+ All Categories
Home > Documents > Human Capital, Black Poverty and “Radical” Economics

Human Capital, Black Poverty and “Radical” Economics

Date post: 03-Oct-2016
Category:
Upload: bennett-harrison
View: 216 times
Download: 1 times
Share this document with a friend
10
BENNETT HARRISON’ Human Capital, Black Poverty and “Radical” Economics IN HIS RECENT mvmw of “radical economics” in the Iuu~nul of Economic Literature, Martin Bronfenbrenner asserts that “as regards the . . . ‘black‘ problem, radical economists have rallied around Charles I(illingsw0rth’s banner of structural unemployment.”l Structural unemploy- ment-that is, unemployment resulting from the relative technical incom- petence of black workers-leads radical economists, in Bronfenbrenner’s opinion, to the advocacy of “heavy investments in training programs” and education for the nonwhite Such a policy prescription does follow logically from the assumption that nonwhites suffer from high unemployment because they lack the technical skills necessary to effectively perform the increasingly complex jobs found in American industry, There are, however, a growing number of economists-including but certainly not limited to the very same group of young researchers in the Union for Radical Political Economics whom Bronfenbrenner cites-who reject a human capital theory of poverty. That is, they reject the position which attributes the cause of poverty to the alleged personal inadequacies of the poor, rather than to constraints built into the structure of the economy and institutions which prevent poor people from realizing their p~tential.~ Recognizing these factors, the last ~~ * Assistant Professor of Economics, University of Maryland. 1 Martin Bronfenbrenner, “Radical Economics in America: A 1970 Survey,” journal of Economic Literature, VIII (September, 1970), 755. 1968), Document No. P-3868, pp. 91-92. 277
Transcript
Page 1: Human Capital, Black Poverty and “Radical” Economics

B E N N E T T H A R R I S O N ’

Human Capital, Black Poverty and “Radical” Economics

IN HIS RECENT mvmw of “radical economics” in the Iuu~nul of Economic Literature, Martin Bronfenbrenner asserts that “as regards the . . . ‘black‘ problem, radical economists have rallied around Charles I(illingsw0rth’s banner of structural unemployment.”l Structural unemploy- ment-that is, unemployment resulting from the relative technical incom- petence of black workers-leads radical economists, in Bronfenbrenner’s opinion, to the advocacy of “heavy investments in training programs” and education for the nonwhite

Such a policy prescription does follow logically from the assumption that nonwhites suffer from high unemployment because they lack the technical skills necessary to effectively perform the increasingly complex jobs found in American industry, There are, however, a growing number of economists-including but certainly not limited to the very same group of young researchers in the Union for Radical Political Economics whom Bronfenbrenner cites-who reject a human capital theory of poverty. That is, they reject the position which attributes the cause of poverty to the alleged personal inadequacies of the poor, rather than to constraints built into the structure of the economy and institutions which prevent poor people from realizing their p~tential.~ Recognizing these factors, the last ~~

* Assistant Professor of Economics, University of Maryland. 1 Martin Bronfenbrenner, “Radical Economics in America: A 1970 Survey,” journal of

Economic Literature, VIII (September, 1970), 755.

1968), Document No. P-3868, pp. 91-92.

277

Page 2: Human Capital, Black Poverty and “Radical” Economics

278 / BENNETTHARRISON

thing we would recommend is continued primary emphasis on training and education, especially if that emphasis stems, as we believe it does, from a political decision to de-emphasize such things as equal employment o p portunity programs with strong sanctions, job restructuring, reversal of rampant “credentialism,” and substantial direct redistribution of income, wealth, and political power.

In this paper,” we take issue with the traditional view of the causes of black poverty by reviewing a number of recent studies which approach the problem from an entirely different perspective. These studies suggest that educational and training differences do not by themselves contribute importantly to the explanation of the lack of employment opportunities for blacks.

