Essay Reviewfc *Discrimination in Economic Theory andDevelopment Studies in Southern AfricaD. G. ClarkeDepartment of Economics, University of Rhodesia, Salisbury.It is now fifteen years since the publicationof Professor Gary Becker's seminal contributionto the economics of discrimination and segre-gation (The Economics of Discrimination,Chicago University Press, 1957). Since thenempirical and theoretical inquiries on raceand economics have blossomed in both Ameri-ca and Britain, as a by-product of growingpublic concern with the problems of racialand ethnic discrimination; consequently suchproblems, and their impact on economic andsocial equality, command considerable attentionin most of the social sciences.1The recent publication of a new edition ofBecker's book*, however, prompts the reflectionthat economists in Southern, Central and EastAfrica have been much slower in following upthe explicit theoretical considerations suggestedin the models and methodology employed inthis field. The reason for this is twofold. First,there has been a general neglect of discrimi-nation in the body of conventional economictheory; secondly, the particular economic cir-cumstances of Southern Africa have tended tofocus attention on other problems. The purposeof this review, therefore, is to examine thesefactors and so throw light on the generaltheoretical importance of Becker's recent con-tributions and their potential significance forŁBECKER, G. S. 1971 The Economics of Discrimi-nation, 2nd. edit. Chicago, University of ChicagoPress, 167 pp.the economic analysis of the problems of dis-crimination and segregation that are all per-vasive in South Central Africa.2NEGLECT IN ECONOMIC THEORYA review of economic theory and the focusof economists' attention between the publica-tion of Adam Smith's Wealth of Nations in1776 and the mid 1950s reveals a neglectof phenomena such as discrimination and segre-gation to an extent that would indicate to anuninformed observer that in past times theseproblems were non-existent or unimportant.The only significant contributions in this periodwere from T. E. Cairnes and F. Y. Edgeworth,who challenged the widely accepted theoriesof perfect competition.3 Cairnes's doctrine of'non-competing groups' is a forerunner of thetheory on segregation in the labour market, butit is extremely rudimentary in comparison torecent theorectieal formulations.4 On an em-pirical level Cairnes interested himself in theeconomics of institutionalized slavery in theSouthern United States, and his publicationThe Slave Power was an attempt to portraythe inherent economic disadvantages of slaveryas a technique of production.5 This subjectalso has received increasing attention of latefrom econometric historians interested in quan-titative evaluations of the profitability of slaveryin the ante-bellum South.6 Edgeworth's con-85cern was with sex discrimination in, the labourmarket; and his principal contribution to theeconomics of discrimination was his 'crowdinghypothesis' which has recently been the basis ofeconometric studies by Bergmann.7Finally, the theoretical attack upon the classi-cal free-market doctrines came in the 1930s andcentred on price fixing, market-sharing, collu-sion and other market imperfections; and thisattack has laid the groundwork for a similarchallenge by Thurow8 to Becker's competitivemarket model. Also it has only been in recentyears, since Becker's first published contribu-tion, that theorizing, model-building and em-pirical testing of hypotheses concerning dis-crimination have come to the forefront ofeconomic analysis.This by-passing of a significant social prob-lem was due to the consistent undervaluationof discrimination as an economic variable. Thisin turn led to a partial treatment of the issuein economic analysis; and it is only recentlythat the discrimination factor has come to theforefront of theoretical studies, as a directconsequence of the increasing interest in racerelations throughout the world since theSecond World War.Explanations of the Neglect.The theoretical neglect of the discriminationvariable in economic analysis has been due to avariety of causes. Becker, for instance, suggeststhat economists, being conscious of the propertyrights of sociologists and anthropologists whopioneered work in race relations, have tendedto shy away from this 'non-economic' domainin the interests of academic division of labour.More convincing is his observation that 'theinability of economists to deal in a quantitativeway with non-pecuniary motives could havebeen a sufficient deterrent. Also, because of thelack of ca systematic theory with which to in-terpret the economic differentials between ma-jority and minority groups', the economist hasin the past only taken a tangential interest inthe economic basis of racial discrimination.9Kenneth Boulding, in contrast, prefers toclaim that economists' interest in poverty anddiscrimination have simply taken second placeto the questions of exchange and pricing theorythat have preoccupied theoretical economics.He argues that the 'interest in exchange even-tually outweighed the interest in poverty andwealth, and that economists lost interest inpoverty as they gained interest in exchange'.Furthermore, because economic science, atleast in the Western world, had its roots in theJudaic-Christian world, its affiliations, subjectmatter and attentions tended to be orientatedby a 'subculture of economists' to serve theneeds of intellectual middle-class groups at theexpense of answering problems for a