the supply of labor, incumbent workers face less competition for jobs, and employers have fewer outside options, so in turn must compromise with labor’s demands. This was why Ely favored immigration restrictions, collective action to control the birthrate, child-labor bans, and other barriers to entry into the labor market.

Overtly racist theorizing, up to and including eugenic sterilization (euphemized here as “collective action to control the birthrate”), is simply brushed aside as if it were a minor concern, provided that its motives serviced the political causes of (white) labor unions and the progressive left.

We are still at an early point in the AEA’s most recent call for a discussion about racism and the economics profession. In order to understand “racism and its impact on our profession and our discipline,” that discussion needs to look inward though at the organization’s own history. Doing so will require a frank, factual, and historically grounded evaluation of the ongoing legacies of formative AEA leaders such as Ely, Commons, and Ross.

*As of 6/13/2020 the AEA’s website indicates that Ely’s name has been dropped from the annual lecture, although no official announcement explaining the reason for doing so is attached. A cached copy of the site is still available here showing his name remained as of a few weeks ago.

Phillip W. Magness

Phil Magness

Phillip W. Magness works at the Independent Institute. He was formerly the Senior Research Faculty and F.A. Hayek Chair in Economics and Economic History at the American Institute for Economic Research. He holds a PhD and MPP from George Mason University’s School of Public Policy, and a BA from the University of St. Thomas (Houston). Prior to joining AIER, Dr. Magness spent over a decade teaching public policy, economics, and international trade at institutions including American University, George Mason University, and Berry College. Magness’s work encompasses the economic history of the United States and Atlantic world, with specializations in the economic dimensions of slavery and racial discrimination, the history of taxation, and measurements of economic inequality over time. He also maintains an active research interest in higher education policy and the history of economic thought. His work has appeared in scholarly outlets including the Journal of Political Economy, the Economic Journal, Economic Inquiry, and the Journal of Business Ethics. In addition to his scholarship, Magness’s popular writings have appeared in numerous venues including the Wall Street Journal, the New York Times, Newsweek, Politico, Reason, National Review, and the Chronicle of Higher Education.

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