Recent Research on the Cause of Black Poverty Education vs. discrimination. A good deal of current and,

therefore, as yet unpublished research strongly challenges the conventional wisdom which links black poverty to inadequate human capitaL5 Stephan Michelson was the first to show that, in analyzing white-nonwhite income differentials with the 1/1000 sample from the 1960 Census, properly speci- fied microemnometric models do not assign to education the explanatory power that others had presumed.e My own doctoral dissertation on 18 urban ghettoes,’ which utilizes nearly 50,000 interviews from the Surveys of Economic Opportunity (OEO-Census data) and the Urban Emphyment Surveys (BLS data), demonstrates that, after accounting for education2 differences, blacks and other minorities lag behind even ghetto whites- their own neighbors-in such welfare indicators as employment, earnings, and occupational status?

~

4 This paper draws upon comments originally prepared for the New Manpower Researchers Conference of the National Manpower Policy Task Force, sponsored by the U.S. Department of Labor and held in Washington, D. C . on September 24-25, 1970. Many of the individuals whose work is cited here (including Professor Bronfenbrenner himself) were kind enough to comment on an earlier draft. I have only them to thank for any improvements in the discussion, and only myself to blame for any remaining errors of fact or interpretation.

6 Not all of the researchers pursuing these questions would call themselves “radicals”; so much for labels.

a Ste han Michelson, Incomes of Rack2 Mtnurttfes (Washington, D. C.: Brookings Institu- tion, 19687, unpublished manuscript.

7 Harrison, op. dt. 8 This work is also represented in other papers of mine: ‘%ducation and Earnings in Ten

Urban Ghettos,” The American Economist, XIV (Spring, 1970); “Education and Underemplo ment in the Urban Ghetto,” in David M. Gordon, editor, Problems in Political Economy: 1; Urban Perspectlue (Lexington, Mass.: Heath, 1971); “The Intrametropoktan Distribution of Minority Economic Welfare,” r delivered to the 1970 North American Meetings of the Regional Science Association, PKiGelphia, November 8-8, 1970, mimeographed; “Metropolitan Suburbanization and Minority Economic Opportunity,” Urban Institute Working Paper, forth- coming.

a

Page 3: Human Capital, Black Poverty and “Radical” Economics

Complementary Collection / 279

For example, I found that a high school diploma has three times the marginal wage payoff to whites as to ghetto nonwhites, and that the marginal expectation of unemployment is inversely related to schooling for ghetto whites, but not for ghetto nonwhites. Randall Weiss has shown this white-nonwhite “earnings gap” to be remarkably insensitive to adjust- ments for educational quality (measured, for example, by the Coleman achievement sc~res) .~ Finally, a study conducted by Barbara Bergmann and Jerolyn Lyle uses Equal Employment Opportunity Commission and Census data to explain variations in the white-nonwhite “occupational status gap” across 67 industries and 46 cities. These authors conclude that:

Explanations . . . of the digerences which run in terms of differences in circum- stances having little or nothing to do with discrimination do not seem to be valid. VariabIes bearing on the quantity and quaIity of education come out particdarly badly . . . efforts to encourage non-discriminatory behavior of employers will have a bigger pay-off than efforts to improve education, transportation, and all the rest.l0

Quantifying discrimination. In another recent study, Bradley Schiller moves considerably beyond these critical analyses by attempting to assign quantitative magnitudes to the processes of discrimination which most of the researchers cited here believe is the principal cause of poverty.ll Schiller is concerned with class discrimination (“class” being defined by income stratum) versus racial discrimination, as these are manifested through re- stricted access to educational and occupational opportunities. He estimates that, if working sons in black families enrolled in the Aid to Families with Dependent Children program could convert their inherited status12 and their years of schooling into occupational status at the same “rate” that poor (i.e., AFDC-enrolled) white sons do, they would gain 3.32 occupational status points (on an ordinal scale of 0-100, developed by Otis Dudley Duncan13). This conversion represents a measure of the extent of racial discrimination, hoIding “class” constant.

On the other hand, if poor white sons could convert their inherited status and their education into occupational status at the same “rate” that

@ Randall Weiss, “The Effect of Education on the Earnings of Blacks and ‘Whites,” Review of Economics and Statistics, LII (May, 1970).