largely-lower class non-white world.10 Also there is aninherent individualistic bias in the frameworkof orthodox economics stemming from classicaland bourgeois economic philosophies with theresult that the 'economics of the group' hasfallen into neglect. Inevitably, therefore, eco-nomics developed 'an insensitivity to the prob-lems of identity, especially group identity,which are so important now'1'Limitations of Marxist AnalysisAlthough the Marxist break with the classicaltradition was partly a revolt against the indi-vidualistic preoccupations of liberal economists,the Marxist diagnosis was quite inadequate.The application of class analysis to economic,situations compounded by racial overtones hasgenerally proved unwieldy and cumbersomewith the real relationships of the problem tend-ing to become obscured by the need to 'fit' theexisting order into a previously defined frame-work.In Rhodesia, Arrighi's treatise on the politi-cal economy of black and white economic re-lationships since 1900 is an outstandingexample of these theoretical and empirical diffi-culties.12 One reviewer has accepted the va-lidity of much of Arrighi's argument,13 but the'analytic and prescriptive value of this Marxistmodel is less than that of the technically rigor-ous theoretical structures of economists, likeThurow, who have addressed themselvesdirectly to the economics of discrimination. For,it is not just that there are weaknesses in classtheories when applied to problems of discrimi-nation in less developed economics, but ratherthat the complexities of inter-racial relation-ships in the socio-economic fabric require thatexplicit, and not merely peripheral, treatmentbe given to the race factor if the elucidationis to be consistent with reality.86r *rLimitations of Classical Economic TheoryClassical economic theory has also had theeffect of playing down the importance of dis-crimination and segregation in the real worldby setting up for analysis theoretical systemsrepresenting economic arrangements which bearlittle relation to the empirical world. Theassumptions of the competitive market system,so long an espoused typology of the idyllic eco-nomic order, have explicitly ignored ethnic orminority problems by holding to premisses thatmaintain homogeneity of labour assumptions.Nearly all equilibrium models and income dis-tribution theories, except for some notable ex-ceptions in the last fifteen years,14 ignore racialdifferentiation and segregation in their laboursupply and demand functions and, in addition,rest explicitly or implicitly on the assumptionof entrepreneurial profit maximization. Theassumption of homogeneity of labour is radi-cally at variance with actual conditions, whilstthe premise that the capitalist operates solelyon the principle of profit maximization pre-cludes the incorporation of other more rele-vant decision-making criteria into the welfarefunction. This criticism is particularly applic-able in cases where owners of capital assets,whether private or public, distribute their re-sources in accordance with non-pecuniary ornon-market objectives. Undoubtedly, as Beckerhas demonstrated, these extra non-monetaryvariables may be catered for within the tra-ditional competitive market framework: buttheir long exclusion can be legitimately citedas a contributory reason for the neglect of prob-lems of discrimination in the literature beforethe Second World War.Beyond this, there has been the belief, on thepart of those propagating the virtues of thepure market system, in the ability of the 'in-visible hand' to correct short-run maladjust-ments. In the long run, emphasis has beenplaced on the equalizing forces of competitionto eradicate factor discrimination and economicsegregation. The case of whether or not theeconomic system has in-built forces to counter-act any tendencies towards discrimination hasbeen raised by Kenneth Arrow who concludedthat if the logic of the competitive system isaccepted, discrimination should still be under-mined in the long run, at least in the caseof employer discrimination.15 However, itshould be noted that the assumed equilibratingpower of the free market is still a contentiousand unresolved matter. Moreover, it is not thelogic of the competitive system that is reallyunder question, rather, it is the basic assump-tions of the classical model that are beingattacked.Underestimation of Role of GovernmentSince, too, government is an importantsource of discrimination, especially in SouthernAfrican economies, any model minimizing thesignificance of centrally directed policies willtend to understress the existence and effects ofdiscrimination. Clearly, for South Africa andRhodesia, this is a major consideration. Only inrelatively recent years, since the Keynesianrevolution, has the role of central governmentin the economic management of resource allo-cation been accorded its proper place in eco-nomic theory. With the growth of the publicsectors in both Rhodesia and South Africa, itcan be expected that the influence of policiesfor discrimination initiated or operated bygovernments will become even more important.However, even with recognition of the economicsignificance of governmental sectors, there is alack of knowledge about the vital issues in-volved in the control of disadvantaged minori-ties by governments who usually act on behalfof the numerical majorities or the economicallypredominant. In fact, even Becker's workstresses discrimination as it arises via themarket and pays less heed to governmental andnon-market