10 Barbara R. Bergmann and Jerolyn Lyle, “Differences Amongst Cities and Industries in the Occu ational Standing of Negroes in the Private Sector,” Department of Economics, University o f Maryland Project on the Economics of Discrimination, September, 1970, mimeo- graphed.

11Bradley R. Schiller, “Class Discrimination vs. Racial Discrimination,” ReuEew of Eco- nomics and Statistics, LIII (August, 1971).

12 “Inherited status” is defined by parental occupation and education. 13 Otis Dudley Duncan, “A Socioeconomic Index for All Occupations,” in Albert J. Reiss,

Jr., editor, Occupations and Soclal Status (Glencoe: Free Press, 1961).

Page 4: Human Capital, Black Poverty and “Radical” Economics

280 / BENNEITHARRISON

nonpoor white sons do, they would gain 2.74 status points. This is Schiller’s measure of class discrimination, holding race constant.

Finally, if poor black sons could convert their inherited status and their schooling into occupational status at the same “rate” that nonpoor white sons do, they would gain 5.66 status points. This is a measure of the joint effects of racial and class discrimination.

Turning from jobs to schooling, Schiller has applied the same residual estimation technique to the explanation of the educational attainment of poor black, poor white, and nonpoor white sons, and found relatively little racial discrimination. Thus it appears that discrimination in employment is signrficantly more important than discrimination in ed~cati0n.l~

Nonwhite labor force participation rates. Even where statistical analysis does seem at h s t glance to support the conventional wisdom, alternative interpretations are possible. Larry Sawers found that the labor force participation rates of the nonwhite urban poor tend to be positively cor- related with education.16 Structuralists attribute this phenomenon to the alleged skill a person needs more education in order to acquire the skills without which employers will not hire him because they cannot profitably use his (or her) labor services in this “technologically complex” age.

But the positive relation between labor force participation rates and education could reflect a quite different phenomenon. It may well be that increased education increases nonwhite aspirations and, as a result, the rate of nonwhite applications for jobs. Consistently rejected in spite of their potential productivity, these workers return to their homes. (Recall the previously cited evidence from my own thesis that the conditional probabilities of ghetto nonwhite unemployment are statistically insensitive to variations in years of schooling; this was true even for college graduates.) Word of their experience then spreads. The discouragement of those who have made an effort to stay in school yet cannot find a job afterward is

14This conclusion is subject to at least one qualification. If blacks receive education of inferior quality relative to the schooling received by whites, and if this is due to the class discrimination which restricts their access to good schooling, then two things would seem to follow: ( 1) Schiller’s estimates of the importance of class (relative to racial) discrimination are too low, and (2) the estimated extent to which discrimination is manifested through limited access to educational (relative to occupational) opportunity is also too low. Schiller makes these points himself.

laLarry Sawers, The Labor Force Purticdputton of the Urban Poor (unpublished Ph.D. dissertation, Universi of Michigan, 1969).

Arbor: Institute of Labor and Industrial Relations, University of Michigan-Wayne State Uni- versity, 1968).

16This term is ? ue to Charles Killingsworth. See his lobs and Income for Negroes (Ann

Page 5: Human Capital, Black Poverty and “Radical” Economics

Complementary Collection / 281

transmitted to ghetto youngsters, who then either cease looking for work altogether or drop out of school to run numbers or peddle heroin. At this point, we as researchers come along, observe that high school noncomple- tion and labor force nonparticipation are correlated, and leap to the wrong conclusions: that lack of education caused low participation rates and that increased investment in nonwhite human capital could increase participation in the world of work.

Structuralists such as Professor Killingsworth insist that education is increasingly important in obtaining a job. We agree-but not necessarily because of a skill twist. Rampant “credentialism”-the use of educational credentials as a quick and cheap device for screening out socially undesir- able individuals-could also explain the same observed phen0men0n.l~ In fact, a number of scholars are coming to the conclusion that the very concept of productivity has no meaning outside of a specific job (i.e., industry-occupation) context.l8

Even where labor force participation and other measures of labor market behavior are directly related to education and training (especially among the urban poor), is this because of a structural skill twist-that is, genuine productivity differences between workers with different amounts of school- ing-or is it because of the widespread use by employers of discriminating credentialism? This remains an open question. That it is still open ought to induce a greater degree of circumspection among those who believe that, to quote a statement from a recent conference of educators and sociol- ogists in New Jersey, “education may well be the most effective anti- poverty instrument of all.”le

17 S . M. Miller, Breaking the Credentiaki Barrier (New York: The Ford Foundation, 1967); S. M. Miller and Marsha Kroll, “Strate ies for Reducing Credentialism,” Good Gouernment, LXXXVII (Summer, 1970). In a study of West Coast cities during the summer of 1970 for an Office of Economic Opportunity-National Civil Service League project designed to identify those civil service rules and procedures which most often “screen out” the black, brown, and poor from jobs in local government, I found the practice of credentialism to be indeed ubiqui- tous. Civil service examiners asked future janitors to “select antonyms to the word ‘alleviate’.” Meter maid candidates were required to have high school diplomas and to solve complex algebra problems involving cars passing one anothe; on super-highways. See Bennett Harrison, “Govern- ment Employment and the Disadvanta ed, in Manpower Rep& of the President, 1971, Chap,

Urban Institute, 1971), Paper No. 11343. 18 Peter B. Doeringer and Michael J. Piore, Internal Labor Markets and Manpower Analy-

8i.s (Lexin ton, Mass.: Heath, 1971); David M. Gordon, Class, Producthtty and the Ghetto (unpublisfed Ph.D. dissertation, Harvard University, 1971); David M. Gordon, Theories of Pouerty and Underemployment (New York: National Bureau of Economic Research, 1971, mimeographed); James Scoville, “A Theory of Jobs and Training,” Industrial Relations, IX (October, 1969).

19 David N. AUoway and Francesco Cordasco, 2% Agony of the Catles (Montclair, N. J.: Montclair State College Press, 1969).

5; and Bennett Harrison, Public Emp 50 yment and Urban Pooerty (Washington, D. C.: The

Page 6: Human Capital, Black Poverty and “Radical” Economics

282 / BENNETTHARRISON

An Alternative Interpretation of the Demand for Nonwhite Labor Recent papers by Howard Wachtel and Larry Sawers have

yielded (albeit sometimes indirect) evidence of the critical importance of demand variables in explaining black poverty.20 Sawers, for example, found that for a sample of poverty area whites, the greater the relative demand for unskilled workers in a standard metropolitan statistical area, the greater the participation rates of poverty area whites. This is a typical labor supply response. But the conventional wisdom does not hold for poverty area nonwhites; for them, greater demand for unskilled labor is met with lower participation rates.

How can we make sense of this result? Labor force participation rates of poor nonwhites are no higher in areas characterized by unskilled-intensive industries than in areas with primarily high skill-intensive industries; labor force participation rates of poor blacks are insensitive to the skill require- ments of the local labor market. If we insist on retaining the neoclassical assumption that employers’ demand for nonwhite labor shifts monotonically with any increase in the individual’s stock of human capital, then Sawers’ finding does not make sense, for it says that poor urban nonwhites are unresponsive to increases in demand for precisely the kind of labor they have

We can, however, relax the neoclassical point of view and explicitly consider alternative patterns of discriminatory hiring behavior (“If we need some extra help for a while, we’ll hire blacks, but not for our regular jobs,” or “We seldom hire Negroes for jobs from which promotion is customary,” or “The Mayor says we have to get two hundred black faces in here by next month,’’ or “Yes, we hire blacks, but there are firms in our city where you’ll never see a black face”)?l From this perspective, we could not expect to find a strong relationship between the skill structure of demand

to supply!