discrimination. The latter set ofproblems was first analysed in 1969 by Thurowwho specifically isolated the effects of govern-ment discrimination, monopolistic practices ofthe dominant group and the contribution ofmarket imperfections to the development andperpetuation of discriminatory behaviour.8Finally, strong pressure in academic circlesin the past to restrict economic analysis to'positive economics' has tended to reduce theprofessional creditability and popularity ofeconomic works that made explicit value judge-ments or assumptions of a normative nature.The strong attacks on the assumed value-freenature of orthodox economics has had theeffect of stimulating greater concern in eco-nomic studies with prevailing socio-economicand political goals, not least of which has to dowith the desirability, equity and economiccosts of discrimination and segregation.16 By87calling into question the relevance of orthodoxdoctrine, criticizing the inappropriateness of afully operative market system and citing thedangers of misplaced aggregation in economicmodels and economic policy-making, develop-ment economists have been able to achieve aconsiderable shift in attitudes towards what wereoften previously regarded as 'non-economic'problems.Recent ImprovementsEconomic theory has also been improved bythe aid of more advanced quantitative tech-niques. The development of sophisticated eco-nometric techniques has enabled analysts todisaggregate variables as well as specify moreaccurately the quantitative values of functionalrelationships. Measurement techniques have,therefore, been an important tool for assessingthe impact, cost and effects of discriminationand segregation and thereby give greater rigourand precision to what was previously based ona priori reasoning, theoretical deduction andintuitive knowledge.17 The use of the Cobb-Douglas production function, to assess the ex-tent to which discrimination is present in aneconomy, is a case in point; the first applicationof this methodology was in fact performed inSouth Africa in 1943 by Browne, and since thenat least two other similar studies have follow-ed.18 No published production function studies,however, are available on the Rhodesianeconomy, although racial income distributionpatterns have been investigated.19In conjunction with the econometric ap-proach improvements in the coverage, presen-tation and quality of statistical data have beeninstrumental in the formulation and testing ofhypotheses on discrimination. The advantagesof more refined methodological inquiries andbetter data can be seen by a comparison ofearly works with more recent research.20 Theformer are characterised by a rudimentary sta-tistical base, loosely formed hypotheses and ten-tative and shaky conclusions; the latter, by con-trast, have a solid statistical analysis, in wellformed hypotheses, and reach meaningful andspecific conclusions.The beneficial effect of quantitative andeconometric studies are now being felt inSouthern Africa. An example of improvedtechnique can be seen by a comparison ofLombard's analysis in 1962 of racial incomedifferentials with the more advanced treatmentand techniques used in Spandau's investiga-tions.21 In many respects Becker needs to berecognised as a pioneer in this regard. As aconsequence, the costs and benefits of alterna-tive policies, and even economic systems, canbe subjected to more intensive and fruitfulstudy before policy decisions are made.22 Thus,the policy orientation of modern day economicsis another contributing factor to the recentupsurge in the economics of discrimination.Lastly, there is the growing recognition thatdiscrimination is closely interwoven with thestill unresolved problems of poverty and under-development in the advanced and less developedcountries respectively. Estimates of the eco-nomic costs of discrimination are, therefore,eagerly sought after by political interest groups,social and economic planners and academicsalike, not only to point out the welfare lossesand gains in existing socio-economic arrange-ments, but also to estimate least cost optionsof implementing efficient segregatory and dis-criminatory policies, as for example, hasoccurred in South Africa.23Changing attitudesThe historical neglect of the race variablein economic theory has been counteracted bythe changing pattern of world race relations; inthe last two decades this has had a profoundeffect on social and economic theory' and hasfinally brought the discrimination componentof socio-economic systems to the forefront ofpolicy and analysis.Undoubtedly, one of the most importantstimulants to an increasing awareness of prob-lems in race relations has been the rise in thepolitical consciousness of large sections of thenon-white world both within the confines ofthe advanced countries, particularly the UnitedStates and Britain, and in the nations of theless-developed world who have recently ob-tained political independence from formercolonial powers. In Southern Africa politicaltendencies towards racial segregation have high-lighted the conflicts between the governmentaldemands for separation and the economic costsof these policies in terms of reduced rates ofgrowth, bottlenecks in the supply of skilledlabour, structural inflation and widening in-come differentials between rich and poor. InRhodesia, the recent policies of promoting rapid88kmnon-selective European Immigration, enforcingthe restrictive and discriminatory employmentprinciples of 'Rate for the Job' and 'No JobFragmentation' throughout the industrial struc-ture, and the economic effects of legal inequali-ties are being increasingly examined in thelight of their economic costs to the communityat large and economic minorities in particular.The cjuest amongst minorities, numerical oreconomic, for political power arises out of arecognition that for economic development orwelfare to be achieved or sustained, gains mustbe secured not only In the economic fields ofprivate enterprise but also in the public domain,its institutions and government as well. Coupledwith a growing public condemnation of themorals and ethics of discriminatory and segre-gatory practices this has led to the implemen-tation of stronger equity considerations in theformulation of public policy and greater useof the legislative framework, aiming at a moreequitable treatment for all. Notable examplesof the latter are the 'War on Poverty', CivilRights Legislation and Fair Employment Lawsin the United States and the Race RelationsAct in the United Kingdom. In contradis-tinction to those trends are other legislative de-vices and administrative practices, particularlyin Southern Africa, designed to maintain socio-economic and political divisions betweendifferent racial groups. Despite these counter-currents the general drift of world opinion isheavily weighted against discrimination and itis a result of this viewpoint that the UnitedNations Organization, and its affiliated bodiesand nations, have sought to expose discrimina-tory practices in the political as well as theeconomic sphere.The present directions in research by indi-viduals, institutions, study groups, churchbodies and others can be expected to ensureincreasing rather than decreasing attention be-ing given to the economics of the race factor:this tendency is already having its impact oneconomic theory as the works of a number ofauthors already indicate.24THE CASE OF SOUTHERN AFRICAThe economic theory on discrimination hasnot been widely known or used in developmentstudies in Southern Africa, an area where, atfirst glance, one would expect it to have sub-stantial relevance. Apart from localized reas-ons, such as the general lack of research in eco-nomics in Rhodesia, there are two importantconsiderations in less developed countries ofthe Southern African type which militateagainst the widespread application of the theoryof economic discrimination.First, because of the generality of theassumptions of most models, the specificity ofindividual socio-economic situations is likely tobe at variance with the general properties of theembyronic theory of discrimination. The theo-rizing on discrimination and segregation fromBecker in 1957 to Arrow in 1970 has beenbased on the structures of advanced economics.The economic morphologies of less developedcountries are radically different, and It is there-fore not surprising that structural differencesbetween advanced and underdeveloped econo-mies preclude the direct relevance of theoryoriginally formulated to analyse and deal withproblems flowing from a different set of socio-economic arrangements. There Is then a needfor the development of specific models to dealwith the specific situations of specific underde-veloped economies.Secondly, the economics of discrimination is inmany ways, at present, a special theory of distri-bution. Yet, in Southern African economics, evenwhile distributional problems are Importantand tend to be sensitive areas of social conflict,the main economic policy concern is still one ofgrowth. Distribution considerations, especiallythose across race boundaries in the direction ofthe underprivileged groups, tend to be ignoredin the welfare criteria used by planners andpolicy makers.25 The existing conceptions of'development' used by policy-makers in South-ern Africa are almost synonymous with theacademic economists' conception of 'growth'.The current pre-occupation with that sacredcow 'the rate of economic growth' has shiftedthe focus of debate from the Imperatives ofdistributional equity, on the tenuous assump-tion that the process of economic growth per sewould, through the benevolent and 'InvisibleHand' of the market, correct racial income in-equalities.There are other specific considerations asŁwell which have led to a limited applicationof the theory of economic discrimination inSouthern Africa. Take, for instance, the oper-ation of some of these factors in Rhodesia.First, the assumptions of the theory have notalways been relevant to Rhodesian circum-89stances. Another limiting influence has beenthe paucity of data on the important variablesthat need to be incorporated into the models.For example, adequate wage earnings data areavailable by race for all major industrial sec-tors; but before use can be made of multipleregression analysis, to estimate Becker's marketdiscrimination co-efficients, cross-sectional dataon the occupational and skill structures of thelabour force are required. These data are notavailable, and the best estimates are outdated,unreliable and partial. Other cross-sectionaldata to account for the influences of variablessuch as age, sex and education are also lacking.Even the available data on population, un-employment, incomes, and wages must be treat-ed with exceptional care in order to accountfor conceptual differences between statisticaland economic interpretations and those of thereal world. Furthermore, data are often col-lected under a number of different definitions.Thus, to calculate black/white income differ-entials in the modern sector, allowance must bemade for the fact