20 Howard M. Wachtel and Charles Betsey, “Employment at Low Wages,” Department of Economics, American University, April, 1971, mimeographed; Sawers, op. cB. An extraordi- narily comprehensive quantitative analysis of the structure of the demand for low-wage labor of different races and both sexes is presently being conducted by Barry Bluestone. His ex lana- tory variables measure such industrial characteristics as concentration, unionization, yfita%iL:’y, and general educational requirements. Barry Bluestone, The Wage Determinants of t e Wmkzng Poor (Ph.D. dissertation, University of Michigan, in progress).

21 A few neoclassical economists have tried to explain such hiring practices throu h con- ventional economic analysis. The “classic” in this regard is, of course, Gary Becker, T f e Eco- nomics of Discrimination (Chicago: University of Chicago Press, 1957). For an excellent critique of the Becker model, see Michael Reich, “Economic Theories of Racism,” in Gordon, editor, up. cit. Recent neoclassical analyses of discrimination include: Kenneth J. Arrow, Some Models of Raciul Discrimination in the Labor Market (Santa Monica: RAND, February, 1971), RM- 6253 RC; and Barbara R. Ber “The Effect on White Incomes of Discrimination in Employment,” Journal of P o l i t t c ~ ~ o m y , LXXIX ( March-April, 1971).

Page 7: Human Capital, Black Poverty and “Radical” Economics

Complementary Collection / 283 and the participation rates, wages, or unemployment rates of the nonwhite urban poor.

The new approaches to the problem of black poverty all have in common the replacement of the neoclassical hypothesis with a frankly institutional and sociopolitical theory of the demand for labor. Several economists including Bluestone, Gordon, Vietorisz, and myseP2 have discussed this theory in terms of the concept of economic “dualism,” whereby the urban economy is systematically stratified into labor markets between which the mobility of labor is severely constrained-a phenomenon, one suspects which is reinforced by the policies of many government manpower institu- tions and programs.25 This concept plays a central role in the various labor market analyses of Peter Doeringer and Michael Piore, who refer to “primary” and “secondary” labor markets (Bluestone calls them the “core” and “~eriphery”)?~ Barbara Bergmann’s “crowding hypothesis,” which dis-

22 In addition to the aforementioned references, see: Barry Bluestone, “The Tri rtite Econ- omy: Labor Markets and the Working Poor,” Poverty and Human Resources, VI &ly-August, 1970); Thomas Vietorisz and Bennett Harrison, “The Potential of Ghetto Development,” paper delivered to the 1971 Northeast Meetings of the Regional Science Association, Binghamton, New York, March 19-21,1971, mimeo a hed.

23 Peter Doeringer has observer ga t , while Boston’s anti-poverty agency established neighborhood employment centers in the slums to recruit ghetto residents for Boston industry, “many of these jobs pay only $2.00 an hour or less.” Thus, “the main benefits of the system have come from prompt referrals to jobs similar to those already available to the ghetto com- munity.” Peter B. Doeringer, “Manpower Programs for Ghetto Labor Markets,” Proceedings of the Industrial Relations Research Association, December, 1968, p . 9, 17. This lack of u p ward mobility in the placement system may well contribute to what fusinessmen call the “poor work habits” of ghetto dwellers, e.g., tardiness and high quit rates. Such practices as the unwill- ingness of manpower agencies to place qualified hetto workers in higher pa ‘ng jobs are no

deliberate exploitation. “This remark a plies, for example, to the U.S. Employment Service. With

discouraged from sendin Negroes for jobs from which they will be automaticaIly excluded. Thus, U.S.E.S. tacitly a i s the job discrimination which, with a different administrative pro- cedure, it could confront.” Michelson, op. cit., pp. 8-23.