that data is primarilygathered under the categories of 'African' and'European'. The former incorporates manypersons in the subsistence sector (also ill-definedand the numbers of which are not accuratelyknown) whilst the latter incorporates Asians,Coloureds as well as Whites.Rhodesia's social plurality implies the exis-tence of a number of discriminatory relation-ships that could only adequately be handledin a three or four sector model. Becker's model,and most others based upon it, operate withtwo sectors. The complications and permuta-tions induced by the inclusion of an additionalsector may easily render quantitative studiesvirtually impossible. Thus, in multiple re-gression studies, or production function studies,where three or four partial regression co-efficients are derived, the incidence of multi-collinearity and increased difficulties of compu-tation may lead to fallacious conclusions.SECOND EDITION OF BECKER'S BOOKThe second edition of The Economics of Dis-crimination has come after fifteen years offertile work, but has little of substantial signifi-cance to offer which was not already presentin his earlier work. The only changes are theinclusion of three addenda:1. An analysis of trade union discriminationin the labour market (originally publishedin 1959)2 with primary emphasis on priceand non-price methods of rationing entryinto unions, the effects of nepotism and thecosts of discrimination to unions;2. a discussion on the relationship betweenmarket discrimination and educational in-vestment (originally published in 1962)26;and3. a defence of empirical estimates regardingthe relative occupational position of Negromales during the first fifty years of thetwentieth century (originally published in1962).The first two of the above issues have a directrelevance to Rhodesia. Unskilled (Black) andskilled (White) unions in Rhodesia present asegregated labour front and, with the exceptionof a few 'multi-racial' unions, bargain on aracially divisive basis with White EmployersOrganisations and White capitalists. Similarly,in the educational sector, which is under theeffective control of government agencies, segre-gationist policies favouring a discriminatory in-vestment of public capital resources have animportant effect on the differential market re-turns to Black and White labour. Both theseaspects are at present under-investigated areasof the Rhodesian economy.Since Becker has left his basic propositionsunaltered, there is some merit in criticallyevaluating his model, particularly since thereis implicit in Becker's modified restatement ofhis theory a number of assumptions which arewidely accepted in the White societies ofSouthern Africa. These are, firstly ,that theperfect market system is an appropriate con-ceptual framework within which to examinethe problems of discrimination; secondly, thatdiscrimination as exercised in the economy issimply a rational ordering of consumer prefer-ences undertaken at an economic cost to thediscriminator group in an attempt to trade-offreal income returns against psychic utilities ob-tained from segregation; and thirdly, the im-plicit denial, in "the largely unmodified structureof the second edition that there is any legiti-macy to critiques and counter-arguments putagainst Becker's original formulation and thatby extension social scientists in Southern Africashould continue to adopt an analytical positionakin to Becker's free market model.904 fBecker's theory has a number of deficienciesas an explanation of the economic motives forracial discrimination and the economic conse-quences of discriminatory behaviour. Thoselimitations relate principally to the theoreticalframework of Becker's analysis, the relevanceof his model to the empirical world especiallyin the Southern African case, and the narrow-ness of perspective in his model about theorigins, consequences and mechanisms of eco-nomic discrimination in the real world.Becker's emphasis is heavily weighted on theside of those factors relating to market dis-crimination. The explicit repercussion of thisapproach is to divert attention away from thosenon-market forces that cause and help to per-petuate discrimination. A non-institutionalapproach must of necessity be partial and ex-clude a whole host of relevant variables. Howfar can it legitimately be assumed that politi-cal and institutional determinants are ofsecondary importance when these factors setthe framework in which different social groupsmust operate? Discriminatory legislation andunequal political power between racial groupsas existing in Southern Africa can be seen tobe of fundamental significance in countrieswhere economic discrimination is highly visible.Thus, the basic theoretical structure withinwhich Becker chooses to examine die problemcannot be regarded as one of general applic-ability and validity. This does not mean, how-ever, that a change in political regime, or are-design of legal systems to make laws, atleast in de jure terms, 'non-racial', will in itselfreduce the intensity of discrimination againsta minority group. Law itself is not a sufficientdeterrent to discriminatory behaviour andmay, like the Industrial Conciliation Act, beframed with non-racial provisions and operatedwith the explicit purpose of facilitating de factodiscrimination in the market place.The thesis that discrimination involves a costto the discriminator also needs closer exam-ination. As Thurow points out, racial dis-crimination is not simply demanding a premiumto associate with another group: 'The discrimi-nator may want to work with, buy from, or hireNegroes, but he insists on specifying the re-lationships under which the two parties willmeet and how the Negro will respond'.27 Thisobservation is highly pertinent to socio-eco-nomic systems in which the dominant, con-trolling group must, for economic survival andwelfare, enter into economic relationships withthe disadvantaged group. To maintain controland to maximize its own welfare function, thedominant group usually seeks both economicdomination and economic gain from thatdomination.Becker's resort to a utility function that hasas one of its constituent elements the mainten-ance of a 'physical distance' from the disad-vantaged group is a narrow perception of theissue involved. Thurow, who suggests that a'social distance' concept may be more relevantand could lead to a different set of actions, iscloser to the empirical world, although evenhere, there is a slighting of the importance ofthe economic factor. Thus, it may be that allthree influences, 'physical distance', 'social dis-tance' and 'economic distance', play an import-ant part in the over-all motives for, and patternsof, discrimination and segregation. Singularreliance on any one could lead to a partialand incomplete insight into the nature of socio-economic discrimination.The concept of the 'taste for discrimination'used by Becker suffers from similar limitations.Dewey criticises the concept of a single indi-vidual 'taste for discrimination' and claims that'most whites have not one but many tastes fordiscrimination which are not necessarily con-sistent'.28 By extension it can be argued thatgroups, governments and employers may notdiscriminate on one occasion but may do so indifferent circumstances or at different pointsin time. Further, because the 'taste for dis-crimination' is assumed to involve a cost, thediscriminator must forfeit income if he wishesto discriminate. On this assertion Thurowcomments pertinently: 'if this deduction iscorrect, empirical impressions are amazinglyfalse. Do the whites of South Africa or theUnited States really have a lower standard ofliving as a result of their discrimination?'19 Theimportance of whether the 'taste for discrimi-nation' involves the discriminator in real in-come gains or losses can be seen where policy-makers are interested in securing changes inexisting discriminatory situations. UnderBecker's theory, discrimination is an exerciseof consumer preference and can only be re-duced by changes in consumer tastes andpreferences. Thurow's analysis stands in contra-distinction to this view, since it is the essenceof Thurow's theory that discriminators gainfrom discrimination. Implicit in this latter91proposition is the idea that a government couldtax these gains thereby making it unprofitableto discriminate. On the crucial question of howa taste for discrimination changes, Becker shedsno light and so his theory has little predictiveor prescriptive content. For economists andpolicy makers interested in the efficient and op-timal allocation of resources in a dynamic con-text, Becker is only able to offer a specificationof existing disequilibrium with few suggestionsfor correcting the maladjustments.Becker's dichotomization of White capitaland labour interests being in conflict within thediscriminating group need not always be so inpractice. Although the separation of the dis-criminating group into capitalists and labourmakes it possible to more accurately identifygainers and losers and estimate gains and losses,there is little reason in Becker's analysis, apartfrom assertations to the contrary, to supposethat White capital and White labour, throughnon-market motives or pressures, would not orcould not collude to enforce discrimination invarying degrees. Becker's theory fails to identi-fy the important mutual interests that Whitecapital and White labour have in the status quowhich cause the former group to subordinatepersonal interests to group interests: or, if White-capital were unwilling to discriminate volun-tarily, which cause mediatory influences of thepublic sector to operate to establish a discrimi-natory equilibrium.. The White capital-labourconflicts in Southern Africa are a clear exampleof this latter behaviour pattern.Melvin Reder raises another objection toBecker's model and argues that it has limitedapplicability since it only refers to large groupsof persons: 'For if Negroes collectively refuseto deal with discriminators they may raise themarginal cost of discrimination sufficiently toalter the relative demand for their labour ser-vices and thereby increase their incomes':Becker, 'neglects the fact that proposals foreconomic retaliation against discriminators al-most always envisage collective action',30 Byconcentrating on individual expression andplaying down the importance of social pressures,groupings and interest groups, Becker is ignor-ing the potential power of minorities to engagein collective action for retaliatory or ameliora-tive purposes. This feature has, however, beenaccounted for by Anne Krueger in her ex-tension of Becker's model where, in addition.an allowance is made for collective counter-action by whites.31It would also, in the light of wide differen-ces in history, circumstances and practices, bedifficult to claim a universality for Becker'smodel. Certainly, some of the concepts andpropositions may transcend national frontiersand the basic economic principles used could beapplied to environments other than the UnitedStates from which source much of the