24 To my knowledge, current interest in the relationships between dualism and urban poverty originates with the work of Doeringer, Piore, and their students at Harvard and M.I.T. in the mid-sixties. See, for example, Peter B. Doeringer, with Penny Feldman, David M. Gordon, Michael J. Piore, and Michael Reich, Low-Income Labor Markets and Urban Manpower Pro- grams: A Critical Assessment (Washington, D. C. : US. De artment of Labor, Manpower Ad- ministration, 1969), mimeographed; Michael T. Piore, “On-txe-job Training in the Dual Labor Market,” in Arnold Weber, et al., editors, Public-Prluate Manpower Policies (Madison: Industrial Relations Research Association, 1969); and Michael J. Piore, “Jobs and Training,” in Sam Beer and Richard Barringer, editors, The State and the Poor (Cambridge: Winthrop Press, 1970), reprinted in Gordon, editor, op. cit. The concept of dualism has a much longer intellectual tra- dition than we can properly consider in this paper. It begins, of course, in studies of under- develo ed countries; two classic articles are: Richard Eckaus, “The Factor Proportions Problem in Unierdevelo ed Areas,” American Economic Reulew, XLV (September, 1955); and W. Arthur Lewis, ‘%conomic Development with Unlimited Supplies of Labor,” The Munchester School of Economic and Social Studies, May, 1954. A number of sociologists have, quite inde- pendently of the economists, alluded to the relationship between stratified labor markets and ghetto pove see, for example, Jan Dizard, “Why Should Negroes Work?” in Louis A. Ferman, et 2 editors, Negroes and Jobs (Ann Arbor: University of Michi an Press, 1968); Elliot Liebow, Talky’s Comer (Boston: Little, Brown, 1967); and David Weknan, Putting on

less reprehensible where they are the result of “e ii cient administrative proceEre” rather than

local budgets often being a function o F placements,” writes Stephan Michelson, “local offices are

Page 8: Human Capital, Black Poverty and “Radical” Economics

284 / BENNETTHARRISON

tinguishes between the set of occupations to which blacks have some access and the set to which they have virtually no access at all, represents an interesting bridge between the neoclassical and sociopolitical approaches to the

Conclusions Established economists’ perceptions of the ideas currently

in circulation among “radical” economists and their friends are curiously incomplete and, in many cases, even myopic, In his Journal of Economic Literature review, for example, Bronfenbrenner quite succinctly captures the essential policy position of a number of analysts toward ghetto develop- ment and so-called “black capitalism”:

What is needed, in the radical view, is capital accumulation in black hands on a scale s&cient to permit developmental “big pushes” in several fields at once. Such development should take maximum advantage of input-output linkages between the new black-owned plants. Also, most of these black plants should be owned by their workers, or by the black communities, or by other cooperative groups rather than by individual black capitalists. Black capitalists may merely become exploit- ers in turn, emulating a few antebellum Southern free Negroes who owned slaves themselves.ae

the Pouerty Program (Boston; New England Free Press, for the Radical Education Project, 1989), reprinted in Gordon, editor, op. cit. Other economists whose discussions of labor market segmentation precede (and to a great extent motivate) the current work,hclude: Harold M. Baron and Bennett Hymer, “The Dynamics of the Dual Labor Market, in Gordon, editor, op. cit.; Louis A. Fennan, “The Irregular Economy: Informal Work Patterns in the Ghetto,” Department of Economics, University of Michigan, 1967, mimeographed; Daniel Fusfeld, “The Basic Economics of the Urban and Racial Crisis,” Conference Papers of the Union for Rucfal Political Economics, December, 1968, reprinted in the Reuteur of Black Political Econom ( Spring-Summer, 1970); and David P. Taylor, “Discrimination and Occupational Wage I3i&r: ences in the Market for Unskilled Labor,’ lndustrial and Labor Relations Reukw, XXI (April, 1968).

25 Bergmann, “The Effect on White Incomes. . . .” 26 Bronfenbrenner, op. ctt., p. 756 f. For some examples of recent research on this subject,