inductiveverification originates. But this is not the sameas providing a generalised theory applicableat all times in all conditions and to manydifferent socio-economic institutions.Another fundamental shortcoming ofBecker's theory when seers from a policy view-point is that it is couched in terms of a two-sector model. Even in the United States thereexist a plethora of minority groups, of differingeconomic status, concentrated in diverse re-gions or urban centres, with a variety of prob-lems facing them, not all of which are similar,and who are subject to a variety of forms andintensities of discrimination and segregation.To argue that minority groups other thanBlacks, who feel the brunt of economic dis-crimination, are a marginal proportion of thetotal population and can be ignored is in thefirst instance acceptable if the objective is toisolate the main areas of discrimination againstBlacks. But this procedure tends to ignore thefact that where a discriminator is able to gainfrom discrimination against a. number of dis-advantaged groups he may well be influencedby the extent to which one group is weakerthan others, or will accept a greater intensityof discrimination. The existence of a trade-offbetween Blacks and other non-whites may be avery real factor in influencing the wage and em-ployment opportunities of smaller minorities.In countries with plural populations, as inSouth Africa, Madagascar, East Africa orRhodesia, the need to demarcate three or moregroups is paramount. It cannot be guaranteedthat the extension of Becker's results and analy-sis to a three or four sector model would yieldthe same type of employer and employee dis-criminatory behaviour patterns, maximizingposition for the dominant discriminator, or re-lationships between capitalists, labour, govern-ment and trade unions. Specific recourse tothe institutional environment is needed in eachcase. This is particularly relevant in societieswhere racial groups are at different stages of* *V *-92I Aeconomic growth and where social, economicand political policies of governments are basedon racial lines with the declared purpose of re-taining discrimination and segregation. Gener-al theories, of the two factor, two societyvariety, used by Becker, are weak on this score.A related problem area concerns the effectsof government revenue and expenditure poli-cies on the real disposable incomes of differentracial groups especially where these groupsare identifiable with markedly discrete incomelevels. Tax, welfare and fiscal policy changes bygovernment may inadvertently, or otherwise,lead to discrimination and so increase incomeinequality between the races. These issues axelargely ignored by Becker and arise out of hisexclusion of a public sector from his generalmodel.It has also been argued by Krueger that theredo exist economic motives to discrimination andit is not necessary to rely on the existence ofa 'taste for discrimination' to explain differen-tials in income. Several different white utilityfunctions could lead to discrimination by whitesall of which exclude tastes for discrimination.Thus the validity of Becker's thesis is eroded bythe existence of theoretical alternatives thatreach contrary conclusions. Krueger's findingslend support to Thurow's interpretation of thepurpose of racial discrimination in the economy.viz., to secure pecuniary gain.CONCLUSIONThere is, then, a wide range of criticismsthat can be urged against Becker's theoryand his second edition has not answered thesecriticisms satisfactorily. Consequently, competi-tors have entered the field of economic dis-crimination and can be said to hold a com-manding position over Becker's initial tour deforce.Nevertheless, The Economics of Discrimi-nation can still be genuinely regarded as alandmark in economic theorizing in this field.The definitions and clarification of conceptshave helped push the boundaries of economicscience much closer to a real understanding ofa difficult area of social inquiry, and haveformed the foundation for the important eco-nomic analyses of Gilman20, Gwartney andLandes.31 FJven though the investigators haveleaned heavily on Becker's original ideas, thereare still valuable insights to be obtained fromdeductive inquiry based on Becker's initial for-mulations. However, the tide of opinion in thetheory has now undoubtedly shifted towardsa sharper recognition of market imperfectionsand a more determinate role for institutionalfactors. In this reviewer's opinion this new-theoretical focus is likely to prove more pro-ductive for empirical research than Becker'sorthodoxy.REFERENCESBRIMMER, A. F. and HARPER, II. 1970 Economists' Perception of Minority Economic Problems: AView of Emerging Literature. Journal, of Economic Literature, 9, 783-806. This survey of economicjournals shows that the number of articles, communications and comments dealing with the economicproblems of minority groups increased steadily from 37 in 1.963 to 112 in 1969, while those specificallyconcerning discrimination, economic aspects of race, black capitalism and non-white incomes, increased3.4.from 13 to 39 in the same period. Similar observations could be made for other disciplines in thesocial sciences.BECKER. G. S. 1959 Union Restrictions on Entry. In: BRADLEY P. D. ed. The Public Stake inUnion Power. Charlottesville, University of Virginia Press.1968 Economic Discrimination. In: SILLS, D. L. ed. International Encyclopedia ofThe Social Sciences. New York, Free Press, vol. 4.CAIRNES. J. E. 1874 Some Leading Principles of Political Economy Newly Exbounded. London, Mac-millan. EDGEWORTH, F. Y. 1922 Equal Pay to Men and Women "for Equal Work. Economicjournal, 32, 433-57.SCHELTJNG, T. C. 1969 Models of Segregation. American Economic Review, Papers and Proceed-ings, 5% 488-93.CAIRNES, J. E. 1862 The Slave Power; Its Character, Career and Probable Designs. London, ParkerBourn. For an assessment, see, MILLER, W. L. 1984 J. E. Cairnes on The Economies of AmericanNegro Slavery. The Southern Economic journal, 30, 333-41.CONRAD, A. H. and MEYER. J. R. 1958 The Economics of Slavery in the Ante Bellum South. Journalof Political Economy, 66, 95-122. See also SARAYADAR. E. 1964 A Note on The Profitiability of AnteBellum Slavery. Sth. Econ. /., 30, 325-32.BERGMANN, B. B. 1971 The Effect on White Incomes in Discrimination on Employment. /. Polit.Econ., 79, 294-313.THUROW, L. C. 1969 Poverty and Discrimination. Washington (D.C.), The Broolcings Institution,Studies m Social Economics.939. The Economics of Discrimination, p. 10.10. BOULDING, K. E. 1970 Is Economics Culture Bound? Am. Econ. Rev., Pap. Proc, 60, 406-7; hesuggests that there exists considerable importance in the location of origin of economic works: If econom-ics had grown up in India there might have been a factor of production for each caste.11. IBID., 410.12. ARRIGHI, G. 1967 The Political Economy of Rhodesia. The Hague, Mouton.13. H. V. W. 1968 Marxist Taxonomy Comes to Rhodesia. Rhodesian Journal of Economics, 2, 43-9.14. An example of the application of income distribution theory to racial problems can be found in KNIGHT,J. B. 1964 A Theory of Income Distribution in South Africa. Bulletin of the Oxford University Instituteof Economics and Statistics, 27, 289-310. The first known attempt at disaggregation of the aggregateproduction function to take account of different labour supply groups can be found in BROWNE, G. W.G. 1943 The Production Function For South African Manufacturing Industry. South African Journal ofEconomics, 2, 258-68.15. ARROW, K. J. 1971 Some Models of Racial Discrimination in The Labour Market, Santa Monica, RandCorporation.16. See notably MYRDAL, K. G. 1957 Economic Theory and Underdeveloped Regions. London, Duck-worth. STREETEN, P. 1958 Value in Social Theory: A Selection of Essays . . . by Gunnar Mydral. LondonRoutledge and Kegan Paul.17. See COLEMAN, S. B. 1969 Statistical Problems in Assessing Racial Disparities in Income. Santa Monica,Rand Corporation.18. VAN DER DUSSEN, P. E. 1970 Estimation of Production Functions for South African ManufacturingIndustries 1945-1963. Rotterdam, Drukkery Brender-Offset. SPANDAU, A. M. K. 1971 "Income distri-bution and economic growth in South Africa. Volume One: Theory and Analysis". Unpublished D.Comm. thesis, University of South Africa.19. FABER, M. L, O. 1961 Income Distribution By Race in Southern Rhodesia. Race, 2, 41-52. SUTCLIFFE,R. B. 1971 Stagnation and Inequality in Rhodesia 1946-1968. Bull. Oxf. Univ. Inst. Econ. Statists, 33,35-56.20. Compare, for instance, DEWEY, D. 1952 Negro Employment in Southern Industry. /. Polit. Econ., 60,279-93, and GILMAN, H. f. 1965 Economic Discrimination and Unemployment. American EconomicReview, 55, 1077-95.21. LOMBARD, J. A. 1964 The Determination of Racial Income Distributions in South Africa. In: HOLLE-MAN, J. el al. eds., Problems of Transition. Proceedings of The Social Science Research Conference1962. Pietermaritzburg, Natal University Press. Spandau (see note 18) makes use of sophisticatedmeasures of income inequality.22. See TRUU, M. L. 1966 A Note on The Economic Consequences of Apartheid. Forum (Rhodes Uni-versity), 1, 15-21.23. Estimates of the economic cost of discrimination in the United States have been made by the Councilof Economic Advisors to the President in 1965. See KAIN, J. F. ed. 1969 Race and Poverty: TheEconomics of Discrimination. New York, Prentice-Hall, 58-9. Statements, reflecting the concern of eco-nomic policy-makers about discrimination can be found in BOTSWANA 1967 Statement on GovernmentPolicy in Relation to the Elimination of Racial Discrimination and the Furtherance of Localization inStatutory Corporations and Private Enterprise. Gaberones, Government Printer, National Assembly Paper,No. 10. See also VAN DER MERWE, P. J. 1969 The Economic Influence of the Bantu Labour Mark-et. S. Afr. J. Econ., 37, 42-59, where the author provides an analysis aimed at furthering the economicefficiency of separate development, or apartheid, in South Africa.24. See for instance, McGALL, J. J. 1970 Racial Discrimination in the Job Market: The Role of Informa-tion and Search. Santa Monica, Rand Corporation.25. In the case of Rhodesia see CLARKE, D. G. 1972 'Income Inequality and Distribution Policy in Rhode-sia 1946-1971'. Paper delivered to the 8th Annual Conference of The East African Universities SocialScience Council, Nairobi.26. BECKER, G. S. 1962 Investment in Human Capital: A Theoretical Analysis. /. Polit. Econ., 70, 9-49.27. Poverty and Discrimination, p. 117.28. DEWEY, D. 1958 Review'of 'The Economics of Discrimination'. Sth. Econ. J., 24, 495.29. Poverty and Discrimination, p. 113.30. REDER, M. W. 1958 Review of 'The Economics of Discrimination' Am. Econ. Rev., 48, 496.31. KRUEGER, A. O. 1963 The Economics of Discrimination. /. Polit. Econ., 71, 481-6.32. GWARTNEY, J. 1970 Discrimination and Income Differentials. Am. Econ. Rev., 60, 396-407. LANDES,W. M. 1967 The Effect of State Fair Employment Laws on The Economic Position of Nonwhites. Am.Econ. Rev., Pap. Proc, 57, 578-90.94