see Joel Bergsman, Alternatiues to the Non-Gilded Ghetto: Notes on Different Goak and Strate- gies (Washington, D. C.: The Urban Institute, 1971), Paper No. 113-29; Barry Bluestone, “The Political Economy of Black Capitalism.” in Gordon, editor, op. ctt.; Matthew Edel, “Develop ment or Dispersal: Approaches to Ghetto Poverty,” in Jerome Rothenberg and Matthew Edel, Readings in Urban Economics (New York: Macmillan, 1972); Goeffrey Faux, Community DeueE opment Corporatbns: New Hope for the Inner Cit (New York: Twentieth Century Fund, 1971); Gerson Green and Geo&e Faux, “The Sociay Utility of Black Enterprise,” in William F. Haddad and G. Douglas Pug{, editors, Black Economic Development (Englewood Cliffs: Prentice-Hall, 1969); Bennett Hamson, “A Pilot Project in Economic Development Planning for American Urban Slums,” International Deuebpment Review, X (March, 1968); William K. Tabb, The Political Economy of the Black Ghetto (New York: Norton, 1970); Thomas Vietorisz and Bennett Harrison, The Economic Deuelopment of Harlem (New York: Praeger, 1970); Vie- torisz and Harrison, “Ghetto Development, Community Corporations, and Public Policy,” testi- mon delivered to the U.S. Senate, Subcommittee on Employment, Manpower, and Poverty in BedLrd-Stu esant, June 14, 1971, to be ublished in the Review of Black Political Economy; and MichaeGwdg, “Black Capitalism an{ the Ownership of Pro rty in Harlem,” Economic Research Bureau, State University of New York at Stony B r m r Working Paper No. 16, August, 1970, mimeographed.

Page 9: Human Capital, Black Poverty and “Radical” Economics

Complementary Collection / 285

Yet Bronfenbrenner completely ignores the underlying rationale for this position. In our monograph on the Harlem economy (to cite one particular formulation of an argument common to most of the literature advocating “development” as opposed to “dispersal”), Thomas Vietorisz and I attempt to show that ghetto economic development has the potential for becoming

. . . far more than simply a mechanism for . . . organizing production, generating profit streams, or even creating jobs. . . . Economic development, wherever it takes place, acts as a catalyst of social and political change. Jobs created inside the ghetto are the instruments as well as the objects of this change, contributing to a reduction in psychological and social pathology, an improvement in the “technology” of com- munity organization, increased skill levels, and the re-enforcement of the commu- nity’s political base and potential. Conventional economic analysis treats these social effects as external - incidental to, and not very important in light of, overall economic activity.We believe, however, that economic development of the ghetto is vital because of the social externalities that it can generate - social benefits far in excess of the mere creation of even a considerable number of otherwise sterile work places.n

Similarly, while he admits that “radical analysis” does offer genuine alternatives to the policy conclusions drawn by most mainstream economists, Bronfenbrenner seems to imply that “radicals” arrive at these conclusions by seeing-to quote a private communication from Stephan Michelson- only “different sides of the same problem,” On the contrary I agree with Michelson that ‘‘. . . the set of problems which radical economists deal with is far larger than the subset to which bourgeois economists also address themselves. The whole point is that we are trying to judge economies; they are trying to manage them.’’28

Perhaps the fundamental problem lies in the failure of the profession to comprehend an important shift of emphasis in the work of a growing number of (largely but not exclusively junior) economists. The human capital theoretic approach to anti-poverty policy has reinforced, and perhaps even rationalized, the national myth according to which a worker -any worker-can “make it” in America by “improving himself.” Individual action-and investments in one’s schooling and/or training are the essence of individualistic actions-will, it is argued, continue to provide the key to upward mobility within American society, “just as it has always done in the past.” All of the research described in this survey places a new em- phasis on demand considerations as they relate to black poverty, and

Vietorisz and Harrison, The E c o m b Development of Harlem, p. BB. 28 Bronfenbrenner is also criticized by Michelson for failing to analyze the (admittedly

brief) historical development of the Union for Radical Political Economics, as reflected, for example, in successive issues of the R e u b of Radical Political E c o m i c s .

Page 10: Human Capital, Black Poverty and “Radical” Economics

286 / BENNETTHARRISON

especially on institutional constraints on individual upgrading. What Pro- fessor Bronfenbrenner fails to see, or at least to report, is that it is the political and cultural pervasiveness of these constraints on individual action which motivates our preference for collective approaches to anti-poverty planning and ghetto development-approaches which involve the building of new black institutions together with the restructuring of discriminatory white institutions.


Recommended